High Performance Computers

Deemed Reexport Guidance

Date of Last Edit: October 31, 2013

Updated BIS Guidance Regarding the Treatment of Dual and Third Country Nationals with Respect to Deemed Reexports of Technology or Source Code Subject to the EAR

I. Background to Updated Guidance -- Export Control Reform EAR and ITAR Harmonization Efforts

Part of the Administration’s Export Control Reform (ECR) Initiative (see www.export.gov/ecr/) is, insofar as possible, to harmonize terms, definitions, and concepts in and between the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). There rarely is a reason for separate regulatory structures and guidance documents with essentially the same objectives to use different terms, definitions, and concepts to accomplish those objectives. The EAR and the ITAR each control the export and reexport by U.S. and foreign persons of various types of goods, technology, software, and services to various destinations, end uses, and end users. They should not, therefore, compound compliance and interpretation difficulties by using different ways to describe the same control objectives. The harmonization efforts are also necessary to lay the groundwork for the potential consolidation and rationalization of the U.S. export control regulations, control lists, and interpretative guidance documents.

Many core EAR and ITAR terms and concepts were harmonized on October 15, 2013 -- the effective date of the first transfers of jurisdiction to the EAR of military items that are no longer identified on the ITAR’s U.S. Munitions List. Other terms and phrases will be harmonized over the course of 2014 as the departments publish amendments to the remaining categories of military items. However, the Administration has not yet proposed any rules that would harmonize, in whole or in part, the treatment in the EAR and ITAR of the release outside the United States of controlled technology/technical data or source code, –i.e., "deemed reexports" -- to dual and third country nationals.

II. BIS Decision to Update Its Guidance Regarding the Treatment of Dual and Third Country Nationals to Include the ITAR’s Treatment of such Nationals

BIS has concluded that an unintended consequence of changing the jurisdiction over military items before harmonizing the Commerce Department and State Department treatments of dual and third country nationals is that the BIS policy in place prior to this revision would impose individual licensing obligations on certain deemed reexports that did not exist for the same items in the same circumstances when they were subject to the ITAR. Such an outcome would violate a general principle of the reform effort, which is not to impose, unintentionally, more restrictive controls for items subject to the EAR than those that exist for the same items when they were subject to the ITAR, in the same circumstances.

For these reasons and as described below, BIS has decided to update its guidance on the subject so that one may use either the current BIS deemed reexport guidance or the comparable ITAR rules or State Department guidance for determining when an individual BIS license or other EAR authorization, such as the application of a license exception, is needed to release technology or source code subject to the EAR outside the United States to a dual or third country national. That is, if an additional authorization would not be required under the ITAR or State Department guidance to release ITAR-controlled technical data outside the United States to a dual or third country national, then an additional EAR authorization is not required to release 600 series or any other technology or source code subject to the EAR to the same dual or third country national in the same situation.

III. Existing Regulations in the EAR and Guidance from BIS regarding Deemed Reexports

EAR section 734.2(b)(5) states that "[a]ny release of technology or source code subject to the EAR to a foreign national of another country is a deemed reexport to the home country or countries of the foreign national. However, this deemed reexport definition does not apply to persons lawfully admitted for permanent residence." Based on its May 31, 2006 Federal Register notice, BIS interpreted this provision to mean that deemed reexport licensing requirements are based on a foreign national’s most recent country of citizenship or permanent residency. See, e.g., 71 FR 30840, 30843 (May 31, 2006). BIS also indicated that this approach would be applied in a flexible manner to address "concerns that may arise in instances where a foreign national maintains dual citizenship or multiple permanent residence relationships." Id. For example, BIS has taken the position that if the status of a foreign national is not certain, the reexporter should consult BIS for guidance regarding whether a deemed reexport license is required. BIS will assist such reexporters in determining where the stronger ties lie, based on the specific case. BIS would review the foreign national’s country, family, professional, financial, and employment ties. Id Similarly, BIS has indicated in its website guidance that the "most recent country" approach reflects a "general policy" or "principle" ("Deemed Export" FAQs, Answers to Questions 6 and 11), not the dispositive criterion for determining the home country or countries of a foreign national for purposes of section 734.2(b)(5) of the EAR. This history gives BIS the flexibility to make the updates described below that are warranted because of the recent amendments to the EAR involving the jurisdictional transfer to the EAR of formerly ITAR-controlled items. BIS is retaining this flexibility and will continue to exercise its discretion to consider requests for advisory opinions regarding whether releases of technology or source code in fact patterns not described in this guidance document would require a license from BIS.

