IT-Silkroad

[U.S. Export Control System]

■ Outline

ㅇ U.S. had been led the export control to logistics materiels through the Coordinating Committee for Multilateral Export Controls(COCOM) since the World War II. After the September 11 attacks in 2001, U.S. reinforced the export control of strategic materials and, since 2003, PSI(Proliferation Security Initiative) has been enforced its authority to expand the control area for the transportation blockage, physical seizure, freezing of funds and other operations of WMD(Weapons of Massive Destruction) and strategic materials.

ㅇ U.S. enforces their jurisdiction in relation to the export control upon the transactions of U.S. commodities, foreign goods partially including U.S. ingredients and/or parts and foreigners(individual persons and corporate bodies) not just within the U.S. territory, but also within the other countries outside the U.S. territory, applying the extraterritorial application of domestic laws.

ㅇ The authorization must be mandatorily given in case of the re-exportation to the economic sanctions target countries of the U.S. such as terror supporting countries(Iran, Syria, Cuba, Sudan, North Korea and etc.), embargoed countries and other highly concerned targets, or the transactions forbidden by the denial order determined under the U.S. government, or the re-exportation for the purpose of transaction forbidden end-users or final military use.

■ Relevant Acts

ㅇ TWEA(Trading With the Enemy Act of 1917)

ㅇ IEEPA(Int'l Emergency Economic Powers Act of 1977)

ㅇ EAA(Export Adminstration Act of 1979)

ㅇ Arms Export Control Act

ㅇ Atomic Energy Act of 1954

ㅇ Acts upon the Proliferation Security of Nuclear Weapons

- Nuclear non-Proliferation Act of 1978

- Export-Import Bank Act of 1945

- Nuclear Proliferation Prevention Act of 1994

- Iran-Iraq Arms Nonproliferation Act of 1992

- Iran Nonproliferation Act of 2000

ㅇ Acts upon the Nonproliferation of Biological Weapons and Missiles

- Chemical & Biological Weapons Control and Warfare Elimination Act of 1991

- Biological Anti-Terror Act of 1989

- Missile Technology Control Act of 1990

■ Export Control Articles

ㅇ Articles under the U.S. export control of strategic materials are largely classified into dual-use articles, defense articles and nuclear articles.

- Dual-use articles are under the BIS(Bureau of Industry & Security);

- Defense articles are under the PM/DDTC(Political-Military/Directorate of Defense Trade Control) and;

- Nuclear articles are under the NNSA(Natioanl Nuclear Security Administration).

ㅇ The U.S. export control of defense articles are specified in the Part120 to Part130 laid down into ITAR(International Traffic Arms Regulations).

- In the Part121 of ITAR, defense articles & services under USML(US Munitions List) are specified as strategic material for the U.S. military.

■ EAR(Export Administration Regulations)

ㅇ EAR(Export Administration Regulations) is aimed to implement the international duties for the U.S. national security, proliferation prevention of WMD and missiles, protection for U.S. to any adverse effect out of the limitless exportation of undersupply articles, UN sanctions and others, controlling the exportation and re-exportation of dual-use items under the U.S. BIS(Bureau of Industry and Security).

- In order to classify dual-use items out of the control articles under the export control by the other U.S. government branches besides the U.S. Department of Commerce, the said dual-use items mean the articles could be used for the dual purpose of military/strategic and commercial uses.

- The term; dual use, is being used to classify the control articles of weapons and other military use articles under the U.S. Department of State out of the control articles related to the nuclear energy under the Nuclear Regulatory Commission(NRC) of the U.S. Department of Energy, and covers the most range of target articles laid down into EAR(Export Administration Regulations). However, EAR also might be applied to some articles used only for the civil uses.

□ EAR Targets

ㅇ The following articles are must be given the authorization by the U.S. Department of Commerce under the U.S. EAR:

- Every existing article within the U.S. territory;

- Every U.S. finished products(regardless of the place of production and location in relation to domestic or international regions);

- Every foreign article that U.S. commodity, technology and/or software exceeding the Deminimis Rule is partially contained within, and that is exported from and/or to the U.S. territory;

- Every article directly manufactured from foreign factories with the use of specific U.S. technologies and/or softwares

- Every article directly producted out of factories

ㅇ In case of ① the re-exportation of articles manufactured within an exporting country by using the U.S. parts exceeding fixed ratio to the a third country, and ② the exportation of articles directly manufactured within an exporting country by using the U.S. manufacturing technologies to a third country, the authorization must be mandatorily given by the U.S. Department of Commerce in compliance with the Export Administration Regulations(EAR).

