Transcript U.S. Dual-Use Export Controls for the Aerospace Industry

U.S. Dual-Use Export Controls
for the Aerospace Industry
Gene Christiansen
Kelly Gardner
U.S. Department of Commerce
Bureau of Industry and Security
Le Bourget
June 17, 2009
Dual-Use Export Controls:
An Framework
• What are you exporting?
• Where are you exporting?
• Who will receive your item?
• For what will your item be used?
Three Main Regulatory
Agencies
• U.S. Department of Commerce
– Controls “dual-use” items
• U.S. Department of State
– Controls “defense articles” and “defense
services”
• U.S. Department of the Treasury
– Embargoes and assets controls
Defense Articles and Services
and
Dual-use Items
• “Dual-use” items are items that may have
both commercial and military applications
– Not primarily for weapons or military
related use
• “Defense articles” and “defense services”
are items specifically designed,
developed, configured, modified or
adapted for a military application
Department of Commerce vs.
Department of State
Regulations
• U.S. Department of Commerce
– Export Administration Regulations (EAR)
– “Dual-use” items controlled under the EAR are
described on the Commerce Control List (CCL)
• U.S. Department of State
– International Traffic in Arms Regulations (ITAR)
– “Defense articles” and “defense services”
controlled under the ITAR are described on the
United States Munitions List (USML)
The Control Lists
• The items on the CCL and the USML are largely
determined by the multilateral export control
regimes:
– Australia Group (AG)
• Chemical and biological weapons
– Missile Technology Control Regime (MTCR)
• Unmanned delivery systems capable of delivering weapons of
mass destruction
– Nuclear Suppliers Group (NSG)
• Nuclear weapons
– Wassenaar Arrangement (WA)
• Conventional arms and dual-use goods and technologies
Establishing Licensing Jurisdiction:
Why is This Important?
• Establishing licensing jurisdiction is the first step in
determining the licensing requirements associated
with your item
• Jurisdictional uncertainty occurs frequently in the
aerospace industry, primarily due to the military
heritage of aircraft
• The Department of Commerce (EAR) and the
Department of State (ITAR) have differing licensing
requirements
• The exporter is responsible for obtaining licenses,
when required, from the appropriate agency
Commodity Jurisdiction
Request
• Used to obtain an official government determination
when there is uncertainty as to whether an item is
subject to the licensing jurisdiction of the
Department of Commerce or the Department of
State
• Commodity Jurisdiction (CJ) Requests are
submitted directly to the Department of State
• CJ Requests are evaluated by the Departments of
Commerce, Defense and State
• The Department of State makes the final
determination
• Information on submitting a CJ request may be
found at:
http://www.pmddtc.state.gov/commodity_jurisdiction/index.html
What Are You Exporting?
EAR Principles
Le Bourget
June 17, 2009
Some Important Terms
• The EAR controls “exports”, “transfers”, and
“reexports” of dual-use “items”
– An “export” is an actual shipment or transmission
of items outside the United States, or a release
of technology or source code to a foreign
national in the U.S. or abroad
– A “transfer” is a shipment, transmission, or
release of items subject to the EAR from one
party to another party within a single foreign
country
– A “reexport” is an actual shipment or
transmission of items subject to the EAR from
one foreign country to another foreign country
– “Items” are commodities, software, and
technology
Items Subject to the EAR
• All items in the U.S., unless subject to the exclusive
jurisdiction of another agency
– Foreign-origin items in the U.S. are subject to the EAR for export
from the U.S. only
• All U.S.-origin items, wherever located, unless subject to the
exclusive jurisdiction of another agency or publicly available
– U.S.-origin items remain subject to the EAR throughout the life of the
item, until it is incorporated into a higher order assembly
• Certain foreign-made items incorporating greater than the
de minimis amount of controlled U.S. content
• Certain foreign-made direct products of U.S.-origin
technology
• Certain activities of U.S. persons
Exports vs. Reexports
• The same rules apply to exports, transfers, and
reexports, of U.S.-origin items
– Same licensing requirements (except for certain
sanctioned/embargoed countries)
– Same License Exceptions, plus Additional Permissive
Reexports (APR)
– Same license application
• For foreign-produced items, these rules extend to
– Items having more than the de minimis amount of
controlled U.S. content
– Certain items that are the direct products of U.S.-origin
technology
• BIS published guidance on reexports:
http://www.bis.doc.gov/licensing/reexportguidance.htm
What Are You Exporting?
