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BIS Amends EAR & CCL to Implement Changes Made to the WA List


The Bureau of Industry and Security (BIS) has implemented changes to the Export Administration Regulations (EAR) and the Commerce Control List (CCL) to implement changes made to the Wasaenaar Arrangement List of Dual-Use Goods and Technologies (WA List) which were agreed upon by all the governments participating in the Wassenaar Arrangement at the December 2017 Plenary meeting. This ruling also includes associated changes to the EAR and a few corrections. The rule became effective on October 24, 2018.

Relevant CCL Changes (final rule revised 50 ECCNS, ECCNs with editorial changes excluded below):

  • Category 0—Nuclear Materials, Facilities, and Equipment [and Miscellaneous Items] 0A617 Miscellaneous ‘‘Equipment’’, Materials, and Related Commodities
    • 0A617 paragraph y.3, containers for shipping or packing defense articles or items controlled by ‘‘600 series’’ ECCNs, is amended by narrowing the scope to International Organization for Standardization (ISO) intermodal containers or demountable vehicle bodies (i.e., swap bodies), but also expands the scope beyond ‘‘specially designed’’ by adding ‘‘or modified’’. As the term ‘modified’ is in single quotes, BIS is also adding the technical note that defines ‘modified,’ which was already existing text in Wassenaar Arrangement Military List of 2017 (WAML 17).
  • Category 1—Special Materials and Related Equipment, Chemicals, ‘‘Microorganisms’’, and ‘‘Toxins’’
    • 1C001: Subparagraph b is amended by moving the phrase ‘‘not transparent to visible light’’ to the beginning and adding more descriptive text ‘‘near-infrared radiation having a wavelength’’ to clarify the scope of the control. Also, the parameters are changed from ‘‘1.5 × 1014 Hz’’ to ‘‘810 nm’’ and ‘‘3.7 × 1014 Hz’’ to ‘‘2,000 nm (frequencies exceeding 150 THz but less than 370 THz)’’. (The frequency band is changed to the equivalent wavelength band to make the parameter easier to understand and not to change the scope of control.)
    • 1C608: WA agreed to add a Note specifying that WAML 8.c.1 does not apply to aircraft fuels—JP–4, JP–5 and JP–8. This rule adds this Note below 1C608.n ‘‘Any explosives, ‘propellants,’ oxidizers, ‘‘pyrotechnics’’, fuels, binders, or additives . . .’’ as well as bringing forth another Note from WAML 8.c.1 that specifies that aircraft fuels specified by WAML 8.c.1 are finished products, not their constituents.
  • Category 2—Materials Processing
    • 2A001 Note 2 at the beginning of the Items paragraph is amended by adding ‘‘(or national equivalents)’’, in order to help efficiently classify bearings using national standards that are equivalent to ISO 3290 as grade 5. 2B001 Machine Tools.
    • 2B006 heading is revised to add ‘‘position feedback units’’ and ‘‘electronic assemblies’’ to more accurately describe the scope of controls in Items paragraph .b.
      • Linear Variable Differential Transformer (LVDT) systems formerly in 2B006.b.1.b are moved to 2B206.d and no longer have a national security control.
    • 2B007 paragraph .a ‘‘[Robots] capable in real-time of full three-dimensional image processing or full three dimensional ‘‘scene analysis’’ to generate or modify ‘‘programs’’ or to generate or modify numerical program data’’ is removed and reserved because of insufficient connection to military capabilities. Robots of national security concern are controlled under 2B007.b, .c and .d.
    • 2B008 heading is amended by replacing ‘‘assemblies or units’’ with ‘compound rotary tables’ and ‘‘tilting spindles’’, as well as removing ‘‘or dimensional inspection or measuring systems and equipment’’ to align with revisions made to the List of Items Controlled in this ECCN.
      • Item paragraphs .a (linear position feedback units) and .b (rotary position feedback units) are removed and reserved, because this rule moves these items to 2B006.b.2 and .c, respectively.
      • Item paragraph .c is amended by replacing and cascading the parameter paragraphs, as well as moving the definition for ‘compound rotary table’ from part 772 to a Technical Note under this Item paragraph.
    • 2B206 is amended by adding Linear Variable Differential Transformer (LVDT) systems to Item paragraph .d, because this item is removed from 2B006.b.1.b. While LVDT systems are no longer controlled for national security reasons, they are still on the Nuclear Supplier’s Group (NSG) list under 1.B.3.b.2 and remain controlled for nuclear nonproliferation reasons on the CCL.
    • 2E003 paragraph .a (‘‘technology’’ for the ‘‘development’’ of interactive graphics as an integrated part in ‘‘numerical control’’ units for preparation or modification of part programs) is removed and reserved because of the advancement of technology.
      • Item paragraph .a is removed from License Exception TSR.
    • Category 3—Electronics Product Group A. ‘‘End Items’’, ‘‘Equipment’’, ‘‘Accessories’’, ‘‘Attachments’’, ‘‘Parts’’, ‘‘Components’’, and ‘‘Systems’’
      • 3A001 is amended by replacing ‘‘Electrical Erasable Programmable Read-Only Memories (EEPROMS), flash memories, and MRAMs’’ with ‘non-volatile memories’ and adding a Technical Note to define ‘non-volatile memories,’ to provide a more generic term for these types of memory integrated circuits.
        • Paragraph a.5.a ‘‘ADCs’’ and the Technical Note below a.5.a are amended by replacing the term ‘‘output rate’’ with the ‘‘sample rate’’ as measured points at the input, except for oversampling (defined as output sample rate), and the Technical Note identifies common ways manufacturers specify ‘sample rate.’ The definition for ‘‘sample rate’’ is added to part 772 ‘‘Definition of Terms. . . .’’
        • Item paragraph a.5.b.2.a, ‘‘settling time’’ parameter, is amended by adding ‘‘arrive at or within’’ to clarify the potentially ambiguous parameter with common usage and understanding of DAC specifications, so that it will not be misinterpreted to mean the time to deviate by the specific amount from the original level.
        • Intensity, amplitude, or phase electrooptic modulators, designed for analog signals, including electro-optic modulators having optical input and output connectors are added to new paragraph 3A001.i to address photonic components for analog Radio Frequency (RF) over fiber antenna remoting, and analog RF distribution of signals. One of the parameters for these items is ‘halfwave voltage’ (‘Vp’), which is defined in a Technical Note below the new paragraph. These items will be eligible for License Exception GBS; therefore, the GBS paragraph is revised to add Item paragraph .i.
      • 3A002 frequency parameter is raised from ‘‘exceeding 10 MHz’’ to ‘‘exceeding 40 MHz’’ for signal analyzers having a 3 dB resolution bandwidth (RBW) in Item paragraph c.1
      • 3B001 Mask ‘‘substrate blanks’’ with multilayer reflector structure consisting of molybdenum and silicon being ‘‘specially designed’’ for ‘Extreme Ultraviolet (EUV)’ lithography and being compliant with SEMI Standard P37 are added to new paragraph 3B001.j, because mask ‘‘substrate blanks’’ and the subsequent substrate blank with multilayer reflector structure are critical materials for EUV lithography 7. EUV lithography opens up integrated circuit fabrication at the most advanced state-of-the-art technology node. The definition for ‘Extreme Ultraviolet (EUV)’ is added to a Technical Note below Item paragraph j.2.
      • 3B002 Test Equipment ‘‘Specially Designed’’ for Testing Finished or Unfinished Semiconductor Devices Item paragraph .a is revised from ‘‘For testing S-parameters of transistor device at frequencies exceeding 31.8 GHz’’ to read ‘‘For testing S-parameters of items specified by 3A001.b.3’’ to remove potential overlapping controls for network analyzers (which measure Sparameters) described in 3A002.e, to harmonize the control text of equipment for testing S-parameters of transistors specified in paragraphs 3A001.b.3.a and 3A001.b.3.b (i.e., transistors that are below 31.8 GHz), and to remove ambiguity regarding the meaning of the phrase ‘‘transistor devices’’ by substituting the unambiguous reference to transistors specified by 3A001.b.3.
      • 3C002 wavelength for positive resists in Item paragraph a.1 is revised from ‘‘wavelengths less than 245 nm . . . .’’ to ‘‘wavelengths less than 193 nm . . . .’’ in order to match the material control with the lithography equipment parameters in 3B001.f.1.a.
      • 3C005 heading revised to move the items that were in the Heading to Items paragraph .a. Polycrystalline ‘‘substrates’’ or polycrystalline ceramic ‘‘substrates’’ are added to Item paragraph .b, because there are both military and commercial applications for microwave transistors fabricated on the engineered substrates. These newly added substrates will be controlled for NS:2 and AT:1 and have License Exception LVS ($3,000), GBS and CIV eligibility.
      • 3C006 heading is amended by adding ‘‘Materials, not specified by 3C001, consisting of a’’ at the beginning of the Heading in order to clarify the scope of the control.
        • The former language of 3C001, 3C005 and 3C006 has common elements that have led to some confusion around the control of silicon carbide wafers.
        • 3C992 heading is amended by replacing the wavelength range from ‘‘370 and 245 nm’’ to ‘‘370 and 193 nm.’’
