BIS Issues Interim Final Rule on Encryption Simplification
The Bureau of Industry and Security has issued an interim final rule, effective October 3, 2008, which amends the Export Administration Regulations (EAR) to make the treatment of encryption items (EIs) more consistent with the treatment of other items subject to the EAR, as well as to simplify and clarify regulations pertaining to the export of EIs.
Highlights of EAR Amendments for EI Exports
The following are highlights of the interim final rule amendments to the EAR for the export of EIs (partial list):
Removal of redundant restrictions for technical assistance. BIS is removing the restrictions pertaining to technical assistance by U.S. persons with respect to EIs are removed, because the current export and reexport restrictions set forth in the EAR for technology already include technical assistance.
(15 CFR 744.9 previously required authorization from BIS for U.S. persons to provide technical assistance (including training) to foreign persons with the intent to aid a foreign person in the development or manufacture outside the U.S. of encryption commodities or software that, if of U.S.-origin, would be "EI" controlled under Export Control Classification Numbers (ECCNs) 5A002 or 5D002.)
Removal of License Exception KMI. This rule removes License Exception KMI (Key Management Infrastructure) from 15 CFR 740.8 as it has become obsolete because of developments in uses of encryption. Products previously eligible for License Exception KMI will be accorded equivalent treatment under license or license exception.
Clarification of License Exception LVS restriction for reexports. This rule revises License Exception LVS under 15 CFR 740.3(d)(5) to clarify that not only exports, but reexports of encryption components or spare parts must be destined to support a commodity previously authorized for export or reeexport.
Removal of notification requirements for 5A992, 5D992, 5E992. This rule removes notification requirements for items classified as 5A992, 5D992, and 5E992.
Specific descriptions of certain EI-controlled items. Additionally, 15 CFR 742.15(a) is revised by more specifically describing what is EI-controlled under ECCNs 5A002, 5D002, and 5E002.)
Requirements for mass market EIs. This rule clarifies the reminder about the review requirements for certain mass market EIs under ECCNs 5A992 and 5D992 by removing the reference to 5E992. (Commodities and software pending mass market review may no longer be exported under ECCNs 5A992 and 5D992 using No License Required (NLR). However, once the mass market review has been received by BIS, then such commodities and software may be exported using License Exception ENC (Encryption Commodities and Software) under ECCNs 5A002 and 5D002.)
Addition of countries under License Exception ENC. This rule adds Bulgaria, Canada, Iceland, Romania, and Turkey to the list of countries that receive favorable treatment under License Exception ENC.
Descriptions of exports, reexports that do/do not require review, etc. 15 CFR 740.17(a) now describes exports and reexports authorized by License Exception ENC that do not require prior government review or post export reporting; and 15 CFR 740.17(b) now sets forth those items authorized under License Exception ENC that require prior review by the U.S. Government, but allows the export or reexport to take place immediately upon registration of the review request with BIS.
Increase of parameters under License Exception ENC. This rule increases certain parameters under License Exception ENC, which is intended to reflect advances in technology.
Addition of review, reporting requirement exclusions. This rule adds two new review and reporting requirement exclusion paragraphs under License Exception ENC for wireless "personal area network" items and for "ancillary cryptography" items.
Requirements for semiannual, key length reporting. The reporting requirements for License Exception ENC are now split into two sections: Semiannual reporting requirement and reporting key length increases. This rule clarifies that the Commodity Classification Automated Tracking System (CCATS) number is a required element of the report.
BIS notes that the Departments of Commerce, State and Defense will continue to review export control, license review policies, and license exceptions for EIs in the EAR.
See BIS' interim rule for complete details on the regulatory changes for EIs.
(See ITT's Online Archives or 09/11/08 news, 08091140, for BP summary of BIS announcing its review of foreign policy-based export controls, which include EIs.)
BIS contact - Sharron Cook (202) 482-2440
BIS interim final rule (D/N 080211163-81224-01, FR Pub 10/03/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-23201.pdf