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ATTORNEYS AT LAW LICENSE EXCEPTION STRATEGIC TRADE AUTHORIZATION ATTORNEYS AT LAW THE PERFECT MATCH.

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Presentation on theme: "ATTORNEYS AT LAW LICENSE EXCEPTION STRATEGIC TRADE AUTHORIZATION ATTORNEYS AT LAW THE PERFECT MATCH."— Presentation transcript:

1 ATTORNEYS AT LAW LICENSE EXCEPTION STRATEGIC TRADE AUTHORIZATION ATTORNEYS AT LAW THE PERFECT MATCH

2 ATTORNEYS AT LAW License Exception STA § The Concept Facilitates exports, re-exports, and transfers (in-country) of numerous eligible products, software, and technology to partners and allies posing low risk of unauthorized use or diversion. –Includes deemed exports. Replaces license requirement with a paper trail –notifications and statements exchanged between the parties to the transaction to provide assurance against diversion.

3 ATTORNEYS AT LAW License Exception STA The Good Implements part of the Administration’s Export Control Reform Initiative announced in Broad — negative list — governed by what it excludes. Items brought across from USML may be eligible for STA after join agency review. Allows BIS resources to be focused on transactions involving core items with greater risk of misuse and diversion. BIS — may eliminate 3,000 of the 22,000 licenses issued in 2010.

4 ATTORNEYS AT LAW License Exception STA The Bad Administrative burden. Complicated?

5 ATTORNEYS AT LAW License Exception STA Background Proposed Rule — December 9, Comments closed — February 7, 2011 (41 comments received). Final Rule — June 16, –http://www.bis.doc.gov/news/2011/fr_ pdf First export using STA Exception — August 2011.

6 ATTORNEYS AT LAW License Exception STA Road Map Eligibility requirements. Limitations on the use of License Exception STA. Authorizing paragraphs. Conditions of use. Some examples (courtesy of BIS Update 2011).

7 ATTORNEYS AT LAW License Exception STA Eligibility §740.20(b)(1)(i) — Only applies to transactions involving CCL based license requirements described in §742. §740.20(b)(1)(ii) — Must comply with administrative requirements (notice, consignee statements) described in §740.20(d).

8 ATTORNEYS AT LAW License Exception STA Limitations  §740.20(b)(2) — Limitations on use of License Exception STA. o (i) May not be used in lieu of license requirements imposed by §744 (end-use, end-user) or §746 (embargoes and special destinations). o (ii) Some crime control items in Category 0.

9 ATTORNEYS AT LAW License Exception STA Limitations (iii) Any item controlled for: o Encryption (EI); o Short Supply (SS); o Surreptitious Listening (SL); o Missile Technology (MT); and/or o Chemical Weapons (CW).

10 ATTORNEYS AT LAW License Exception STA Limitations (iv) Any item that is subject to the exclusive export control jurisdiction of another agency. (v) All pathogens and certain toxins in Category 1. (vi) Except certain toxins (1C351d (1) through (10)) if: o Max 100 mg of any one toxin per shipment; and o Max of 6 shipments per end user per calendar year. (vii) Some gas turbine software and technology in Category 9.

11 ATTORNEYS AT LAW License Exception STA Authorizations §740.20(c) — Authorizing paragraphs. o All reasons for control that apply to the transaction must be authorized by STA. o Two authorizing paragraphs listing reason(s) for control and destination(s).

12 ATTORNEYS AT LAW License Exception STA Authorizations §740.20(c)(1) — Multiple reasons for control: o NS, CB, NP, RS, CC, and SI. 36 eligible destinations: o Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, and United Kingdom.

13 ATTORNEYS AT LAW License Exception STA Authorizations §740.20(c)(2) — Controls of lesser sensitivity: o NS. 8 additional eligible destinations: o Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, Taiwan.

14 ATTORNEYS AT LAW License Exception STA Authorizations STA Paragraphs — 49 ECCN’s. o designate ECCN’s or portions that are ineligible for STA if destination is listed in §740.20(c)(2). o See §738.2 – explaining that STA paragraphs in ECCN limit eligibility (opposite to most ECCN paragraphs). o Tracks Wassenaar Arrangement Sensitive List. o See Final Notice FR for list.