      • 3E001 Note 3 is added to exclude from 3E001 ‘Process Design Kits’ (‘PDKs’) unless they include libraries implementing functions or technologies for items specified by 3A001. A Technical Note is added below Note 3 to define ‘Process Design Kit’ (‘PDK’). PDKs do not provide knowledge about production tools.
    • Category 4—Computers
      • 4A003 Adjusted Peak Performance (APP) is raised from ‘‘exceeding 16 WT’’ to ‘‘exceeding 29 WT’’ in Item paragraph .b and in accordance with this revision the APP is raised to 29 in the AT control text in the License Requirements table and in two places in the Note to the table.
      • 4D001 Adjusted Peak Performance (APP) is raised from 16 Weighted TeraFLOPs (WT) to 29 WT in License Exceptions TSR and STA in accordance with the new APP level in 4A003.b. The APP control level is raised from ‘‘exceeding 8 WT’’ to ‘‘exceeding 15 WT’’ in Item paragraph b.1. These revisions continue to address the need to track incremental (e.g., ‘‘Moore’s Law’’) improvements in microprocessor technology.
    • Category 5—Part 1— ‘‘Telecommunications’’
      • 5A001 In the NS Column 1 paragraph of the License Requirements table, the order of the referenced Item paragraphs is corrected. For telecommunications equipment specially designed to withstand transitory electronic effects or electromagnetic pulse effects, the temperature range parameters is changed from ‘‘to operate outside the temperature range from 218K (-55 °C) to 397 K (124 °C)’’ to ‘‘below 218K (-55°C)’’ in Item paragraph a.3 or ‘‘above 397 K (124 °C)’’ in new Item paragraph a.4, which does not change the scope of control, but seeks to make the text easier to understand.
        • Because of technology advances, phased array antennae are increasingly being developed for civil telecommunications applications, including cellular, WLAN, 802.15, and wireless HDMI. Exclusion Note 2 is added in order to remove from control phased array antennae specially designed for those purposes.
      • Category 5—Part 2
        • 5A002 Paragraph .a is amended by replacing the phrase ‘‘where that cryptographic capability is usable without ‘‘cryptographic activation’’ or has been activated’’ with the phrase ‘‘where that cryptographic capability is usable, has been activated, or can be activated by means of ‘‘cryptographic activation’’ not employing a secure mechanism’’. The revision clarified that an item is controlled if (1) the ‘cryptography for data confidentially’ is usable from the beginning regardless of ‘‘cryptographic activation’’ (i.e., not dormant), (2) the cryptographic capability was previously dormant but is now usable (whether by ‘‘cryptographic activation’’ or by other means; or (3) the ‘‘cryptographic activation’’ mechanism is not secure (i.e., the cryptographic capability is not securely kept dormant). Items paragraph .b is amended by replacing ‘‘to enable’’ an item with ‘‘for converting’’ an item and replacing ‘‘to achieve or exceed the controlled performance levels for functionality specified by 5A002.a that would not otherwise be enabled’’ with ‘‘not specified by Category 5 —Part 2 into an item specified by 5A002.a or 5D002.c.1, and not released by the Cryptography Note (Note 3 in Category 5—Part 2), or for enabling, by means of ‘‘cryptographic activation’’, additional functionality specified by 5A002.a of an item already specified by Category 5— Part 2’’. This clarifies that a ‘‘cryptographic activation’’ mechanism is controlled by 5A002.b in two situations: (1) It converts an item classified outside of Category 5—Part 2 into a 5A002.a item (e.g., by activating ‘cryptography for data confidentiality’ capability in an item that was previously limited to performing ‘‘authentication,’’ or by activating encryption capability which disqualifies a product from the Cryptography Note exclusion (Note 3 in Category 5—Part 2)); or (2) it enables additional functionality specified in 5A002.a in an item that was already classified in Category 5—Part 2 (e.g., making additional encryption algorithms usable by the item, or that would change the item from being eligible or described under § 740.17(b)(1) into an item described under § 740.17(b)(2) or (3)).
        • 5D002 Paragraph .b of ECCNs 5D002 and 5E002 is amended by replacing ‘‘enable’’ with ‘‘for converting’’ and replacing ‘‘to meet the criteria for functionality specified by 5A002.a, that would not otherwise be met’’ with ‘‘not specified by Category 5—Part 2 into an item specified by 5A002.a or 5D002.c.1, and not released by the Cryptography Note (Note 3 in Category 5—Part 2), or for enabling, by means of ‘‘cryptographic activation’’, additional functionality specified by 5A002.a of an item already specified by Category 5— Part 2’’. These revisions are made to create mirroring entries consistent with the changes being made to 5A002.b.
      • Category 6—Sensors and Lasers
        • 6A002 Paragraph .f is added to establish a control for Read-Out Integrated Circuits (ROICs) to ensure that certain ROICs not controlled on the Munitions List, but that provide night vision capability, are controlled. In order to maintain consistent paragraph placement with the WA List this rule adds and reserves Items paragraph .e, so that ROICs can be added to Item paragraph .f. For consistency, Items paragraph .f is added to the Regional Stability controls (RS Column 1) in the License Requirements section, because 6A990, where ROICs were formerly controlled, was controlled for RS Column 1.
        • 6A003 paragraphs a.1 (high-speed cinema recording cameras) and a.2 (mechanical high speed cameras) are removed and reserved because of the advancement of technology. Item paragraph a.3.a (mechanical streak cameras) is also removed because of the advancement of technology. As a result of this change, electronic streak cameras are moved from Item paragraph a.3.b to a.3.
        • 6A004 Dynamic wavefront measuring equipment is added to Item paragraph .f, with parameters in subparagraphs and a Technical Note at the end to define ‘‘frame rate’’. The purpose of wavefront sensing is to measure the level of the wavefront aberration as it is transferred through an optical system, regardless if the source of that aberration is the optical system itself or something external to that system. Wavefront sensors are principally used as one of the main components of adaptive optics systems where they serve to close the control loop and feed the information about the required correction to deformable mirrors and beam steering mirrors in real-time, which are also controlled in this ECCN.
        • 6A005 Item paragraph f.1 (dynamic wavefront (phase) measuring equipment) is removed and reserved, because this item is moved to ECCN 6A004.f, because of its close association to the mirrors controlled in 6A004. A Nota Bene is added to point to the new Item paragraph where this item is controlled. Item paragraph f.2 (‘‘Laser’’ diagnostic equipment) is amended by replacing ‘‘capable of measuring’’ with ‘‘specially designed for dynamic measurement of’’ and replacing ‘‘equal to or less than’’ with ‘‘and having an angular ‘‘accuracy’’ of’’ to refine the scope of the entry. The phrase ‘‘(microradians) or less (better)’’ is added after ‘‘10 mrad’’ to clarify the unit. Item paragraph f.3 (Optical equipment and components) is amended by moving the phrase ‘‘coherent beam combination’’ for better readability. The ‘‘accuracy’’ parameter is cascaded down to Item paragraph f.3.b and a new ‘‘accuracy’’ parameter is added to f.3.a, so that the equipment is controlled if it meets either of the ‘‘accuracy’’ parameters.
      • Category 9—Aerospace and Propulsion
        • 9A002 Heading is amended by revising and moving the parameter ‘‘with an ISO standard continuous power rating of 24,245 kW or more and a specific fuel consumption not exceeding 0.219 kg/ kWh in the power range from 35 to 100%’’ to the Items paragraph and adding ‘‘designed to use liquid fuel and having all of the following (see List of Items Controlled),’’ to the Heading. Two parameters are added for this ECCN: Maximum continuous power and ‘corrected specific fuel consumption’. (These revisions therefore do not change the scope of the existing control text, but rather clarify it by making it clear that the specific fuel consumption of concern applies at the ‘‘turndown performance’’ of 35%.)
        • 9A004 The scope of Item paragraph f.1 (Telemetry and telecommand equipment) is clarified by adding ‘‘specially designed’’ and two specific end uses in order to eliminate data processing equipment for mission data, such as GPS, science data, communication and broadcasting, since this data is not meant to be controlled under 9A004.f.1. The scope of Item paragraph f.2 (Simulators) is narrowed by adding ‘‘specially designed for ‘verification of operational procedures’ of ‘‘spacecraft’’.
        • 9D004 Paragraph .b (‘‘Software’’ for testing aero gas turbine engines, assemblies, ‘‘parts’’ or ‘‘components’’) is amended by removing the parameter and cascading subparagraphs with specific features or functions, such as ‘‘specially designed’’ for testing aero gas turbine engines . . . , to clarify and focus (narrow) the scope of control. A Note is added above Item paragraph .c to exclude software for operation of the test facility or operator safety, or production, repair or maintenance acceptance-testing . . .’’

