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December 08, 2014 

New Clarifying Language to be Included on BIS Export and Reexport Licenses

In an effort to make export and reexport licenses more clear, the Bureau of Industry and Security (BIS) announced today that the following notice will appear on all new licenses authorizing the export, reexport and in-country transfer of goods, technology and software subject to the Export Administration Regulations (EAR):

Unless limited by a condition set forth below, the export, reexport or transfer (in-country) authorized by this license is for the item(s), end-use(s), and parties described in the license application and any letters of explanation. The applicant is responsible for informing the other parties identified on the license, such as ultimate consignees and end-users, of the license’s scope and of the specific conditions applicable to them. BIS has granted this license in reliance on representations the applicant made in the license application, letters of explanation, and other documents submitted.
BIS stated that this change is intended to "rationalize and make more consistent the use of conditions on BIS licenses" and to "eliminate, to the greatest extent possible, the inclusion of requirements and prohibitions included in the Export Administration Regulations (EAR) as conditions on validated licenses."

BIS is eliminating such conditions because they are already applicable to all exports, reexports and in-country transfer of items subject to the EAR by operation of law. Express reference to such conditions, therefore is redundant. 

This is illustrated by the following conditions included on a BIS export license that was recently issued for "600 series" parts and components:
  1. Applicant must inform consignee of all license conditions.
  2. For stated end-use only
  3. No resale, transfer, or reexport of the items listed on this license is authorized without prior authorization by the U.S. Government.
As a result of this change, these types of general statements will not be included as license conditions. License conditions will be reserved only for requirements applicable to a particular license, such as licenses requiring national security (NS) controlled items to be repaired by a citizen of Country Group A:1.

In making this change, BIS hopes to eliminate the confusion caused from having expressly referenced in the license some requirements and/or prohibitions of the EAR but not others. BIS was concerned that exporters might infer erroneously that those provisions not expressly identified were not applicable to the licensed transaction.

BIS also hopes this change clarifies the scope of issued licenses given that the new language specifies that the license authorizes only the transaction requested by the license applicant. 

License applicants interested in receiving authorization to ship items other than those listed on their license applications must either request that their license applications be returned for correction or submit an additional license application. Exporters may, in limited circumstances, continue to avail themselves of the EAR's provisions on non-material changes to a license, which remain unchanged.

September 12, 2014 

BIS Adds Major Russian Energy and Defense Companies to Entity List

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

As part of the next phase of U.S. sanctions on Russia, today the U.S. Department of Commerce's Bureau of Industry and Security (BIS) expanded the controls on export and reexports to companies in Russia by adding ten companies in the Russian oil and gas and defense sectors to the BIS Entity List.


BIS's actions are in addition to the the new sanctions on Russia's financial services, energy and defense sectors announced today by the Treasury Department that will be implemented by OFAC.

Today's move by BIS dramatically expands the previously imposed restrictions on the export or reexport of U.S. origin good, software and technology intended for Russia's energy sector, since any product or software that is "subject to the Export Administration Regulations" (EAR) will require a BIS license (with a presumption of denial) if:


1. it will be used by the five energy companies listed below; and 
2. in the exploration of, or production from, deepwater, Arctic offshore, or shale projects in Russia.

These restrictions are much broader than the sanctions imposed by the EU and other countries to date.

Here is a summary of the parties added to the BIS Entity List today:

Russian Energy Sector

  • Gazprom, OAO major business lines are geological exploration, production, transportation, storage, processing and sales of gas, gas condensate and oil, sales of gas as a vehicle fuel as well as generation and marketing of heat and electric power.
  • Gazpromneft  is a Russian oil company engaged primarily in oil & gas exploration and production, the sale and distribution of crude oil, and the production and sale of petroleum products.
  • Lukoil, OAO is a leader of Russia’s petroleum industry.
  • Rosneft a leader of Russia’s petroleum industry. Rosneft activities include hydrocarbon exploration and production, upstream offshore projects, hydrocarbon refining, and crude oil, gas and product marketing in Russia and abroad.
  • Surgutneftegas is a Russian oil and gas company that was created in 1993 by merging several previously state-owned companies owning large oil and gas reserves in Western Siberia.
BIS will impose a license requirement for the export, reexport or foreign transfer of items subject to the Export Administration Regulations (EAR) to these companies when the exporter, reexporter or transferor knows those items will be used directly or indirectly in exploration for, or production from, deepwater, Arctic offshore, or shale projects in Russia.  License applications for such transactions will be reviewed with a presumption of denial when for use directly or indirectly for exploration or production from deepwater, Arctic offshore, or shale projects in Russia that have the potential to produce oil. As before, natural gas projects appear to be subject to a case-by-case review.

