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NOAA Workshop on U.S. Export Controls June 10 th & 11 th , 2009 – HCHB July 21 st & 22 nd , 2009 - Seattle

NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

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Page 1: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

NOAA Workshop on U.S. Export Controls

June 10th & 11th, 2009 – HCHBJuly 21st & 22nd, 2009 - Seattle

Page 2: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 2

U.S. Department of CommerceBureau of Industry and Security

Deemed Export Compliance

Bernard KritzerDirectorOffice of Exporter [email protected]

Page 3: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 3

Agenda

• Export Controls Overview• How to Classify Items on the Commerce Control

List• Foreign National Visitor and Guest Access

Program• Deemed Exports Overview• NOAA Deemed Export Compliance Program• Exercises• Show how to navigate and use the EAR

Page 4: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 4

BIS is here to help!

• Outreach Activities• Exporter Counseling• Advisory Opinions• Commodity Classifications• Compliance Strategies

Page 5: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 5

Need Assistance?

Bureau of Industry and Security Ph. (202) 482-4811Outreach & Educational Services Fax (202) 482-2927

14th St. & Pennsylvania Ave. NWWashington, DC 20230

Western Regional Offices3300 Irvine Avenue, Suite 345 Ph. (949) 660-0144Newport Beach, CA 92660 Fax (949) 660-9347

96 North 3rd Street, Suite 250 Ph. (408) 291-4212San Jose, CA 95112 Fax (408) 291-4320

Page 6: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 6

Page 7: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

7June 2009

Bureau of Industry and Security

■ Bureau Mission: to advance U.S. national security, foreign policy, and economic interests

Statutory Authority: Export Administration Act (EAA) of 1979, as amended; International Emergency Economic Powers Act, as amended

Responsibilities: BIS is responsible for implementing and enforcing the Export Administration Regulations (EAR), which regulate the export and reexport of most commercial and dual-use items.

Page 8: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

8June 2009

The ThreatThe Threat

■ Dangers of illegal technology transfers Dangers of illegal technology transfers

are very real: are very real:

‑ ‑ WMD ProliferationWMD Proliferation

‑ ‑ Weapon Design/ManufactureWeapon Design/Manufacture

‑ ‑ Industrial EspionageIndustrial Espionage

■■ U.S. economy damaged by illegal U.S. economy damaged by illegal

technology transfers.technology transfers.

Page 9: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

9June 2009

The ThreatThe Threat■ Significance: Both national security and

U.S. economy can be seriously damaged by illegal technology transfers.

■ Damage to the economy can include loss of large amounts of proprietary R&D done

over many years.

■ Loss of proprietary R&D can result in the establishment and/or enhancement of

foreign competitors in leading edge technology sectors.

Page 10: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

10June 2009

Origin of the Threat

■ U.S. Intelligence Community has noted: Collection and acquisition activities from

over 56 foreign nations 13 countries assessed to be most aggressive

collectors of U.S. proprietary economic information and critical technologies

Use of clandestine and illegal methods to collect technology

U.S. private sector studies estimate loss in the billions every year

Page 11: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

11June 2009

What is being targeted?

Nationally Biotechnology

Pharmaceuticals

Nanotechnology

Quantum Computing

Advanced Materials

Communications and Encryption Technology

Weapons Systems yet unclassified

Page 12: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

12June 2009

Methods Used to Target Technology

Unsolicited emailsUnsolicited emails

Front companiesFront companies

Liaisons with universities Liaisons with universities that have ties to defense that have ties to defense contractorscontractors

Recruitment by foreign Recruitment by foreign intelligence servicesintelligence services

National laboratoriesNational laboratories

Compromise of laptop Compromise of laptop while traveling overseaswhile traveling overseas

Attending/Hosting Attending/Hosting conferencesconferences

Relocating R&D facilities Relocating R&D facilities overseasoverseas

Circumventing export Circumventing export control lawscontrol laws

Visiting scientific and Visiting scientific and research delegationsresearch delegations

HackingHacking

Downloading information Downloading information from your networkfrom your network

Page 13: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

13June 2009

Deemed Export Enforcement Facts

■ Since 2004, Export Enforcement has closed over 120 investigations, involving a deemed export. Many of these investigations resulted in action being taken or the issuance of a warning letter.