Relevant EAR (Relevant changes listed below with editorial changes excluded):

  • Part 772: This rule removes 37 definitions from § 772.1 and adds them to the ECCNs where they are used. According to the WA drafting guidelines, if a term is only used in a single ECCN, then the definition must be in a Technical Note close to where that term is used.
  • Supplement No. 6 to Part 774: Sensitive List Paragraph (1)(i), ECCN 1A002, is amended by narrowing the scope from all of ECCN 1A002 to only subparagraph a.1 ‘‘ ‘‘Composite’’ structures or laminates made from an organic ‘‘matrix’’ and ‘‘fibrous or filamentary materials’’ specified by 1C010.c or 1C010.d’’, because the rest of the items in ECCN 1A002 do not warrant control on the Sensitive List as they are not key technologies.
  • Supplement No. 7 to Part 774: Very Sensitive List Paragraph (1)(i), ECCN 1A002, is amended by narrowing the scope from subparagraph .a to subparagraph a.1 (‘‘Composite’’ structures or laminates made from an organic ‘‘matrix’’ and ‘‘fibrous or filamentary materials’’ specified by 1C010.c or 1C0010.d), because the rest of the items in ECCN 1A002.a do not warrant control on the Sensitive List as they are not key technologies.
  • Section 740.16: License Exception APR is amended to remove a reference to ECCN 6A990 in paragraphs (a)(2) and (b)(2)(v), because ECCN 6A990 is removed from the CCL by this rule. ROICs are now specified in 6A002.f.
  • Section 740.20 License Exception STA is amended to remove reference to ECCNs 6A990 and 6E990 from paragraph (b)(2)(x), because these ECCNs are removed from the CCL. ROICs are now specified in 6A002.f and ROIC technology is specified in ECCNs 6E001 and 6E002.
  • Section 742.6: Regional Stability Paragraph (b)(1)(ii) is amended by removing reference to ECCN 6E990, because this ECCN is removed by this rule. ROIC technology is now controlled under ECCNs 6E001 and 6E002.
  • Section 744.9: Restrictions on Exports, Reexports, and Transfers (In-Country) of Certain Cameras, Systems, or Related Components Section 744.9 is amended by removing reference to ECCN 6A990 from paragraphs (a) and (b), because this ECCN is removed from the CCL. ROICs are now controlled under ECCN 6A002.f.

Federal Register Notice:

OFAC Releases Changes to Iranian Transactions and Sanctions Regulations


The Office of Foreign Assets Control (OFAC) published a final rule effective November 5, 2018 which makes changes to the Iranian Transactions and Sanctions Regulations (ITSR) to further implement President Trump’s decision to end the United State’s participation in the Join Comprehensive Plan of Action (JCPA) back in May of this year. These changes basically reimpose certain sanctions as well as change an existing general license to ITSR to allow US person to sell personal property in Iran and transfer the proceeds to the US.


  • 560.211 by revising paragraph (c), adding a note to paragraph (c)(2), and revising notes 1 and 2 to paragraphs (a) through (c) to read as follows:
  • 560.211 Prohibited transactions involving blocked property.

(c)(1) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any foreign branch, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

  • Any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to paragraphs (a) through (c)(1)(i) of this section; or
  • Any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(A) To have, on or after August 7, 2018, materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran; or

(B) To have, on or after November 5, 2018, materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the National Iranian Oil Company (NIOC); the Naftiran Intertrade Company (NICO); any entity owned or controlled by, or operating for or on behalf of, NIOC or NICO; or the Central Bank of Iran.

(2) Paragraph (c)(1)(ii) of this section shall not apply with respect to any person for conducting or facilitating a transaction involving a project—

(i) For the development of natural gas and the construction and operation of a pipeline to transport natural gas from Azerbaijan to Turkey and Europe;

(ii) That provides to Turkey and countries in Europe energy security and energy independence from the Government of the Russian Federation and the Government of Iran; and

(iii) That was initiated before August 10, 2012 pursuant to a production sharing agreement, or an ancillary agreement necessary to further a production-sharing agreement, entered into with, or a license granted by, the government of a country other than Iran before August 10, 2012.

  • Revise Note 1 to § 560.304 to read as follows:
  • 560.304 Government of Iran.
    Note 1 to § 560.304: The names of persons that the Office of Foreign Assets Control (OFAC) has identified as meeting this definition are published in the Federal Register and incorporated into OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) with the identifier ‘‘[IRAN].’’ The SDN List is accessible through the following page on OFAC’s website: However, the property and interests in property of any persons meeting the definition of the term Government of Iran are blocked pursuant to § 560.211 regardless of whether the names of such persons are published in the Federal Register or incorporated into the SDN List.
  • Revise Note 1 to § 560.324 to read as follows:
  • 560.324 Iranian financial institution.
    Note 1 to § 560.324: The names of persons that the Office of Foreign Assets Control (OFAC) has identified as meeting this definition are published in the Federal Register and incorporated into OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) with the identifier ‘‘[IRAN].’’ The SDN List is accessible through the following page on OFAC’s website: However, the property and interests in property of any persons meeting the definition of the term Iranian financial institution are blocked pursuant to § 560.211 regardless of whether the names of such persons are published in the Federal Register or incorporated into the SDN List.
  • Add a Note to § 560.518 to read as follows:
  • 560.518 Transactions in Iranian-origin and Iranian government property.

Note to § 560.518: See § 560.543 for an authorization to engage in all transactions necessary and ordinarily incident to the sale of certain real and personal property located in Iran.

  • Amend § 560.543 by revising the section heading, paragraph (a), and paragraph (b)(2) to read as follows:
  • 560.543 Sale of certain real and personal property in Iran and transfer of related funds to the United States.
    (a) Individuals who are U.S. persons are authorized to engage in transactions necessary and ordinarily incident to the sale of real and personal property in Iran and to transfer the proceeds to the United States, provided that such real and personal property was acquired before the individual became a U.S. person or inherited from persons in Iran. Authorized transactions include engaging the services of any persons in Iran necessary for the sale, such as an attorney, funds agent, or broker.

(b) * * *

(1) * * *

(2) The re-investment in Iran of the proceeds from the real or personal property sales authorized in paragraph (a) of this section; or

Federal Register Notice:

US Implements Third Set of Export Control Reform List Shifts


By: John Black

In the January 2, 2014 Federal Register the departments of Commerce and State published notices shifting export control jurisdiction over certain military items and technologies in the US Munitions List (USML) in the International Traffic in Arms Regulations (ITAR) to the Commerce Control List (CCL) in the Export Administration Regulations (EAR).  This is the third group of items that has undergone the shift from the USML to the CCL as part of the US Export Control Reform initiative.  The changes published on January 2, 2014 do not enter into force until July 1, 2014.


The Directorate of Defense Trade Controls revised the USML so that this list shift applies primarily to four categories in the USML.  Those categories and the highlights of the changes are:

Category IV,  Launch Vehicles, Missiles Rockets, Torpedoes, Bombs and Mines

DDTC clarified the scope of Category IV by enumerating the items controlled in paragraphs (a) and (b).  DDTC also shifted demolition blocks, blasting caps and military explosive excavating devices to the CCL in the EAR (for example, ECCN 0A604.b for military explosive excavating devices).  DDTC also moved ablative materials from paragraph (f) to Category XIII(d).

The new IV(h) controls specified systems, subsystems, components, parts, accessories, attachments and associated equipment.  IV(h) controls certain items using the “specially designed” approach and other items using an enumerated approach.  IV(h)(28) enumerates controls on pneumatic, hydraulic, mechanical, electro-optical or electromechanical flight control systems (including fly-by-wire systems) and attitude control equipment for rockets and missiles—interestingly, IV(h)(28) does not specify attitude control equipment for teenagers as such items are not known to exist.  If attitude control equipment for teenagers were developed, I would expect the US Government would apply a 0y521 control to it.

Category V: Explosives, Energetic Materials, Propellants, Incendiaries

A significant change here is that DDTC enumerated specific controlled items and replaced the former catch-all approach in Category V.  As a result certain spherical aluminum powder and hydrazine and its derivatives shift to the CCL.

Category IX: Military Training Equipment

DDTC’s objective in Category IX is to establish a bright line between the items the USML controls and the items the CCL controls.  The newly enumerated paragraph (a) identifies training equipment, including, for example, towed targets and models or mockups used for maintenance or ordinance disposal training.  The new paragraph (b) identifies simulators including system simulators that replicate the operation of an individual crew station, a mission systems or a weapon of a controlled end-item, and simulation software.

