BIS Final Rule Revises CCL, Adds/Expands Unilateral U.S. Controls, Etc. to Conform to Wassenaar Changes (Part II)

The Bureau of Industry and Security (BIS) has issued a final rule, effective September 7, 2006, which amends the Export Administration Regulations (EAR) at 15 CFR Parts 740, 743, 772, and 774 to implement changes made to the Wassenaar Arrangement's List of Dual-Use Goods and Technologies (Wassenaar List), and Statements of Understanding maintained and agreed to by the governments participating in the Wassenaar Arrangement.

Specifically, this final rule revises certain entries on the Commerce Control List (CCL) that are controlled for national security reasons in Categories 1, 2, 3, 5 Part I (Telecommunications), 5 Part II (Information Security), 6, 8, and 9, and definitions to conform with changes in the Wassenaar List.

This is Part II of a multi-part series of summaries on this BIS final rule. Part II focuses on the addition of Croatia, Estonia, Latvia, Lithuania, Malta and South Africa to the Wassenaar Arrangement as well as certain new and expanded export controls. See future issues of ITT for additional summaries.

Croatia, Estonia, Latvia, Lithuania, Malta, and South Africa Now Listed as Wassenaar Participants

According to BIS, in April-June 2005, consultations resulted in decisions to admit Croatia, Estonia, Latvia, Lithuania and Malta to the Wassenaar Arrangement as new Participating States, and in December 2005 at the Plenary meeting, South Africa was added as a new Participating State. To reflect this change, this rule adds Croatia, Estonia, Latvia, Lithuania, Malta, and South Africa to the list of Wassenaar Arrangement Participating States in Supplement No. 1 to 15 CFR Part 743.

New or Expanded Export Controls Imposed by Final Rule

According to BIS, new or expanded export controls are imposed by this final rule as follows:

New or expanded anti-terrorism (AT) controls. BIS' final rule imposes a unilateral U.S. license requirement to export and reexport commodities (and related software and technology) controlled under Export Control Classification Numbers (ECCNs) 1E998, 2B006.b.1.d, 2D001, 2E001, 2E002, 2E201, 5A001.f, 5A002.a.9, 5D001, 5D002 , 5E001, 5E002, 6A006.b, 6D003.f, 6E003.f, 9A012.b, 9B010, 9E001, 9E003.a.11 for AT reasons to Cuba, Iran, North Korea, Sudan and Syria, in addition to the national security controls imposed to implement the Wassenaar Arrangement's decisions, because under Section 6(j) of the Export Administration Act of 1979 a license is required for items that could make a significant contribution to the military potential of such country or could enhance the ability of such country to support acts of international terrorism. BIS states that there is a general policy of denial for applications to terrorism supporting countries, as set forth in 15 CFR Part 742.

In addition, certain of these countries are also subject to embargoes, as set forth in 15 CFR Part 746 and Supplement No. 1 to 15 CFR Part 736 for Syria. BIS states that a license is also required for the export and reexport of these items to specially designated terrorists and foreign terrorist organizations, as set forth in 15 CFR Part 744; license applications to these parties are reviewed under a general policy of denial.

New or expanded significant items (SI) controls. This final rule also imposes foreign policy controls pursuant to section 6 of the Export Administration Act of 1979, as amended, to export and reexport technology required for the development, production or overhaul of commercial aircraft engines controlled under ECCN 9E003.a.11 for SI reasons to all countries, except Canada, in addition to the national security controls imposed to implement the Wassenaar Arrangement's decisions. BIS states that applications to export and reexport this technology will be reviewed on a case-by-case basis to determine whether the export or reexport is consistent with U.S. national security and foreign policy interests. For designated terrorism-supporting countries or embargoed countries, the applicable licensing policies are found in 15 CFR Parts 742 and 746, and Supplement No. 1 to 15 CFR Part 736 for Syria.

New or expanded NS Column 2 controls. This final rule imposes a license requirement under 15 CFR 742.4(a) for exports and reexports of commodities (and related software and technology) described in ECCNs 2B006.b.1.d, 5A001.f, 6A006.b, to destinations that are not Country Group A:1 destinations, or that are not cooperating countries (see Supplement No. 1 to 15 CFR Part 740). These destinations have an "X'' indicated in NS column 2 on the Commerce Country Chart of Supplement No. 1 to 15 CFR Part 738. BIS states that the purpose of the controls is to ensure that these items do not make a contribution to the military potential of such destination countries that would prove detrimental to the national security of the U.S. For designated terrorism-supporting countries or embargoed countries, the applicable licensing policies are found in 15 CFR Parts 742 and 746, and Supplement No. 1 to 15 CFR Part 736 for Syria.

New or expanded NS Column 1 controls. This final rule imposes a license requirement under 15 CFR 742.4(a) for exports and reexports to all destinations, except Canada, of commodities (and related software and technology) described in ECCNs 2D001, 2E001, 2E002, 5A002.a.9, 5D002, 5E002, 6D003.f, 6E003.f, 9A012.b, 9B010, 9D001 and 9D002 (only software for the development and production of equipment classified under ECCN 9B010), 9E001 (only technology for the development of equipment under ECCNs 9A012 and 9B010), and 9E003.a.11. These destinations have an "X'' indicated in NS column 1 on the Commerce Country Chart of Supplement No. 1 to 15 CFR Part 738. BIS states that the purpose of the controls is to ensure that these items do not make a contribution to the military potential of any other country or combination of countries that would prove detrimental to the national security of the U.S. For designated terrorism-supporting countries or embargoed countries, the applicable licensing policies are found in 15 CFR Parts 742 and 746, and Supplement No. 1 to 15 CFR Part 736 for Syria.

According to BIS, the licensing policy for national security controlled items exported or reexported to any country except a country in Country Group D:1 (see Supplement No. 1 to 15 CFR Part 740) is to approve license applications unless there is a significant risk that the items will be diverted to a country in Country Group D:1. BIS states that the general policy for exports and reexport of items to Country Group D:1 is to approve license applications when BIS determines, on a case-by-case basis, that the items are for civilian use or would otherwise not make a significant contribution to the military potential of the country of destination that would prove detrimental to the national security of the U.S.

(See ITT's Online Archives or 09/19/06 news, 06091915, for Part I of BP summary.)

BIS final rule (D/N 060807211-6211-01, FR Pub 09/07/06) available at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-7385.pdf