Classifying Your Item on the CCL
Le Bourget
June 17, 2009
Classifying Your Item
on the CCL
• The U.S. has adopted the EU Control List
• Therefore, in most cases, multilaterallycontrolled items are classified in the same
way
– Entries differ only in format:
9E3 becomes 9E003
• The U.S. also maintains some unilateral
controls, which are incorporated into the
CCL
Classifying Your Item
on the CCL
• The proper classification is essential to
determining any licensing requirements
associated with your item
• Classification options:
– Classify the item on your own:
http://www.bis.doc.gov/licensing/do_i_needaneccn.html
– Check with the item’s manufacturer or exporter
– Submit a classification request to have BIS
determine the classification for you:
http://www.bis.doc.gov/licensing/bis_eccn.pdf
Classifying Your Item
on the CCL
• Entries on the CCL are alpha-numeric
codes called Export Control Classification
Numbers (ECCNs)
• Each ECCN on the CCL provides:
– A description of the technical parameters of a
particular item or type of item
– The control(s) associated with the item
– Any License Exceptions for which the item is
eligible
Classifying Your Item
on the CCL
• If your item does not fit within the technical
parameters of any ECCN on the CCL, it is
designated as “EAR99”
• EAR99 items generally consist of lowtechnology consumer goods and do not
require a license in most situations
Where Are You Exporting?
Determining License Requirements
Based on Item and Destination
Le Bourget
June 17, 2009
Commerce License Requirements
Based on Reason(s) for Control
• All items on the CCL are controlled for specific reasons (e.g.,
NS, MT, CB, NP)
• Each ECCN indicates the reason(s) the item is controlled
• With the control reason(s) and the country of the consignee,
the Commerce Country Chart fixes the licensing requirement
• If there is no license requirement based on the Commerce
Country Chart, you must still consider the destination, the enduser, and the end-use in order to rule out a license requirement
– This is true for items classified on the CCL (i.e., items having an
ECCN), and for items designated as EAR99
Reasons for Control
•
•
•
•
•
•
•
•
Regime/Convention-based
CB = Chemical &
Biological Weapons
CW = Chemical Weapons
Convention
EI = Encryption Item
FC = Firearms Convention
NP = Nuclear
Nonproliferation
NS = National Security
MT = Missile Technology
UN = United Nations
Unilateral
• AT = Anti-Terrorism
• CC = Crime Control
• RS = Regional Stability
Commerce Country Chart
Supplement No. 1 to EAR Part 738
http://www.access.gpo.gov/bis/ear/pdf/738spir.pdf
License Exceptions
EAR Part 740
• Authorization to export or reexport, under
stated conditions, items subject to the
EAR that would otherwise require a
license
• Two types of License Exceptions:
– List driven
– Transaction driven
http://www.access.gpo.gov/bis/ear/pdf/740.pdf
License Exceptions
with Aerospace Applications
List Driven
• GBS - Shipments to
Country Group B
countries
• TSR - Technology
and software under
restriction
Transaction Driven
• TMP - Temporary
imports, exports and
re-exports
• RPL - Servicing and
replacement of parts
and equipment
• AVS - Aircraft and
vessels
• APR - Additional
permissive re-exports
Country Considerations
• The EAR maintains strict licensing
requirements for the following
sanctioned/embargoed countries:
– Cuba
– Iran
– North Korea
– Sudan
– Syria
http://www.bis.doc.gov/policiesandregulations/regionalconsiderations.htm
U.S. Department of the Treasury
Office of Foreign Assets Control
• The U.S. Department of the Treasury’s Office of
Foreign Asset Controls (OFAC) administers and
enforces economic and trade sanctions against
targeted:
– Foreign governments
– Individuals (e.g., terrorists, narcotics traffickers)
– Entities (e.g., charities linked to terrorist groups, drug
front companies)
– Practices (e.g., WMD proliferation, trade in noncertified rough diamonds)
• In certain instances, BIS and OFAC controls
overlap
Licensing Authorities for Reexports
to Certain Countries
• Reexports of CCL items to Iran:
OFAC
• Reexports of EAR99 items to Iran:
– by a non-U.S. persons
BIS
– by a U.S. Person
OFAC
• Reexports of all items to Sudan:
OFAC
• Reexports of CCL items to Sudan:
BIS & OFAC
• Reexports of all items to Cuba:
BIS
• Reexports of all items to Syria:
BIS
• Reexports of all items to North Korea: BIS
Who Will Receive Your Item?