These Entity List restrictions on the five designated Russian energy sector companies are in addition to the previously issued BIS export restrictions on a specified list of items to any end-user in Russia. Thus, which items are subject to control depends on the end-user.  Both sets of prohibitions only target the three types of covered activities, deepwater, Arctic offshore and shale. 

Russian Defense Sector

  • Almaz-Antey Air Defense Concern Main System Design Bureau, JSC is one of the world’s largest defense industry complexes, specializing in development of anti-air, anti-missile and space defense systems.
  • Tikhomirov Scientific Research Institute of Instrument Design specializes in the development of weaponry control systems for fighter planes and mobile medium range anti-aircraft surface to air missile (SAM) defense vehicles.
  • Mytishchinski Mashinostroitelny Zavod, OAO manufactures and supplies ordnance and accessories, including naval, aircraft, anti-aircraft and field artillery products.
  • Kalinin Machine Plant, JSC designs and manufactures machines for military and civil applications.
  • Dolgoprudny Research Production Enterprise develops and manufactures high-technology defense products.
BIS will impose a license requirement for the export, reexport or foreign transfer of items subject to the to the EAR to the designated entities, with a presumption of denial.  BIS will also require licenses for an additional group of items destined to military end uses or end users in Russia.

August 04, 2014 

BIS Published New Russian Energy Sector Sanctions on August 6, 2014 That Will Significantly Impact Companies Involved in Russia's Oil and Gas Industry

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

Following the European Union’s adoption of Russian energy sector sanctions last week and successive waves of targeted economic sanctions by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), on August 6, 2014 the U.S. Commerce Department's Bureau of Industry and Security (BIS) published a final rule amending the U.S. Export Administration Regulations (EAR) to implement the most aggressive set of export controls against Russia since the end of the Cold War. 

The BIS final rule, which took effect upon publication in the Federal Register on Wednesday, August 6, 2014, imposes controls on a wide range of items intended for use in the exploration or production of “deepwater”, “Arctic offshore” or “shale projects” that have the potential to produce oil or gas in Russia.

The complete text of the final BIS regulation published in the Federal Register on August 6, 2014 can be found here.

Unlike the EU regulation, which contains no definition of the term "deepwater", that term is defined in the BIS regulation to included depths of more than 500 feet. Like the EU regulation, the terms "arctic offshore" and "shale projects" are not defined in the BIS regulation.

As discussed in more detail below, the BIS rule has no "savings clause", meaning that any delivery of the listed items to Russia occurring on or after the August 6, 2014 publication date is prohibited and would result in a violation of the EAR if the listed items are delivered to Russia for use in deepwater, Arctic offshore or shale oil and gas projects.


A.  Entity List Addition

The final rule contains two separate sections, referred to as Part A and Part B.

Part A of the final rule adds United Shipbuilding Corporation, a Russian state-owned company that designs and constructs ships for the Russian Navy, to the BIS Entity List. This means that a BIS license will be required to export, reexport, or transfer (in-country) any items subject to the EAR (i.e., U.S. origin items and non-U.S. origin items with a greater than de minimis amount of U.S. content) to United Shipbuilding Corporation.
 
OFAC previously added United Shipbuilding Corp. to the List of Specially Designated Nationals and Blocked Persons on July 29, 2014.  The addition to the Entity List is significant in that it prohibits exports, reexports, and transfers of items subject to the EAR even by non-U.S. persons, whereas the OFAC sanctions are limited to U.S. persons.    

