By: John Black
Maybe you were beginning to feel comfortable with the sweeping changes to US export controls resulting from the Obama Administration’s Export Control Reform Initiative. Well, the regulatory change party isn’t over. Get out your reading glasses and free up some time in your calendar because it won’t be long before the EAR-ITAR definitions clean-up regulations hit the street. In 2015, DDTC and BIS published proposed, so-called harmonization rules to harmonize EAR and ITAR definitions of terms such as export, publicly available/public domain and others. At first glance I thought the proposed EAR and ITAR rules were not harmonization because they proposed to have different definitions of many key terms. Then the musicians in my family reminded me that when two people sing harmony they do not sing the same note at the same time but they sing different notes at the same time. So I guess the proposal to have definitions in harmony was musically correct because the definitions were not the same.
It’s easier for me to talk about the rules as definitions clean up, updates or clarifications, or perhaps just changes. In any event, putting aside the name I prefer to use, this is a high level overview of what I/we should expect:
- Clarifications of the EAR definitions of export (something leaves the US), reexport (something goes from one foreign country to another) and retransfer (change in end-use or end-user).
- Stating in the EAR that a person’s country status under the EAR deemed export rule is the most recent country of citizenship or permanent resident status.
- If technical data, technology or software is electronically transmitted or moved using end-to-end encryption, and is not intended for storage in the most sensitive export control countries such as China, Russia, and arms-embargoed countries, it is not an unauthorized export if electronic transmissions transit countries for which the a license would be required for the content of the transmission.
- The EAR will include provisions to apply the ITAR 126.18 and 124.16 concepts to EAR deemed reexports of technology or source code. Deemed reexports from Country Group A:5 STA eligible countries to nationals of any of those A:5 countries will be authorized. Deemed EAR reexports involving other countries and nationals will be authorized along the lines of ITAR 126.18 which means the deemed reexporter has an NDA from the recipient, a compliance procedure to vet/control the deemed reexport and there is no substantive contact with problem countries.
- The EAR will include provisions to apply ITAR special arrangements involving countries such as Canada, the UK and Australia to EAR issues.
- The EAR will require that the license applicant inform all other parties in the license of the license scope and conditions.
- The EAR will clarify that technology that is an input into a fundamental research is not fundamental research.
To a large extent, the definition changes will merely clarify that the definitions mean what you thought they meant, which will increase your confidence in your understanding of the regulations and, hopefully, make it easier for you to explain and apply the rules in your organization, and perhaps help you to sleep better at night. Clarification, even without hope for changes to the restrictions and requirements, is something I always appreciate because for me it is always better to understand the rules than to agree with them.
In any event, once the new changes are out, it will be time to join me as I print out the Federal Register notices, get some small sticky notes and a couple highlighter pens, pour yourself a big cup of coffee, and start to read the notices, including the preamble text, and study the new rules. I am looking forward to it, and I hope you are too.