IV. Deemed Reexport Regulations and Guidance in the ITAR and from the Directorate of Defense Trade Controls (DDTC)

ITAR section 124.16 is,inter alia, a special retransfer authorization for the release of unclassified technical data to nationals of member states of NATO, the European Union, Australia, Japan, New Zealand, and Switzerland. ITAR section 126.18 is an exemption regarding intra-company, intra-organization, and intra-governmental transfers to employees who are dual or third-country nationals. They can be reviewed at: http://www.pmddtc.state.gov/regulations_laws/itar.html. The State Department has also entered into several country-specific agreements regarding the reexport of ITAR controlled technology to dual and third country nationals. These are described in more detail below.

As described above, if the ITAR would permit the release of ITAR-controlled technical data, which includes software, to a dual or third country national outside the United States ( i.e., a "deemed reexport") without an individual license in a particular situation, BIS’ policy is to not require an individual license under the EAR to release technology or source code subject to the EAR outside the United States in the same situation. It would not, however, make sense to repeat the relevant ITAR provisions word-for-word in this BIS guidance because the ITAR provisions, guidance, and exchanges of letters use many ITAR-specific terms and also address issues not directly related to the release outside the United States of technology or source code to dual and third country nationals. Thus, BIS has, in the next section of this document, combined its existing dual and third country national regulations and guidance with those of the comparable provisions and principles of the ITAR’s dual and third country national regulations, guidance, and country-specific agreements. To make the collection of various policies from different primary sources easier to read, BIS has put them in an outline format using EAR-specific terminology.

V. Updated BIS Guidance Regarding When a Person or Entity Outside the United States May Release, without a License or other EAR Authorization, Technology or Source Code Subject to the EAR to a Foreign Person who is a Dual or Third Country National

In the absence of a license issued by BIS or the application of an EAR license exception, you (e.g., an entity outside the United States) may release (i.e., reexport) outside the United States technology or source code that would otherwise require such a license or license exception to a dual or third country national if any of three situations is applicable – the reexport is within the scope of (A) legacy BIS guidance, (B) the ITAR’s provisions in section 124.16 in effect on the publication date of this guidance, or (C) the ITAR’s provisions in section 126.18, including country-specific agreements based on section 126.18, or relevant DDTC guidance in effect on the publication date of this guidance.

A. Legacy BIS Dual and Third Country National Reexport Guidance

In general, you (e.g., an entity outside the United States) may reexport technology or source code subject to the EAR outside the United States to a dual or third country national without an additional license issued by BIS or the application of an EAR license exception if:

1. You are authorized to receive the technology or source code at issue, whether by an individual license, license exception, or situations where no license is required under the EAR for such technology or source code; and

2. You are certain that the foreign national’s most recent country of citizenship or permanent residency is either:

i. the same as yours (e.g., the same country in which your company outside the United States is located), or

ii. that of a country to which export from the United States of the technology or source code at issue would be authorized by the EAR either under a license exception, or in situations where no license under the EAR would be required.

If you are uncertain of the foreign national’s most recent country of citizenship or permanent residency and none of the other guidance from the provisions and guidance described below is applicable, you should seek guidance from BIS regarding whether a license or other authorization is required under the EAR to release technology or source code subject to the EAR to the dual or third country national.

A BIS license authorizing the release of technology to an entity also authorizes the release of the same technology to the entity’s dual and third country nationals who are permanent and regular employees of the entity’s facility or facilities authorized on the license, except to the extent a license condition limits or prohibits the release of the technology to nationals of specific countries or country groups.

