BIS to Propose New License Exception for Exports to Allies and Partners
At the Bureau of Industry and Security’s recent Annual Export Controls Update Conference, a BIS official announced that, in cooperation with the Departments of Defense, State, and Energy, BIS is developing a regulatory proposal that will provide more flexible licensing authorizations as one moves down the export control tiers1.
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Proposal Would Eliminate Certain Dual-Use Licensing Requirements
According to BIS, this approach will eliminate certain dual-use licensing requirements for allies and partner nations, consistent with U.S. statutory and international obligations.
(This proposed License Exception was announced during a broader discussion of Phase II of the Administration’s export reform effort. One of the primary aspects of Phase II is the development of a licensing policy for Tier 2 and Tier 3 items.)
New License Exception Proposal Could be Issued as Soon as Fall 2010
BIS will implement the new licensing policies in the Export Administration Regulations by creating a new 15 CFR Part 740 License Exception that will authorize the export and re-export of EAR-controlled items to specified destinations without an individual validated license. The details of precisely which countries will be fixed to which of the tiers are still being worked out. According to BIS, the proposed rule could be issued as soon as fall 2010.
BIS states that use of the new License Exception would impose a licensing requirement on the reexport from abroad, even by foreign persons, to most destinations outside the exception’s applicable country group of items originally exported from the U.S. under the authority of the exception.
License Exception Would Likely Have Several Conditions on its Use
According to BIS, the primary reason for adopting a License Exception as the method for implementing the new licensing policies is that the use of License Exceptions in the EAR can easily be made conditional (i.e., if an exporter wants to export an item without a license under the scope of a License Exception, there are additional steps and obligations pertaining to the export).
The new License Exception will likely impose as a condition for its use some combination of:
- end-use restrictions and assurances,
- destination control statements,
- reporting requirements that distinguish between end-users and distributors, and
- recordkeeping requirements.
In addition, based on the data derived from the reporting requirements, BIS would conduct outreach to U.S. companies with a history of exporting to destinations eligible for the License Exception on the enhanced compliance requirements.
1The Administration, as part of its export control reform efforts, will be splitting the Commerce Control List (CCL) and U.S. Munitions List (USML) into three tiers to distinguish the type of items should be subject to stricter or more permissive levels of control for different destinations, end-uses, and end-users.