License Exception ENC
740.17(a)
740.17(a) describes four instances in which you can export under license exception ENC without a classification or reporting requirement. Each section of 740.17(a) is briefly summarized below
• 740.17(a)(1)(i) authorizes exports to 'private sector end-users' headquartered in a Supp. 3 country (Supplement No. 3 to Part 740) for internal use for the "development" or "production" of new products.
• 740.17(a)(1)(ii) authorizes certain additional exports to 'private sector end-users' headquartered in a Supp. 3 country for uses other than the "development" or "production" of new products. To meet this requirement:
– The item must not be U.S. origin and must have become subject to the EAR after production;
– All parties to the transaction must be subsidiaries of the same Supp. 3 company;
– The end-user must be a ‘private sector end-user’; and
– The characteristics of the item must not be enhanced unless otherwise authorized
Example:
• Company A manufactures a router outside the U.S. It has 0% US content and is not subject to the EAR. Company A exports the router to a customer in another country. The router breaks. Company A sends the router to Company A’s U.S. office for repair, and sends the customer a new router. Company A’s U.S. office fixes the router and sends it to Company A’s German office to hold as stock. The export from the U.S. to the German office to hold as stock would be authorized under 740.17(a)(1)(ii).
• 740.17(a)(2) authorizes exports to "U.S. Subsidiaries", wherever located, for internal use, including to foreign national employees and individual contractors or intern of the U.S. company.
• 740.17(a)(3) authorizes exports of foreign made encryption items developed with or incorporating U.S. origin encryption source code, components, or toolkits, provided the U.S. origin encryption item has been classified or reported under license exception ENC and the encryption functionality has not changed.