B.  Russia Industry Sector Sanctions

More significantly, Part B of the final rule outlines the new Russia Energy Industry Sector Sanctions on certain aspects of the Russian oil and gas sector as follows:

Elements of Russia Deepwater/Arctic/Shale End-Use Rule. New section 746.5 of the EAR is the key section added to the EAR, which is entitled “Russian Industry Sector Sanctions.” This new provision imposes a BIS license requirement (with a presumption of denial) for:
  • any person (U.S. or foreign) to
  • export, reexport, or transfer (in-country)
  • any item "subject to the EAR"
  • listed on the new Russian Industry Sector Sanctions List (Supplement No. 2 to Part 746 of the EAR)) and items specified on the Commerce Control List (CCL) under ECCNs 0A998 (which is new), 1C992, 3A229, 3A231, 3A232, 6A991, 8A992, and 8D999 (also new)
  • when the exporter, reexporter, or transferor knows or is informed that
  • the items will be used directly or indirectly
  • in exploration for, or production of oil or gas
  • in Russian deepwater (greater than 500 feet), or Arctic offshore locations, or shale formations in Russia,
  • or is unable to determine whether the listed item will be used in such projects.
Breaking down the restrictions in new section 746.5 of the EAR into these elements highlights the key legal issues, questions and breadth of these new controls.

The restrictions of the items included on the new Russian Industry Sector Sanctions List and the eight listed ECCNs is similar to the EAR's “China Military Rule,” except that this is a “Russia Deepwater/Arctic/Shale End-Use” rule.

Creation of the Russian Industry Sector Sanction List. The new Russian Industry Sector Sanction List is included in the BIS rule as new Supplement No. 2 to Part 746 of the EAR.

This list covers a wide range of items used by oil and gas exploration and production companies, as well as oilfield services companies, that normally do not require an export license to be exported or reexported to Russia since they are classified as EAR99.

The list of controlled items is virtually identical to the items included in Annex II of the EU Regulation issued on July 31, 2014, but is broken out by the 10-digit U.S. Schedule B number, which is consistent with the EU list to the 6-digit level. Because classification interpretation can vary by country, it is possible that EU Member State countries and the United States might differ in their interpretations of which items fall within their respective lists. 

Examples of Listed Items. BIS states that the items on the Russian Industry Sector Sanction List include but are not limited to items such as drilling rigs, parts for horizontal drilling, drilling and completion equipment, subsea processing equipment, Arctic-capable marine equipment, wireline and down hole motors and equipment, drill pipe and casing, software for hydraulic fracturing, high pressure pumps, seismic acquisition equipment, remotely operated vehicles, compressors, expanders, valves, and risers.

This list is not precise. Therefore, U.S. and non-U.S. exporters of any of these types of items should carefully examine the list of Schedule B numbers  to determine whether the items that will be exported to Russia are covered or not. For example, most valves are classified in HTS Subheading 8481, not 8413. In addition, as noted below, the term "high pressure pumps" is not defined.

ECCNs Controlled to Targeted Types of Projects. In addition to the EAR99 items included on the Russian Industry Sector Sanction List, items covered by the following eight ECCNs are also now subject to the license requirement of section 746.5:
  • ECCN 0A998. This is a new ECCN that covers certain specified Oil and gas exploration equipment, software.  This ECCN includes: (a) oil and gas exploration data, e.g., seismic analysis data; and (b) certain hydraulic fracturing (commonly known as "fracking") items, including hydraulic fracturing design and analysis software and data. This new ECCN is unusual since it treats seismic analysis data as a commodity and not as "technology" or "software."
  • 1C992: Commercial charges and devices containing energetic materials, n.e.s. and nitrogen trifluoride in a gaseous state (see List of Items Controlled).
  • 3A229: Firing sets and equivalent high-current pulse generators (for detonators controlled by 3A232), as follows (see List of Items Controlled).
  • 3A231: Neutron generator systems, including tubes, having both of the following characteristics (see List of Items Controlled).
  • 3A232: Detonators and multipoint initiation systems, as follows (see List of Items Controlled).
  • 6A991: Marine or terrestrial acoustic equipment, n.e.s., capable of detecting or locating underwater objects or features or positioning surface vessels or underwater vehicles; and “specially designed” “parts” and “components,” n.e.s. [note" n.e.s. means not elsewhere specified]
  • 8A992: Vessels, marine systems or equipment, not controlled by 8A001 or 8A002 and “specially designed” “parts” and “components” therefor, and marine boilers and “parts,” “components,” “accessories,” and “attachments” therefor (see List of Items Controlled).
  • 8D999 (new): “Software” “specially designed” for the operation of unmanned submersible vehicles in the oil and gas industry. Unlike the other ECCNs subject to section 746.5, the list of items controlled is contained in the ECCN heading.
The following restrictions apply to these eight ECCNs and the items listed on the Russian Industry Sector Sanctions List:

Licensing Presumption of Denial. BIS’s licensing policy will be a “presumption of denial” for any item that requires a license to Russia . . . when for use directly or indirectly for exploration or production from deepwater (greater than 500 feet), Artic offshore, or shale projects in Russia that have the potential to produce oil.” (Emphasis added.) This presumption of denial, therefore, seems to go beyond the items listed on the new Russian Industry Sector Sanctions List (Supplement No. 2 to Part 746 of the EAR) and items specified under the eight ECCNs enumerated in section 746.5.

