International Trade Law News

Published by Jacobson Burton Kelley PLLC

Today the Bureau of Industry and Security (BIS) published a regulation in the Federal Register amending the Export Administration Regulations (EAR) to reflect the U.S. Government's April 23, 2004 decision to modify the U.S. sanctions on Libya. Effective April 29, 2004, U.S. companies and their foreign subsidiaries may now export and reexport U.S. origin products to Libya, subject to the limitations discussed below. As the Federal Register notice indicates, BIS now has jurisdiction over the export and reexport of items subject to the Export Administration Regulations (EAR) to Libya. OFAC will continue to have jurisdiction over certain financial transactions with Libya and transactions involving blocked Libyan assets or Libyan entities included on the list of Specially Designated Nationals (SDN List).

The following is a summary of the main points of BIS's new licensing requirements and policies involving Libya:

License Requirements for Exports and Reexports to Libya

*Items subject to the EAR, but not listed on the Commerce Control List (CCL) (i.e., EAR99 items), generally do not require a license for export to Libya (except as defined in the end-user and end-use controls set forth in Part 744 of the EAR).

*Most items on the CCL (i.e., non-EAR99 items, such as high-performance computers, software containing advanced cryptographic, cryptoanalytic and cryptologic items ) will require a license from BIS for export or reexport to Libya.

*The de minimis rules applicable to Libya remain unchanged. Reexports of items to Libya from third countries are subject to the EAR when U.S.-origin controlled content in such items exceeds 10% and would require a license if exported or reexported to Libya as an individual component. Reexports that exceed 10% but do not exceed 20% U.S.-origin controlled content will be reviewed on a case-by-case basis.

*Items controlled by multilateral export control regimes (i.e., items controlled for national security (NS), missile technology (MT), chemical and biological weapons (CB), and nuclear nonproliferation (NP) reasons on the Commerce Control List (15 CFR Part 774)(CCL)) will require a license to Libya, as do items controlled for crime control (CC) and regional stability (RS) reasons.

*Libya remains on the list of designated state sponsors of terrorism. As a result, most items controlled for anti-terrorism (AT) reasons will continue to require a license for export or reexport to Libya.

*Additionally, certain categories of items controlled for reasons not included on the Country Chart in Part 738 of the EAR (e.g., encryption (EI), short supply (SS), Chemical Weapons (CW), Computers (XP) and Significant Items (SI)) also require a license for export or reexport to Libya.

Deemed Exports

Section 734.2(b)(ii) of the EAR provides that the release of technology or source code to a foreign national in the United States is "deemed" to be an export to the home country of that foreign national. License applications for the deemed export of technology or source code to Libyan nationals in the United States will be reviewed by BIS on a case-by-case basis. This license requirement does not apply to Libyan nationals who have established permanent residency in the United States or to persons protected under the Immigration and Naturalization Act (8 USC § 1324(b)(a)(3)).

OFAC Licensing and Restrictions

BIS will recognize the validity of any specific license authorized by OFAC for export to Libya until the date indicated by OFAC at the time of issuance, or until May 1, 2005 if the license does not have a specified expiration date. Items exported or reexported to Libya under a specific license from OFAC may not be transferred within Libya to a new end-user without authorization from BIS. Additionally, items reexported from Libya must conform with relevant provisions of the EAR on the basis of the country to which the items are being sent. Items reexported from Libya may require a BIS license or be eligible for shipment under a License Exception. Companies may not make sales to the Libyan military, police, intelligence service or other sensitive end-users or with individuals or groups designated as terrorists on OFAC's list of Specially Designated Nationals (SDN).

End-use/End-user Controls

This new regulation does not relieve exporters and others of their responsibility to comply with obligations under the end-user and end-use controls maintained under the Enhanced Proliferation Control Initiative (EPCI), as set forth in Part 744 of the EAR. EPCI prohibits the export or reexport of any item subject to the EAR, if, at the time of export or reexport, the exporter has reason to know, or are informed by BIS that the item will be used in the design, development, production or use of weapons of mass destruction.

Labels: BIS