BIS Final Rule Revises Export/Reexport Controls/Policy for China, Etc. (Part IV - Final - End User Statements, Etc.)

The Bureau of Industry and Security has issued a final rule, effective June 19, 2007, which amends the Export Administration Regulations at 15 CFR Parts 742, 743, 744, 748, 750 and 758 to revise and clarify U.S. licensing requirements and licensing policy on exports and reexports to China, among other things.

This is Part IV, the final partof a multi-part series of summaries of this final rule, and highlights amendments to the requirements for end-user statements, import certificates, and support documents.

Final Rule Amends Import Certificate/End-User Statement Requirements

The following are highlights of the amendments made in BIS' final rule to 15 CFR 748.10 and 748.9 regarding import certificates and end-user statements (see final rule for complete details):

Terminology change from "end-user certificate" to "end-user statement," etc. BIS' final rule amends 15 CFR 748.10 and 748.9 to change references to "end-user certificate" to "end-user statement."

Requirements apply to all China transactions requiring license, etc. The final rule amends 15 CFR 748.10(a) to add that in the case of China, 15 CFR 748.10 applies to transactions involving all items that require a license to China for any reason (subject to the higher threshold discussed below).

Threshold for import certificate/end-user statement for China and/or certain other countries raised to $50,000, etc. BIS' final rule amends 15 CFR 748.10(b)(4) in order to raise to $50,000 (from $5,000) the threshold for which an import certificate or end-user statement is required if the license application involves the export of commodities and software classified in a single entry on the CCL, the ultimate consignee is in any destination listed in 15 CFR 748.9(b)(2), and the total value of the transaction exceeds $50,000¹ (see footnote for certain China exceptions).

License applications may list several separate CCL entries. If any individual entry including an item that is controlled for national security reasons exceeds $50,000, then an import certificate must be obtained covering all items controlled for national security reasons on the license application.

If the total value of entries on a license application that require a license to China for any reason listed on the CCL exceeds $50,000, then an end-user statement covering all such controlled items that require a license to China on the license application must be obtained.

If the license application involves a lesser transaction that is part of a larger order for items controlled for national security reasons (or, for China, for any reason) in a single export control classification number (ECCN) exceeding $50,000, an import certificate, or an end-user statement, as appropriate, must be obtained.

BIS may also specifically request that the applicant obtain an import certificate or an end-user statement for a transaction valued under $50,000, or for a transaction that requires a license to China for reasons in the EAR other than those listed on the CCL.

WIth respect to China, BIS' fact sheet states that although the updated regulations expand the requirement for end-user statements to a broader range of items, the higher dollar threshold means that there should be no net increase in the number of end-user statements issued by China's Ministry of Commerce as a result of this final rule.

For China, license applicants must request that importer obtain the end-user statement. BIS is also amending 15 CFR 748.10(c) to state that in the case of China, applicants must request that the importer obtain an end-user statement for all items on a license application that require a license to China for any reason listed on the Commerce Control List (CCL). (Applicants must obtain original import certificates or end-user statements from importers.)

China end-user statements no longer required to be submitted with the license application. BIS has amended 15 CFR 748.10(g) to state that import certificates and end-user statements must be retained on file by the applicant and should not be submitted with the license application. (The regulations had previously required China end-user statements to be submitted with the license application.) However, 15 CFR 748.10(g) is also amended to state that BIS will require applicants, on a random basis, to submit specific original import certificates and end-user statements to assist in license reviews.

Added consideration of China for determining support documentation. BIS also amends 15 CFR 748.9(b), which states that license applications not exempt under 15 CFR 748.9(a) generally must be supported by documents designed to elicit information concerning the disposition of the items intended for export or reexport. In determining the type of support documentation that may be required, the final rule adds the consideration of whether a transaction involves items destined for China and/or whether a transaction involves items that require a license to China for any reason.

Name change for branch of Chinese government issuing end-user statements. BIS is also amending Supplement No. 4 to 15 CFR Part 748 to provide the correct name of the branch of the Government of China that issues end user statements.

¹The $50,000 threshold does not apply to exports to China of computers subject to the provisions of 15 CFR 748.10(b)(3) or items classified under ECCN 6A003 (cameras).

(See ITT's Online Archives or 06/19/07, 06/21/07, and 06/28/07 news, 07061925, 07062115, and 07062815, for Parts I-III of BP's summary of BIS' final rule.)

(See ITT's Online Archives or 07/18/06 news, 06071820, for the final part of BP's summary of the July 6, 2006 proposed rule, with links to the other parts. See ITT's Online Archives or 11/08/06 news, 06110805, for BP summary of BIS' supplemental guidance on the proposed rule.)

BIS contact - Bernard Kritzer (202) 482-0092

BIS final rule (D/N 061205125-7125-01, FR Pub 06/19/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-11588.pdf

BIS fact sheet available at http://www.bis.doc.gov/News/2007/06-15-07%20Export%20Rule%20Fact%20Sheet%20-%20FINAL.pdf