When businesses seek to sell goods, services, data or technology abroad, they must comply with U.S. export controls. Normally, that means following standard rules—i.e., if U.S. export regulations stipulate that a particular item requires a license to a country, with few exceptions, you need a license.
Yet, U.S. export controls are complex—and in certain cases, that means standard rules alone aren’t sufficient to ensure 100% compliance.
In select cases under Part 744 of the Export Administration Regulations (EAR), “catch-all” rules – also known as end use and end user-based controls – apply. These rules were devised to regulate exports, reexports and transfers involving certain entities or for specific purposes…often no matter the item. These catch-all controls operate in addition to standard, control list-based license requirements. For example, if your organization seeks to export an item to a company that’s on the Entity List, or if you know it will be used in the development of, say, chemical weapons or something similarly restricted, it will likely require a license.
The Military End Use Rule – What It Is, How It Works and When It Applies
One of the most common catch-all rules is the Military End Use and Military End User (MEU) Rule. Essentially, the rule provides that a license is required for export, reexport or transfer when both of the following criteria apply:
- The item in question is classified under an Export Control Classification Number (ECCN) listed in Supplement No. 2 to Part 744 of the EAR.
- The exporter, reexporter or transferrer knows that the item is intended for a military end use or military end user in one of four countries: Burma, China, Russia or Venezuela.
The Bureau of Industry and Security (BIS) initially established the MEU Rule in 2007 to prevent exports that would enhance the military capability of China. Since then, BIS has expanded the country scope of the rule to include Burma, Russia and Venezuela.
BIS made several changes to the rule in 2020, including two major amendments. First, BIS expanded the MEU Rule so that it now applies to many more items, including one of the top U.S. exports: civil aircraft parts. Some additional examples of items subject to the MEU Rule include mass market encryption devices and software, numerous common electronic components, and parts specially designed for vessels. Second, BIS introduced a non-exhaustive list of military end users (aka, the Military End User (MEU) List) – putting those who trade in items subject to the MEU rule on notice that they must apply the rule when these listed entities are involved. Taken together, these two revisions mean that the MEU Rule is now relevant to more exporters and to more transactions.
Additional insights on the MEU Rule are included in the Export Compliance Training Institute’s (ECTI’s) recent on-demand webinar, “2020: The Export Control Year in Review.” This webinar is ideal for those who want to be brought up to date on recent developments in export controls and related sanctions in only an hour. In addition to information on the MEU Rule, topics include:
- Export control reform for firearms and ammunition in the U.S. Munitions List Categories I, II and III
- The end of Hong Kong’s special status
- The elimination of License Exception CIV
- Emerging technologies and other changes to the Commerce Control List (CCL)
- Expansion of the direct product rule for certain Entity List parties
- Huawei and other notable developments in restricted parties lists
- New ITAR exclusion for encrypted technical data
- Latest DDTC guidance on 126.4 exemption and U.S. persons abroad
- Major developments to OFAC sanctions programs
- Additional Export Administrations Regulations (EAR) controls affecting Russia and Yemen
- New export controls on personal protective equipment (PPE)
- Temporary pandemic-related modifications to DDTC and BIS policies
- Latest FAQs and other published agency guidance
- DDTC’s new licensing system (DECCS)
Export Compliance Training and the Military End Use Rule – Knowing the Path Forward Can Save Time, Money and Effort While Avoiding Costly Penalties
To sum it all up, even if it seems on the surface like a particular entity isn’t a military end user, or wouldn’t necessarily use an item for a military end use, that item would be required to have a license under the Military End Use Rule.
In the realm of U.S. export controls, 100% compliance with all relevant laws is essential. Nothing less puts your business at substantial risk. At the Export Compliance Training Institute, we understand the challenges that companies face in complying with the complex and voluminous universe of U.S. export controls. We have built our business around the goals of simplifying U.S. export control compliance and helping companies of all sizes and scopes achieve compliance and maintain it over time. Through our industry-leading e-seminars, live seminars, live webinars and 80-plus on-demand webinars, we can help you sell more items abroad—and still achieve total compliance in doing so.
We hope this article helps you understand what the Military End Use Rule is and when it could apply to your company. As we said earlier, export compliance is a complex and detailed undertaking. Your company’s investments rely on achieving 100% compliance with all applicable export regulations and controls. That said, it is absolutely achievable—you can do it, provided you take the necessary time up front to align with an established and widely acclaimed export compliance training partner who can guide you step by step toward compliance success.
Do you have questions about the Military End Use Rule or other export compliance challenges for your company? Visit www.learnexportcompliance.com to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminars, live seminars and live webinars and browse our catalog of 80-plus on-demand webinars, visit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.
Scott Gearity is President of ECTI, Inc.