Since our last update, the Department of Commerce, Bureau of Industry and Security (BIS) has released a small flurry of new and proposed technology controls, continuing its review of emerging technologies required by ECRA and ongoing negotiations within the Wassenaar Arrangement.

BIS Expands Controls on Cybersecurity Items, Creates New License Exception ACE

On October 21, 2021, BIS published an interim final rule with request for comments (86 FR 58205) which would expand controls on cybersecurity items, but also creates a new license exception authorizing exports in many circumstances.

The new rule would create new Export Control Classification Numbers (ECCNs) 4A005 and 4D004, new paragraph 4E001.c, and a revised 4E001.a and 5A001.j.  According to BIS, “These items warrant controls because these tools could be used for surveillance, espionage, or other actions that disrupt, deny or degrade the network or devices on it.”

License Exception Authorized Cybersecurity Exports (ACE) would be created in the Export Administration Regulations (EAR) §740.22.  The new exception would allow “the export, reexport and transfer (in-country) of ‘cybersecurity items’ to most destinations, except to destinations listed in Country Groups E:1 and E:2” (currently Cuba, Iran, North Korea, and Syria), with some differentiation between government and non-government end-users and end-use restrictions.

For additional information and how to submit comments, please refer to the Federal Register Notice.  Comments will be accepted through December 6, 2021.

The interim final rule is effective January 19, 2022 if not revised.

BIS Proposes Restrictions on STA Exception

On October 22, 2021, BIS published a proposed rule (86 FR 58615) which would “clarify and expand restrictions on the availability of License Exception Strategic Trade Authorization” (STA).

The proposed rule would affect certain Category 9 ECCNS, restrict the availability of STA for ECCNs 1E001 and 2E003.f, and make conforming changes to STA and the affected ECCNs.  The proposed changes are largely related to gas turbine engine hot section parts and components, but may also affect other industries such as optics.

For additional information and how to submit comments, please refer to the Federal Register Notice.  Comments will be accepted through December 6, 2021.

BIS Requests Comments on Brain-Computer Interface Controls

On October 26, 2021, BIS published an Advance Notice of Proposed Rulemaking (ANPRM) (86 FR 59070) regarding potential emerging technologies controls on Brain-Computer Interface (BCI) technology.

Examples of BCI technology include neural-controlled interfaces, mind-machine interfaces, direct neural interfaces, and brain-machine interfaces.  This follows a November 19, 2018 ANPRM, the comments of which are summarized in the current notice.

BIS is seeking comments on the impact of BCI on U.S. national security and how to ensure that any controls would be “effective (in terms of protecting U.S. national security interests) and appropriate (with respect to minimizing their potential impact on legitimate commercial or scientific applications).”

Comments are specifically requested on the following topics:

1. What specific uniform standards for BCI technology would need to be adopted to ensure their application on a global basis (i.e., as international standards for BCI technology)?
2. Where does the development of BCI in the United States stand with respect to other countries (e.g., is the United States on the forefront of BCI technology development)?
3. Is BCI technology currently available for commercial use in certain foreign countries and, if so, where and for what specific purposes (e.g., have foreign companies already developed devices or chips for specific commercial applications)?
4. Has the current stage of development with respect to invasive and/or non-invasive BCI technology reached the point at which such technology is ready for commercial production and use?
5. Is the main progress with respect to non-invasive brain signal sensors being made in terms of real-time algorithms designed to transform neural signals into commands ( i.e., what is developing faster: “software” (algorithms) or hardware (sensors))?
6. What impact would the establishment of export controls on BCI technology have on U.S. technological leadership (i.e., not only in the field of BCI technology, but overall) and would this impact be distinctly different if controls were placed primarily on “software” as opposed to hardware, or vice versa?
7. How is the future development of artificial intelligence (AI) technology or other emerging technologies likely to impact the development of BCI technology, or vice versa ?
8. What types of ethical or policy issues are likely to arise from the use of BCI technology (e.g., for medical or military purposes)?
9. What kinds of risks and benefits currently exist, or are likely to arise, as a result of the application of BCI technology?
10. What are the potential advantages or disadvantages of using invasive and non-invasive BCI chips/sensors and related “software” (e.g., algorithms for signal processing) for specific applications? To what extent would these advantages or disadvantages correspond (or differ) based upon whether invasive or non-invasive BCI chips/sensors and related “software” were being used?
11. Are there any BCI technologies that are significantly more vulnerable than others to cybersecurity threats (e.g., military systems employing BCI technologies that could adversely impact U.S. biodefense)?
12. What is the potential for transmitted BCI data to be hacked or manipulated to influence the user or machine? Is such data inherently more vulnerable to hacking or manipulation than other forms of data? Would the invasive or non-invasive characteristics of BCI data have any impact on the potential vulnerability of such data?