End-User Based
License Requirements
Le Bourget
June 17, 2009
Who Will Receive Your Item?
End-User Controls
• Certain individuals and organizations are
prohibited from receiving U.S. exports, and
others may only receive goods if they have
been licensed
• This includes items that would not
normally require a license based on the
ECCN and Commerce Country Chart or
based on an EAR99 designation
Who Will Receive Your Item?
End-User Controls
• The U.S. Government publishes various
end-user lists, which identify certain
individuals and organizations that
– Are prohibited from receiving U.S. exports;
– May only receive goods if they have been
licensed; or
– Constitute a “Red Flag” that should be
resolved prior to carrying out a transaction
End-User Lists
• Denied Persons List
http://www.bis.doc.gov/dpl/thedeniallist.asp
• Entity List
http://www.access.gpo.gov/bis/ear/pdf/744spir.pdf
• Unverified List
http://www.bis.doc.gov/enforcement/unverifiedlist/unverified_parties.html
• Specially Designated Nationals List
http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf
• Nonproliferation Sanctions
http://www.state.gov/t/isn/c15231.htm
• Debarred List
http://www.pmddtc.state.gov/compliance/debar.html
For What Will Your Item
be Used?
End-Use Based
License Requirements
Le Bourget
June 17, 2009
For What Will Your Item be Used?
End-Use Controls
• In addition to the “list based” and “enduser” controls, BIS implements a series of
end-use controls
• Some end-uses are prohibited, while
others may require a license
End-Use Controls
EAR Part 744
• Restrictions on certain nuclear end-uses
• Restrictions on certain rocket systems and unmanned
air vehicles end-uses
• Restrictions on certain chemical and biological
weapons end-uses
• Restrictions on certain maritime nuclear propulsion
end-uses
• Restrictions on certain exports to and for the use of
certain foreign vessels or aircraft
• Restrictions on certain exports and reexports of
general purpose microprocessors for “military enduses” and to “military end-users”
• Restrictions on certain “military end-uses” in the
People's Republic of China (PRC)
http://www.access.gpo.gov/bis/ear/pdf/744.pdf
Restrictions on Certain Military
End-Uses in the PRC
• A license is required to export, reexport, or transfer
items controlled under 31 ECCNS when the items
are intended for a “military end-use” in the PRC
• “Military end-use” means:
– Incorporation into a military item described on the USML,
the Wassenaar Munitions List, or items listed under
ECCNs ending in “A018" on the CCL of the EAR
– For the “use”, "development", or “production” of military
items described on the USML or the Wassenaar
Munitions List, or items listed under ECCNs ending in
“A018" on the CCL
– “Deployment” of items classified under ECCN 9A991
(certain aircraft)
http://www.access.gpo.gov/bis/ear/pdf/744.pdf
The BIS Licensing Process
Le Bourget
June 17, 2009
Applying for a License
• Electronic application via the BIS website:
Simplified Network Application Process
Redesign (SNAP-R)
• SNAP-R gives you the ability to:
– Submit export and re-export applications, and
commodity classification requests, via the Internet in
a secure environment
– Receive same day acknowledgment of your
submission
– Obtain online validations (e.g., electronic facsimile of
export license)
http://www.bis.doc.gov/snap/index.htm
The License Application
• On the license application
– Define the item(s) in terms of the technical
parameter(s) of the ECCN(s)
– Identify the specific end-use(s)
– Provide any know information about the
ultimate consignee/end-user(s)
– Provide information on any internal controls in
place to mitigate the risk of diversion or
unauthorized end-use
• All information provided in support of a
license application is restricted to U.S.
