On December 21, the Bureau of Industry and Security (BIS) published a Military End User (MEU) list to further implement the military end user/end use (MEU) rule defined in Section 744.21 of the Export Administration Regulations (EAR). An EAR license is required to export or reexport to the listed entities a broad range of items subject to U.S. jurisdiction.
The list, which had been the subject of public reports last month, represents a first tranche of 103 entities with 58 from China and 45 from Russia. A majority of the entities listed are in the aerospace industry, although other industries are also represented. Additional parties may be added or removed from the list as further determinations are made by the End-User Review Committee, an interagency body comprised of the Departments of Commerce, Defense, Energy, State, and Treasury. The list is not exhaustive, and exporters must still conduct due diligence on other end users to determine whether an export license is required.
An expanded MEU rule came into effect on June 29, 2020, which (i) broadened the list of Export Control Classification Numbers (ECCNs) subject to an export license requirement, (ii) expanded the restrictions in EAR Section 744.21 to apply to military end users in China, and (iii) broadened the definition of what constitutes a “military end use”. “Use” normally has a conjunctive definition with six elements – meaning all the elements need to be satisfied to constitute “use.” However the final rule expands the “military end use” definition to also include any item that supports or contributes to any one of the elements of “use.” The published MEU list comes as a response to requests for clarification from U.S. companies regarding how to determine whether a particular Chinese, Russian or Venezuelan customer should be considered a ‘military end user’ subject to an export license requirement.
Special notice should be given to entities not included on this latest MEU list but identified in the Department of Defense’s NDAA 1999 Section 1237 list. Although the two lists are independent of each other, BIS has indicated that identification as a “Communist Chinese military company” on the Department of Defense list constitutes a “red flag” under the EAR, and therefore require special due diligence.
Companies included in the MEU List will be allowed to petition for removal by submitting a request to the End-User Review Committee that addresses why the end user does not meet the criteria for being a military end user.