1	Introduction presented by Christopher Padilla Assistant Secretary for Export Administration Bureau of Industry and Security U.S. Department of Commerce
2	Joint Statement of March 2, 2006 In the March 2, 2006, Joint Statement, President George W. Bush and Prime Minister Manmohan Singh “welcomed the U.S. Department of Commerce's plan to create a license exception for items that would otherwise require an export license to end-users in India engaged solely in civilian activities.” The creation of the Validated End User, or Trusted Customer, program builds on the positive momentum of the strategic partnership and further advances the bilateral high technology trade relationship.
3	What is Trusted Customer? Trusted customer is a simple concept: Customers who have demonstrated their ability to use controlled items responsibly can become eligible to receive that technology without a license. Unlike individual licenses (which typically expire after two years), Trusted Customer authorizations are valid for an indefinite time period.
4	Benefits of Trusted Customer Allows for more efficient trade between U.S. exporters and Indian importers by removing export licensing requirements. Creates a “trusted customer” list of Indian end-users that are responsible users of sensitive goods and technology. Acts as a market-based incentive for firms to follow responsible export control practice.
5	Launching Trusted Customer The Bureau of Industry and Security will launch the Trusted Customer Program in the first half of 2007. There will be two steps: Amend the Export Administration Regulations to designate India as country eligible for Validated End User authorization. Publish an initial list of names of Indian end users that have qualified as Trusted Customers.
6	Nominating Indian End Users There will be a number of ways for Indian entities to be nominated for Trusted Customer authorization: The U.S. government can identify end users based on export licensing data. Indian companies can apply for Trusted Customer. U.S. suppliers can nominate their customers in India.
7	Application Process The Federal Register Notice announcing India as eligible for Trusted Customer will give detailed instructions on how to apply to the Department of Commerce. Application will be in the form of a letter to the Department of Commerce. Applicants must identify items, end-users, and end uses in addition to describing record keeping and compliance plans.
8	A Simple Application and Adherence Process The process for apply for, and adhering to, Trusted Customer will be simple and easy to understand.
9	How are Trusted Customers Reviewed Candidates must meet a number of end use criteria, including: Demonstrated record of engaging only in civil end uses; Not contributing to the proliferation of WMD; Not engaging in activities that are contrary to U.S. foreign policy or national security interests; Must have a positive track record of complying with U.S. export controls; Commitment to comply with Trusted Customer requirements; Agree to on-site record reviews by U.S. government officials.
10	Additional Criteria In addition, the U.S. government will consider the status of export controls in India. For example, are the items proposed for a particular Trusted Customer controlled by India in a manner comparable to the relevant multilateral control regime?
11	Types of Items Eligible for Trusted Customer Items controlled for national security, chemical/biological or nuclear nonproliferation reasons can be considered for Trusted Customer. Items exporter under Trusted Customer cannot be used for nuclear, chemical, missile, or biological weapons proliferation activities that are prohibited by the Export Administration Regulations. Indian end-users would need a license for onward re-exports.
12	Impact of VEU VEU allows for more efficient trade between U.S. exporters and Indian importers by removing export licensing requirements. Through an analysis of BIS licensing data, VEU could result in an initial reduction of 10-15% in licensing volume for India.
13	Conclusion For the first time, Commerce will create an export authorization that will act as a market-based incentive for firms to demonstrate good export control behavior. We hope that customers will be anxious to earn this treatment – showing that market competition and counter-proliferation can be mutually reinforcing. As India continues to make progress in harmonizing its export controls with those of the major multilateral control regimes, we anticipate that even more trade will become eligible for this treatment.