BIS also encourages comments that would help it to determine:

1. Which aspects of BCI technology would be more likely to require monitoring by the U.S. Government (USG); and
2. Whether specific USG policies and regulations, as well as industry standards, need to be established before this technology becomes widely available for use in commercial applications.

Other related comments may also be welcome.  For additional information and how to submit comments, please refer to the Federal Register Notice.  Comments will be accepted through December 10, 2021.

ITAR Update: Ethiopia Formally Added to 126.1

On November 1, 2021, the Department of State, Directorate of Defense Trade Controls (DDTC) published a rule (86 FR 60165) officially adding Ethiopia to the International Traffic in Arms Regulations (ITAR) §126.1 list of prohibited destinations.  This change has been anticipated since September 17, 2021.

Ethiopia is now listed under §126.1(n) with the following policy:

(n) Ethiopia. It is the policy of the United States to deny licenses or other approvals for exports of defense articles or defense services destined to or for the armed forces, police, intelligence, or other internal security forces of Ethiopia.

The entry for Eritrea under §126.1(h) was also revised to reflect a similar policy:

(h) Eritrea. It is the policy of the United States to deny licenses or other approvals for exports of defense articles or defense services destined to or for the armed forces, police, intelligence, or other internal security forces of Eritrea.

Minor revisions were also made to the table heading for §126.1(d)(1) and §126.1(d)(2).  The addition of Ethiopia was originally announced on September 17, 2021 on the DDTC website and the new §126.1 entries took effect immediately with the November 1^st Federal Register Notice.

January saw a number of updates to export compliance regulations and policies to close out a number of Trump administration initiatives.  On January 20, 2021, the Biden administration announced a regulatory freeze.  How do these relate?  Read on.

Regulatory Freeze

Let’s start with the regulatory freeze, since what everyone wants to know is whether new rules are really going into effect or not.  The White House announcement requested executive agencies to (1) refrain in most cases from sending new rules to the Federal Register before review by new political appointees, (2) withdraw pending rules not yet published, and (3) postpone the effective dates of published but pending rules.  This is typical for changes in administrations.  Rules already published and effective may be revised in the future through normal administrative processes and we will report on notable changes.  Most of the changes below were effective before January 20^th, with a few notable exceptions.

Commerce Updates Chemical Weapons Lists

On January 7, 2021, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (86 FR 936), also effective January 7^th, amending the Chemical Weapons Convention Regulations (CWCR) and the Export Administration Regulations (EAR).  This amendment adds three chemical families and one chemical now controlled under the Chemical Weapons Convention (CWC) and revises the definition of “production” of CWC chemicals.

The Chemical Weapons Convention is an international arms control treaty that seeks to eliminate chemical weapons by the parties to the treaty.  The parties have agreed to a number of restrictions for listed chemicals.  The new changes reflect decisions adopted at the November 2019 CWC Conference of the States Parties.

The specific chemicals are identified in the Federal Register Notice and the full list is in Part 745 of the EAR.  The revised definition of “production” applies to the CWCR only, not the EAR.

Commerce Clarifies Vaccine Controls

Also on and effective January 7, 2021, BIS published a rule (86 FR 944) clarifying controls on vaccines under Export Control Classification Number (ECCN) 1C991.

The new rule amends 1C991 to:

1. Include vaccines containing or designed for use against pathogens and organisms listed under ECCNs 1C351, 1C353 or 1C354.  According to BIS:
   Prior to the effective date of this final rule, ECCN 1C991 indicated that it controlled vaccines “against” such items, but was not specific about whether all vaccines “containing” such items were controlled, irrespective of whether the vaccines were designed for use “against” such items.
2. Control medical products containing genetically modified organisms and genetic elements described in ECCN 1C353.a.3 and adjust definitions.
3. Renumber 1C991.c and .d based on level of export control.

These changes are based on a decision of the Australia Group June 2019 Plenary meeting.  The Australia Group is a multilateral forum for the harmonization of export controls related to chemical and biological weapons.