15 ATTORNEYS AT LAW License Exception STA Conditions §740.20(d)(1) — Furnish ECCN to consignee. o (i) Exporter must furnish ECCN(s) of item(s) to be shipped. o (ii) Reexporters and transferors must furnish ECCN(s) to all subsequent consignees. o Good for subsequent shipments of same item(s) to consignee, if ECCN(s) remain(s) accurate at time of new shipment. o (iii) Consignee can rely on ECCN furnished to it for purposes of determining STA eligibility unless they “know” that ECCN has changed or is incorrect. Knowledge defined in §772.1.

16 ATTORNEYS AT LAW License Exception STA Conditions §740.20(d)(2) — prior consignee statement. o Prior to first STA eligible shipment, the exporter, reexporter, and/or transferor must obtain written statement from consignee — (5 year retention). One statement is good for multiple shipments of same item(s) between same parties if names, description(s) of the item(s), and ECCN(s) remain correct. Exporter, reexporter, and transferor must maintain log or other records identifying each STA shipment and to which consignee statement it relates to. Consignee Statement Back

17 ATTORNEYS AT LAW License Exception STA Conditions Consignee statement: o Aware that item(s) will be shipped under STA. o Informed of ECCN by [Exporter, reexporter, transferor]. o Understands that STA item(s) are not eligible for subsequent reexport pursuant to License Exception APR(a) or (b). o Agrees not to export, reexport, or transfer in violation of EAR. o Agrees to provide copies of documents to U.S. Govt. upon request.

18 ATTORNEYS AT LAW License Exception STA Conditions Notification Out  §740.20(d)(3)— Notification to Consignee. o Exporter, reexporter, or transferor must notify consignee in writing that shipment is made under STA. o Must identify which item(s) is (are) subject to STA or that entire shipment is STA. Must identify to which shipment it applies. o May be paper or electronic and need not accompany Shipment.

19 ATTORNEYS AT LAW License Exception STA Conditions §740.20(d)(4) — deemed exports. o The party releasing the software or technology to a national of a country listed in (c)(1) or (c)(2) must notify recipient of the restrictions upon further release. o Must either expressly inform the recipient that the EAR imposes restrictions or be in the form of an agreement that is at least as restrictive as the EAR. In writing and copy retained by releasor and recipient. May be separate or in contract or NDA. Restriction does not expire.

20 ATTORNEYS AT LAW License Exception STA Conditions §740.20(e) — License Exception APR (additional Permissive Reexports) §§740.16(a) and (b) do not apply. o Once shipped under STA a commodity may not be subsequently exported, reexported, or transferred pursuant to APR(a) or (b). o §§740.16(a) and (b) do not apply to software or technology.

21 ATTORNEYS AT LAW License Exception STA Conditions §740.20(e) — §743.1 Wassenaar reporting requirements apply to some exports. o Rare. If you have an export from 1 of the 49 ECCN’s (which track Wassenaar Arrangement Sensitive List) and export is to Iceland (only non-Wassenaar member state to which STA authorizes).

22 ATTORNEYS AT LAW License Exception STA Step-by-Step Is a license required? Does § preclude use of license exceptions generally? Does § (b) preclude use of STA? Does § (c)(1) authorize use of STA? o Are all reasons for control that apply to the transaction in paragraph (c)(1)? o Is the destination in paragraph (c)(1)?

23 ATTORNEYS AT LAW License Exception STA Step-by-Step Does § (c)(2) authorize use of STA? o Is the only reason for control that applies to the transaction NS? o Is the destination in paragraph (c)(2)? o Is the item for export excluded in an STA paragraph in the license exception section of the applicable ECCN?

24 ATTORNEYS AT LAW License Exception STA Step-by-Step Provide consignee with ECCN. Obtain consignee statement. Notify consignee that shipment (or specific items within a shipment) is (are) under STA. Keep record showing which shipments belong to each consignee statement.

25 ATTORNEYS AT LAW License Exception STA Example 1 Virus to a research laboratory in Australia for human vaccine development. ECCN 1C351.a.11. No parties on Entity List, Denied Persons List or List of Specially Designated Nationals and Blocked Persons. No prohibited end uses under part 744.

26 ATTORNEYS AT LAW 1C351 Human and zoonotic pathogens and “toxins”, as follows (see List of Items Controlled). License Requirements Reason for Control: CB, CW, AT Control(s)Country Chart CB applies to entire entry CB Column 1 CW applies to 1C351.d.5 and d.6 and a license is required for CW reasons for all destinations....a. Viruses, as follows:....a.11.