Since 2004, BIS has issued 19 final orders in 17 investigations involving deemed export violations. This has resulted in over $2 million in fines.

Approximately one-half of the cases involved Voluntary Self- Disclosures (VSDs) and both commodity and technology exports.

Eight cases involved deemed export violations alone.

Most violations involved unauthorized transfers of Category 3 (Electronics) and Category 5 (telecommunications).

Page 14: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

14June 2009

Key Compliance Issues Since 2004, a central theme that has been identified in the

course of over 120 investigations of deemed exports has been the poor communications or disconnect between the key compliance actors in the private sector:

1) Export Compliance Personnel

2) Human Resources

3) Hiring Managers There were also issues surrounding foreign visitors and

the need for enhanced compliance training.

This is significant for high technology companies because the investigations identified the fact that many companies maintained effective programs for commodities but that it did not carry over in the area of technology.

Page 15: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

15June 2009

Technology Control Plan (TCP)

■ The key to technology export compliance is an effective Technology Control Plan.

■ A TCP should contain the following essential elements:

• Management commitment to export compliance• Physical security plan• Information security plan• Personnel screening procedures• Training and awareness program• Self-evaluation program

■ Meaningful compliance is “win-win” because it protects national security and allows a company to protect its proprietary technical data essential to R&D and bringing new products to market timely.

Page 16: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

16June 2009

Key Points for Discussion Successful deemed export compliance

incorporate commodities and technologies.

Successful deemed export compliance also represents management’s commitment to a holistic approach, involving successful interaction between the key stakeholders--export compliance personnel, hiring managers, and human resources.

Rarely have we seen a deemed exporter fail that established and maintained a strong TCP, successful interaction between internal stakeholders, and meaningful annual assessments of its program.

Page 17: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

17June 2009

Key Points for Discussion The cost of such compliance is small given

the potential downside loss of millions of dollars of proprietary technology and compromises to national security.

Meaningful deemed export compliance also requires an active partnership between government and all affected stakeholders.

Page 18: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

Overview of the Export Administration Regulations

(EAR)

Page 19: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 19

BIS Mission

• To advance U.S. national security, foreign policy, and economic interests.

– BIS is responsible for implementing and enforcing the Export Administration Regulations (EAR), which regulate the export and reexport of most commercial items.

Page 20: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 20

How Do We Control Exports?

Statutory Authority

• Export Administration Act (EAA) of 1979, as amended

• International Emergency Economic Powers Act, as amended

Page 21: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 21

Broad jurisdiction BUT… narrow license requirements

Export Administration Regulations (EAR)

• Implement the Export Administration Act

• Apply to most commercial items

Page 22: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 22

Where can you find the EAR

• Code of Federal Regulations– 15 CFR 730-774– www.gpoaccess.gov

• Available on-line:– www.bis.doc.gov

• Order from Government Printing Office– 866-512-1800 (toll-free)– www.access.gpo.gov

Page 23: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 23

Why Do We Control Exports?

