New US Export Control Rules Provide Businesses With Greater Flexibility For International Operations
Article by
Simeon M. Kriesberg ,
Carol J. Bilzi and
Kristy L. Balsanek
Previously published October 8, 2008
Keywords: BIS, export control, Export
Administration Regulations, intra-company transfers, US-origin,
license exception, compliance, de minimis calculation, Bureau of
Industry and Security, US Department of Commerce, License Exception
ICT, controlled items
The Bureau of Industry and Security (BIS) of the US Department
of Commerce issued in recent days three new proposed or interim
final rules that substantially revise US export control laws. Any
company exporting or reexporting US-origin commodities, software,
or technology may benefit from these important changes in areas of
the law that have long frustrated international businesses. The
rules aim to simplify the Export Administration Regulations (EAR)
pertaining to intra-company transfers of controlled US-origin
items, exports and reexports of encryption items, and de minimis
calculations for exports and reexports of foreign-produced items
containing US-origin content.
Proposed Intra-Company Transfer License Exception
On October 3, 2008, BIS published a proposed rule to establish
License Exception Intra-Company Transfer (ICT). This new license
exception would authorize approved parent companies and their
approved wholly owned or controlled-in-fact entities to export,
reexport, or transfer (in-country) a wide range of controlled items
among themselves for internal company use, without obtaining
individual export licenses. Previously, companies had to apply to
BIS on a transaction-by-transaction basis and obtain multiple
export licenses from BIS to transfer items among their foreign
branches, subsidiaries, and parent companies. Such applications
delayed internal product development, reduced sales, and hindered
competitiveness.
The main features of the proposed new rule are the
following:
Pre-approved parent companies and their wholly owned or
controlled-in-fact entities would be able to utilize License
Exception ICT. Parent companies would not need to be incorporated
in, or have their principal place of business in, the United
States. If located outside the United States, however, the parent
company would have to be incorporated in, or have its principal
place of business in, Europe, Australia, New Zealand, Argentina,
Turkey, Japan, or South Korea. Colleges and universities generally
would not be eligible.
License Exception ICT could be used to ship a wide range of
authorized commodities, software, and technology. It could not be
used for certain items, however, including items controlled for
missile technology reasons, Encryption Items (EI) reasons, and
Significant Items (SI) reasons. License Exception Encryption
Commodities and Software (ENC) would remain the primary
authorization for intra-company transfers of encryption items.
License Exception ICT also could not be used for shipments to Cuba,
Iran, North Korea, Sudan, or Syria.
Unlike most other license exceptions...
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