B. Updated BIS Dual and Third Country National Guidance Consistent with ITAR Section 124.16

In general, you (e.g., an entity outside the United States) may release technology or source code subject to the EAR to a dual or third country national without an additional BIS license issued or the application of an EAR license exception if:

1. You are authorized to receive the technology or source code at issue, whether by an individual license, license exception, or through situations where no license is required under the EAR;

2. The dual or third country national is a bona fide regular and permanent employee directly employed by you; Date of Last Edit: October 31, 2013

3. Such employee is a national exclusively of countries that are member states of NATO or the European Union, Australia, Japan, New Zealand, or Switzerland; and

4. The release of technology or source code takes place completely within the physical territory of any such country.

C. Updated BIS Dual and Third Country National Guidance Consistent with ITAR Section 126.18

In general, you (e.g., an entity outside the United States) may release technology or source code subject to the EAR to a dual or third country national without an additional BIS license issued or the application of an EAR license exception if:

1. You are authorized to receive the technology or source code at issue, whether by an individual license, license exception, or situations where no license is required under the EAR;

2. The dual or third country national is a bona fide regular and permanent employee directly employed by you;

3. The release takes place completely within the physical territory of the country where you are located, conduct official business, or operate;

4. You have effective procedures to prevent diversion to destinations, entities, end users, and end uses contrary to the EAR; and

5. Any one of the following six (i.e., a, b, c, d, e, or f) situations is applicable:

a. the dual or third country national has a security clearance approved by the host nation government of the entity outside the United States;

b. the entity outside the United States:

i. has in place a process to screen the employee and to have the employee execute a non-disclosure agreement that provides assurances that the employee will not disclose, transfer, or reexport controlled technology contrary to the EAR or without an authorization issued by BIS;

ii. screens the employee for substantive contacts with countries listed in Country Group D:5;

iii. maintains a technology security or clearance plan that includes procedures for screening employees for such substantive contacts;

iv. maintains records of such screenings for the longer of five years or the duration of the individual’s employment with the entity; and

v. will make such plans and records available to BIS or its agents for civil and criminal law enforcement purposes upon request;

c. the entity is a UK entity implementing ITAR section 126.18 pursuant to the US-UK Exchange of Notes regarding ITAR section 126.18 for which the UK has provided appropriate implementation guidance, which can be found at: http://www.bis.gov.uk/assets/biscore/eco/docs/itar-rule-change/11-1337-question-and-answer-matrix-itar-rule-change.doc;

d. the entity is a Canadian entity implementing ITAR section 126.18 pursuant to the US-Canadian Exchange of Letters regarding ITAR section 126.18 for which Canada has provided appropriate implementation guidance, which can be found at : http://ssi-iss.tpsgc-pwgsc.gc.ca/dmc-cgd/bulletins/bulletin3-eng.html;

e. the entity is an Australian entity implementing the exemption at paragraph 3.7b of the ITAR Agreements Guidelines;  or

f. the entity is a Dutch entity implementing the exemption at paragraph 3.7c of the ITAR Agreements Guidelines.

D. Definitions

1. "Substantive contacts," in this context, has the same meaning as it has in ITAR section 126.18, which is that it includes regular travel to countries in Country Group D:5; recent or continuing contact with agents, brokers, and nationals of such countries; continued demonstrated allegiance to such countries; maintenance of business relationships with persons from such countries; maintenance of a residence in such countries; receiving salary or other continuing monetary compensation from such countries; or acts otherwise indicating a risk of diversion. Although nationality does not, in and of itself, prohibit access to technology or source code subject to the EAR, an employee who has substantive contacts with persons from countries listed in Country Group D:5 shall be presumed to raise a risk of diversion, unless BIS determines otherwise.

2. The phrase "permanent and regular employee" is a combination of BIS’s definition of "permanent employee," as set forth in its November 19, 2007 advisory opinion, and the ITAR’s definition of "regular employee" in section 120.39, and is an individual who

a. is permanently (i.e., for not less than a year) and directly employed by an entity, or

b. is a contract employee who:

i. is in a long-term contractual relationship with the company where the individual works at the entity’s facilities or at locations assigned by the entity (such as a remote site or on travel);

ii. works under the entity’s direction and control such that the company is responsible for determining the individual’s work schedule and duties,

iii. works full time and exclusively for the entity, and

iv. executes a nondisclosure certification for the company that he or she will not disclose confidential information received as part of his or her work for the entity.

Note: If the contract employee has been seconded to the entity by a staffing agency, then the staffing agency must not have any role in the work the individual performs other than to provide the individual for that work. The staffing agency also must not have access to any controlled technology or source code other than that authorized by the applicable regulations or a license.