• National Security• Foreign Policy

– Anti-terrorism– Crime control– Regional Stability

• Non Proliferation– Nuclear weapons– Chemical/biological weapons– Missiles

Page 24: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 24

Who Else is Involved in Export Controls?Other Regulatory Agencies

Part 730, Supplement 3

• US Dept. of State - Directorate of Defense Trade Controls

• US Dept. of Treasury - Office of Foreign Assets Control

• US Dept. of Energy

• Nuclear Regulatory Commission

• US Dept. of Commerce – Patent & Trademark Office

• US Department of Interior

• Food and Drug Administration

• U.S. Department of Commerce –records) Bureau of the Census (trade statistics and SEDs/AES

• U.S. Department of Homeland Security – Border and Transportation Security– U.S. Customs Service (works with BIS to ensure compliance)

Page 25: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 25

Important EAR Terms

• Dual-Use• Item• Export• Reexport• Deemed export/reexport• Commerce Control List (CCL)• Export Control Classification Number (ECCN)

Page 26: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 26

Dual-use Items

• Items that have both commercial and military or proliferation applications.

• This term is often used informally to describe items that are subject to the EAR.

Page 27: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 27

What is an item?Part 772

Page 28: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 28

What is an export?

• An export is a shipment or transmission of items

out of the United States.

Page 29: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 29

What is a deemed export?

• The release of technology or source code to foreign national in the US is deemed to be an export.

Page 30: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 30

What is a reexport?

• A reexport is a shipment or transmission of items subject to the EAR from one foreign country to another.

Page 31: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 31

Technology and Software Exports and Reexports

• Include transfers regardless of the method or media– Consultations– Phone conversations– Instruction– Conferences– Application of knowledge– Visual inspections– Disks, blueprints, hardcopy, etc.– Internet, E-mail, Fax

Page 32: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 32

Other Important Concepts

• Commerce Control List (“CCL”)

• Export Control Classification Number (“ECCN”)

Page 33: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 33

What does “Subject to the EAR” mean?§734.2(a)

Items and activities under the regulatory jurisdiction of the EAR– Remember there are other government

agencies that administer export controls

“Subject to EAR” does not mean that a license is automatically required

Page 34: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 34

What is “Subject to the EAR?”§§734.3-734.5

• Items in the United States

• Some items located outside of the United States

• Activities of U.S. and Foreign Persons

Page 35: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 35

What is “Subject to the EAR”? Items in the United States

§734.3(a)(1)

• ALL Items in the United States, except: – Publicly available technology & software (excluding

encryption)– Items subject to the exclusive jurisdiction of

another federal department or agency– Literary publications, such as newspapers or

literary works (non-technical in nature)

Page 36: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 36

What is “Subject to the EAR”? Items Outside the United States

§734.3

• Some items located outside the United States:– U.S.-origin items wherever located– Certain foreign-made items, if:

• The value of the U.S. content exceeds the de minimis percentage

• The foreign-product item is the direct product of U.S. technology or software

Page 37: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 37

Who is “Subject to the EAR”? U.S. Persons and Foreign Persons

§734.5

• Certain activities of U.S. persons (§744.6)– Related to proliferation

• Activities of U.S. or foreign persons prohibited by any order issued under the EAR.

Page 38: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 38

Overview-Summary

• BIS regulates exports, reexports and certain transfers of items subject to the EAR in addition to certain activities of U.S. persons.

• Important terms: Items, export, reexport, deemed export, CCL & ECCN

• First order of business is to determine whether or not your transaction is subject to the EAR.

Page 39: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

Classification of Items on the Commerce Control List

Darrell SpiresEngineer

Office of Nonproliferation and Technology Transfer Controls

Page 40: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 40

Topics of Discussion

• Determining the Export Control Classification Number (“ECCN”)– The Commerce Control List (“CCL”)

• Self-Classification

• Official Commodity Classification Request– SNAP-R

Page 41: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 41

Why are classifications so important?

• Proper classifications prevent:

– Delays in exporting

– Potential violations of the EAR

Page 42: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 42

Commerce Control List (“CCL”)Part 774, Supplement No. 1

• Contains lists of those items subject to the licensing authority of BIS

• Each entry is called an Export Control Classification Number (“ECCN”)

• Most items are described in terms of their technical parameters

Page 43: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 43

What does Export Control Classification Number (“ECCN”) tell us?

Part 772

• What items are controlled?

