BIS Seeks Comments on Possible Encryption Item Controls on Foreign Products of U.S. Encryption Technology or Software

To determine the appropriate extent and scope of U.S. export controls on foreign products that are the direct products of U.S.-origin encryption technology or software, the Bureau of Industry and Security has issued a notice of inquiry seeking information on the potential impact of controlling such foreign made items for Encryption Items (EI) reasons under the Export Administration Regulations.

Comments are due by March 9, 2009.

Specifically, BIS is requesting comments regarding the impact of potentially controlling Export Control Classification Numbers (ECCNs) 5A002 or 5D002 under the EAR, if the direct product of U.S.-origin ECCN 5E002 technology or ECCN 5D002 software.

Comments Sought on Possible Impact, Burdens, Cost, Etc.

BIS is seeking public comment and information on:

the impact such a revision to 15 CFR 736.2(b)(3)(i) would have on both U.S. manufacturers of encryption technology and software and foreign manufacturers of products (including under contract to U.S. companies who own and maintain the intellectual property, branding, marketing and distribution rights to the end-products manufactured offshore) that are derived in whole or in part from U.S.-origin encryption technology or software.

the cost of compliance with such a revision, including U.S. Government review of foreign direct products prior to export from abroad.

the burdens of complying with multiple sets of laws, foreign and U.S., which could result from the potential revision.

the various (commercial and military) applications of foreign products that are derived in whole or in part from U.S.-origin encryption technology or software.

the factors that foreign manufacturers of encryption items or their competitors might consider in deciding to produce or use U.S.-origin encryption technology or software.

specific information (URL addresses, technical specifications, etc.) about the availability of foreign encryption technology and software that is equivalent to U.S.-origin encryption technology and software classified under ECCNs 5E002 and 5D002.

the impact on the U.S. information technology manufacturing base and U.S. jobs if encryption products continue to be not subject to the EAR when exported from abroad or reexported to countries other than those listed in Country Group D:1 and E:2, simply by being manufactured under an export license, when identical products manufactured onshore by U.S. companies (or overseas by U.S. subsidiaries pursuant to License Exception ENC or License Exception ENC-eligible "private sector end users") are subject to the EAR.

(See ITT's Online Archives or 10/07/08 news, 08100735, for BP summary of BIS' interim final rule which made the treatment of EIs more consistent with other items subject to the EAR.)

BIS notice (D/N 0810231384-81391-01, FR Pub 01/06/09) available at http://edocket.access.gpo.gov/2009/pdf/E8-31371.pdf