Commerce Unmanned Aerial Systems Licensing Policy Amended

On January 12, 2021, BIS published a final rule (86 FR 2252), also effective January 12^th, which amends the Unmanned Aerial Systems (UAS) licensing policy in the EAR.

The amended policy replaces a presumption of denial with case-by-case review for systems with “a range and payload capability equal to or greater than 300 km/500 kg but a maximum true airspeed of less than 800 km/hr.”

A corresponding proposal was made to the Missile Technology Control Regime (MTCR), a multilateral export control group, but has not been adopted within the MTCR by the required consensus.  The change in U.S. review policy was announced in July 2020.

The Missile Technology licensing policy is located in the EAR at §742.5.

Commerce Removes Anti-Terrorism Controls on Sudan

As anticipated, on January 19, 2021, BIS issued a rule (86 FR 4929), effective January 14^th, removing Anti-Terrorism (AT) controls for items destined for Sudan and removing Sudan from Country Group E:1.

Sudan’s removal is based on an agreement reached between the U.S. and Sudan in 2020 resolving claims related to victims of terrorism.  Sudan is now listed in Country Group B and is newly eligible for a number of license exceptions and the 25% de minimis level for U.S. content.  Notably, Sudan joins Ukraine as the only members of Country Group B not eligible for License Exception GBS (Shipments to Country Group B Countries, EAR §740.4).

Sudan remains subject to an arms embargo, as listed under ITAR §126.1(v) and EAR Country Group D:5.

As revised, there are currently no countries subject to AT controls except to the extent that Cuba, Iran, North Korea, and Syria are subject to comprehensive sanctions.

U.S. Person Activities and ICTS Supply Chain Rules Issued, But Not Yet Effective

On January 15, 2021, BIS issued an interim final rule (86 FR 4865) imposing license requirements on specified U.S. person activities related to “nuclear explosive devices, missiles, chemical or biological weapons, whole plants for chemical weapons precursors, foreign maritime nuclear projects, and foreign military intelligence services.”  This rule is effective March 16, 2021 and may be subject to the regulatory freeze described above.  It would amend the EAR to control activities by U.S. persons wherever located regardless of whether the items involved are subject to the EAR.  Comments have been requested through March 1, 2021.

On January 19, 2021, BIS issued an interim final rule (86 FR 4909) that establishes regulations and requests comments on “Securing the Information and Communications Technology and Services Supply Chain.”  This rule is effective March 22, 2021 and may be subject to the regulatory freeze described above.  It is intended to provide a process to review information and communications technology and services (ICTS) supply chain transactions, “similar to the process by which entities may inform the Committee on Foreign Investment in the United States (CFIUS) of investments in U.S. businesses.”  A related proposal was published in November 2019.  Comments have been requested through March 22, 2021.

State Department Precision-Guided Munitions Policy Announced

On January 19, 2021, the Department of State, Directorate of Defense Trade Controls (DDTC) announced a policy for the review of direct commercial sale (DCS) precision-guided munitions (PGMs).  Notably, DDTC stated:

“…before authorizing DCS exports, reexports, or retransfer of U.S.-origin PGMs, their critical components, and/or related technical data or defense services, as enumerated below, the U.S. government will confirm the foreign end-user government possesses or is in the process of procuring sufficient U.S., indigenous, or third-party [advanced target development] capabilities…

No action will be required on the part of the U.S. applicant. A valid ATD solution is current for five years, after which the technical support and data need to be refreshed.  Within the five-year period of currency, in-scope licenses will be adjudicated as normal.”

This process is intended to ensure that U.S.-origin PGMs are used “consistent with U.S. intent when approving the transfer” including the ability to mitigate the risk of civilian casualties.

Civil Monetary Penalties Adjusted for Inflation

Inflationary adjustments to civil monetary penalties were issued by both the Department of Commerce (86 FR 1764) and the Department of State (86 FR 7804).  Maximum penalties depend on the specific kind of violation and both notices also update a number of additional regulatory penalties.

The ITAR §127.10 civil penalties were amended as follows:

• § 127.10(a)(1)(i) increased from $1,183,736 to $1,197,728.
• § 127.10(a)(1)(ii) increased from $860,683 to $870,856 (or five times the amount of the prohibited incentive payment, whichever is greater).
• § 127.10(a)(1)(iii) increased from $1,024,457 to $1,036,566.

