Archive for the ‘BIS’ Category

Free, Updated Searchable ITAR and CCL Available Now!

Tuesday, June 2nd, 2015 by Danielle McClellan

By: Jill Kincaid

ECTI strives to provide useful tools and resources for trade compliance professionals in addition to our live training seminars, webinars and e-Seminars.   For that reason, ECTI has created a searchable ITAR and a searchable CCL.  You might think DDTC and BIS already offer these—in which case you would be wrong.

ECTI’s newest tool is a FREE Searchable ITAR document.  The ITAR document includes all of Parts 120-130 in one single pdf file which is updated and current with all ITAR  changes on a monthly basis.  The document is downloadable in searchable PDF format with bookmarks so it is easy to find what you are looking for—in one convenient file!

Similarly, for some time now ECTI has been offering a CCL tool that includes all of CCL categories 0 – 9 in a single pdf file which is updated and current with all CCL changes on a monthly basis.    Both of these tools are FREE and available for download at any time on our website!

Searchable ITAR

Searchable CCL

Commerce and State Publish PROPOSED Changes for Night Vision, Optics, and Guidance Items

Tuesday, June 2nd, 2015 by Danielle McClellan

By: Danielle McClellan

Export Control Reform has returned with a proposed rule change to Category XII (Fire Control, Range Finder, Optical and Guidance and Control Equipment) of the USML.  New, proposed changes to the ITAR and EAR, if implemented, would eventually shift certain less sensitive items out of Category XII to the CCL, where they normally would end up in proposed:

  • New “600 series” ECCNs  6A615, 6B615, and 6D615 for military fire control, range finder, and optical items, and
  • Revised ECCN 7A611 and new ECCNs 7B611, 7C611, and 7E611 for military optical and guidance items.

The proposed rule would also expand in a new way the scope of end-use restrictions on certain exports and reexports of certain cameras, systems or equipment and expand the scope of military commodities described in ECCN 0A919.

The proposed rule is focused on identifying the types of articles that are currently controlled by USML Category XII that are either: inherently military and otherwise warrant control on the USML or if it is a type of common to non-military equipment, possess parameters or characteristics that provide a critical military or intelligence advantage to the US, and that are almost exclusively available from the US. If an article met one or both of these criteria, the article will remain on the USML. If it did not satisfy either requirement because of differences in form or fit, “specially designed” for military applications, it was identified in current or new ECCNs proposed above.

BIS and DDTC are seeking public comments on their respective proposed changes.   DDTC and BIS will accept comments until July 6, 2015.

Once the US Government analyzes the public comments on the proposed changed, the departments of Commerce, State and Defense will determine what, if any changes to make to the proposed rules and then DDTC and BIS will publish final rules to make actual changes to their regulations.  It seems optimistic to think the new final rules could be published by early 2016 (or late 2015) and the final rules will have a six-month delay after publication before they enter into force.  That would mean that actual changes to the controls on these items would enter into force in the summer of 2016.

To review the ITAR proposal go to:  http://www.pmddtc.state.gov/FR/2015/2015-09673.pdf

To review the EAR proposed rule go to:  http://www.bis.doc.gov/index.php/regulations/federal-register-notices#FR25798

Learn more by viewing ECTI’s On Demand, Export Control Reform for Category XII webinar today!

Russia/Crimea Restrictions…You Are Responsible—You Can’t Say BIS Didn’t Officially Warn You

Tuesday, June 2nd, 2015 by Danielle McClellan

By: Danielle McClellan and John Black

Without reading the details of this guidance, you should get this message:  You better be careful so you do not end up being the first one caught with a significant violation of the new, complicated US sanctions and export controls put in place in response to Russia’s actions in Ukraine and the situation in Crimea.

If you have not studied the complicated array of various new BIS and OFAC rules, you should do so immediately

If you do not understand that these BIS and OFAC rules can have a dramatic impact in your business activities in Russia, Ukraine, Crimea and nearly every other country in the world, you need to study the rules again and study the guidance from the departments of Commerce and Treasury regarding the scope of their respective rules.