For more information on deemed exports, please click here to review the  Deemed Export Frequently Asked Questions on the BIS website.

 

Deemed Exports

Details

The obligation to obtain an export license from BIS before releasing controlled technology to a foreign person is informally referred to as a deemed export. Release of controlled technology to foreign persons in the U.S. are "deemed" to be an export to the person’s country or countries of nationality and is found in 734.2(b) of the EAR. Typical organizations using deemed export licenses include universities, high technology research and development institutions, bio-chemical firms, as well as the medical and computer sectors. Note that those organizations having persons with permanent residence status, U.S. citizenship, and persons granted status as "protected individual" are exempt from the deemed export rule.

Many of the licenses for deemed exports involve those conducting scientific research. Note that under 734.8 of the EAR, fundamental research is defined as "basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community" and, as such, is exempt from EAR licensing requirements. Research conducted using publically available information is also exempt from any license requirements.

Regulatory Information

The following questions and answers (Q&As) are intended to provide guidance on deemed export issues addressed in the Export Administration Regulations (EAR) and in the Federal Register Notice entitled “Revisions and Clarification of Deemed Export Related Regulatory Requirements” (RIN 0694-AD29) published on May 31, 2006. The notice published on May 31 did not change any provisions of the EAR; rather, it addressed certain recommendations made by the Department of Commerce Office of Inspector General (OIG) in its report entitled “Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S.” (Final Inspection Report No. IPE-16176-March 2004), and it withdrew an earlier Advanced Notice of Proposed Rulemaking. These Q&As provide additional guidance in areas which have generated both significant interest and confusion subsequent to the OIG Report.

The Federal Register Notice: “Revisions and Clarification of Deemed Export Related Regulatory Requirements” (RIN 0694-AD29) can be reviewed in its entirety at:


Country of Citizenship

Question (1): My company just hired a foreign national employee who was recently admitted for permanent residence in the U.S. Do I need to apply for a deemed export license in order to transfer export-controlled technology to her?

Answer (1): No. Lawful U.S. permanent residents are not subject to the deemed export rule.

  • The deemed export rule does not apply to individuals who are:
    a) U.S. citizens;
    b) Persons lawfully admitted for permanent residence in the U.S.; or
    c) Protected individuals under the Immigration and Naturalization Act (8 U.S.C. 1324b(a)(3)).

  • If individuals in your organization fit into any of the three categories above, you need not apply for a deemed export license before transferring export controlled technology to them. For additional guidance on this topic, see part 734.2(b)(2)(ii) of the EAR.

Question (2): How do I treat foreign nationals with dual-citizenship under the deemed export rule?

Answer (2):

  • BIS recognizes an individual’s most recent country of citizenship or permanent residency as his or her home country for licensing requirements.

  • For example, if an individual is a citizen of China, but most recently became a Canadian citizen, then under the BIS deemed export licensing policy, we would recognize this individual as a Canadian for licensing purposes. In this example, export control licensing requirements for Canada would apply to this individual.

  • If an exporter is uncertain which country of origin should be used for deemed export license purposes or has a concern regarding a foreign national’s dual-citizenship status, then the exporter should contact BIS for further guidance and resolution (see Question (4)).

Question (3): How do I determine the deemed export licensing requirements for individuals with non-U.S. permanent residence status?

Answer (3):

  • BIS policy is to recognize an individual’s most recent country of citizenship or permanent residency as his or her home country for licensing purposes.

  • For example, if an individual is a citizen of India, but has obtained permanent residency in the United Kingdom (U.K.), then this individual would be recognized as a U.K. permanent resident for licensing purposes. In this example, that means that this individual would be required to obtain a license only for technology which is export controlled to the U.K.

Question (4): What happens if an individual’s most recent citizenship or residency cannot be determined?

Answer (4):

  • If, for some reason, the status of a foreign national is not certain, then you should seek an advisory opinion from BIS to determine where the stronger ties lie, based on the facts of the specific case.

  • In response to a request for the status of a foreign national, BIS will look at the foreign national’s family, professional, financial, and employment ties.

Controlled “use” technology

Question (1): How do I determine if “use” technology available to a foreign national here in the United States requires a deemed export license?