Category X: Personal Protective Equipment

DDTC’s objective in Category X is to establish a bright line between the items the USML controls and the items the CCL controls.  Protective shelters shifted from the USML to the EAR in ECCN 1A613.  Anti-gravity suits, pressure suits and atmosphere diving suits also shifted to the EAR.  Equipment for producing Category X items shifted to EAR ECCN 1B613.  Finally, DDTC clearly narrowed the scope of Category X controls on parts and components to focus on things such as ceramic or composite body armor plates, laser protective lenses and other items.

Category XVI:  Nuclear Weapons Materials

DDTC clarified that neither the ITAR nor Category XVI apply to most of the items described in Category XVI prior to this notice because those items and technologies are under the jurisdiction of the Nuclear Regulatory Commission or the Department of Energy.  This category will continue to control tools that model or simulate the environments generated by nuclear detonations.

In addition to the changes described for the individual categories above, DDTC, as it has done with past list shift rules, added a new paragraph (x) to each category, which will be used to identify CCL controlled items on DDTC license applications.

EAR/CCL Changes

The 31-page Commerce Department notice created many detailed, new ECCNs and revised existing ECCNs.  In addition, Commerce revised License Exception TMP in EAR 740.9(a)(11) and License Exception BAG in EAR 740.14(h) to authorize exports, reexports and transfers of personal protective equipment classified under 1A613.c or d. in a fashion similar to the existing ITAR exemption for exports of personal protective equipment.

These new and revised ECCNs require careful review, especially if you are involved in the areas shifted off the USML.  The following summary is not a substitute for analyzing the new EAR controls, but it may be a useful road map.

Commerce created new 600 series ECCNs to receive the items shifted off the USML.  New ECCNs 0A604, 0B604, 0D604, 0E604 9A604, 9B604, 9D604, 9E604 control items shifted off USML Categories IV and V, with the new ECCNs in Category 0 controlling the shifted explosives/propellant-type stuff and related items and the new ECCNs in Category 9 controlling the items related to missiles and launch vehicles. Commerce created ECCNs 0A614, 0B614, 0D614 and 0E614 to receive military training equipment and related items.  ECCN0A614.a controls equipment specially designed for military training that is not controlled by Category IX.  0A614.x controls specially designed parts and components in the standard 600 series fashion. Interestingly, there is no y. paragraph in 0A614.

Commerce revised existing ECCN 1A005 for body armor and added several new 1Axxx ECCNs to control devices to initiate charges, devices containing energetic materials, charges, and other armored and protective equipment.  Corresponding changes were made to ECCNs in sub-categories B, C, D, and E in Category 1.

Finally, Commerce made revisions and conforming changes to many existing ECCNs.


Action Items

Even though the rules do not enter into force until July 1, 2014, export compliance personnel should find time soon to take a look at the changes to the USML and CCL.  After an initial review, you may find that you will need to work with technical experts to make specific decisions as to how the changes impact the export control classifications of your products and technologies.  This is an important, and, in some cases, difficult task.  The bad news is that, based on my initial analysis, this export control list shift does not seem to offer the benefit of moving as many items into EAR No License Required (NLR) eligibility as was the case for past changes for aircraft, gas turbine engines, land vehicles, surface vessels and submersible vessels.

As with past reform changes, after you determine how this impacts  your classifications, you need to decide your strategy for using existing ITAR approvals, transitioning to EAR approvals, and determining what type of EAR approvals you will need.  In addition, if your EAR expertise is not at the level of your ITAR expertise, you need to increase your EAR knowledge.

July 1 will be here before you know it.

BIS Amends EAR and CCL to Implement Wassenaar Arrangement 2012 Plenary Agreements


By: Brooke Driver and John Black

The Bureau of Industry and Security has taken steps to implement changes to the Commerce Control List of the Export Administration Regulations discussed at the Plenary Meeting in 2012. This final rule revises the CCL to implement changes made to the Wassenaar Arrangement’s List of Dual-Use Goods and Technologies, agreed to by participants of the Plenary Meeting. The rule revises ECCNs in every category of the CCL except category 8.  In addition, BIS changed the EAR Part 743 Wassenaar Arrangement (WA) reporting requirements for certain license exception exports of items in 2D001, 2E001, and 2E002.
For aerospace companies, the rule makes important relaxations to what some people view as the antiquated 7E004 controls on technology.  BIS added a new ECCN to control source code related to 7E004:

7D004 “Source code” incorporating “development” “technology” specified by 7E004.a or 7E004.b, for any of the following: (see List of Items Controlled).

BIS also adjusted the ECCN 9E003.a.5 controls on technology for cooled turbine blades, vanes or tip shrouds to bring those controls more in line with other controls.  BIS added this new software ECCN:

2D003 “Software”, designed or modified for the operation of equipment specified by 2B002, that converts optical design, workpiece measurements and material removal functions into “numerical control” commands to achieve the desired workpiece form.

BIS made WA based changes to these other ECCNs 1A004, 1C001, 2B001, 2B006, 2D001, 2D002, 3A001, 3A002, 3B001, 3C002, 4D001, 5A001, 5B001, 5E001, 5A002, 5E002, 6A001, 6A002, 6A005, 6C004, 6C005, 7A001, 7D003, 7E001, 9A001, and 9A018.
For the details, visit:

Census Publishes New AES Rule


By: Brooke Driver

On March 14, 2013, the Census Bureau’s Foreign Trade Division (FTD) published the final revision of the 2008 Foreign Trade Regulations (FTR), Title 15, Part 30. Although published in the Federal Register in March, the new requirements will not come into effect until January 8, 2014, in order to allow exporters sufficient time to become acclimated to the new export reporting requirements, which are as follows:

  • The Census Bureau is requiring mandatory filing of export information through the Automated Export System (AES) or through AESDirect for all shipments of used self-propelled vehicles, regardless of value or destination, and temporary exports valued over $2,500 per Schedule B
  • The revisions also include updated requirements for reporting port of export, new exclusion statements and new data items on how to report value, among other changes
  • A number of definitions have been added, deleted or modified

For a detailed description of these changes, see:

Reform Regulations Published Let the List Shifting Begin!


By: John Black

As I contemplated the 82 pages (each with three columns of the smallest font size I can read) of the Commerce Department Federal Register notice, I glanced at the corresponding 20 page State Department FR notice (same 3 columns and small font) sitting on my desk. Yep, over one hundred pages of regulatory notices that will have a dramatic impact on my job, and yours, especially if you deal with the ITAR items that will be list shifted from the USML to the CCL.

Note: The advance copy of the Commerce Department notice is 355 pages long because it is printed in a one column, 12 point font, double spaced format. It came out a few days before the actual Federal Register notice. And let me tell you one thing, there is nothing that makes an export control insider happier than getting an advance copy of a new regulation, or seeing 355 pages of advance regs come pouring out of the laser printer. I know at many a bar in Washington, people were bragging because they got the advance reg 17 minutes before everybody else.

I haven’t been studying the multiple proposed regulations that have been coming out over the past few years that are the basis for the 100 pages of final rules sitting on my desk today, so I didn’t know what to expect in the new regs. But I did know what to do.

I poured me a strong pint (coffee). I grabbed my highlighter. I adjusted the binder clip holding the 80+ page Commerce notice, so that only half of it was pinching the pages and the other half was hanging over the edge-After 29 years of reading regulations, there is one thing I know, and that is how to properly apply a binder clip so not one of the precious words of the regulations are hidden in the pinch and so that each page, once devoured by this regulatory steel trap I call my brain, will fold over perfectly revealing the next fresh page of regulatory text hot off the presses (i.e., my laser printer).

Fast forward 5 hours.

I’ve read and studied the new regs. My brain is full. (For what it is worth, I found the new regulations to be well-written and, don’t tell anybody, interesting.) Now, my job is to reduce 100+ pages of regulations to an article that tells you what the new rules do, in a fashion that reveals sufficient details so you understand the rule and know what you need to research further, while at the same keeping the article to a length you can easily understand and possibly read to the end in one sitting. OK, let’s dive in.


Big Picture

As I have discussed in prior articles, these regulation changes prepare the Export Administration Regulations (EAR) and the Commerce Control List (CCL) to receive items the Obama Administration decided to list shift from the US Munitions List (USML) in the International Traffic in Arms Regulations (ITAR). In other words, before shifting certain military aircraft parts from the USML to CCL, the Commerce Department has to revise the EAR/CCL to add some ITAR/USML style policies to apply to certain of the list shifting items. That is because the EAR will apply ITAR-like, or ITAR-lite, policies to some of the list shifted items and the EAR will apply more standard EAR policies to the other list shifted items. These regulations also shift certain military aircraft and gas turbine engine related items from the USML to the CCL. At the end of the day (or maybe at the end of the year) (or maybe in a year or so), when companies figure out the new rules, they will see less stringent US export controls for the list shifted items.

These regulations do not simplify US export control regulations. These rules make the regulations more complex. The benefit of the complexity is that the new rules significantly relax US export control regulations that apply to list-shifted items.