• Why BIS controls the item?

• Which destinations will require a license?

– Country Chart in Supp. 1 to part 738,

• What (if any) list-based license exception applies?

Page 44: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 44

The Structure of the ECCN

0 A 018

0 Category

A Product Group

018 Type of Control

Page 45: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 45

Categories of the Commerce Control List

0 Miscellaneous & Nuclear Materials

1Materials, Chemicals, Microorganisms, and Toxins

2 Materials Processing

3 Electronics

4 Computers

5 Part 1-Telecommunication

5 Part 2- I nformation Security

6 Sensors & Lasers

7 Navigation & Avionics

8 Marine

9 Aerospace & Propulsion

0 A 018

Page 46: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 46

Product Groups of the Commerce Control List

A Systems, Equipment & Components

B Test, I nspection & Production Equipment

C Materials

D Software

E Technology

0 A 018

Page 47: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 47

Type of Controls Associated with Entry

0 National Security Reasons

1 Missile Technology Reasons

2 Nuclear Nonproliferation Reasons

3 Chemical & Biological Weapons Reasons

9

Anti-terrorism

Crime Control

Regional Stability

Short Supply

UN SanctionsSurreptitious Listening

0 A 018

Page 48: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 48

Most of the time related items are grouped in series

Equipment, assemblies

and components

Test, inspection

and production equipment

Software

Technology

Materials

Page 49: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 49

How to Read an ECCN entry

• Number and Heading• License Requirements

– Reasons For Control• License Exceptions (List-based)• List of Items Controlled

– Units– Related Controls– Related Definitions– Items

Page 50: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 50

How to Read an ECCN

Heading:

ECCN & Descriptio

n

Page 51: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 51

How to Read an ECCN

License Requirement

s:

Reasons for Control

Page 52: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 52

How to Read an ECCN

License Exceptions

:

List-Based

Page 53: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 53

How to Read an ECCN

List of Items

Controlled:

Units

Related Controls

Related Definitions

Items

Page 54: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 54

Page 55: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 55

Technology and Software Classification

• Review Commerce Control List (CCL)• Identify Export Control Classification

Number (ECCN)• In most cases, technology tied

directly to hardware “development”, “production”, or “use”

• Refer to General Technology and Software Notes (Supplement No. 2 to Part 774)

Page 56: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 56

General Technology Note

The export of “technology” that is “required” for the “development”, “production”, or “use” of items on the Commerce Control List is controlled according to the provisions in each category.

Page 57: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 57

5A101

5D101

5E101

Technology and Software ECCNs

Telemetry Equipment

Telemetry Software

Telemetry Technology

Product Groups D and E

Page 58: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 58

Technology and Software Terms

• Development

• Production

• Use

• Required

Page 59: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 59

"Development"• "Development" is related to all

stages prior to serial production, such as: design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into a product, configuration design, integration design, layouts

Page 60: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 60

"Production"• Means all production stages, such as:

product engineering, manufacture, integration, assembly (mounting), inspection, testing, quality assurance.

Page 61: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 61

"Use"• Operation, installation (including

on‑site installation), maintenance (checking), repair, overhaul and refurbishing.

Page 62: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 62

"Required"• As applied to "technology" or

"software", refers to only that portion of "technology" or "software" which is peculiarly responsible for achieving or extending the controlled performance levels, characteristics or functions. Such "required" "technology" or "software" may be shared by different products.

Page 63: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 63

General Software NoteSupplement No. 2 to Part 774

• Sold from stock at retail selling points without restriction, by means of:

1. Over the counter transactions;2. Mail order transactions;3. Electronic transactions; or4. Telephone call transactions; and

• Designed for installation by the user.

Page 64: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 64

EAR99 Items• Items that are not specifically listed on the

Commerce Control List yet subject to the EAR, use the designation EAR99 in place of an ECCN.