Answer (1):

  • The EAR outlines specific parameters to determine whether technology is subject to the EAR or whether technology is not subject to the EAR.

  • “Use” technology that is not subject to the EAR and therefore not subject to deemed export licensing includes:

    • Items that are exclusively controlled for export or reexport by other U.S. government agencies;

    • Prerecorded records, printed books, pamphlets and miscellaneous publications; or,

    • Publicly available technology and software (excluding encryption), which includes: i) information already published or that will be published, see part 734.7; ii) information arising during or resulting from fundamental research, see part 734.8; iii) information which is educational, see part 734.9 and iv) information included in certain patent applications, see part 734.10.

  • If the “use” technology available to your foreign national falls into any of the above categories, then it is not subject to the EAR, and thus, a deemed export license is not required.

  • If you determine that the “use” technology available to your foreign national does not fall into any of the above categories, it may be subject to deemed export licensing depending on the commodity classification of the “use” technology and the country of origin of the foreign national.

Question (2): Using the above guidelines, I have determined that the “use” technology to be released to a foreign national is subject to the EAR. How can I determine the commodity classification of the “use” technology?

Answer (2):

  • The EAR defines “use” technology as specific information necessary for the “operation, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing” of a product. See Part 772, definitions of “technology” and “use.” If the technology available to the foreign national does not meet all of these attributes, then it is not “use” technology for deemed export licensing purposes.

  • If the technology at issue does meet all of these attributes, then it constitutes “use” technology. Pursuant to the General Technology Note in Supplement 2, part 774 of the EAR, the export of “technology” that is “required” for the “use” of items on the Commerce Control List (CCL) is controlled according to the provisions in each Category. This means that you must first determine whether the “use” technology associated with an item is listed on the CCL, and then, following the usual rules of the CCL and the associated Country Chart, you must determine whether a license is required to export the “use” technology at issue to the home country of the foreign national.

  • In other words, the commodity classification and licensing procedures for “use” technology are the same as for any item on the CCL. You should determine whether a particular Export Control Classification Number (ECCN) is associated with the particular “use” technology you have, and if so, then determine whether a license is required for the release of that “use” technology to a particular country.

  • If you plan to release controlled “use” technology to a foreign national, and a license would be required to export that “use” technology to the home country of that foreign national, then you must apply for a license before releasing the “use” technology to that foreign national.

  • Also note that “required” technology, as applied to “use” “technology” or “software,” refers to only that portion of “technology” or “software” which is peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics or functions.

  • If the “use” technology does not enable an operator:

    • to replicate or improve the design of the controlled item being operated; and,

    • the operation of the controlled item is not directly related to the production, development or use of a nuclear explosive, chemical or biological weapon, or missile or rocket system;

    • then, the “use” technology does not meet the “required” threshold and is likely classified as EAR99.

Question (3): Does this mean that my foreign national employee, researcher or student needs a deemed export license to operate export controlled equipment?

Answer (3):

  • Not necessarily. Keep in mind that the deemed export rule does not regulate the operation of controlled equipment. Rather, it is a release to a foreign national of export-controlled “use” technology that may have deemed export licensing implications, and “use” technology includes all of the attributes of “use” as defined in the EAR Part 772 (i.e., operation, installation, maintenance, repair, refurbishing and overhaul).
  • If the foreign national has access only to the technology that is necessary to operate the export controlled equipment, a release of “use” technology has not occurred and no deemed export license requirement is triggered.

Question (4): Is there a deemed export license requirement for EAR99 technology?

Answer (4):

  • Under the EAR, releases of EAR99 technology to Cuban nationals require a deemed export license. See §746.2 of the EAR. In addition, releases of EAR99 technology to certain persons described in Part 744 of the EAR including [but not limited to] Specially Designated Global Terrorists require a deemed export license. See §744.12 of the EAR.

  • Additionally, pursuant to the Iranian Transactions Regulations maintained by the Department of the Treasury's Office of Foreign Assets Control, certain releases of EAR99 technology require a license from OFAC. See 31 C.F.R. §560.418.

  • For all other foreign nationals, EAR99 technology may be released without a license, unless you know that the foreign national intends to use such technology in activities related to nuclear, chemical or biological weapons or missiles as described in Part 744 of the EAR.