Significantly, natural gas projects in Russia do not appear to be subject to this policy of denial and presumably would be reviewed on a case-by-case basis.

License Exceptions Revoked. No EAR License Exceptions (such as ENC, RPL or TMP) are now available to overcome the Russia end-use prohibitions described in new section 746.5 of the EAR, except for License Exception GOV.

Other Important Aspects of the BIS Oil and Gas Industry Sanctions Regulations

The following is a summary of some of the other important aspects of this new regulation imposing sectoral sanctions on certain aspects of Russia's oil and gas industry.

No Savings Clause.  It is important to note that the BIS regulation does not contain a "savings clause", meaning that any in-process shipments of the restricted items that are intended for export or reexport to Russia may not proceed to Russia on or after August 6, 2014. This includes items exported NLR (no license required) or pursuant to a License Exception. 

Application to Non-U.S. Persons. Goods subject to the U.S. Export Administration Regulations remain subject to U.S. jurisdiction wherever the item is located. Thus, even if an item has been sold and exported by a U.S. company to an non-U.S. company, the item is still subject to BIS reexport and in-country transfer controls. In this case, if one of the restricted items noted above has been previously been exported from the U.S., that item cannot be reexported or transferred by non-U.S. persons for use in deepwater/Arctic offshore/shale projects in Russia. 

Treatment of Technology.  The BIS regulation does not control any new “technology” to Russia.  Technology previously controlled to Russia, however, no longer would qualify for License Exceptions and would be subject to a licensing policy of denial, if intended for prohibited end-uses.

De Minimis. The new BIS regulation does not appear to modify the de minimis threshold applicable for Russia, which is currently 25%.

Definitional Difficulties. The absence of definitions for the terms “Arctic offshore” and “shale projects” coupled with the fact that 500 feet is not considered particularly deep within the oil and gas industry increases the potential scope of these controls and creates a considerable degree of uncertainty for exporters.  Because the EU regulation does not define “deepwater”, it is possible that EU Member States will interpret this term to mean depths significantly greater than 500 feet, placing U.S. industry at a competitive disadvantage.

In addition, the term "high pressure pumps" in ECCN 0A998.b.3 is not defined and it is not clear if the controls are intended for hydraulic fracturing applications only or high pressure pumps. 

CCL/End-User/End-Use Controls Remain.  Section 746.5 includes language reminding exporters that “other provisions of the EAR, including parts 742 [CCL-based controls] and 744 [end-use and end-user controls] also apply to exports and reexports to Russia.” 

Russia's National Security Favorable Licensing Policy Revoked. This final rule revokes Russia’s favorable licensing policy for items controlled for National Security (NS) reasons.  Although the policy is now stated to be case-by-case for such NS items, section 746.5(b) imposes a presumption of denial if the item is intended for use in deepwater/Arctic offshore/shale projects.

BIS Prohibition on Exports Contributing to Russia's Military Capabilities Remains in Effect, but no "Military Catch-All". While this final rule does not specifically address exports to Russia's military, BIS’s April 28, 2014 policy announcement that it would deny licenses to export or reexport "any high technology item subject to the EAR to Russia or occupied Crimea deemed to contribute to Russia's military capabilities" remains in effect. While BIS has indicated that it will take actions to revoke any existing export licenses which meet these conditions, as of this writing BIS has not yet revoked any such export licenses but plans to contact licensees whose licenses will be revoked. 

It is important to note that BIS does not currently impose any restrictions or license requirements on the export or reexport of goods, technology or software for military end-use in Russia, or for military or defense-related companies in Russia, as long as the goods, software or technology are classified as EAR99 or would not otherwise require a license to Russia (for example, computers classified as ECCN 4A994 or other items subject to Anti-Terrorism (AT) controls only). 