ㅇ In case of any foreign enterprise that handles the U.S. technologies and/or softwares is about to open such technologies or softwares to their foreign workers and/or foreign visitors, the authorization must be mandatorily given in advance under EAR.

- Namely, provided that the case where the U.S. technologies transferred to foreign territories are provided to the foreigners of third countries within any foreign territory once more is occurred, such U.S. technologies are deemed to be exported to the said third countries, resulting the U.S. government to control such circumstances thereby.

- In addition, the authorization also must be mandatorily given by the U.S. Department of Commerce in advance for the case where such U.S. technologies are being transferred to any third country by the means of e-mail, fax, telephone and others(ITT(International Technology Transfer), namely, the invisible transfer of technologies).

※ Competent authorities: Office of Export Enforcement under BIS(Bureau of Industry & Security) of the U.S. Department of Commerce

□ EAR Application Procedures

ㅇ EAR is required to take two procedures largely in order to confirm the determination that the authorization by the U.S. Department of Commerce is necessarily given under the U.S. export control ordinances upon dual-use articles for the nonproliferation of WMD.

ㅇ First, the determination where articles are under the EAR target must be made.

- Every U.S. article is covered under the EAR target range and, if any foreign article contained U.S. parts whose equivalent value is exceeding the Deminimis Rule in comparison to those of the said foreign article, such foreign article shall also be covered under the EAR target range abovementioned. If articles are not covered under the EAR target range, the authorization by the U.S. Department of Commerce is no longer necessary.

- The Deminimis Rule shall be applied with a ratio of 10% if the place of destination is IranㆍNorth KoreaㆍSyriaㆍCubaㆍSudan and other E:1 countries, otherwise the ratio of 25% shall be applied to the other countries and, provided that the last 3 numbers of a control number of an article is 600 series, the 0% ratio shall be applied for any (re)exportation to arms embargoed countries(D:5 countries), including 5 countries forementioned, designated by the U.S. Department of State.

ㅇ Secondly, provided that articles are under the EAR target range, the determination whether the said articles are listed in the U.S. CCL(Commerce Control List) must be confirmed.

□ EAR CCL(Commerce Control List)

ㅇ U.S. implements the export control in the vary wide scope by designating control articles as the role of unilateral system, not only for the articles under the international export control system, but also the fulfillment of anti-terrorism, undersupply, UN sanctions and others.

ㅇ U.S. Dept. of Commerce CCL(Commerce Control List) is consisted of EAR99 articles; the U.S. unilateral control articles, and ECCN articles given ECCN(Export Control Classification Number).

ㅇ The Content of CCL

ㅇ ECCN

- ECCN is consisted of 5 unit code combined with numbers and alphabets.

- ECCN, if suppose a code; 2A991, the first unit 2 means the category, the second A means the type, the third unit 9 means the cause to control, the fourth unit 9 means a simple classification number from 0 to 8 and finally, the fifth unit 1 means the serial number.

- As explained above, U.S. unilateral control articles shall be classified with the last 3 number; 900 series, of ECCN 5 unit code.

ㅇ U.S. is not included in CCL, but, the U.S. articles under EAR are commonly called "EAR99". The EAR99 articles are generally NLR(No License Required). However, the authorization by the U.S. Department of Commerce must be mandatorily given in case of any exportation to embargoed and/or sanction countries, or for the purpose of forbidden end-use.

□ EAR Authorization Application

ㅇ BIS(Bureau of Industry & Security) under the U.S. Department of Commerce operates the online system called SNAP-R(Simplified Network Application Process Redesign) for the export management of strategic materials. Enterprises may send an application for their export and/or re-export authorization through the system, and the said application procedures can be referred to the online web-site.

