De Minimis Guidelines

Details

De minimis Rules Guidelines - as modified on 7/10/14

(§ 734.4 and Supplement No. 2 to part 734 of the EAR)

 

  •  IF ...
    • Foreign-made commodity incorporates controlled U.S.-origin commodities
    • Foreign-made commodity is 'bundled' with controlled U.S.-origin software,
    • Foreign-made software is commingled with controlled U.S.-origin software, or
    • Foreign-made technology is commingled with controlled U.S.-origin technology,

 

  •  THEN... the Foreign-made item is subject to the EAR if the U.S.-origin controlled content exceeds:
    • "600 series" & 9Y515 .a - .x items: 0% to Country Group D:5, 25% to all other destinations.
    • "600 series" & 9Y515 .y items: 0% to China or Country Group E:1, unlimited to all other destinations.
    • Non-"600 series" & non-9Y515 items: 10 % to Country Group E:1, 25% to all other destinations.
    • Non-"600 series" & non-9Y515 AT only: 10% to Country Group E:1, unlimited to all other destinations.
    • EAR99: 10 % to Cuba, N. Korea and Syria (except food and medicines), unlimited to all other destinations.

 

  • "Controlled content"= US-origin items that require a license to the ultimate destination of the foreign product.
    • EAR99 items are considered "controlled content" for certain sanctioned countries.
    • Fair Market Value of the "controlled content" is needed to calculate de minimis percentage

 

  •   Content that you don't have to count: 
    • License Exception GBS or items that do not require a license to the ultimate destination of the foreign product (NLR designated items).

 

  • Content that is not eligible for de minimis treatment
    • U.S.-origin "600 series" & 9Y515 content when the foreign-made items are destined to Country Group D:5 of Supp. No. 1 to Part 740.
    • Certain 9E003 technology
    • Certain U.S. origin components of high performance computers
    • Encryption 5E002, and encryption commodities and software that don't meet the eligibility criteria in § 734.4(b)
    • QRS 11 if in commercial standby instrument system or commercial aircraft w/such system
    • Foreign made military commodities that incorporate cameras classified under ECCN 6A003.b.4.b

 

  • U.S. items are 'incorporated' when all of the following conditions are met:
    • They are essential to the functioning of the foreign equipment,
    • They are customarily included in the sale of foreign-made items, and
    • They are reexported with the foreign produced item.

 

  • Bundling
    • Software that is configured for a specific commodity, but is not necessarily physically integrated into the commodity.
    • Eligible software is software that is listed on the Commerce Control List (CCL) and is controlled for antiterrorism (AT) reasons or software that is designated EAR99 (subject to the EAR, but not listed on the CCL).

 

       
  • One-time report required for technology
    • Percentage of U.S. content by value
    • Description of your calculations
    • Values, assumptions, methodologies
    • Export price of U.S. content
    • Description and fair market value of the foreign technology

 

  • If over the de minimis limit ...
    • Classify the foreign product (self-classification vs BIS classification)
    • Determine License Requirements
    • Determine License Exception eligibility
    • Obtain any necessary authorization