The new rules have a remarkably broad potential scope when compared to other US sanctions and export controls.  The broad scope is at least partially due to the new, prohibited parties lists that target important and large Russian entities and the multitude of the unlisted affiliates of the listed parties that often are subject to the same restrictions as the listed parties.

Now, you add to that the BIS guidance that says if you are dealing with a company in Panama and that company’s website says or hints that it is related to a certain listed party, you may have a problem.

And don’t fail to notice that for purposes of these sanctions BIS says “Exporters.”

Finally, one purpose of the guidance may be to give exporters and reexporters friendly advice.  Another purpose may be to put exporters and reexports officially on notice regarding how to comply with the complex rules so as to remove the “we didn’t know BIS wanted us to do that” argument from the list of possible arguments to use to negotiate smaller penalties if you end up doing something BIS doesn’t like.

Anyway, enough of the warnings.  Here is the news:

BIS recently released guidance related to the current export restrictions imposed on Russia due to the “ongoing situation in Crimea.” In August 2014, BIS placed restrictions on exports of certain items to Russia and expanded some licensing requirements later in December 2014.

BIS is now providing additional guidance to US exporters in order to prevent unauthorized reexports to Russia, mainly those involving NS-controlled items or items listed in Supplement No. 2 to Part 744 of the EAR.  BIS advised that exporters should remember that when a party who is not going to use the item is listed as the final destination (e.g., a freight forwarder), exporters have an affirmative duty to inquire about the end use, end user, and ultimate destination of the item(s) to ensure their transaction fully complies with the EAR.  BIS is reminding exporters to do the following:

  • When inquiring into the ultimate destination of the item consider e-mail addresses, telephone number country codes and languages used in communications as well as the customers website
  • Research the intermediate and ultimate consignees and purchaser (addresses, business registers, company profiles, websites etc.)
  • Screen all customers using an export screening tool
  • Pay attention to the countries that freight forwarders serve
  • Look into industry sectors and distributors or non-end user customer supplies

If you have any concerns about suspicious inquires that come to your company, BIS encourages you to contact local BIS Export Enforcement Office or use BIS’s online tip form.  Of course, before you contact the BIS law enforcement agents, it would be prudent to discuss the situation you are considering and the related history with your management and legal counsel.

BIS Guidance: http://www.bis.doc.gov/index.php/compliance-a-training/export-management-a-compliance/russia-due-diligence-guidance

Potential Poster Child for Violating US Export Controls on Russia?: Flider Electronics’ Put on the U.S. Denial List for Shipments to Russia

Monday, April 27th, 2015 by Brooke Driver

By: Brooke Driver

BIS recently issued a temporary denial order suspending Californian-based Flider Electronics, LLC’s export privileges for 180 days, due to two of its officers’ illegal activities, who are accused of smuggling and money laundering.

BIS claims that the company exported items subject to the EAR to Russia without a license by transshipment through third countries, listing in AES filings Estonian and Finnish end-users who, in reality, acted as freight forwarders. In addition, BIS discovered no licensing history from the company of controlled U.S.-origin electronics to Russia.

BIS chose to issue the temporary denial order due to its belief that a violation of the EAR was “imminent in both time and degree of likelihood.”  This temporary denial leaves the door open for BIS to impose further penalties.

Russia likely is joining China and Iran at the top of the list of countries that will get you in the most trouble for violating US export or reexport controls.  The US Government is certainly looking for a more well-known company to be the “Don’t Let This Happen to You” poster child for violations of US trade controls on Russia.

BIS Revises Support Document Requirements for License Applications

Monday, March 30th, 2015 by Brooke Driver

By: Brooke Driver

Effective March 13, 2015, the BIS has amended the EAR to streamline the support document requirements for license applications in part 748. Under the new rule, it is no longer necessary to obtain an International Import Certificate or Delivery Verification during the licensing process. The changes also limit the requirement to obtain a Statement by Ultimate Consignee and Purchaser to exports, reexports and transfers (in-country) of 600 Series Major Defense Equipment.

