U.S. Government Implements Changes to Iraq Export, Reexport, Licensing Policies, Etc. (Part II)
In the July 30, 2004 Federal Register, an Executive Order (EO), an interim rule, and a final rule were published in order to, among other things, set forth changes to the U.S. government's export, reexport, and licensing policies with respect to Iraq.
This is Part II of a multipart series of summaries of the order and rules, and highlights certain provisions, as discussed in the preamble of the Bureau of Industry and Security's (BIS') interim rule.
(See ITT’s Online Archives or 08/04/04 news, (Ref: 04080420) for BP summary of Part I, which announced the issuance of the order and rules. See future issues of ITT for additional summaries of this interim rule and a final rule issued by the Office of Foreign Assets Control (OFAC).)
Reversion of Certain Licensing Responsibility to BIS, Etc.
BIS explains that this interim rule, which is effective July 30, 2004, amends the Export Administration Regulations (EAR) to implement the reversion to BIS from OFAC of the licensing responsibility for exports and reexports to Iraq of items subject to the EAR. The interim rule also sets forth a licensing requirement for certain transactions involving the transfer of items subject to the EAR within Iraq.
BIS notes that while the interim rule retains substantial restrictions on exports to Iraq destined for inappropriate end-users or end-uses, the rule does further the goal of ensuring that exports and reexports of controlled items destined to civil infrastructure rebuilding do not suffer undue licensing delays.
License Requirements - Exports, Reexports, & Certain Transfers
In the preamble of its interim rule, BIS highlights the following license requirements:
Items for which export license requirements are generally lifted.Items subject to EAR but not listed on CCL. BIS states that items subject to the EAR but not listed on the Commerce Control List (15 CFR part 774) (CCL) (i.e., EAR99 items) will generally not be subject to a license requirement except pursuant to the end-user and end-use controls set forth in 15 CFR part 744 of the EAR and revised 15 CFR 746.3.
Items controlled on CCL for AT reasons only. Items controlled only for anti-terrorism (AT) reasons on the CCL, except for items controlled under six Export Control Classification Numbers (ECCNs), will also not be subject to a licensing requirement, except for the end-use and end-user requirements noted above. The six ECCNs controlled for AT reasons only for which licensing requirements are imposed by this rule are: 0B999, 0D999, 1B999, 1C992, 1C999, and 6A992. BIS adds that this interim rule retains AT controls for items controlled under ECCNs 1C995 and 1C997.
BIS states that as a result, in most instances, the new policy will allow the export or reexport to Iraq, or the transfer within Iraq, without a license, of items classified as EAR99 or controlled only for AT reasons.
De minimis rules applicable to Iraq. Also, BIS states that the de minimis rules applicable to Iraq are amended to provide generally that reexports of items to Iraq from abroad are subject to the EAR only when U.S.-origin controlled content in such items exceeds 25% (as opposed to the existing 10%).
Items for which export license requirements will be retained. BIS' interim rule retains license requirements for the export or reexport of items on the multilateral export control regime lists, the Wassenaar Arrangement, the Nuclear Suppliers' Group, the Australia Group and the Missile Technology Control Regime, and items controlled for crime control (CC) or regional stability (RS) reasons. These license requirements are set forth in 15 CFR part 742 and are reflected in the relevant columns of the Country Chart in Supplement No. 1 to 15 CFR part 738. Certain categories of items that are controlled for reasons not included on the Country Chart (e.g., encryption (EI), short supply (SS), and Chemical Weapons (CW)) also require a license for export or reexport to Iraq or transfer within Iraq.
New license requirements.Transfers within Iraq. According to BIS, a license is required for the transfer within Iraq of any item subject to the EAR exported or reexported pursuant to a specific license issued by OFAC or a BIS specific license or License Exception.
“Military end-use” or by “military end-user.” 15 CFR 746.3 of this interim rule imposes a license requirement for the export, reexport, or transfer of items subject to the EAR if, at the time of the export, reexport, or transfer, one knows, has reason to know, or is informed by BIS that the item will be, or is intended to be, used in Iraq for a "military end-use'' or by a "military end-user'', as defined in that section.
BIS adds that this license requirement does not apply to exports, reexports, or transfers of items for the official use by personnel or agencies of the U.S. Government or exports, reexports, or transfers to the Interim Government of Iraq or the Multinational Force in Iraq.
Moreover, this new license requirement is in addition to the existing license requirements established pursuant to the Enhanced Proliferation Control Initiative (EPCI), as set forth in 15 CFR part 744. The EPCI requirements will now also apply to the transfer within Iraq of any item subject to the EAR, if, at the time of the transfer, one knows, has reason to know, or is informed by BIS that the item will be used in the design, development, production or use of weapons of mass destruction or the means of their delivery.
