BIS Revises EAR Based on 2015 MTCR | Practical Law

BIS Revises EAR Based on 2015 MTCR | Practical Law

The Bureau of Industry Security (BIS) has amended the Export Administration Regulations (EAR) to reflect the 2015 agreements between Missile Technology Control Regime (MTCR) countries. The final rule explicitly authorizes the minimum necessary software and technology to be included in licenses for MT-controlled items. The rule also amends the Commerce Control List (CCL) to be consistent with preexisting changes to the MTCR Annex.

BIS Revises EAR Based on 2015 MTCR

Practical Law Legal Update w-001-8379 (Approx. 4 pages)

BIS Revises EAR Based on 2015 MTCR

by Practical Law Commercial Transactions
Published on 06 Apr 2016 • USA (National/Federal)
The Bureau of Industry Security (BIS) has amended the Export Administration Regulations (EAR) to reflect the 2015 agreements between Missile Technology Control Regime (MTCR) countries. The final rule explicitly authorizes the minimum necessary software and technology to be included in licenses for MT-controlled items. The rule also amends the Commerce Control List (CCL) to be consistent with preexisting changes to the MTCR Annex.
On April 4, 2016, BIS issued a final rule (81 Fed. Reg. 19026) amending EAR. The amendments were prompted by agreements by MTCR member countries at the October 2015 Plenary in Rotterdam, Netherlands, and the April 2015 Technical Experts Meeting in Bern Switzerland.
The new rule:
  • Expands MT policy to include the minimum necessary software and technology export licenses for MT-controlled items.
  • Revises six Export Control Classification Numbers (ECCNs) to better align the CCL with the MTCR Annex.

Inclusion of Certain Minimum Software and Technology in MT Licenses

BIS’ final rule specifies that the licenses for MT-controlled items also authorize exports of the minimum software and technology needed to use the missile technology in the license. The rule applies to:
  • Existing licenses. Previously issued licenses are assumed to include the minimum necessary software and technology unless they say otherwise. Licensees do not need to obtain replacement licenses under the new policy.
  • New licenses. New license applicants are not required to identify or provide support documentation for the minimum necessary software and technology.
  • Bug fixes. The rule also applies to defect-correcting software for BIS-approved licensed items, if the bug fixes are exported to the same ultimate consignee(s) and end user(s) on the license.
There are exceptions to the inclusion of software and technology, including:
  • Any minimum software and technology specifically excluded by BIS on the license.
  • Any defect-correcting software that enhances the capability and/or performance of the licensed item.

ECCN Revisions

BIS’ final rule also makes the following changes to existing ECCNs:
  • ECCN 1B101. The term “fiber-placement machines” has been revised to “fiber/tow-placement machines” to better clarify the scope of the control parameter.
  • ECCN 1C111. The final rule revises paragraphs b.4, b.9, d.9 and d.12, in the List of the Items Controlled section, to include additional Chemical Abstract Service (CAS) numbers (these changes are not expected to have any impact on the number of license applications received by BIS). These CAS numbers have been included to make it easier to identify the materials controlled under the items in the 1C111 paragraphs. CAS numbers are numerical identifiers assigned to every chemical substance described in open scientific literature, including:
    • organic compounds;
    • inorganic compounds;
    • minerals;
    • isotopes; and
    • alloys.
  • ECCN 7A116. The term "pneumatic" has been added to the beginning of the heading and “fly-by-light” has been added to the parenthetical phrase "(including fly-by-wire systems)".
  • ECCN 9A012. Adds to paragraph b.5 in the List of Items Controlled to include:
    • pneumatic, hydraulic, mechanical, electro-optical, or electromechanical flight control systems (including fly-by-wire and fly-by-light systems) and attitude control equipment;
    • designed or modified for UAVs or drones controlled by ECCN 9A012; and
    • capable of delivering at least 500 kilograms payload to a range of at least 300 km.
  • ECCN 9A610. Revises paragraph w in the List of Items Controlled to include pneumatic flight control systems and “fly-by-light” systems.
  • ECCN 9B106. Revises paragraphs a.1 and a.2 to replace “simulating all of the following flight conditions” with “having all the following characteristics.”
For more information on US export regulation, see Practice Note: Export Regulations: EAR, ITAR, and FTR.