• This designation may be found at the end of every category of the CCL:

“EAR99 Items subject to the EAR that are notelsewhere specified in this CCL Category or inany other category in the CCL are designated

by the number EAR99.”

Page 65: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 65

How can you obtain the ECCN of your item?

1. Ask the manufacturer, but verify…

2. Self-classify

• Work with company engineer or someone who knows the item

3. Submit formal classification request to BIS

Page 66: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 66

An Approach to Self-Classifying Items

• Do an index comparison (good starting point)

You need to understand the functions & characteristics of the item!

Page 67: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 67

Helpful Hints for Self-Classification

• Get started early classifying your items• Understand organization of CCL and approaches to classifying items• Understand the technical parameters of your item

Page 68: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 68

How to Request a Classification File using SNAP-R (or BIS-748-P)

• “Best guess” ECCN• Maximum of six items per request• Item details

– Manufacturer– Model/Part number– Applications– Specifications

• Include detailed technical specifications– Pictorial illustration, e.g. sales brochures

Page 69: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 69

Classification- Summary

Determining an ECCN

1. Check with the Manufacturer

2. Work with company engineer/someone who knows the item

• CCL is organized in a logical manner

• ECCN entries are based on the technical parameters of an item and contain a wealth of information regarding export controls

3. Submit formal classification request to BIS

Page 70: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

Determining License Requirements based on ECCN

and Destination

Page 71: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 71

Commerce Country ChartPart 738, Supplement No. 1

• Reasons for Control/Country Chart• If there is:

– “X” in the box indicates a license requirement– No “X” in the box indicates no license

requirement

Page 72: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 72

Structure Commerce Country ChartWhen the Destination and the Reason for Control Meet, Ask Yourself…

Is there an “X” in the box?

Page 73: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 73

No License Required

(“NLR”)

• You may use NLR for:– EAR99 items, or– ECCNs where there is no “X” on the Country Chart

under reason(s) for control; and– When the transaction does not require an export

license based on any other licensing requirement (e.g., end-use/user requirements)

Page 74: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 74

Summary-Determining Licensing Requirements based on ECCN & Destination

• “X” in the box indicates a license requirement

• No “X” in the box indicates no license requirement

Page 75: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

License Exceptions

Toni JacksonExport Administration Specialist

Office of Exporter Services

Page 76: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 76

There is an “X” in the Box…

What do I do?

Page 77: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 77

Topics of Discussion

• What is a License Exception?

• Restrictions

• List Based License Exceptions

Page 78: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 78

What is a License Exception?Part 740

An authorization that allows you to export or reexport, under stated conditions, items subject to the EAR that would otherwise require a license.

Page 79: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 79

When can’t you use a License Exception?

§740.2• Authorization has been suspended or revoked• Export subject to a General Prohibition that is

not eligible for License Exceptions.• Surreptitious Interception Devices • Crime control items to most destinations• Most Missile Technology control items• Embargoed destinations, in most instances

For Full list Refer to §740.2

Page 80: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 80

The way the EAR sees the world…

Country Groups Supplement 1 to Part 740

Group A: Regime Members

Group B: Less Restricted

Group D: Countries of Concern

Group E: Terrorist Supporting

Page 81: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 81

Commerce Control List-Based License Exceptions

Availability Based on ECCN– Shipments to B Countries (GBS)– Civil End Users (CIV)– Limited Value Shipments (LVS)– Technology and Software Restricted

(TSR)– Computers (APP)

Page 82: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 82

GBS Group B Shipments §740.4

• Shipments to Country Group B• Commodities requiring a license to the

ultimate destination for national security reasons only

Page 83: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 83

CIV Civil End-Users §740.5

• Country Group D:1, except North Korea

• Items that require a license to the ultimate destination for national security reasons only

• Civil end-uses and end-users– No military or proliferation

end-users/uses

Page 84: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 84

LVS Limited Value Shipment §740.3

• Country Group B• Commodities• Net value cannot exceed LVS value limit• Annual value restriction

– 12 x LVS value of same ECCN to same consignee

• Single shipment

NO splitting orders!

