International Trade Law News

Published by Jacobson Burton Kelley PLLC

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.