☞ SNAP-R Web-site:

https://snapr.bis.doc.gov/snapr/

☞ SNAP-R FAQ Web-page:

https://snapr.bis.doc.gov/snapr/docs/snaprFAQ.htm

■ VEU(Validated End User)

ㅇ VEU(Validated End User) means the U.S. export control system aimed to promote trades between exporters and end-users with distinct records specifying the articles shall be used only for civil purposes, approving these users to export with no additional export authorization.

- The system is aimed to realize efficient trades and reduce the burden to get the export authorization, and is being implemented to China and India.

- Once exporters are designated as VEU, their shipment may be immediately done with no additional export authorization when export. The U.S. government is expected to promote the exportations within the U.S. territory by implementing the system.

ㅇ To be designated as VEU, the capabilities of filing and the agreement to the field survey to confirm whether the VEU requirements are complied must be made.

- Even enterprises participated in the transactions of defense articles may be allowed to apply if the proof that articles to be imported will only be used for civil uses. The determination upon VEU shall be noticed to an applicant within the period of 30 days through the reviews by competent departments after every relevant documentation is prepared and then the application is made.

ㅇ When an exporter is verified to become a Validated End User(VEU), the name of exporter would be registered in the Part 748 Supplement 7 of the U.S. Export Administration Regulations(EAR). After the registration, every exporter and re-exporter may implement their exportations with no additional authorization toward the said VEU.

■ Government Branches related to Export Control

ㅇ The authorities and responsibilities to regulate the export control of strategic materials are being handled by various U.S. government branches, and such control operations are being done complementarily by the mutual cooperations; the principal of the U.S. export control system.

ㅇ U.S. handles the export authorization for every articles abovementioned by classifying its government branches into the U.S. Department of Energy, Commerce, State, Treasury and others, according to each export control articles.

- DTSA(Defense Technology Security Administration) under the U.S. Department of Defense(USDOD) represents USDOD, and delivers the final stance of USDOD after reviewing the Export License(E/L) applications prepared from the U.S. Dept. of Commerce, and State.

- Any import declaration of firearms is being handled by the U.S. Department of Homeland Security.

□ U.S. Dept. of Commerce

ㅇ Control targets

- Every exportation, re-exportation and relocation of dual-use articles and technology data

ㅇ Relevant acts and regulations

- Export Administration Act, 1979

- Nuclear nonproliferation Act

- Export Administration Regulations

ㅇ Competent Authorities

- BIS(Bureau of Industry & Security) under the U.S. Dept. of Commerce is in charge of handling the export control, export administration, international program and export enforcement of dual-use articles under EAR.

□ U.S. Dept. of State

ㅇ The competent authority for the control of military strategic materials is the U.S. Dept. of State(USDOS), and USDOS is in charge of handling the national defense trade duties with consideration for the U.S. foreign policies, national security and international export control system and, according to the Executive Order 11958, of determining the confirmation upon whether articles to be exported are listed into the U.S. Munitions List(USML) with DTSA under USDOD.

ㅇ Control targets

- Every exportation and re-exportation of weapons and defense articles and relevant technology data

ㅇ Relevant Acts and Regulations

- Arms Export Control Act, 1976

- International Traffic Arms Regulations

ㅇ Competent Authorities

- The export control of military strategic materials is responsible for The Under Secretary for Arms Control and International Security Affairs, and the Directorate of Defense Trade Control under the Bureau of Policy-Military Affairs is in charge of handling the export authorization.

□ U.S. Dept. of Energy

ㅇ Control Targets

- Every exportation and re-exportation of technology data related to nuclear energy, and re-exportation of nuclear equipment and nuclear materials

ㅇ Relevant Acts and Regulations

- Atomic Energy Act, 1954

- Nuclear non-Proliferation Act

- Regulations of Supporting Foreign Nuclear Activities

ㅇ Competent Authorities

- Office of Export Control Policy & Cooperation under the National Nuclear Security Administration

□ U.S. Dept. of Treasury

ㅇ Control Targets

- Every WMD proliferation related activity and every importation, exportation, financial transaction from and/or to regulatory countries, and every fund, exportation and re-exportation of target countries

ㅇ Relevant Acts and Regulations

- Trading with the Enemy Act

- Int'l Emergency Economic Powers Act, 1977

- Regulation of foreign fund management act 1999

ㅇ Competent Authorities

- Office of Foreign Assets Control(OFAC)