The people who will be most impacted by these rules are those whose items move from the relatively simple and highly restrictive ITAR, to the complex and less-restrictive EAR. On the other hand, if all you make is EAR99 truck parts, the new rules will have little impact on your current activities.

The regulations were published in the April 16, 2013 Federal Register. The regulations do not enter into force until October 15, 2013. You may not use the new regulations until October 15. That means you have some time to learn the rules and then make your action plan to get ready for October 15.

In this article, I will highlight the most important elements of the new rules.   I will try to cover what everybody needs to know. Some of the issues I discuss probably deserve an article of their own-issues such as License Exception STA, the definition of “specially designed,” the details of the new USML Category VIII and Category XIX, an analysis of what shifted from the USML to the CCL, and maybe even License Exception GOV. I will endeavor to write articles analyzing various aspects of the new rules over the coming months, and years.

This article is not a substitute for reviewing the new rules. It is intended to teach you about the new rules so you will find it easier to read and apply the new rules. It is also intended to highlight for you the key aspects of the rules that you need to understand.


What Shifted from the USML to the CCL?

In its Federal Register notice, DDTC published the new Category VIII (Aircraft and Related Articles) and Category XIX (Gas Turbine Engines and Associated Equipment). Category XIX controls many of the military aircraft gas turbine engines that were formerly in Category VIII, as well as other military gas turbine engines. Category VIII no longer controls engines and related items.

For the purpose of this article, I will avoid a deep and thorough analysis of Category VIII and Category XIX and what items shifted lists. I think that is best left for another day (noting that it is currently Saturday afternoon). What I want to do here is use the new Category VIII to show you the structure and approach of the new/revised USML categories, and point out some key things to notice and analyze, to make it easier for you to figure how they impact your items.

One thing you will immediately notice is that Category VIII is much longer than it used to be. This is because one objective of the reform process is to replace catch-all language (e.g., parts specifically designed or modified for military aircraft) with specific language that names (the regulations constantly use the word “enumerates” for this) specific items (e.g., tail hooks and arresting gear, wing folding systems, air-to-air refueling systems). So, for the most part, the Category VIII(h) current control on “parts, components, accessories and attachments specifically designed or modified for” military aircraft is replaced by the new paragraphs (h)(1) – (h)(26) in Category VIII. Paragraph (h) is much longer because it names (or enumerates) everything it controls, but it controls significantly fewer items because it only controls what it names (or enumerates).

(Note: Among the many benefits of being an export control nerd like me is the benefit that export regs often expand my vocabulary. The EAR antiboycott rules made “tertiary” a part of my vocabulary. I now see that the reform regs will pull “enumerates” off the English language top shelf and bring it into my standard vocabulary.

Note: Throughout this section, when I include excerpts from the regulations, I will not include certain words so that we can save space and focus on key points. You will see “…” when I do that. I also add bold face when I need to make sure you see something.

First let’s look at the controls on military aircraft. The current VIII(a) controls aircraft “specifically designed, modified or equipped” for military use, which is a catch-all control approach. The new Category VIII has paragraphs (a)(1) – (13) which enumerates (or names) the specific aircraft that are controlled. Here is an excerpt that illustrates this:

Category VIII-Aircraft and Related Articles

(a) Aircraft (see §121.3 of this subchapter) as follows:

*(1) Bombers;

*(2) Fighters, fighter bombers, and fixed-wing attack aircraft;

*(3) Turbofan- or turbojet-powered trainers used to train pilots for fighter, attack, or bomber aircraft;

*(4) Attack helicopters;

(11)Aircraft incorporating any mission system controlled under this subchapter; 

(12) Aircraft capable of being refueled in flight including hover-in-flight refueling (HIFR);

The first thing to analyze is that paragraph (a) mentions the new 121.3 definition of “aircraft.” We need to look at that because if something flies, but does not meet the definition of 121.3, then it is not an ITAR controlled “aircraft”, so it is not in Category VIII(a).

§121.3 Aircraft.

(a) In Category VIII, except as described in paragraph (b) below, “aircraft” means aircraft that:

(1) Are U.S.-origin aircraft that bear an original military designation of A, B, E, F, K, M, P, R, or S;

(2) Are foreign-origin aircraft specially designed to provide functions equivalent to those of the aircraft listed in paragraph (a)(1) of this section;

(3) Are armed….;

(4) Are strategic airlift aircraft…;

(5) Are capable of being refueled in-flight;

(6) Incorporate any “mission system” controlled under this subchapter. “Mission system” is defined as a “system” (see §121.8(g) of this subchapter) that is a defense article that performs specific military functions beyond airworthiness, such as by providing military communication, radar, active missile counter measures, target designation, surveillance, or sensor capabilities; or 

(7) Are Optionally Piloted Vehicles (OPV)…

(b)Aircraft specially designed for military applications that are not identified in paragraph (a) of this section are subject to the EAR and classified as ECCN 9A610, including any unarmed military aircraft, regardless of origin or designation, manufactured prior to 1956 and unmodified since manufacture. Modifications made to incorporate safety of flight features or other FAA or NTSB modifications such as transponders and air data recorders are considered “unmodified” for the purposes of this paragraph.

Paragraphs (a)(1) – (5) focus on identifying specific aircraft that are ITAR “aircraft” and paragraph (a)(6) is a catch-all approach that controls any aircraft that incorporate a mission system. This would control, for example, a Lear Jet that incorporates military radar. Paragraph (a)(6), while it is a catch-all, is narrower than the current Category VIII(a), which controls aircraft “designed, modified or equipped” for military use, because (a)(6) requires that the aircraft actually incorporates a “mission system” This same concept is also in Category VIII(a)(11).

The happy news is paragraph (b) which shifts certain pre-1956, unarmed military aircraft from the USML to the CCL. Well, it is happy news for collectors and antique dealers, but maybe not for the many of you who are dealing with pre-1956 aircraft and related items.

Now, let’s look at other key Category VIII(h) controls on parts, components, accessories, attachments and associated equipment and systems.

(h) Aircraft parts, components, accessories, attachments, associated equipment and systems, as follows:

(1) Parts, components, accessories, attachments, and equipment specially designed for the following U.S.-origin aircraft: the B-1B, B-2, F-15SE, F/A-18 E/F/G, F-22, F-35 and future variants thereof; or the F-117 or U.S. Government technology demonstrators. Parts, components, accessories, attachments, and equipment of the F-15SE and F/A-18 E/F/G that are common to earlier models of these aircraft, unless listed in paragraph (h) of this category, are subject to the EAR;

(2) Face gear gearboxes …

(3) Tail boom, stabilator and automatic rotor blade folding systems …;

(4) Wing folding systems and specially designed parts and components therefor;

(5) Tail hooks and arresting gear and specially designed parts and components therefor;

(6) Bomb racks, missile launchers, missile rails …

We see in (h)(1) catch all controls on any items specially designed for the sensitive US-origin aircraft. Clearly, the US Government wants to retain full ITAR controls on these items for sensitive aircraft. If we have an item that is not for a sensitive U.S.-origin aircraft in (h)(1), we look to paragraphs (h)(2) – (26) to find the item. So, if our part for a non-sensitive US-origin military aircraft is not enumerated and controlled in (h)(2) – (26), it is not controlled by Category VIII, which means it is either controlled somewhere else in the USML or it is in the CCL.

Next let’s look at VIII(i) which controls technical data and defense services.

(i) Technical data (see §120.10 of this subchapter) and defense services (see §120.9 of this subchapter) directly related to the defense articles enumerated in paragraphs (a) through (h) of this category and classified technical data directly related to items controlled in ECCN’s 9A610, 9B610, 9C610, and 9D610 and defense services using classified technical data. (See §125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

Worthy of note is that the ITAR retains control over classified technical data directly related to items that may have list shifted to the specified ECCNs and defense services using classified tech data. A related point is that the new rules revise the ITAR definition of technical data in ITAR 120.10(a)(2) to point out that the definition of ITAR tech data includes (and controls) classified tech data related to 600 series ECCNs in the CCL.

The last instructive point here is the new paragraph (x) that will be in most USML categories. Here is VIII(x):

(x) Commodities, software, and technical data subject to the EAR (see §120.42 of this

subchapter) used in or with defense articles controlled in this category.

As we will discuss later, the new rules allow you to include CCL-controlled items on DDTC applications for USML items in certain cases. When you do that for CCL aircraft parts, you identify them as VIII(x) on your DDTC application.


The New 600 Series ECCNs

In a fashion similar to how I discussed the USML changes, I will discuss the new ECCNs. I will not analyze what each paragraph in each new ECCN controls. That will be left for another day (preferably not another Saturday). Here I want to point out key things you need to understand as you prepare to carefully analyze each new ECCN.

