International Trade Law News

Published by Jacobson Burton Kelley PLLC

Today the Bureau of Industry and Security (BIS) issued an advance copy of the final rule containing the Syria General Order (General Order No. 2 to Supplement No. 1 of Part 736 of the Export Administration Regulations (EAR)). The final rule and General Order will be published in the Federal Register on Friday, May 14th and will become effective on that date.

Effective May 14, 2004, a license must be obtained from BIS prior to the export or reexport to Syria of all items subject to the EAR, except food and medicines that are classified as EAR99. A license is also required for the "deemed export" and "deemed reexport" of any technology or source code on the Commerce Control List (CCL) to a Syrian foreign national. "Deemed exports" and "deemed reexports" involving technology or source code subject to the EAR but not listed on the CCL do not require a license to Syrian foreign nationals.

The General Order imposes strict limitations on the use of license exceptions in connection with exports to Syria.

The General Order specifies that BIS "may" issue specific licenses on a case-by-case basis to export certain products to Syria, including:
--Items in support of activities, diplomatic or otherwise, of the United States Government;
--Medicines on the CCL and medical devices (as discussed below medicines classified as EAR99 may be exported to Syria without a license);
--Parts and components intended to ensure the safety of civil aviation and the safe operation of commercial passenger aircraft (subject to a $2 million limit per each two-year license issued);
--Aircraft chartered by the Syrian Government for the transport of Syrian Government officials on official Syrian Government business;
--Telecommunications equipment and associated computers, software and technology;
--Items in support of United Nations operations in Syria.

The General Order makes clear that the following are not subject to this General Order and thus will not require a license to be exported to Syria:
--Informational materials in the form of books and other media;
--Publicly available software and technology; and
--Technology exported in the form of a patent application or an amendment.

In addition to permitting the export of food and medicine classified as EAR99 to Syria without a license, the General Order provides that "BIS may also consider" license applications for the export and reexport of medicine (on the CCL) and medical devices on a case by case basis.

With respect to medicine and medical devices, it will be necessary to obtain an export license from BIS to ship any medicine listed on the CCL and all medical devices directly from the U.S. to Syria. It will also be necessary to obtain a license to reexport any U.S. origin medicine on the CCL and medical devices from a third country to Syria. An analysis of all foreign-produced products should be undertaken before those products are exported to Syria to ensure that the value of the U.S.-origin parts and components contained in the finished product conforms to the de minimis requirements of the EAR.

Unfortunately, because the Syria Accountability Act (SAA) did not conform to the language of the Trade Sanctions Reform Act, the General Order only permits the unlicensed export of food, but does not permit "agricultural commodities" to be exported to Syria. One of the problems with this is that the term "food" is not defined in the EAR or in the General Order. BIS will have to issue guidance in the future to eliminate confusion over what products fall within the scope of the term "food" used in the SAA and in the General Order.

While not specifically noted in the General Order, BIS is likely to examine very closely the end-users stated in license applications. Over the past few years, BIS has had a policy of denying license applications to Syria when the products were destined for the Syrian military, police, intelligence services or similar types of end-users.

While not specified in the General Order, applications to obtain an export license must be subitted to BIS on Form 748P or via SNAP, BIS' electronic licensing system.