"NEW RULE" INCREASES VISIBILITY AND TIGHTENS CONTROL OVER EXPORTS, REEXPORTS AND TRANSFERS (INCOUNTRY) FOR CHINA, RUSSIA AND VENEZUELA.
ISSUED BY: TRADE INNOVATIONS
The U.S. Government continues to tighten controls on export activity to China, Russia and Venezuela with expanded definitions and the addition of products (ECCN’s) controlled by DOC.
The “new rule” will require companies to increase due diligence efforts and dig deeper into the operations of their existing client base located in or servicing these regions.
KEY POINTS:
EEI FIling
ALL exports destined to China, Russia and Venezuela will require an EEI filing, regardless of value or export license. The ECCN is also a mandatory reporting field.
Expansion of Military End Use Controls
You must first understand that end use relates to how the product will be ultimately used. Moving forward you will need to consider:
- Direct use (parts, components, or subsystems of weapons and other defense articles).
- Indirect use (weapon design and development, testing, repair and maintenance).
- ANY item that supports, or contributes to the installation, maintenance, repair, overhaul, refurbishing, “development,”or “production,” of military items.
Expansion of Military End User Controls
A military end user is any branch of the military/armed forces PLUS government intelligence, reconnaissance organizations and police.
- June 2007 – BIS Imposes license requirements on items intended for military end use in China
- September 2014 – BIS Imposes license requirements on items intended for military end use in Russia
- November 2014 -BIS Imposes license requirements on items intended for military end use in Venezuela
- April 2020- new license requirements for military end use and end users in China.
Increased scope of product subject to licensing requirements in §744.21
New ECCN Categories (of common and commercial products) driving a license requirement for military end use or destined to military end users.
- COT (commercial off the shelf) items in materials processing, electronics, telecommunications, information security, sensors and lasers and propulsion have been added with presumption of denial.
- If you have an item/ ECCN detailed in Supplement No. 2 to part §744, you will now submit a license application request if your item is used in a military application or by a military end user.
NEXT STEPS:
- Review current contracts and backlog
- Review sales history
- Scrub you customer database and KYC (Know
- Your Customer)
- Understand your item(s) export classification
- and licensing requirements
- Train and educate your staff on the “new rule”
HELPFUL LINKS & RESOURCES:
Contact
If you have any questions regarding Federal register 23459, released April 28, 2020 or this trade Alert, please contact Trade Innovations
Katrina Nichols
Founder & CEO
katrina@globaltradeinnovations.com
Alexandria, LA
900 4th Street
Suite 400
Alexandria, LA 71301
info@globaltradeinnovations.com
"Export control is changing everyday, exporters have to be agile and innovate new solutions to meet those demands".
- Katrina Nichols
Trade Innovations is an International Trade Compliance company focused on helping small and medium sized companies achieve compliant global growth. We provide private risk free consultations, export licensing services, project contracts, managed services as well as training & education.