The Department of Commerce increased the maximum penalty for a violation of the Export Control Reform Act of 2018 from $305,292 to $308,901.

OFAC Issues Hong Kong-Related Sanctions Regulations

On January 15, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a rule (86 FR 3793), also effective January 15^th, creating the Hong Kong-Related Sanctions Regulations.  This is the latest step in a series of actions following Hong Kong’s loss of autonomy in 2020.  OFAC typically issues separate, but similar, sanctions regulations to implement country-specific sanctions.

ECS will continue to monitor changes to export control regulations and policies, particularly for DDTC, BIS, and OFAC.  Watch this space for updates!

In a flurry of activity in December, the Department of Commerce, Bureau of Industry and Security (BIS), updated licensing policies for countries near and far.  The updates will have notable impacts on license exemption availability as described below.

Hong Kong no Longer a Separate Destination

On December 23, 2020, BIS issued a final rule (85 FR 83765) removing Hong Kong as a separate destination under the Export Administration Regulations (EAR).  This follows the July suspension “all License Exceptions for Hong Kong that provide differential treatment as compared to those available to the People’s Republic of China (PRC).”  The PRC imposed a new “national security law” in 2020 which reduced Hong Kong’s preexisting autonomy and increased the risk of diversion U.S. technology and hardware.

Changes to Country Groups for Ukraine-Removes an Exception
Mexico, and Cyprus Adds STA as an Exception but Cyprus still a D:5 Country

On December 28, 2020, BIS issued a final rule (85 FR 84211) which moves Ukraine from Country Group D to Country Group B and adds Mexico and Cyprus to Country Group A:6.

No changes were made to license requirements in the Commerce Country Chart.  Under the EAR, Country Groups are used to determine eligibility for many license exceptions.

Ukraine’s addition to Country Group A:6 is unique, as it specifically excludes eligibility for License Exception GBS (§740.4 Shipments to Group B Countries) and License Exception TSR (§740.6 Technology and Software under Restriction), but other license exceptions available to Group B countries do become available.  Under this change, General Prohibition Three (the Foreign-Produced Direct Product Rule) no longer applies to Ukraine.  EAR §746.6 continues to restrict exports to the Crimea Region of Ukraine.

The addition of Mexico and Cyprus to Country Group A:6 authorizes the use of License Exception Strategic Trade Authorization (STA) §740.20(c)(2) (controls of lesser sensitivity).

Cyprus remains an ITAR §126.1 country (with a recently updated licensing policy) and is still included in Country Group D:5.  Under EAR §740.2(a)(12) and (13), license exceptions are limited for 9×515 and 600 series items for Cyprus (and other D:5 countries)

These updates are based on: “(1) The Government of Ukraine’s continuing engagement with regional and international export control authorities; (2) Mexico’s multilateral export control regime memberships and national security approaches and interests compatible with the United States; and (3) Cyprus’ European Union membership and like-minded export controls.”

Sudan

On December 18, 2020, the Department of State published a notice rescinding Sudan’s designation as a State Sponsor of Terrorism.  This change was previously announced in October, subject to a 45-day Congressional notification window.  Sudan is currently the only country designated as requiring export licenses for Anti-Terrorism (AT) purposes on the Commerce Country Chart that is not subject to comprehensive restrictions.  This requirement has not yet been removed.

After the re-designation of Cuba as a State Sponsor of Terrorism, the list now includes Cuba, Iran, North Korea, and Syria.  All four are already subject to comprehensive export restrictions.

On August 27, 2020, the Department of Commerce, Bureau of Industry and Security (BIS) released an advance notice of proposed rulemaking (ANPRM) (85 FR 52934) requesting public comments on potential controls for “foundational technologies.”  This inquiry is based on the Export Control Reform Act of 2018 (ECRA) which requires the Department of Commerce to establish controls on emerging and foundational technologies.  The related inquiry for emerging technologies was published in November 2018.

As explained by the notice, “Foundational technologies essential to the national security are those that may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat to the United States.”  This is distinct from “critical technologies” and includes commodities and software, not merely “technology.”  The inquiry does not seek to expand controls over “fundamental research” which is not subject to the Export Administration Regulations (EAR) under §734.8.

