BIS' FY 2008 Annual Report Shows Penalties Decreased, License Applications Increased, Etc.
The Bureau of Industry and Security recently posted its "Annual Report to the Congress for Fiscal Year 2008" which summarizes the activities of BIS in FY 2008. Excerpts of BIS' annual report include:
FY 2008 Reforms Enhanced Dual-Use Export Controls
BIS states that it implemented a number of reforms in FY 2008 to enhance the focus of the dual-use export control system, including revising the Commerce Control List (CCL) based upon a systematic review of the CCL, simplifying encryption controls, amending de minimis provisions, adding end-users of concern to the Entity List, and proposing the establishment of a new license exception for intra-company transfers. In the coming years, BIS states that it will implement similar reforms to facilitate U.S. trade and stimulate the U.S. economy.
(See ITT's Online Archives or 10/06/08 news, 08100630, for BP summary of BIS' proposed rule on the establishment of an intra-company transfer license exception.)
Deemed Exports Advisory Committee Established
During FY 2008, BIS announced the completion of the Deemed Export Advisory Committee's (DEAC's) report. In response, BIS began working with other U.S. Government agencies, including the Departments of Defense, State, and Energy, to consider the report's analysis and recommendations as a basis for reforming current deemed export policy implementation. As a result, BIS created a new Technical Advisory Committee, the Emerging Technology and Research Advisory Committee (ETRAC). The ETRAC provides recommendations to BIS on how to keep the CCL current with respect to emerging technologies and research and development activities that have dual-use applications.
(See ITT's Online Archives or 01/23/08 news, 08012330, for BP summary of DEAC's report. See ITT's Online Archives or 03/17/08 news, 08031715, for BP summary of trade organization criticism of DEAC report.)
Criminal and Administrative Penalties Fell in FY 2008
BIS investigations in FY 2008 resulted in the criminal conviction of 40 individuals and businesses for export and antiboycott violations. The penalties for these convictions came to over $2.7 million in criminal fines, over $800,000 in forfeitures, and 218 months of imprisonment; compared to 16 convictions and over $25.3 million in criminal fines in FY 2007.
In FY 2008, BIS investigations resulted in the completion of 56 administrative cases against individuals and businesses and over $3.6 million in administrative penalties, as compared to 75 cases and over $6 million in administrative penalties in FY 2007.
Antiboycott penalties, cases were down. Of these, six cases involved antiboycott violations that resulted in penalties of $162,450 in FY 2008, as compared to 10 cases and $194,500 in penalties in FY 2007.
Number of Licenses Processed Increased, Processing Times Decreased
In FY 2008, BIS processed 21,293 export license applications valued at approximately $72.1 billion, a 9% increase over the number of applications processed in FY 2007 and the highest number of applications reviewed by BIS in over 15 years.
BIS approved 17,945 license applications (84%), returned 3,171 applications without action (15%), and denied 177 applications (less than 1%).
(The license applications with the highest value were for the export of crude oil. The highest number of license application approvals under one commodity classification was for chemical manufacturing facilities and equipment (Export Control Classification Number 2B350).)
Largest number of approved applications were for exports to China. China was the destination for the largest number of approved license applications. BIS approved 1,990 license applications for exports to China, 25% of which were for deemed export licenses to release controlled technology or source code to Chinese nationals working in U.S. companies and universities.
In FY 2008, BIS' average processing time for all license applications fell to 27 days (from 28 days). In FY 2008, the average processing time for all approved licenses to China was 33 days, a 12% decrease from the average processing time of 38 days in FY 2007.
Over 400 Cases Were Escalated for Dispute Resolution
BIS' Operating Committee, with membership from the Departments of Commerce, Defense, Energy, and State, resolves license applications where there is disagreement among the relevant U.S. Government agencies as to the appropriate licensing action. In FY 2008, 422 cases were escalated to the OC for dispute resolution. The average processing time for these cases was 16 days, down from 17 days in FY 2007. Of these 422 cases, 20 were further escalated to the Assistant Secretary-level Advisory Committee on Export Policy (ACEP) for resolution.
BIS Processed Over 7,000 Commodity Classification/Jurisdiction Requests
In FY 2008, BIS processed 6,629 commodity classification request applications in an average of 33 days. (With a commodity classification an exporter can request an official ECCN from BIS.)
In FY 2008, BIS processed 539 commodity jurisdiction requests in an average of 37 days. (A commodity jurisdiction (CJ) request is used to determine whether an item or service is subject to the export licensing authority of the Department of Commerce or the Department of State, Directorate of Defense Trade Controls (DDTC).
BIS Completed Almost 500 Licensing Determinations for CBP
BIS analyzes cases received from U.S. Customs and Border Protection, which inspects shipments prior to export. If there is a question regarding the export licensing documentation, CBP will detain the shipment and request a licensing determination from BIS. The determination provided by BIS contributes to CBP's decision on the action to be taken. BIS completed 471 such reviews in FY 2008.
BIS annual report available at http://www.bis.doc.gov/news/2009/bis_annual_report_2008.pdf.