Page 85: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 85

TSR Technology & Software Under Restriction

§740.6

• Country Group B

• Technology & software requiring a license to the ultimate destination for national security reasons only

• Prior to use, written assurance required from consignee

Page 86: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 86

TSR Written Assurance

• Letter, other written communication, licensing agreement, fax

• No written assurance -- No TSR

Page 87: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 87

Summary-License Exceptions

• Make sure your deemed export requires a license (i.e. there is an “X” in the box), before reviewing the License Exceptions.

• Before going to a specific license exception, make sure there are no restrictions.

• Each exception is unique, make sure you meet of all of the criteria.

Page 88: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

William ArvinSenior Export Policy AnalystOffice of Exporter Services

Deemed Exports

Page 89: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 89

Deemed Exports: Definition

• Release of • technology or source code • that is subject to the EAR • to a foreign national • in the United States (EAR

§ 734.2(b)(2)(ii)).

• Release is “deemed” to be an export to foreign national’s home country

Page 90: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 90

Technology or Source Code Possible Release Methods

• Tours of laboratories

• Research, development, & manufacturing activities

• Foreign students or scholars conducting research

• Hosting a foreign scientist

Page 91: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 91

Deemed Export Rule Does Not Apply To:

• United States Citizens;• Permanent Resident Aliens (i.e., “Green Card” holders); and• Protected individuals under 8 U.S.C.

1324b(a)(3). Protected individuals include political refugees and political asylum holders.

Page 92: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 92

Country of Origin(Permanent Residency)

Release of technology to a foreign national of one country, say India, who has obtained permanent residency in another, say the U.K., is treated as if the technology transfer were being made to the U.K. and licensing requirements would be the same as for a British national in the U.K.

If the Indian national becomes a British citizen, transfers of technology would be viewed as transfers to the U.K.

Page 93: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 93

If an Indian foreign national becomes a citizen of the U.K. but retains Indian citizenship, the most recent citizenship is with the U.K. and releases of technology would be viewed as releases to the U.K.

As a general principle, a foreign national’s most recently obtained citizenship governs the licensing requirement.

Country of Origin(Dual Citizenship)

Page 94: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 94

Deemed ExportsLicense Requirements

• Is the technology (or source code) subject the EAR?

• Is a license required?

Page 95: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 95

Technology Not Subject to the EAR

• Publicly available (EAR § 734.7)• Generally accessible to the interested

public• Periodicals, books, print, electronic

other media forms• Libraries (university, public etc)• Released at open conferences

Page 96: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 96

Technology Not Subject to the EAR

•Product of fundamental research (EAR § 734.8)•Basic and applied research where resulting information is ordinarily published and broadly shared within scientific community

Page 97: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 97

Technology Not Subject to the EAR

• Educational information (EAR § 734.9)• Released by instruction in catalog courses• Associated teaching laboratories of academic

institutions

• Patent information (EAR § 734.10)• Public information available on patent

application

Page 98: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 98

Technology Not Subject to the EAR (Cont.)

• Technology subject to the exclusive export licensing jurisdiction of another agency• Directorate of Defense Trade

Controls• Nuclear Regulatory Commission• Department of Energy

Page 99: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 99

Deemed Export License Requirements

• Usually Commerce Control List Based• Other license requirements based on

• End use• Embargoed destinations• Entity List

Page 100: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 100

Deemed Export License Requirements

• Classify the commodity • Second character of ECCN will be A, B or C

• Look for a related software (D) or technology (E) ECCN usually in the same category

• Most software and technology ECCNs apply to software or technology for “development,” “production,” or “use.”

