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New Export License for Libya
In response to the unrest in Libya, the Office of Foreign Assets Control has issued a General License No. 2 to permit the export of goods and service to diplomatic missions of the Government of Libya to the US and UN permitting the payment of such goods.
Export compliance tip of the day: Kevin Wolf, Undersecretary of BIS, spoke Friday Dec 17th in Boston about export control reform and stressed the following:
"Export Control Reform" – "we are at the end of the beginning. It will be completed in 3 phases. Last, Phase III, when it is completed (Export Control Nirvana) will look like –
- Single licensing agency
- Single IT system
- Single enforcement agency
- Single set of regulations."
Phase II – List review
All agencies are screening against a set of criteria to have a 3-tiered system:
Tier 1 – items only available from US and have a military advantage. These would have world-wide licensing requirements
Tier 2 – items that have substantial military or intelligence advantage will require a license outside of NATO and close allies
Tier 3 – items that are more widely available
They will eventually drop off when availability is high enough.
US Munitions List will become a positive list. Now "specially designed" catches too many components. Components should not be controlled at the same level as the end item.
Please review Federal Register Dec 10 th notice (below) and provide comments by Feb 8th.
There will be a new license-free zone under license exception STA – Strategic Trade Authorization that will permit export to NATO and members of at least 3 of the license regimes. This exception is also permitted for deemed exports. This will eliminate approximately 24,000 licenses where there have been only 11 denials, 5 for being on the Denied Parties List, so they should have been caught anyway under other prohibitions.
The agencies are also working on a single license form. The electronic submission will be outsourced. Definitions will be harmonized from all the regulations: fundamental research, publicly available, technology and specially designed.
DDTC abandons Third country national rule
DDTC announces that tensions with other countries about restricting employees based on country of birth and not citizenship or residency results in dropping this interpretation. Foreign companies receiving defense technologies are bound to adopt security measures and assess the employees on-going ties to their homeland.
DDTC now makes commodity jurisdiction form available for electronic submission
See instructions for submitting DS-4076 www.pmddtc.state.gov/commodity jurisdiction
Normal encryption controlled under 740.17 b.1 now requires one-time registration and annual reporting. If your company does not have an assigned Company Identification Number with BIS, you need to have this to register.
New Encryption Rule Table:
| License Exception ENC: Does not require a BIS/NSA review prior to being granted eligibility |
Been replaced by new encryption registration, classification request and reporting requirements depending on the product, transaction parameters, and the use of the item.
Exporters may self-classify most encryption items |
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| Exports for internal development or production of new products to private sector end-users headquartered in a close U.S. allied country (2) U.S. subsidiaries |
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No registration, classification request, annual self-classification reporting or semi-annual reporting: |
| Exports/ re-exports not covered by 15 CFR 740.17 (b)(2) or (3): |
Require only an encryption registration and the receipt of an encryption registration number (ERN) are required. |
No further reporting |
740.17 B2 shipments to Supp 3 countries
15 CFR 740.17 (b)(2), open cryptographic interface (OCI) items, and non-standard cryptography technology to any end-user located or headquartered in a close U.S. allied country
(2) cryptanalytic items and encryption source code ineligible for license exception TSU to non-government end-users located or headquartered in a U.S. allied country
(3) eligible items to any end-user located or headquartered in an U.S. allied country |
Submit classification and once you have an ERN and submission of a classification request, you can ship immediately |
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740.17 b2 items outside of Supp 3 countries to non govt end-users
Is allowed for
(1) cryptanalytic items to non-government end-users in U.S. allied countries
(2) OCI items and non-standard cryptography technology to any end-user located or headquartered in an U.S. allied country
(3) items eligible under 15 CFR 740.17 (b)(3) to any end-user, except for Group E:1 countries |
Shipment upon receipt of an ERN and 30 days after the submission of a classification request: |
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Mass Market Treatment:
Exceeding 64 bits |
Immediate shipment upon receipt of an ERN and submission of a classification request:
Use new encryption registration, classification - 5A992/5D992 under NLR, except to Group E:1 countries;
Does not require BIS/NSA review prior to exportation and re-exportation of mass market items |
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| Shipment upon receipt of an ERN and 30 days after the submission of a classification request: |
Is allowed for specified mass market items as NLR, except to Group E:1 countries |
(while a classification request is pending before BIS, exporters have the option of using license exception ENC for shipments to end-users in U.S. allied countries) |
| Annual Self-Classification Reports must be submitted to BIS and NSA for exports/re-exports of items: |
15 CFR 740.17 (b)(1) for license exception ENC and
15 CFR 742.15 (b)(1) for mass market items. |
(while a classification request is pending before BIS, exporters have the option of using license exception ENC for shipments to end-users in U.S. allied countries) |
| Semi-Annual Sales Reporting Requirements: |
Only items within 15 CFR 740.17(b)(2) and (b)(3)(iii) are subject to semi-annual reporting
Have been removed for most encryption items under license exception ENC |
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A New Note 4:
Items incorporating or using cryptography that do not have communication, computing, networking or information security as primary function |
are exempted from Category 5, Part 2 controls
Was added at the
Beginning of Category 5, Part 2 |
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| After the submission of registration, De Minimis Treatment: |
Is given to encryption items and software authorized for license exception ENC |
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New
Provision for encryption components and a new list of additional sensitive items have been added in 15 CFR 740.17(b)(3) (i.e. items that perform vulnerability analysis, network forensics or computer forensics) |
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| Previously reviewed 5E002 encryption technology (except that relating to cryptanalytic items, non-standard cryptography, or OCI): |
Has been decontrolled |
May be exported/re-exported to non-government end-users not in country groups D:1 or E:1 |
| Per a Grandfather provision, exporters: |
Are not required to register, submit classification requests or file semi-annual reports for items that subject to BIS review requests for which classification determinations (i.e., Commodity Classification Automated Tracking System numbers) were obtained prior to June 25, 2010. |
Are required, however, to comply with these new requirements with regard to previously unclassified items described in 15 CFR 740.17 (b)(2)(i) |
| B1Normal OAMP encryption |
B2 Network infrastructure |
B3S |
DTrade users – old forms no longer accepted
If you have not submitted a license in a few months and you saved your own template, you may need to download the new forms, now part of D-Trade 2. DTrade 1 is no longer an option for submitting license applications. To ensure you have the latest copy of the Forms and Batch schemas, please download them from the DTrade 2 web site at the following: https://dt2.pmddtc.state.gov/dtrade/CertificateLogin.
BIS announces changes to Encryption Regulations
- BIS published an advisory opinion that clarified that companies would not be violating laws if they were to post software containing encryption functionality on the web for free download, and the software was downloaded in an embargoed country, unbeknownst to the company.
- As of now, hardware and software in which the encryption is "ancillary" do not need to undergo a one-time review by BIS and NSA, and are not subject to the semi-annual export reporting requirements.
- President Obama announced that the administration was working to replace the current process for encryption items, which will eliminate up to 85 percent of all the technical reviews of these products.
Obama Vows To Reform Export Control Process
Gates announced that the administration plans to combine the State Dept. and Commerce Dept. licensing process into one agency.
From press release – "While Cabinet-level officials have already endorsed the creation of a single agency, which would combine the functions currently spread among the departments of Defense, State and Commerce, the Gates speech has been delayed for several weeks in part due to resistance to that idea from senior bureaucrats in those departments, sources said. The creation of a single agency poses more of a threat to these civil servants because they believe that only their agency approaches export controls with the correct balance of national security and economic priorities and because they are personally invested in the status quo in terms of careers." |