BIS Corrects Amendments that Shifted USML Cat. XI to CCL

Wednesday, February 4th, 2015 by Brooke Driver

By: Brooke Driver

Effective December 29, 2014, BIS corrected certain provisions of the EAR that were amended in 13 past final rules taking place between November 5, 2007 and October 14, 2014. The changes enact corrections meant to improve clarity and consistency in the regulations. The rule also addresses typographical errors included in the 13 final rules.

BIS Expands Microprocessor Military End-Use and End-User Control

Wednesday, February 4th, 2015 by Brooke Driver

By: Brooke Driver

On December 17, 2014, in an effort to accommodate technological advances, BIS revised the Export Administration Regulations (EAR) to amend  the microprocessor military end-use and end-user control in 744.14 of the EAR. The rule altered the scope of microprocessors subject to restriction.  The rule now prohibits exports, reexports or transfers (in-country) of:

  • Microprocessors (“microprocessor microcircuits,” “microcomputer microcircuits,” and microcontroller microcircuits having a processing speed of 5 GFLOPS or more and an arithmetic logic unit with an access width of 32 bit or more, including those incorporating “information security” functionality), or
  • Associated “software” and “technology” for the “production” or “development” of such microprocessors s.

The rule only applies to items destined to a “military end-use” or “military end-use” (see 744.17(d) for definitions) in Country Group D:1.

BIS said it amended the regulations to incorporate recent advances to microprocessor chips and to include related technology and software involved in the development and production of these products.

BIS Revises Six 600 Series ECCNs

Wednesday, February 4th, 2015 by Brooke Driver

By: Brooke Driver

A final rule came into effect December 30 that revises six Export Control Classification Numbers to accommodate a new ECCN, created July 1, 2014. This final rule revised the pertinent six ECCNs by clarifying that certain basic parts, components, accessories and attachments are not controlled by those ECCNs, but caught by the new ECCN. Likewise, the rule also removes controls on certain monolithic microwave integrated circuit power amplifiers and discrete microwave transistors and related technology, because these controls are outdated since the release of two other July 1 rules that provide controls on those items. Finally, the rule states how “specially designed” applies to printed circuit boards, populated circuit card assemblies and multichip modules to eliminate confusion.

BIS Slightly Tightens Controls on Hong Kong

Wednesday, February 4th, 2015 by Brooke Driver

By: John Black

In the December 23, 2014 Federal Register the Commerce Department revised the Export Administration Regulations to add export and reexport licensing requirements for certain items controlled for national security (NS) reasons.  Specially, items controlled for NS2 reasons are no longer eligible for export or reexport as No License Required (NLR) to Hong Kong.  The rule does not otherwise change Hong Kong’s eligibility for license exceptions, or change other aspects of the EAR controls on Hong Kong.  Items that are not eligible for NLR for Hong Kong still may qualify for export or reexport to Hong Kong under a license exception.

BIS Revises Controversial Controls on MMICs and Discrete Microwave Transistors

Wednesday, February 4th, 2015 by Brooke Driver

By: John Black

In the December 23, 2014, Federal Register the Bureau of Industry and Security (BIS) amended the EAR controls in 3A001 and 3A611 to address the controversial controls on microwave monolithic integrated circuits (MMIC) and discrete microwave transistors, and other items.  This rule change addresses a classic export control dilemma:  How should the US Government control items that have both sensitive military applications and non-sensitive commercial applications.  How should the US control radar used in both military and civil applications?  Where should the government draw the lines of control?

In the July 2014 USML and CCL military electronics changes, which entered into force on December 30, 2014, certain mimics and discrete microwave transistors (we will focus our conversation on these items to illustrate the issues) became subject to must stricter export controls because of US Government concerns about the sensitive military radar and other military applications for these items.  This change did not upset a lot of US companies because not many companies make these things, however, several US companies who manufacture these devices were quite unhappy with the change.  For starters, the items that they had long been selling under less stringent export controls were going to be subject to strict export controls under 3A611 which controls “military electronics.”  And nobody likes to have to get export licenses, especially for things that did not previously require licenses.