  • In certain circumstances, a release of EAR99 technology to a foreign national could constitute a violation of Section 764.2(e) of the EAR. This provision bars the taking of certain enumerated actions with respect to an item subject to the EAR with knowledge that a violation of the EAR has occurred, is about to occur, or is intended to occur in connection with such item. For example, while a release of EAR99 technology to a U.S. person might not in itself be subject to the EAR's deemed export licensing requirements, such release could trigger a violation of Section 764.2(e) if it occurred with knowledge that such technology will subsequently be released to a foreign national to whom the deemed export licensing requirements apply (e.g., a Cuban national). Parties should refrain from structuring transactions in a manner to evade the deemed export licensing requirements.

Fundamental Research

Question (1): Do I need authorization for a foreign graduate student to work in my laboratory?

Answer (1):

  • You do not need a license or authorization for the mere presence of a foreign graduate student in your laboratory. You do need a license if you plan to transfer controlled technology to a foreign national and the export of that technology is restricted to the foreign national’s home country.

  • The EAR license requirements apply to the transfer of controlled technology for “development”, “production”, or “use” of certain equipment. See Part 772 for definitions of all three terms.

  • If the graduate student is receiving technology that has already been published, then that technology is not subject to the EAR and no license is required for the release of that technology. See §734.3(b)(3) and §734.7 (defining published technology). BIS considers user manuals for equipment to be “published” when they are available from the manufacturer, either (1) for purchase at a price that does not exceed the cost of distribution, or (2) as part of the normal materials that accompany the equipment when sold to the public and without restrictions on further distribution.

  • If the graduate student is receiving technology in the context of instruction in a catalog course (or associated teaching laboratories) of an academic institution, then that technology is not subject to the EAR and no license is required for the release of that technology. See §734.3(b)(3)(iii) and §734.9.

  • If the graduate student is receiving technology that arises during, or results from, “fundamental research,” then that technology is not subject to the EAR and no license is required for the release of that technology. See §734.3(b)(3)(ii) and §734.8.

  • But if you plan to release technology that is subject to the EAR and that is, according to the CCL and Country Chart, restricted for export to the home country of the foreign graduate student, then you will need a deemed export license.

 

 

Deemed Exports and Fundamental Research for Biological Items

Many people have questions on what triggers a requirement for a deemed export license in the Export Administration Regulations (EAR) for biological research.

What is a Deemed Export ?

Any release of technology or source code subject to the EAR to a foreign national (Part 734.2(b)(2)(ii). This does not apply to permanent residents or protected individuals.

What Technology is Subject to the EAR ?

All technology in the United States is subject to the EAR except for the following:

technology under the jurisdiction of another agency, printed books, publicly available technology, technology that has been or will be published, technology that arises during or results from fundamental research, educational technology, and technology in certain patent applications (Part 734.3)

Is Biological Research subject to the EAR ?

Research in the United States would be subject to the EAR unless it met one of the exclusions noted above. Much of the research in University laboratories is not subject to the EAR if it is fundamental research.

What is Fundamental Research (Part 734.8) ?

Fundamental research is basic and applied research in science and engineering, where the resulting information is ordinarily published and shared broadly within the scientific community. The techniques used during the research are normally publically available or are part of the published information.

- Example: University based research on vectors for salmonella typhi which is published broadly

What is NOT Fundamental Research ?

It is not considered fundamental research when there are restrictions placed on the outcome of the research or restrictions on methods used during the research. Proprietary research, industrial development, design, production, and product utilization the results of which are restricted and government funded research that specifically restricts the outcome for national security reasons are not considered fundamental research.

- Example: University based research on bacillus anthracis that has restrictions on publications of scientific and technical information resulting from the research

- Example: A university has a collaborative research agreement with a private company. The company releases its proprietary technology to the university to conduct the research with the condition that it not be released to the public. The university agrees to a non-disclosure statement as part of the collaborative agreement. The company proprietary information, if subject to the Export Administration Regulations (i.e., not subject to the jurisdiction of another Agency, e.g., the Department of State and the International Trade in Arms Regulation), may require deemed export licensing authorization if released to a foreign national.