Government reviewers only
Interagency Review
• Ensures that the U.S. Government decision on a license
application draws on the breadth and scope of the
government’s expertise
• Reviewing agencies have common national security and
foreign policy interests, but unique perspectives
• Reviewing Agencies:
– Department of Commerce
• Technical issues
• Economic issues
– Department of Defense
• National defense issues – Brings the technical expertise of the
Services focused on an individual export/reexport
– Department of Energy
• Nuclear issues
– Department of State
• Foreign policy issues
License Review Period
• Department of Commerce must review the
application and refer it to the reviewing agencies
within 9 days of receipt
• Reviewing agencies have 30 days to respond
with recommendations
• If the reviewing agencies concur on the
disposition of the license application, it will be:
– Approved
– Approved with conditions
– Denied
License Denials
• Notice of intent to deny letter sent to
the applicant
• Applicant has 20 days to respond to the
denial notice with additional information or
arguments
• If the applicant responds, the application
will be reconsidered with the new
information received from the applicant
• If no response is received from the
applicant within 20 days, the license denial
is issued
Your Responsibilities
as a License Holder
• Understand and comply with any license
conditions
– You will be given a chance to review and agree
to all proposed license conditions before the
license is approved/issued
– Some license conditions should be shared
with/agreed to by the consignee/end-user(s)
• Be mindful of the license validity period
– Usually two years, or for the quantity of the
items approved, whichever comes first
– Decrement the license as exports are made, and
maintain the records for five years from the last
shipment
U.S. Dual-Use Export Controls
for the Aerospace Industry
Wrap-Up
Le Bourget
June 17, 2009
Dual-Use Export Controls:
A Summary
• What are you exporting?
– Establish licensing jurisdiction for your item
– Determine the proper classification for your item
• Where are you exporting?
– The Commerce Country Chart fixes licensing
requirements
• Who will receive your item?
– Prohibited/restricted end-user lists
• What will your item be used for?
– End-use controls
• Applying for a license
– SNAP-R
BIS Export Control
Initiatives
• BIS has developed a regularized process for
review of the items controlled on the CCL
http://www.bis.doc.gov/policiesandregulations/cclreviewprocess.html
• BIS has developed and published the basis of
CCL controls and applicable EAR references
http://www.bis.doc.gov/policiesandregulations/basis_of_ccl_controls.htm
BIS Export Control
Initiatives
• BIS has developed a webpage where
sources of publicly available information on
Commodity Classifications can be found
http://www.bis.doc.gov/commodityclassificationpage.htm
• BIS has developed an “Online Training
Room” that includes both instructional videos
narrated by BIS staff and transcripts
http://www.bis.doc.gov/seminarsandtraining/seminar-training.htm
How to Obtain
More Information
• BIS Website:
www.bis.doc.gov
• State DDTC Website:
www.pmddtc.state.gov
• Treasury OFAC Website:
www.treasury.gov/offices/enforcement/ofac
How to Obtain
More Information
Gene Christiansen
Email: [email protected]
Phone: +1 202 482 2984
Fax: +1 202 482 3345
Kelly Gardner
Email: [email protected]
Phone: +1 202 482 0102
Fax: +1 202 482 3345