27 ATTORNEYS AT LAW License Exception STA Example 1 Commerce Country Chart Reason for Control CB1 CB2 CB3 NP1 NP2 NS1 NS2 MT1 RS1 RS2 FC1 CC1 CC2 CC3 AT1 AT2 Australia X X X X

28 ATTORNEYS AT LAW License Exception STA Example 1 License exception restrictions under § do not apply. Marburg virus is a pathogen in Category 1 that is listed in ECCN 1C351.a.11. STA restrictions under §740.20(b)(2)(v) list ECCN 1C351.a. Therefore Marburg virus is excluded by an STA restriction and we need not go to the authorization paragraphs.

29 ATTORNEYS AT LAW License Exception STA Example 1 Remember that STA is not the only license exception. E.g., License Exception GOV may apply to this transaction if the research laboratory is part of the Australian government.

30 ATTORNEYS AT LAW License Exception STA Example 2 Telescopic sight to Argentina and Finland for hunting. ECCN 0A987.a. No parties on Entity List, Denied Persons List or List of Specially Designated Nationals and Blocked Persons. No prohibited end uses under part 744.

31 ATTORNEYS AT LAW 0A987 Optical sighting devices for firearms (including shotguns controlled by 0A984); and parts (See list of items controlled ). License Requirements Reason for Control: FC, CC, UN Control(s) Country Chart FC applies to optical sights for firearms * * * FC Column 1 CC applies to entire entry CC Column 1 UN applies to entire entry Iraq, North Korea, and Rwanda * * * * * List of Items Controlled * * * * * Items a. Telescopic sights. * * * * *

32 ATTORNEYS AT LAW License Exception STA Example 2 Commerce Country Chart Reason for Control CB1 CB2 CB3 NP1 NP2 NS1 NS2 MT1 RS1 RS2 FC1 CC1 CC2 CC3 AT1 AT2 Argentina X X X X X X X X X * * * * * Finland X X X X X X

33 ATTORNEYS AT LAW License Exception STA Example 2 License exception restrictions under §740.2 do not apply (e.g. crime control restrictions do not apply to STA-eligible transactions per § 740.2(a)(4)(iv)). STA restrictions under § (b) do not apply. We go to the authorization paragraphs.

34 ATTORNEYS AT LAW License Exception STA Example 2 Argentina & Finland are both in authorization paragraph (c)(1). CC reason for control is in (c)(1) but FC reason for control is not in that paragraph. STA authorizes this shipment to Finland but not to Argentina.

35 ATTORNEYS AT LAW License Exception STA Example 3 Ceramic based materials to Israel. ECCN 1C007.a and.c. No parties on Entity List, Denied Persons List or List of Specially Designated Nationals and Blocked Persons. No prohibited end uses under part 744.

36 ATTORNEYS AT LAW 1C007 Ceramic base materials, non-“composite” ceramic materials, ceramic-“matrix” “composite” materials and precursor materials, as follows (see List of Items Controlled). License Requirements Reason for Control: NS, MT, AT Control(s)Country Chart NS applies to entire entry NS Column 2 MT applies to items MT Column 1 in 1C007.d and.f... AT applies to entire entry AT Column 1 License Exceptions... STA: License Exception STA may not be used to ship any item in 1C007.c or d to any of the eight destinations listed in § (c)(2) of the EAR.

37 ATTORNEYS AT LAW License Exception STA Example 3 Commerce Country Chart Reason for Control CB1 CB2 CB3 NP1 NP2 NS1 NS2 MT1 RS1 RS2 FC1 CC1 CC2 CC3 AT1 AT2 Israel X X X X X X X X X X X X

38 ATTORNEYS AT LAW License Exception STA Example 3 License exception restrictions under §740.2 do not apply. STA restrictions under § (b) do not apply.

39 ATTORNEYS AT LAW License Exception STA Example 3 Israel is not in § (c)(1) but is in (c)(2). NS is the only reason for control that applies to this export.

40 ATTORNEYS AT LAW License Exception STA Example 3 ECCN 1C007 License Exception STA paragraph reads STA: License Exception STA may not be used to ship any item in 1C007.c or.d to any of the eight destinations listed in (c)(2). Therefore the 1C007.a item is eligible for STA to Israel and the 1C007.c item is not eligible for STA to Israel.

41 ATTORNEYS AT LAW THANK YOU! Ian H. Moss Posternak Blankstein & Lund, LLP Prudential Tower 800 Boylston Street Boston, MA Tel


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