Transfers to designated terrorist or terrorist organizations, etc. In addition, this interim rule provides that transfers within Iraq to designated terrorists or terrorist organizations, as set forth in 15 CFR 744.12, 744.13, or 744.14, and transfers to any persons referenced in 15 CFR 744.18, will require a license.
CCL items controlled for UN reasons. In addition to the license requirements described above, items on the CCL controlled for United Nations (UN) reasons (including shotgun shells controlled under ECCN 0A986) will require a license for export or reexport to Iraq or transfer within Iraq, except exports, reexports or transfers to the Interim Government of Iraq or the Multinational Force in Iraq.
(ECCN 6A018 deleted from CCL. In this interim rule, BIS is also deleting from the CCL the entry for ECCN 6A018, "Magnetic, pressure, and acoustic underwater detection devices specially designed for military purposes and controls and components.'' References to ECCN 6A018 in entries for ECCNs 6E001 and 6E002 also will be removed. BIS has determined that no items subject to the EAR are controlled under this entry. Such items are subject to the export licensing authority of the State Department's Division of Defense Trade Controls.)
Licensing Policy -- Case-by-Case Review of Most License Applications
BIS states that except as set forth in revised 15 CFR 746.3 (Iraq), license applications for exports or reexports to Iraq and certain transfers within Iraq will be reviewed on a case-by-case basis pursuant to applicable licensing policies set forth in 15 CFR parts 742, 744, or elsewhere in the EAR.
BIS states that such review will be conducted consistent with UNSC Resolution 1483 and 1546, and relevant resolutions including UN Security Council (UNSC) Resolutions 687 and 707. BIS explains that UNSC Resolution 1483 reaffirms Iraq's disarmament obligations contained in prior UNSC resolutions relating to nuclear, chemical, and biological weapons as well as ballistic missiles (which are defined for Iraq as those capable of a range greater than 150 km).
According to BIS, UNSC Resolutions 1483 and 1546 also retain restrictions on the sale or supply to Iraq of arms and related material and their means of production, and limit Iraq's civil or military nuclear activity, except for use of isotopes for medical, industrial, or agricultural purposes. BIS adds that UNSC Resolution 1546 affirms these restrictions, while permitting exports, reexports, and transfers to the Interim Government of Iraq or the Multinational Force in Iraq.
In its interim rule, BIS discusses the licensing policies with respect the export or reexport to Iraq or transfer within Iraq of the following reasons for control:
· Chemical and Biological Weapons (CB)
· Nuclear Nonproliferation (NP)
· National Security (NS)
· Missile Technology (MT)
· Licensing Policy Specific to 15 CFR 746.3 (Iraq)
Guidance on the Transition of Licensing Responsibility from OFAC to BIS, Etc.
BIS states that, among other things, the termination of the national emergency declared in EO 12722 ends the export prohibition in that and related EOs and in OFAC's Iraqi Sanctions Regulations, 31 CFR Part 575.
However, to facilitate a smooth transition of licensing responsibility from OFAC to BIS, this interim rule extends the validity of licenses issued by OFAC for Iraq. BIS states that for those specific licenses with specified expiration dates, such dates will continue to apply. BIS states that licenses without specified expiration dates will be valid through July 30, 2005.
In addition, items licensed by OFAC and subsequently returned from Iraq to the U.S. do not require further authorization from BIS. However, persons returning items to the U.S. that were previously exported or reexported to Iraq under a specific license granted by OFAC will be subject to a recordkeeping requirement set forth in revised 15 CFR 746.3(e).
BIS also states that items exported or reexported to Iraq under a specific license granted by OFAC may not be transferred within Iraq to a new end-user without a license from BIS.
In addition, reexports of items previously exported or reexported to Iraq under a specific license granted by OFAC must conform with relevant provisions of the EAR based on the country to which the items are being reexported. In certain circumstances, such reexports may be eligible for a License Exception or may not require a license. Such reexports will also be subject to the recordkeeping requirement set forth in 15 CFR 746.3(e).
-written comments on BIS' interim rule are due by August 30, 2004
BIS Contact -- Joan Roberts (202) 482-4252
EO 13350 (FR Pub 07/30/04) available at http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-17615.pdf
BIS Interim Rule (D/N 040302078-4078-01, FR Pub 07/30/04) available at http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-17532.pdf
OFAC Final Rule (FR Pub 07/30/04) available at http://a257.g.akamaitech.net/7/257/2422/30jul20040900/edocket.access.gpo.gov/2004/pdf/04-17636.pdf