Details of BIS' Final Rule to Expand Chemical/Biological Controls, Etc. (Part II)

The Bureau of Industry and Security (BIS) has issued a final rule, effective April 14, 2005, which amends the Export Administration Regulations (EAR), by expanding the country scope of the license requirements that apply to chemical/biological (CB) equipment and related technology, and by making amendments to CB-related end-user/end-use and U.S. person controls.

This is Part II of a multi-part series of summaries of this final rule and pertains to the expanded country scope of CB controls for entries containing Australia Group items. See future issues of ITT for additional summaries.

BIS Increases Country Scope for Chemical/Biological Controls on Certain CCL Entries; Makes Conforming Changes to 15 CFR 742.2(a)

BIS is amending the EAR by increasing the country scope of the CB controls that apply to entries on the Commerce Control List (CCL) (Supplement No. 1 to 15 CFR 774) that list CB equipment and related technology included on the Australia Group (AG) Common Control Lists, and by making conforming changes to 15 CFR 742.2(a), as follows:

(The AG is a multilateral forum, consisting of 38 participating countries, that maintains export controls on lists of chemicals, biological agents, and related equipment and technology that could be used in a chemical or biological weapons program.)

Expands country scope of CB license requirements for 11 ECCNs. The final rule amends Export Control Classification Numbers (ECCNs) 1A004, 2A226, 2A292, 2B350, 2B351, 2B352, 2E001, 2E002, 2E201, 2E290, and 2E301 by revising the License Requirements section in each of these ECCNs to expand the country scope of the CB license requirements for these ECCNs from CB Column 3 to CB Column 2. (The countries that require a license under CB Column 2 or CB Column 3 are indicated in the Commerce Country Chart (Supplement No. 1 to 15 CFR 738).)

(Prior to the publication of this final rule, these ECCNs required a license, for CB reasons, only to certain countries of concern for CB weapons reasons. Effective April 14, 2005, the CB license requirements for these ECCNs now apply to all destinations, worldwide, except for those countries that participate in the AG (i.e., those countries identified in Country Group A:3 (Australia Group) in Supplement No. 1 to 15 CFR Part 740).)

Revises ECCN 1E001 for "dual-use" technologies, etc. This final rule also amends ECCN 1E001 by: (1) revising the ECCN, in conformance with entry 1.E.1 on the Wassenaar Arrangement (WA) "List of Dual-Use Goods and Technologies,'' to control technology for the "development'' or "production'' of equipment controlled by ECCN 1A004; (2) expanding the CB Column 2 controls in ECCN 1E001 to include technology for the "development'' or "production'' of chemical detection systems and dedicated detectors therefor, in ECCN 1A004.c, that also have the technical characteristics described in ECCN 2B351.a; and (3) correcting the NS Column 1 controls in ECCN 1E001 to include technology for the development'' or "production'' of metals and compounds controlled under ECCN 1C011. These changes are consistent with BIS' regular practice of including technologies on the WA Dual-Use List in the CCL and ensure that this ECCN 1A004 technology is subject to the appropriate national security (NS), CB, and anti-terrorism (AT) controls.

Conforming changes to 15 CFR 742.2(a). This final rule makes conforming changes to 15 CFR 742.2(a), which identifies the CB license requirements that apply to those ECCNs containing items identified on one of the AG lists.

Specifically, this final rule removes all references to ECCNs 1A004, 2A226, 2A292, 2B350, 2B351, 2B352, 2E001, 2E002, 2E201, 2E290, and 2E301 from 15 CFR 742.2(a)(3). This section identifies those ECCNs containing AG-listed items requiring a license to countries indicated under CB Column 3 of the Commerce Country Chart. This final rule also adds references to these ECCNs (as well as the ECCN 1A004.c CB-controlled technology in ECCN 1E001) to 15 CFR 742.2(a)(2), which identifies those ECCNs containing AG-listed items requiring a license to countries indicated under CB Column 2 of the Commerce Country Chart.

Above amendments will likely result in increased license applications and "deemed export" license applications. According to BIS, the changes made to the CCL and to 15 CFR 742.2 by this final rule are intended to make the EAR license requirements that apply to AG-listed CB equipment and related technology consistent with the AG "Guidelines for Transfers of Sensitive Chemical or Biological Items.'' These changes will likely result in an increase in the number of license applications that will have to be submitted to BIS for exports and reexports of equipment and technology affected by the expansion in the number of destinations for which a license is required for CB reasons.

For example, expanding the number of destinations for which a license is required for exports and reexports of technology related to AG-controlled CB equipment (i.e., CB-controlled technology in ECCNs 1E001, 2E001, 2E002, 2E201, 2E290, and 2E301) will likely result in an increase in the number of "deemed' export" license applications that will have to be submitted to BIS.

Savings Clause for Shipments and "Deemed Exports"

BIS states that shipments of items removed from eligibility for export or reexport under a license exception or without a license (i.e., under the designator "NLR'') as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on April 29, 2005, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previously applicable license exception or without a license (NLR) so long as they are exported or reexported before May 16, 2005. Any such items not actually exported or reexported before midnight, on May 16, 2005, require a license in accordance with this regulation.

According to BIS, transfers (in-country) that are made subject to a license requirement as a result of this regulatory action may be made without a license before May 16, 2005. Beginning at midnight on May 16, 2005, transfers (in-country) require a license in accordance with this regulation.

In addition, BIS states that "deemed exports" of "technology'' and "source code'' removed from eligibility for export under a license exception or without a license (under the designator NLR'') as a result of this regulatory action may continue to be made under the previously available license exception or without a license (NLR) before August 12, 2005. Beginning at midnight on August 12, 2005, such "technology'' and "source code'' may no longer be released, without a license, to a foreign national subject to the "deemed'' export controls in the EAR when a license would be required to the home country of the foreign national in accordance with this regulation.

(See ITT's Online Archives or 04/18/05 news, 05041825, for Part I of BP summary on this final rule.)

BIS Contact - Mark Sagrans (202) 482-7900

BIS Final Rule (D/N 050401091-5091-01, FR Pub 04/14/05) available athttp://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-7523.pdf