In particular, BIS is looking at “items controlled only for anti-terrorism (AT), crime control (CC), or short supply (SS) reasons, subject to United Nations (UN) embargoes, or designated as EAR99.”

While the notice did not include a representative list for potential controls, it does raise several areas of concern:

1. Items restricted for military end-users in China, Russia, or Venezuela under EAR Supplement No. 2. to part 744 “including semiconductor manufacturing equipment and associated software tools, lasers, sensors, and underwater systems… tied to indigenous military innovation efforts in China, Russia or Venezuela.”
2. Items “being utilized or required for innovation in developing conventional weapons, enabling foreign intelligence collection activities, or weapons of mass destruction applications.”
3. “Technologies that have been the subject of illicit procurement attempts which may demonstrate some level of dependency on U.S. technologies to further foreign military or intelligence capabilities in countries of concern or development of weapons of mass destruction”

The notice also presents eight questions about foundational technologies:

1. How to further define foundational technology to assist in identification of such items;
2. sources to identify such items;
3. criteria to determine whether controlled items identified in AT level Export Control Classification Numbers (ECCNs), in whole or in part, or covered by EAR99 categories, for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security;
4. the status of development of foundational technologies in the United States and other countries;
5. the impact specific foundational technology controls may have on the development of such technologies in the U.S.;
6. examples of implementing controls based on end-use and/or end-user rather than, or in addition to, technology based controls;
7. any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and
8. any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of an foundational technology that would warrant consideration for export control.

Overall, items currently subject to the EAR, whether EAR99 or with controls that rarely require licenses, may be subject to additional restrictions as “foundational technologies.”  This may be accomplished through country-specific controls on new and existing ECCNs as well as an expansion of or new rules in the style of the §744.21 restrictions on military end-users.

Comments will be accepted through October 26, 2020.  Please refer to the Federal Register Notice for more information and how to submit comments.

On May 19, 2020, the Department of Commerce, Bureau of Industry and Security (BIS), published an interim final rule (85 FR 29849) amending the Export Administration Regulations (EAR) to expand the Direct Product Rule to apply to specific members of the Entity List—at this time China’s Huawei Technologies and 114 non-U.S. affiliates.  The rule was effective May 15, 2020, the date on which it was made available for public inspection.

Huawei Technologies and 114 of its overseas affiliates were added to the Entity List in 2019. However, Huawei has continued to use U.S. software and technology to design semiconductors, undermining the national security and foreign policy purposes of the Entity List by commissioning their production in overseas foundries using U.S. equipment.

The rule amends the Direct Product Rule (General Prohibition Three) at EAR §736.2(b)(3) to bar the transfer of items specified in a footnote to the Entity List

(vi) Criteria for prohibition relating to parties on Entity List. You may not reexport, export from abroad, or transfer (in-country) without a license or license exception any foreign-produced item controlled under footnote 1 of Supplement No. 4 to part 744 (“Entity List”) when there is “knowledge” that the foreign-produced item is destined to any entity with a footnote 1 designation in the license requirement column of the Entity List.

The interim rule is intended to block global chip supplies to Huawei by specifying direct products of U.S. origin technology in Export Control Classification Numbers (ECCNs) 3E001, 3E002, 3E003, 3E991, 4E001, 4E992, 4E993, 5E001, or 5E991 as well as U.S. origin software specified in ECCNs 3D001, 3D991, 4D001, 4D993, 4D994, 5D001 or 5D991.

U.S. manufacturers must comply with the interim rule by:

1. Due diligence “denied parties screening” of all parties to an overseas transaction.

2. Obtaining signed End User Statements acknowledging that the goods (technology, software and articles) are controlled by the U.S. Department of Commerce, Export Administration Regulations, and any in-country retransfer or reexport of these goods to another party requires prior authorization by the U.S. Department of Commerce, Bureau of Industry Security.

Comments on the interim final rule may be submitted through July 14, 2020.  Review the Federal Register Notice for the full rule and how to submit comments.  The Commerce Department also issued a press release on this action.

Related Actions Related to China and Huawei

This action follow three notices published in April expanding restrictions on exports to military end-users, the elimination of the License Exception Civil End Users (CIV), and modification of the License Exception Additional permissive Reexports (APR).

BIS also extended the Temporary General License for Huawei and its listed affiliates on March 18, 2020 (85 FR 29610).  The General License, which authorizes activities “including those necessary for the continued operations of existing networks and equipment as well as the support of existing mobile services, including cybersecurity research critical to maintaining the integrity and reliability of existing and fully operational networks and equipment,” is now valid through August 13, 2020.