Items list shifted from the USML to CCL often will land in the new 600 series ECCNs (i.e., ECCNs in which 6 is the third character), such as 9A610, for “Military Aircraft and Related Commodities.” Certain items in existing ECCNS ending in “018” will move into 600 series ECCNs. An important aspect of the new 600 series ECCNs are the .x and .y paragraphs, such as 9A601.x and 9A610.y, respectively.

The 600 series .y paragraphs, such as 9A601.y, identify decontrolled items such as parts, components, accessories, attachments specially designed for an item in the same ECCN, or in the USML (if the USML, of course, has released control on the parts, components, accessories or attachments). The .y paragraph will name decontrolled items-for example, 9A601.y names aircraft tires, map cases and urine collection bags/pads/cups/pumps, all of which are specially designed for military aircraft. These “decontrolled” items are controlled for anti-terrorism (AT) reasons and eligible for No License Required (NLR) to all countries, except Cuba, Iran, North Korea, Sudan and Syria.

The 600 series .x paragraphs, such as 9A610.x, imposes fairly stringent export controls on parts, components, accessories and attachments that are not named in 9A610.y and are:

1) Specially designed for an item in the same ECCN or in the USML (if the USML has released controls on the parts, components, accessories or attachments); and

2) Not elsewhere specified in the USML or CCL.


General Order No. 5 and Dual Licensing

Supplement No. 1 to Part 736 of the EAR contains the new General Order No. 5 (“GO 5”) that addresses various transition issues. Key elements of GO 5:

  • If you have a license or approval (agreement or GC) from the Directorate of Defense Trade Controls (DDTC) for items that are list shifted from the USML to the CCL, you may continue to use that license or approval after the list shift occurs, even though the items are no longer ITAR-controlled (as long as the license or approval was issued prior to the list shift).
  • Between the time there is a Federal Register notice saying a list shift will occur and the effective date of that list shift, you may apply for licenses to the Bureau of Industry and Security (BIS) for the things that will shift to the CCL. BIS will process the applications, including inter-agency reviews in the US Government. If an application is ready for approval, prior to the effective date of the list shift, BIS will Hold Without Action (HWA) the applications until the effective date, and on the effective date, BIS will issue the license.
    • For example, military aircraft parts that the April 16 Federal Register shifted to the CCL effective October 15: You may start applying for BIS licenses today. If BIS decides to approve your application in June, it will put your application in HWA status and issue it on October 15.
  • After the effective date of a list shift, you may stop using your DDTC licenses and return your licenses to DDTC, according to 123.22 of the ITAR.
  • After the effective date of a list shift, you may terminate your Technical Assistance Agreements (TAA), Manufacturing License Agreements (MLA), and Warehouse and Distribution Agreements (WDA), according to 124.6 of the ITAR.
  • If you chose to do a voluntary disclosure for a violation that involves both EAR and ITAR violations, you should send your disclosure to both BIS and DDTC.

The new rules are friendly and flexible when it comes to licenses and approvals for items shifted from the USML to the CCL. In addition, to what GO 5 provides, you may put items shifted from the USML to the CCL on your DDTC license and agreement applications for the USML items. This means you may obtain a single license, for example, to export a USML Category VIII military aircraft and CCL 9A610 parts for that aircraft. You may use a TAA to export both ITAR technical data and EAR technical data.

The rules for this single license for CCL and USML items are in ITAR 120.5(b) and 123.1(b) and EAR 734.3(e). To be eligible to include CCL items along with USML items on an ITAR license, these three things have to be true:

  • The purchase documentation includes both USML and CCL items;
  • The CCL items are for use in or with the USML items; and
  • The application separately enumerates the CCL items in a USML (x) paragraph-for example, Category VIII(x).

(You will notice that USML categories that have undergone a list shift will include an (x) paragraph, such as VIII(x), which is the classification to be shown on the license application for EAR items.)

There are also similar provisions for mixing CCL items with USML items in Foreign Military Sales authorizations.


New EAR Country Groups

The new rules create new country groups in Supplement No. 1 to Part 740:

Country Group A:5: Countries eligible to receive all STA-eligible items under License Exception STA

Country Group A:6: Countries eligible to receive only certain STA-eligible items under License Exception STA

Country Group D:5: Countries subject to US arms embargoes. This country group comes from the list of countries in ITAR 126.1 because the EAR is intended to reflect ITAR policies for these countries, especially with regards to 600 series and military items.. Thus, in many cases, countries in Country Group D:5 are subject to more stringent EAR controls than those that apply to other countries.


New Red Flags for 600 Series Items

The EAR says you may not proceed with an activity if there is a “Red Flag” present that indicates a high risk that the transaction is related to a violation, or will result in a violation.   There are two new Red Flags for 600 series items in the List of Red Flags in Supplement No. 1 to Part 732:

13. You receive an order for ”parts” or ”components” for an end item in the ”600 series.” The requested ”parts” or ”components” may be eligible for License Exception STA, another authorization, or may not require a destination-based license requirement for the country in question. However, the requested ”parts” or ”components” would be sufficient to service one hundred of the ”600 series” end items, but you ”know” the country does not have those types of end items, or only has two of those end items.

14. The customer indicates, or the facts pertaining to the proposed export suggest, that a ”600 series” item may be reexported to a destination listed in Country Group D:5 (see Supplement No. 1 to part 740 of the EAR).

These Red Flags reflect the theme that the EAR considers some of the items shifted from the USML to the CCL to be more sensitive than many current CCL items so there are some new special rules, such as these Red Flags, for such items.


Controls on Foreign Made Items

The EAR imposes controls on items made outside of the United States (“foreign made items) if, in certain circumstances, they contain US content or they were produced using US technology.

EAR 734.4(a)(6) states that the standard EAR de minimis rules do not apply to foreign made items that incorporate 600 series US content when destined for a country list in Country Group D:5. This means when such foreign made items are destined to Country Group D:5, they do not benefit from the 10% and 25% de minimis thresholds that apply to most items subject to EAR jurisdiction. Importantly, however, when such foreign made items are destined for a country not in Country Group D:5, the standard EAR de minimis rules are applicable.

EAR 736.2(b)(3)(iii) imposes US controls on foreign items that were produced using 600 series US technology or software. This control is more restrictive than the standard EAR controls on foreign items produced using US technology/software. The new rule says the EAR controls 600 series foreign made items when all three of these are true:

  • They are the direct product of US 600 series technology or software;
  • They are in a 600 series ECCN; and
  • They are destined to Country Groups D:1, D:3, D:4, D:5 or E:1.


New Definitions

There are new definitions of these terms in Part 770 of the EAR:

  • 600 Series
  • 600 Series Major Defense Equipment
  • Component
  • Equipment
  • Facilities
  • Material
  • Military Commodity
  • Part
  • Specially Designed
  • Build to Print Technology
  • Accessories
  • Attachments
  • End Item
  • Dual Use
  • System

I will discuss “specially designed” below. You may review the others at your leisure.


License Exceptions

A wide range of changes were made to EAR Part 740 which contains the EAR license exceptions. In some cases, the changes limit license exception availability for 600 series items. In other cases, they change the scope of specific license exceptions, often to make the EAR license exceptions authorize at least as much as corresponding ITAR license exemptions.

740.2: Restrictions on All License Exceptions:

  • A new paragraph 740.2(a)(12) says you may not use license exceptions for 600 series items destined to, shipped from, or manufactured in Country Group D:5, except for License Exception GOV in certain cases.
  • A new paragraph 740.2(a)(13) imposes limits on using license exceptions for 600 series items by identifying the only license exceptions available for 600 series items and identifying certain restrictions applicable to those license exceptions.
  • New paragraph 740.2(a)(15) and (16) limit the use of license exceptions for “600 series Major Defense Equipment” based on the dollar value of the contract and the country, except for US Government end users under GOV.

License Exception TMP 740.9

Currently, TMP authorizes exports to a US person’s foreign affiliates in Country Group B. The new rules would remove the Country Group B limitation.

License Exception GOV 740.11

The rules make various changes to GOV. The highlights are:

  • Certain ECCNs will limit the availability of GOV for certain items in the ECCN and the limits in GOV itself for certain items have been adjusted.
  • GOV may be used to send items to US Government contractors in certain situations, subject to written authorization from the appropriate US Government agency and special export clearance requirements.
  • GOV now authorizes exports under the direction of the US Department of Defense consistent with the existing exemptions in ITAR 125.4(b)(1) and (3) and 126.6(a).

License Exception TSU

Among the various changes:

  • TSU authorizes US universities to release software source code and technology in the United States to their bona fide full time, regular foreign national employees similar to ITAR 125.4(b)(10).
  • TSU authorizes the export of copies of technology previously authorized for export, similar to ITAR 125.4(b)(4).

License Exception STA

License Exception STA in EAR 740.20 will be one of the primary export authorizations for the 600 series items. This means that many, but not all, list shifted items go from requiring an ITAR license to not requiring an EAR license (i.e., they are either eligible for a license exception or NLR).