Page 101: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 101

Deemed Export License Requirements

• “Development” – all stages prior to serial production

• “Production” – all production stages including inspecting and testing

• “Use” – Operation, installation, maintenance, repair, overhaul and refurbishing• E.g., Providing operating instruction for a

machine by itself is not a transfer of use technology for that machine

Page 102: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 102

Deemed Export License Requirements

• Determine the classification of the technology or software

• Identify reasons for control• Determine foreign national’s home

country• Check country chart to see if a

license is required to that country.

Page 103: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 103

The Deemed Export Application

• Detailed letter of explanation• Comprehensive resume• Complete job description• Foreign national’s particular

qualifications• Safeguards to restrict access to that

approved (Technology Control Plan)

Page 104: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 104

Letter of Explanation• Identities of all parties to the transaction• Exact project location (where the technology or

software will be used)• Type of technology and scope• Availability abroad of comparable foreign

technology or software• Form in which the technology will be released

and the uses for which the technology will be employed.

• Applicant’s internal technology control plan

Page 105: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 105

Foreign National’s Resume

• Include all educational institutions attended beyond high school

• Street addresses

• Degrees or certificates received.

• All positions held

• Employers’ names and street addresses

• Brief description of work done.

Page 106: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 106

Foreign National’s Resume (Cont.)

• Account for all time since from high school graduation

• Present in month and year format

• No gaps greater than 30 consecutive days.

• Include brief abstracts of all scientific and technical papers published, and presentations at scientific and technical conferences.

Page 107: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 107

Technology Control Plan

• The requirement for a technology control plans are a standard condition found in deemed export and technology exports licenses.

Page 108: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 108

Technology Control Plan (Cont)• Essential elements:

• Physical security plan• Information security plan• Personnel screening procedures• Training and awareness program • Self evaluation program• Corporate commitment to export

compliance

Page 109: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 109

Helpful Information

• Does the foreign national:• Have strong ties to the U.S. (e.g., family

here, home ownership, etc.) and / or • Intend to become a U.S. citizen?

• What ties does the foreign national have to his / her country of origin?

• What special benefits or expertise the foreign national brings to the applicant?

Page 110: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 110

BIS - Application Review• Verify classification of technology• Review licensing requirements & license

exceptions based on home country• Assess appropriateness of job description,

responsibility, title • Assess appropriateness of education level

and field to technology & end-use • Determine reasons for control for correct

referrals

Page 111: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 111

License Exceptions for Deemed Exports

• CIV: Civil End Use (EAR § 740.5)• ECCN 3E002 technology.

• APP: Adjusted Peak Performance (EAR § 740.7)

• ECCNs 4D001 and 4E001 software and technology

• Both require foreign national review

Page 112: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 112

Foreign National Review (FNR)Sections 740.5 & 740.7

• Applicant must submit FNR request before disclosing technology under license exceptions CIV and APP.

• Request must provide same information on the foreign national as a license application.

• Faster review than license applications

Page 113: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 113

License Exceptions for Deemed Exports

• TSR: Technology and Software Under Restriction (EAR § 740.6)• Applies to technology and

software under national security only for country group “B” nationals.

• Letter of assurance required

Page 114: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 114

Deemed Export Application Statistics FY2008-- Results

• Total applications processed1252• Approvals 1147 (91%)• RWA’s 101 (8%)• Denials 4 (>1%)

Page 115: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 115

Deemed Export Application Statistics FY2008– Nationalities

• 57% People’s Republic of China• 10% India• 7% Russia• 6% Iran• 5% United Kingdom• 1% Germany• 2% Others

Page 116: NOAA Workshop on U.S. Export Controls June 10 th & 11 th, 2009 – HCHB July 21 st & 22 nd, 2009 - Seattle

June 2009 116

Deemed Export Contacts

Deemed Exports and Electronics Division

Brian Baker Kurt FranzDirector Senior Export Policy

Analyst202-482-5534 [email protected] [email protected]

Bob JusteSenior Electrical [email protected]