On April 28, 2020, the Department of Commerce, Bureau of Industry and Security (BIS), published three notices revising the Export Administration Regulations (EAR).  These changes are intended to increase restrictions on exports to China, but will affect transactions involving other countries as well:

• 85 FR 23459 – Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End Use or Military End Users in the People’s Republic of China, Russia, or Venezuela

• 85 FR 23470 – Elimination of License Exception Civil End Users (CIV)

• 85 FR 23496 – Modification of License Exception Additional Permissive Reexports (APR)

This rule comes after much delay as these changes have been anticipated since 2018 and we now have two final rules and one proposed rule from BIS.

Chinese Military End Use

Effective June 29, 2020 (85 FR 23459), EAR Part 744 will be amended to further restrict exports and reexports to China, as well as to Russia and Venezuela, when destined for a military end user or end use.

• 744.21 previously restricted exports to China for military end use, as well as exports to Russia or Venezuela for military end use or end users. By adding military end users in China, the new rule will apply the same limitations to all three countries. The new rule also broadens the definition of military end use to include additional items.

Items subject to the military end use or end user restrictions are identified by Export Control Classification Number (ECCN) in Supplement No. 2 to Part 744.  The following ECCNs will be added to the supplement or their controls expanded: 2A290, 2A291, 2B999, 2D290, 3A991, 3A992, 3A999, 3B991, 3B992, 3C992, 3D991, 5B991, 5A992, 5D992, 6A991, 6A996, 8A992, 9A991 and 9B990.

Items restricted under the revised §744.21 will require a BIS license and be subject to a policy of denial.  Previously, such applications were reviewed on a case-by-case basis, considering whether an export would make a material contribution to military capabilities and result in advancing military activities contrary to U.S. national security interests.

The rule also establishes a Regional Stability (RS) license requirement for any 9×515 or 600 series paragraph .y items destined for China, Russia, or Venezuela.  There is an exception for the export or reexport of items to Russia for the International Space Station (ISS).

Finally, the rule amends the EAR to require Electronic Export Information (EEI) filings for any items destined China, Russia, or Venezuela regardless of value, unless shipped under License Exception GOV.”

Between the expanded definitions and “China’s widespread civil-military integration,” these revisions will require increased due diligence when evaluating end users in China.

For additional detail, refer to the Federal Register Notice.

Removal of License Exception CIV

Also effective June 29, 2020 (85 FR 23470), the §740.5 License Exception Civil End Users (CIV) will be removed from the EAR.

License Exception CIV currently allows exports and reexports of specifically identified CCL items controlled for National Security reasons to twenty three countries of national security concern when “destined to civil end-users for civil end-uses.”

License Exception CIV is not generally available—the license exception must be positively identified in the ECCN entry for the item in question.  License Exception CIV is generally a counterpart to the Shipments to Country Group B Countries (GBS) or Technology and Software Under Restriction (TSR) exceptions, which allow similar exports to the EAR’s Country Group B.

In removing License Exception CIV, BIS is primarily concerned by “the increasing integration of civilian and military technology development in these countries of concern.”  The removal of the license exception means that BIS licenses will be required for such transactions for all D:1 countries.

The rule also makes conforming changes to the EAR, largely removing the “CIV: Yes” or “CIV: No” indications from ECCNs.

The Commerce Country Groups are listed in Supplement No. 1 to Part 740.

For additional detail, refer to the Federal Register Notice.

Modification of License Exception APR

Finally, BIS issued a proposed rule (85 FR 23496) to modify the §740.16 License Exception Additional Permissive Reexports (APR).

License Exception APR currently allows the reexport of some controlled items from Country Group A:1 or Hong Kong, given certain conditions including an export authorization from the reexporting country.  Because of concerns about these countries’ licensing review standards, APR may allow the reexports that would have been denied for export directly from the U.S.

The BIS proposal removes Country Group D:1 as eligible destinations under License Exception APR so that the U.S. government approval would be required for reexports to these countries of national security concern.

Comments may be submitted through June 29, 2020.  In particular, BIS requests comments on how the proposal would impact current use of License Exception APR and the volume of transactions affected.  Review the Federal Register Notice for the full proposed rule and how to submit comments.