But there is much more to this story—More even than I will talk about here.  The MMICs and discrete microwave transistors are used in a wide range of non-sensitive applications such as cellular telephone communications, commercial satellite communications (e.g., direct individual access to internet via satellite, passenger aircraft access to satellite internet connections),  telecommunications test equipment and civilian maritime, air traffic and weather radar.  Unfortunately for manufacturers and exporters, the same devices also have very sensitive military applications in radar and other items.  You might say a classic dual-use item in the Wassenaar sense of the word.  (OK, you probably wouldn’t say that, but I am sure some people would.)

By putting the MMICs and discrete microwave transistors into 3A611, the Commerce Department made the export and reexport of the items to China require a license that would be subject to a presumption of denial.  This would prevent US manufacturers from selling these items for use in non-sensitive commercial communications equipment manufactured in China.  To make matters worse, some of the devices in question are available from non-US sources, for example, Singapore and Japan, who do not have the same extensive and restrictive export controls on these devices.  And adding icing on the matters worse cake, the European Union member countries are far behind schedule in implementing even the current Wassenaar agreed controls on electronics which are much less stringent than the new US 3A611 controls, so it is unlikely that the EU would implement controls following the US approach on these devices anytime soon, if ever.

Add up all those things that make matters worse, and we end of the sum of all worse matters, which equals China telecomm manufacturers buying the devices from non-US suppliers, increasing the prospect that US manufacturers end up sending their manufacturing know-how to other countries to have the formerly US items made abroad where the foreign made duplicates of the US devices would be subject to less stringent US controls, including no US controls on the foreign devices that are duplicates of US devices once they would be incorporated into foreign telecomm equipment.

Enter the Great US MIMIC Depression of 2015.

OK, well, the depression was narrowly avoided as the US Government  decided to modify its July 1 military electronics changes that would have entered into force December 30, by publishing in the December 23 Federal Register a change to the July 1 change.  Without getting into the important and complex details of the change to the change, what we more or less ended up with is a middle ground approach to control for these devices.  The devices largely will be classified as 3A001 and have the standard, flexible 3A001 licensing requirements when destined for civil telecommunications use.  For all other uses, the items will be subject to an export/reexport license requirement when destined for any country other than Canada.

And that is just the quick summary of the complicated and interesting situation.  This situation is a classic example of balancing national security concerns and economic concerns, a balancing act made more complex by the fact that national security concerns and economic concerns sometimes agree with each other and sometimes do not.  On the one hand, there are the national security concerns because of the highly sensitive military applications of the devices and the concerns that China and other countries could use these devices to strengthen their military capability and, thus, harm US national security.

On the other hand is the interest in keeping the US manufacturers of these advanced technology devices strong and thriving by not imposing controls that could cause them to lose market share vis-à-vis their non-US competitors while the availability of non-US sources means US controls would not prevent China and others from getting the devices anyway.  The classic analysis comes down to the fact that it is sometimes better to have US companies selling sensitive devices under a flexible level of US controls than having strict, unilateral US controls that foster the development of foreign sources of the sensitive items.  Foreign sources will sell free from any level of US controls and take money out of the hands of US suppliers.  Nobody in the US wins when that happens.

It supports US national security to have US companies excel in making devices such as these and having US companies profit from doing so will allow them to continue to develop new and better technologies to develop new and better devices for US military applications and commercial applications too.  That strengthens US national security.  And all of this is good for the US economy.

So, in a way, it all comes full circle:  Sometimes we can serve both national security interests and economic interests by having US companies who make sensitive and valuable technologies thrive while targeting our controls at those specific exports that could obviously and directly give the adversaries of the United States a military advantage.  Sometimes flexible controls are a win-win for national security and economic interests.

Kum-ba-ya my friend.    Kum-ba-ya.

Don’t miss Felice Laird’s Export Controls on Electronic Components, Telecom & Infosec: 2015 Update Webinar which will cover this topic.