Since April 28, 2014, the Directorate of Defense Trade Controls has implemented a policy of denying license applications for the export or reexport of defense articles subject to the ITAR that would contribute to Russia's military capabilities.  

April 14, 2014 

Computer Issues Delay DDTC's Processing of Commodity Jurisdiction Requests

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

The State Department's Directorate of Defense Trade Controls (DDTC) has recently been experiencing problems with the computer system used to process Commodity Jurisdiction requests (CJs) submitted by industry. These technical issues have been causing delays in DDTC's processing CJs over the past few weeks.  

Today DDTC posted the following announcement confirming these delays:

 CJ Submissions: Due to technical issues, all new CJ submissions and those currently in process will be on hold until further notice. Updates regarding this web notice will be provided as new information is received. (04.14.14)
Over the past few years the time for DDTC to process and issue a CJ determination has fallen dramatically and most CJs are issued within 60 days after they are submitted. By contrast, as indicated in a GAO report issued in 2007, the median CJ processing time was 157.5 days in 2006 and 126 days in 2007.

CJ requests are submitted to DDTC when it is not clear whether a product, software or technical data is subject to the licensing jurisdiction of the International Traffic in Arms Regulations (ITAR) administered by DDTC or the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce's Bureau of Industry and Security. The pending Export Control Control Reform process, which has already clarified many categories of the U.S. Munitions List and will address additional categories in the coming months, is expected to lead to a reduction in the number of CJs being submitted. 

April 11, 2014 

U.S. Takes Additional Steps Over Russia's Annexation of Crimea

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

Today the U.S. Government took two measures to place pressure on Russia for its recent annexation of Crimea.

Addition of Chernomorneftegaz to BIS Entity List

First, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) added Crimea-based oil and gas company Chernomorneftegaz to the BIS Entity List in response to the recent expropriation of the company by Crimea's parliament.

Chernomorneftegaz, also known as NJSC Chornomornaftogaz, is a regional oil and gas company in Crimea that is a subsidiary of the Ukrainian company Naftogaz. Various news reports state that Chernomorneftgaz's assets are now being overseen by Russian government interests, including Gazprom.

The BIS Entity List, found in Supplement No. to Part 744 of the U.S. Export Administration Regulations (EAR), includes the names of businesses, research institutions, government organizations and individuals that have been identified as being involved in activities that merit additional scrutiny and licensing requirements. The entries on the Entity List specify the license requirements and license review policy that are applicable to shipments to each listed entity and in many cases the listed entities are prohibited from receiving items subject to U.S. jurisdiction. 

In this case, the Entity List designation for Chernomorneftegaz imposes a license requirement for the export, reexport or in-country transfer of items subject to the U.S. Export Administration Regulations to Chernomorneftegaz, with the presumption of denial. Thus, the practical impact of today's action is that no U.S. origin product, software or technology may be exported or reexported to Chernomorneftegaz.

Chernomorneftegaz is being identified under two separate entries on the Entity List, one in "Crimea (Occupied)" with an additional entry under "Ukraine".

In October 2012 BIS added 164 parties to the Entity List who were identified during a U.S. government investigation as assisting a network of companies and individuals involved in the procurement and delivery of U.S. electronic products to Russia.

Addition of Chernomorneftegaz and Seven Individuals to OFAC's SDN List

In a related move, the U.S. Department of the Treasury designated Chernomorneftegaz and seven individuals in Crimea under section 1 of Executive Order 13660 because of their alleged involvement in the "misappropriation of state assets of Ukraine or of an economically significant entity in Ukraine." 

These individuals and Chernomorneftegaz are now included on OFAC's SDN List under the [Ukraine] designation. 

The SDN listing for Chernomorneftegaz states that it does not include its parent company Naftogaz.

Executive Order 13660 prohibits U.S. persons from engaging in transactions with SDNs and requires and requires the freezing of any assets within U.S. jurisdiction that they may have.  

April 03, 2014 

President Obama Issues Executive Order Authorizing Targeted Sanctions on Persons in South Sudan

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

Today President Obama issued a new Executive Order ("EO") entitled “Blocking Property of Certain Persons With Respect to South Sudan.” The text of the EO can be found here

Today’s EO does not actually name any persons in South Sudan or otherwise impose any restrictions on doing business with the Government of South Sudan or companies located in South Sudan. 