But wait, you are an ITAR only exporter, you never do anything (other than the occasional release of brochures at trade fairs) without getting a written approval from DDTC. Are you ready for the new world of self-policing your exports? To paraphrase Jack Nicholson from A Few Good Men, “Can you handle self-policing your exports, reexports and retransfers? Can you? You have always lived in a world that requires licenses. And those licenses are issued by officials who do a thorough national security and foreign policy review of your transaction. Who is gonna do the review for you? You? Your back-up Mr. Nerdly? DDTC has a greater export control responsibility than you can possibly fathom. You weep for lost sales and curse inconsistent provisos. You have that luxury. You know nothing of transaction review, a world in which the US Government, while slow and inconsistent, prevents dangerous exports. Government review of your activities, while grotesque and incomprehensible to you, saves lives.   You don’t want to review your own exports. Because deep down, in places you don’t talk about at parties, you want DDTC on that wall. You need DDTC on that wall. Licensing officers use words like national security concerns, RWA, provisos. We use these words as the backbone to a life spent defending something. You use ’em as a punchline at an SIA golfing event. DDTC has neither the time nor the inclination to explain itself to a man who rises and sleeps under the blanket of the very freedom it provides, then questions the manner in which DDTC provides it!”

Or, to quote Dirty Harry, “Do you feel lucky, punk?”

As is the case with all license exceptions, the use of STA is optional. I would not be surprised if some ITAR experts who are encountering controlled EAR exports for the first time choose to apply for licenses instead of using STA. If you prefer getting a license over using STA, feel free to do so-and when I say free, I also mean free in that BIS license applications do not carry the $250 per license fee that DDTC licenses have.

In general, STA will authorize exports of most 600 series items (as well as other non-600 series items) to the new Country Group A:5 and nationals of (and in) Country Group A:5. STA will continue to authorize a smaller set of items to the new Country Group A:6.   EAR 740.2 and individual ECCNs will limit and define the scope of items eligible for STA, so you should check both before using STA. Some specific points are:

  • In 740.20(b)(3) STA is for 600 series items only when the ultimate end user is the armed forces, police, paramilitary, law enforcement, customs, correctional, fire or search and rescue agency of a government of Country Group A:5 or the United States, or are for the development or production of items destined to the same types of end users in the same countries.
    • An exception to the above country limit is that STA may be used to export items to a foreign party in Country Group A:5 even if the party plans to reexport some of the items to a country not eligible under STA as long as the foreign party has a BIS reexport license and gives a copy of the license to the US exporter.
  • The Note following 740.20(c)(1) says that STA may be used for 600 series items only if the purchaser, intermediate consignees, ultimate consignees, and end-users are on a previously approved BIS or DDTC license.
  • 740.20(g) describes the process for getting BIS approval to use STA to export 600 series end items in 9A610.a STA may not be used to export end item aircraft in 9A610 unless BIS has approved the export of that aircraft under 740.20(g) of STA-See 740.20(b)(3)(iii).
  • STA may not be used to export 600 Series Major Defense Equipment in a contract valued over $25 million. -See 740.20(b)(3)(iv).
  • In 740.20(d)(2)(vi) and (vii), the STA “consignee statement” for 600 series items requires that the end-user acknowledge the end-use and consignee restrictions applicable to 600 series items and consent to US Government post-shipment verification checks.

Generally speaking, STA is a complex license exception that replaces getting an export license with establishing a paper trail of export control responsibility. I have mentioned only the highlight of some of the new things in STA. If you have never used STA, or if you have been using it in its current format, you should do a thorough analysis of the new STA before you begin using it on October 15.

600 Series Major Defense Equipment

Items shifted from the USML to 9A610.a or 9A619.a – .c are 600 Series Major Defense Equipment (MDE) if they have a non-recurring research and development cost of more than $50 million or a total production cost of more than $200 million. Thus, these items bring with them an MDE status similar to MDE in the ITAR.   EAR 743.5 says that in certain cases, BIS will notify Congress before it approves licenses for MDE depending on the dollar value and country on the license. For Country Group A:5, the threshold is $25 million and for the rest of the world, the threshold is $14 million.

Special Military End-Use Based License Requirements

The new rule adjusts the narrow military end use rules for the PRC in EAR 744.21. First, it states that you may not send any 600 series items to the PRC without a license. This has its major impact where it requires a license for military end use in China of the items in the 600 series .y paragraphs which normally are NLR eligible for most of the world. In 744.21(f), it also adjusts the definition of “military end use” for the PRC to include incorporation in or development/production/use of :

  • USML items
  • Wassenaar Arrangement Munitions List items
  • 600 series ECCNs
  • ECCNs ending with A018.

The rule also revised the definition of “military end-use” for the military end user controls on 3A991.a.1 microprocessors destined to Country Group D:1, to include incorporation in or development/production/use of :

  • USML items
  • Wassenaar Arrangement Munitions List items
  • 600 series ECCNs
  • ECCNs ending with A018.


Specially Designed

One objective of reform is to clarify the meaning of “specially designed” (or in ITAR terms, “specifically designed”) and revise it, so it more precisely controls the things the government thinks need to be controlled. Another objective is, as much as possible, to move away from controlling an item just because it is “specially designed” for another item and move towards controlling items by enumerating (or naming) them in a control list. We have already seen how Category VIII and ECCN 6A010, to some extent, move away from using “specially designed” as the “catch-all” basis for controlling an item and include long lists of specifically enumerated items. That makes Category VIII and 6A010 relatively lengthy. The new one-page (3 columns per page of the smallest print I can read) definition of “specially designed” also takes the long-standing EAR approach of more-words-mean-clearer-and-more-focused-regulations.

Both the EAR and the ITAR use the same approach in their new definitions of “specially designed,” although there are some differences because each is set up in the framework of its own respective area of export jurisdiction. The ITAR definition (120.41) focuses on “specially designed” as it relates to determining USML vs. CCL jurisdiction for an item. The EAR (Part 770) looks at the definition as it relates to determining the ECCN or EAR99 classification.

The US Government refers to the definition as a “catch and release” approach because it starts out by catching a lot of things but eventually releases most things with the definition, in the end, controlling only what the government wants to control. In both regs, paragraph (a) catches things into being controlled and then paragraph (b) releases things into a lesser controlled status.

Here we will look at the ITAR definition of specially designed to understand the new approach in both the EAR and ITAR. The definition below is in indented italics and my commentary is not.

§120.41 Specially designed.

(a) Except for commodities or software described in paragraph (b) of this section, a commodity or software (see §121.8(f) of this subchapter) is “specially designed” if it:

(1) As a result of development, has properties peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics, or functions described in the relevant U.S. Munitions List paragraph; or

(2) Is a part …, component …, accessory …, attachment …, or software for use in or with a defense article.

We see here that (a) catches a lot of items. Now for the good news. If any item meets the requirements of any one of the paragraphs (b)(1) – (5), it is not caught by a “catch all” control:

(b) A part, component, accessory, attachment, or software is not controlled by a USML “catch-all” or technical data control paragraph if it:

(1) Is subject to the EAR pursuant to a commodity jurisdiction determination;

(2) Is, regardless of form or fit, a fastener (e.g., screws, bolts, nuts, nut plates, studs, inserts, clips, rivets, pins), washer, spacer, insulator, grommet, bushing, spring, wire, or solder;

Paragraph (b)(2) is straight-forward good news for those items.

(3) Has the same function, performance capabilities, and the same or “equivalent” form and fit as a commodity or software used in or with a commodity that:

(i) Is or was in production (i.e., not in development); and

(ii) Is not enumerated on the USML;

That means if the military part you are looking at is identical in function, form and fit to an item in production for a non-USML item, your item is not controlled as being “specially designed” for a USML item. A note after the definition makes this even more generous by saying that a commodity is “equivalent” if its form has been modified solely for fit purposes.

(4) Was or is being developed with knowledge that it is or would be for use in or with both defense articles enumerated on the USML and also commodities not on the USML; or

(5) Was or is being developed as a general purpose commodity or software, i.e., with no knowledge for use in or with a particular commodity (e.g., a F/A-18 or HMMWV) or type of commodity (e.g., an aircraft or machine tool).

Paragraphs (4) and (5) say if the item is for both USML and non-USML items, or its general purpose is that it can be for many items, it is not caught as “specially designed.” The notes following the definition say that if you use these two paragraphs as the basis for determining something is not “specially designed,” you must have documents that prove it is true. If you do not have the documents, you may not use these paragraphs as the basis for an item not being “specially designed.”

Also for paragraphs (4) and (5), the notes say that the word “knowledge” includes not just certain knowledge, but also awareness that there is high probability that something is true or will be true in the future. If somebody disregards or avoids certain available information, you have knowledge. (This is an example of the ITAR using the EAR definition of “knowledge.”)

