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BIS Clarifies Use of License Exceptions GOV and STA

On November 1, 2017, the Department of Commerce’s Bureau of Industry and Security (BIS) introduced clarifications to the Export Administrative Regulations (EAR) for the use of license exception “Governments, International Organizations, International Inspections under Chemical Weapons Convention, and the International Space Station” (GOV), and license exception “Strategic Trade Authorization” (STA). BIS explained that the agency is not changing the requirements for the use of these exceptions, instead it is only providing guidance to answer questions frequently received from the public.

The key elements of these clarifications are as follows:

License Exceptions GOV

  • Clarification for the term “contractor support personnel” under (b)(2)(ii) – Paragraph (b)(2)(ii) authorizes exports, reexports, and transfers of items to a department or agency of the U.S. Government, including its “contractor support personnel.” BIS clarified that:

    • The term “contractor support personnel” is limited to those individuals who are providing support within a U.S. Government owned or operated facility or under the direct supervision of a U.S. government employee.
    • Private security contractors are not “contractor support personnel” for purposes of (b)(2)(ii). 
  • New note 1 to paragraph (b)(2)(iii)(C) – Paragraph (b)(2)(iii)(C) authorizes the “temporary” export, reexport, or transfer (in-country) of an item in support of any foreign assistance or sales program authorized when the item is provided pursuant to a contract with a department or agency of the U.S. Government or when the exporter, reexporter, or transferor obtains a written authorization from the Secretary or agency head of the U.S. Government department or agency responsible for the program. BIS clarified that:

    • The term “temporary” means that “within no more than four years from the date of an item’s initial export, reexport, or transfer (in-country), it must be returned to the exporter, reexporter or transferor or its disposition otherwise authorized (e.g., pursuant to a license or another license exception) in accordance with the EAR.”
  • New note 1 to paragraph (c)(1) – Paragraph (c)(1) authorizes exports, reexports, and transfers (in-country) to agencies of “cooperating governments” and North Atlantic Treaty Organization (NATO) agencies. BIS clarified that:

    • Civil intergovernmental organizations in which the membership is limited to national governments that are “cooperating governments” are also considered “cooperating governments” for purposes of (c)(1).
    • An agency such as the European Space Agency (ESA) where membership is limited to national governments that are “cooperating governments” would be considered a “cooperating government.” However, an agency such as the European Aviation Safety Agency (EASA), the United Nations, and the World Bank would not be considered “cooperating governments” because their memberships are not solely composed of governments that are “cooperating governments.”

License Exception STA

  • New note 1 to paragraph (a) – Paragraph (a) authorizes exports, reexports, and transfers (in-country), including releases within a single country of software source code and technology to foreign nationals, in lieu of a license that would be required under controls in the commerce control list. BIS clarified that:

    • License exception STA authorizes transfers (in-country) as long as all applicable requirements for the use of the license exception were met. In particular, BIS explained that “if the transfer (in-country) did not require an authorization, such as for exports received under License Exception STA, an authorization is not required for subsequent transfers (in-country)…”

  • New note 1 to paragraphs (b)(2) and (b)(3) – Paragraph (b)(2) sets the limitations on the use of license exceptions STA for various ECCN categories (e.g., categories 0, 1, 7, 9), and paragraph (b)(3) sets the limitations on the use of license exception STA specific to “600 series” items. BIS clarified that:

    • “600 series” items authorized under License Exception STA must be provided to an eligible ultimate end user to stay in compliance with the original STA authorization, regardless of how many times the item is transferred or whether the items are incorporated into higher level assemblies – this process is referred to in the new note as “completing the chain.”
    • Exports, reexports, or transfers of 9×515 and other non-600 series items do not have the same ultimate end user requirements as “600-series” items. Nevertheless, the export, reexport, or transfer (in-country) of 9×515 and other non-600 series items must be completed within the terms and conditions of the original STA license exception authorization.

  • Greater specificity to paragraphs (d)(1) and (d)(2) and new notes to paragraph (d)(2) – Paragraph (d)(1) establishes the requirement to furnish an export control classification number for exports, and paragraph (d)(2) establishes the requirements for prior consignee statements. BIS clarified that:

    • Some instances of the terms “shipment” and “shipping” have been removed for lack of definition and are replaced with the defined terms “exports, reexports, or transfers (in-country).”
    • A new sentence specifies that an exporter, reexporter, or transferor is required prior to making any export, reexport, or transfer (in-country), including those that are intangible, to ensure that a prior consignee statement has been obtained pursuant to the requirements of paragraph (d)(2).
    • Paragraph (d)(2)(i) is revised to explain that BIS only expects a general description of items (e.g., 9A610) in prior consignee statements and that make and model numbers are not required.
    • New note 1 to paragraph (d)(2) allows for the use of a single consignee statement to identify multiple consignees. In other words, the same consignee statement document can be signed by multiple companies.
    • New note 2 to paragraph (d)(2) states that government consignees from Country Group A:5 and A:6 are not required to sign or provide a prior consignee statement to an exporter, reexporter, or transferor under license exception STA.
  • New note 1 to paragraph (d)(3) – Paragraph (d)(3) establishes that the exporter (reexporter or transferor) must inform the consignee when a shipment is made under license exception STA. BIS clarified that:

    • The new note specifies that intangible exports, reexports, and transfers (in-country) made under license exception STA are not subject to the notification requirements of paragraph (d)(3).

More information may be found here.