This EO was issued in order to provide the U.S. government with a vehicle for imposing targeted sanctions on Government of South Sudan officials or opposition leaders that are responsible for the recent violence in South Sudan. 

While OFAC will likely use this EO to add persons or government entities in Sudan to the List of Specially Designated Nationals and Blocked Persons ("SDN List"), no such parties have been added yet. Once those parties are added to the SDN List then any of their assets in the U.S. must be blocked and U.S. persons are prohibited from engaging in transactions with the SDNs. The EO also prohibits donations to the blocked persons. 

South Sudan remains subject to normal export controls administered by BIS. Meanwhile, no changes have been made to the comprehensive U.S. sanctions on the Republic of Sudan (North Sudan).

 

Census Bureau and U.S. Customs Announce 180 Day "Informed Compliance" Period to Comply with EEI/AES Changes

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

Today the U.S. Census Bureau issued FTR Letter Number 8 (reprinted below) advising that Census and U.S. Customs and Border Protection ("CBP") will implement an 180 day "informed compliance" period to allow U.S. exporters to comply with the changes to the Foreign Trade Regulations ("FTR") that take effect on April 5, 2014. 

As we indicated in our previous post on this subject, the amendments to the FTR will affect all Electronic Export Information (“EEI”) filings made through the Automated Export System (“AES”), whether filed directly by the U.S. exporter or via an agent, such as a freight forwarder. 

While the addition of new data elements will impact all EEI filings some of the changes are particularly important to exporters that ship goods under export licenses issued by the Bureau of Industry and Security (“BIS”) or the Directorate of Defense Trade Controls (“DDTC”). 

What the "informed compliance" period means is that CBP will not impose monetary penalties on those that fail to comply with the new FTR requirements for the next 180 days. Violations of the new FTR requirements occurring after October 2, 2014 may be subject to monetary penalties.

It is important to note, however, that this policy does not apply to violations of existing requirements. Therefore, CBP will continue to issue penalties for violations of the FTR requirements that were in effect prior to the April 5, 2014 changes. For example, late filings and inaccurate information in the current data elements are still subject to CBP penalties. 

April 01, 2014 

BIS Issues Advisory Opinion Confirming that the EAR’s General Technology Note Applies to All ECCNs Controlling “Technology”

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

On March 25, 2014 the U.S. Commerce Department's Bureau of Industry and Security (BIS) issued an Advisory Opinion (reprinted below) clarifying that the General Technology Note (GTN) in Supplement No. 2 to Part 774 of the U.S. Export Administration Regulations (EAR) applies to all Export Control Classification Numbers (ECCNs) on the Commerce on Commerce Control List “regardless of whether the ECCN specifically refers to the GTN or uses the term ‘required’”. 

The reason for this inquiry is that there has been some uncertainty regarding the scope of the GTN in the EAR. This is because the GTN is based on the Wassenaar Arrangement’s (WA) GTN, which applies to the WA’s Dual-Use List. The U.S. Commerce Control List (CCL), however, includes many more items than covered by the WA Dual-Use List, such as items controlled for missile technology reasons, chemical and biological reasons, as well as many U.S. unilateral controls. As a result of Export Control Reform the CCL also contains certain military-related parts and components under the new “600 series” and will soon control commercial space and satellite-related items under the “500 series”. 

The related “technology” for an item included on the CCL is controlled under the corresponding “E” Group of the ECCN. In many cases involving items controlled by the WA, the corresponding “E” Group specifically mentions the GTN, such as ECCN 3E001 which covers “’Technology’ according to the General Technology Note for the ‘development’ or ‘production’ of equipment or materials controlled by 3A . . . 3B . . . or 3C.” Many other “E” Group ECCNs do not refer to the GTN. 

The BIS Advisory Opinion makes clear that, while the GTN is based on the WA List, the “EAR does not limit its definition of technology or the GTN to only those technologies controlled in the EAR pursuant to the WA” and “[t]herefore, the GTN and the EAR's definition of "required" apply to all references to ''technology" in all the ECCNs on the CCL.” 

This confirms BIS’s longstanding but heretofore unwritten policy that, regardless of CCL category, the term “required” “refers to only that portion of ‘technology’ or ‘software’ which is peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics or functions.” What this means from a practical perspective is that while the GTN applies to all ECCNs, not all technology related to a controlled item is necessarily “required” for its development, production, or use. Thus, careful analysis must be performed when classifying technology under the EAR.


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