Paragraphs (4) and (5) give a favorable definition that can release things from control, but the documentation requirements and knowledge definition mean you better be able to prove your position, and you better take into account everything that everybody in your company knows or suspects about the situation. In the current regs, there is no comprehensive definition of “specially designed”-it is just a term that the government interprets on a case-by-case basis. In the new regs, the added clarity means you can make your own decisions about “specially designed”, but you better be able to defend it.

The notes following the definition clarify various aspects of the definition by telling you what “enumerated” and “catch-all” mean, which I already explained.

As I said, the EAR and ITAR take the same approach to specially designed. You may still use the Commodity Jurisdiction determination procedure to get a DDTC ruling on whether something is ITAR controlled as “specially designed.” A new EAR 748.3(e) describes the process for getting a BIS ruling on whether something is “specially designed.”


BIS Applications for 600 Series Items

In the BIS license application, in Block 24 you should enter any precedent DDTC approved licenses or approvals. If the precedent meets the requirements stated in Supplement No. 1 to Part 748 Block 24, your application will be processed in a shorter time period.


BIS License Validity Periods EAR 750.7(g)

Most new BIS licenses will be valid for 4 years (currently 2). You may ask for a longer validity period.


Export Clearance/Documents and AES/EEI

The new rules have several important changes for 600 series items.

EAR 758.1(b)(3): You must do an AES filing for exports of 600 series paragraphs a. through x. items to all countries regardless of value. 600 series paragraph y. items are subject to standard EAR AES rules.

EAR 758.1(b)(4): You must do an AES filing for exports under STA.

EAR 758.6(b): You must identify the ECCN for all 600 series items on the invoice and on the bill of lading, air waybill, or other export control document that accompanies the shipment. Those are the same documents on which you must put the Destination Control Statement.



Well, that about does it. From which items shifted from the USML to the CCL, to clearing your exports out of the country, I have tried to provide an instructive summary of the first tsunami of export control reform regulations. I tried to explain what I think is a reasonable and digestible first bite of the new reg. I also gave cites in the new regs so you can dig deeper into the issues I pointed out. And digging deeper is something you need to put on your agenda. It is on my agenda. I need to learn more about the new rules and the issues they create for exporters and reexporters. Fortunately, I have until October 15 to do so.

In the meantime, we need to develop our plans for transiting our compliance programs and procedures to the new regs. We should understand enough of the concepts, even if we lack expertise on all the details, to make our plans.

As I worked through my study of the new regs and this write, I realized that I am bound to miss something in this first run. There are many nuances to these new rules that I will discover only through reading and studying them more and, ultimately, after October 15, applying them to actual transactions. In the meantime, we all need to get trained. And we need to train others in our companies.

I don’t think I can absorb more of these new regs now, but I know what to do. Pour me a strong pint (not coffee), drop my empty highlighter in the trash, and put my binder clip in the fully locked, briefcase-ready position.

John Black is a consultant with BSG Consulting with over 30 years of experience in the field of export controls.  He regularly instructs seminars and webinars for the Export Compliance Training Institute and will be speaking on the current state of the reform efforts, among other things, at upcoming seminars in Montreal, Washington DC and San Francisco.


Treasury Identifies Countries Requiring Cooperation With an International Boycott


By: John Black

Once again the Treasury Department has identified the countries cooperating with an international boycott that raises issues related to claiming foreign tax credits under the Internal Revenue Service (IRS), specifically section 999(a)(3) of the IRS Code of 1986. The countries are:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

The IRS antiboycott rules come into play in many of the same situations in which the antiboycott provisions in Part 760 of the Export Administration Regulations (EAR) come into play. While the Commerce Department does not publish a list of countries for its EAR Part 760 antiboycott rules, as a practical matter the IRS list certainly represents many of the highest risk countries for EAR purposes so it is a good starting point for the focus of your EAR antiboycott compliance program. For EAR compliance purposes, US persons should also be aware that certain other Moslem countries cooperate with the Arab League boycott of Israel and present antiboycott compliance issues. These other countries include Bangladesh, Malaysia, Indonesia and Pakistan.

For the actual Federal Register notice go to

US Publishes Rules to Prohibit Foreign Subsidiaries of US Companies from Doing Business with Iran


By: John Black

As we described in past issues, on December 26, 2012, the United States published a Federal Register notice to revise the Iranian Transaction and Sanctions Regulations (ITSR) to prohibit foreign-based subsidiaries of US companies from being involved in most activities with Iran. The Office of Foreign Assets Control (OFAC) in the US Treasury Department revised the ITSR to implement elements of the Iran Threat Reduction and Syria Human Rights Act of 2012 and multiple executive orders.

One of the key changes is that a new section 560.215 was added to the ITSR to prohibit entities owned or controlled by a United States person and established or maintained outside the United States from “knowingly” engaging in activities in which US persons have long been prohibited from engaging. These entities outside the United States, let’s call them foreign subsidiaries, are “owned or controlled by a US person if the US person:

  • Holds a 50 percent or greater equity interest by vote or value in the entity;
  • Holds a majority of seats on the board of directors of the entity; or
  • Otherwise controls the actions, policies, or personnel decisions of the entity.

Now, foreign subsidiaries, like US persons, are prohibited from knowingly engaging in any transaction directly or indirectly with Government of Iran or any person subject to the jurisdiction of Iran (for example, any entity located in Iran). “Knowingly” means having actual knowledge or reason to know. If you combine “reason to know” with engaging “indirectly” in an activity, you have a broad prohibition that could create huge compliance challenges for large and complex organizations.

There are two key exemptions from this new prohibition on foreign subsidiaries. The first applies to certain activities related to the natural gas pipeline from the Shah Deniz natural gas field in Azerbaijan’s sector of the Caspian Sea to Turkey and Europe (and related pipeline projects). The second exemption applies to authorized intelligence activities of the US Government, which frees up the US CIA and its affiliates from having to file voluntary disclosures for actions in Iran.

The ITSR includes a “winding down” general license provision that gives foreign subsidiaries a short time period to end their activities involving Iran. ITSR 560.555 authorizes activities normally incident to winding down newly prohibited activities through March 8, 2013 as long as no US persons are involved in those activities.

On a related point, section 4 of an October 9, 2012 Executive Order says that the penalties for a foreign subsidiaries violations may be assessed against the owning/controlling US company but the penalties will not be applied if the US person divests or terminates its business with the entity by February 6, 2013.

When the US Government imposed its trade embargo on Iran back in the mid-1990’s it intentionally allowed foreign subsidiaries to do business with Iran as long as the US parent company was not involved. Not only are those days gone, but now US persons face the difficult, and in some cases nearly impossible, task of ending their foreign subsidiaries activities in Iran or ending their ownership/control of the foreign subsidiary. Good luck will be needed for this impossible task, even for those companies who began ending their Iran activities long before these new rules entered into force.

For the complete Federal Register notice go to

Treasury Department Announces Countries Requiring Compliance with Arab Boycott of Israel


By: John Black

In the August 13, 2012 Federal Register the Treasury Department announces, that for purposes of compliance with the antiboycott provisions of the IRS code, the list of countries which “require or may require participation in, or cooperation with, an international boycott.   This notice refers to the countries that require cooperation with the Arab League’s secondary and tertiary boycotts of Israel.  Under  the IRS rules a company may not claim foreign tax credits if it cooperates with such boycotts.

Part 760 of the Export Administration Regulations (EAR) also prohibits US persons from complying with certain aspects of unsanctioned foreign boycotts.  It has been a long time since the Commerce Department announced which countries require cooperation with boycotts for EAR purposes.  Even though the IRS list is not officially endorsed by the Commerce Department, it certainly makes a good list to use as a basis for deciding how to spend your antiboycott compliance resources.

The countries are:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

New BIS Encryption Regulation Contains Good and Bad News for US Exporters



In response to industry pressure and a Presidential Directive issued earlier this year, the Bureau of Industry and Security (BIS) published an interim final rule on October 3, 2008 modifying the Export Administration Regulations (EAR) governing the export of hardware, software and technical data using encryption technology. The rule makes some marginal changes to the regulations but falls short of any significant restructuring of the regulatory regime which as been in place for almost a decade. Despite the limited nature of the changes, many U.S. companies will need to tweak their compliance practices immediately in order to comply with the new rules — there is no “grace period” for implementation.

The new rule, ironically entitled “Encryption Simplification” takes up eighteen pages in the Federal Register. BIS plans on developing additional guidance to be posted on its website as questions will inevitably be raised regarding the correct interpretation of certain provisions contained in the final rule.

Good News for Some

Companies in the business of making products for the consumer market will benefit from the regulatory changes. For example, companies that make mass-market products using weak cryptography (now defined as using key lengths not exceeding 80 bits; for asymmetric algorithms with key lengths not exceeding 1024 bits; and for elliptic curve algorithms with key lengths not exceeding 160 bits) no longer have to submit a notification of self-classification prior to export. These products can be classified as 5X992 and exported under “NLR”. (more…)