If your research is NOT fundamental Research, then your technology may be subject to the EAR, but does it require a license ? Does your biological research involve a controlled pathogen (1C351, 1C352, 1C353, 1C354, 1C360, 1C991) or controlled equipment (2B352) ? Please review the Commerce Control List which can be found at www.bis.doc.gov.

If you are working with controlled pathogens or equipment, then the technology being shared with the foreign national needs to be determined. There are 5 main technology ECCNs that need to be reviewed for biological research:

1E001 which is technology for the “development” or “production” of controlled biological agents

1E351 which is technology for the disposal of controlled biological agents

2E001 which is technology for the “development” of controlled equipment

2E002 which is technology for the “production” of controlled equipment

2E301 which is technology for the “use” of controlled items

Let’s go through each type of technology and give examples:

1E001: “development” or “production” technology – If most of the technology being shared with the foreign national on how to grow, maintain, quality check a pathogen is in the public domain and the research is going to be published, then this research is not subject to the EAR and no deemed export license is required Alternatively, if the researcher was working on a sensitive project involving biodefense or some other type of research that would not be allowed to be published without strict review and involved proprietary or non-standards technology regarding the pathogen (not in the scientific literature), then 1E001 might apply.

1E351: disposal technology – Most biological agents are destroyed through autoclave, chemicals, and other publically available techniques and therefore it is not subject to the EAR.

2E001 and 2E002 technology controls – These would only apply if the researcher was developing 2B352 controlled biological equipment. They would be producing or developing controlled equipment. The same exclusion applies, that if the research will be broadly published, then it would be considered fundamental research and not subject to the EAR.

2E301 which is "use' of controlled biological equipment. In order for technology to be considered use it must have all six elements of the definition of use: operating, installing, maintaining, repairing, overhauling, and refurbishing. This is not the normal activity of researchers. They are typically operating, maintaining and maybe repairing a controlled item such as a fermentor. The operation of a piece of equipment is not “use” technology as defined in the EAR

General Technology Note (Supplement Number 2 to Part 774)

“The export of “technology” that is “required” for the “development,” “production,” or “use” of items on the Commerce Control List is controlled according to the provisions of each Category

Definitions (Part 772)

Required. (General Technology Note) – As applied to “technology” and “software”, refers to only that portion of “technology” or “software” which is peculiarly responsible for achieving or exceeding controlled performance levels, characteristics or functions.

Development. (General Technology Note) – “Development” is related to all stages prior to serial production, such as: design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into a product, configuration design, integration design, layouts.

Production. (General Technology Note) (All Categories) – Means all production stages, such as: product engineering, manufacture, integration, assembly (mounting), inspection, testing, quality assurance.

Use. (All Categories and General Technology Note – Operation, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing.

Thumb Rule on “use” technology: if the technology does not enable improvement of equipment design (i.e., “development” technology) or replication of the item (i.e., “production” technology) then the information, if subject to the EAR (i.e., not in the public domain) is likely EAR99.

Note on “required” technology: if the information is not in the public domain, therefore subject to the EAR, and does not enable achieving or exceeding the controlled parameters of the end item, then the technology is likely EAR99.

QUIZ:

  1. If a foreign national is working with a controlled pathogen does that require a deemed export license ? (Remember: Access to a controlled pathogen or to controlled equipment associated with the work on a pathogen is not a deemed export. A deemed export is the release to a foreign national in the United States of “technology” or “source code” “required” for the “development,” “production,” or “use” of the controlled pathogen or controlled equipment.) Answer: No, if technology arises during or results from fundamental research, or if the technology to be shared does not meet the definition of development or production as noted above even if the research is not fundamental. Yes, if the technology being shared meets the definitions and it is during fundamental research.
  2. If a foreign national is using controlled equipment in a laboratory does that require a deemed export license ? Answer: No, the information provided did not indicate that the individual was overhauling or refurbishing equipment – they were only operating the equipment and it does not meet the definition of “use”
  3. If a foreign national works in a BSL3 or BSL4 lab does that require a deemed export license ? Answer: No – working in a facility is indicative of the types of dangerous pathogens but just stepping foot into a facility does not trigger a deemed export license requirement
  4. If a foreign national is coming to accept the purchase of a piece of equipment and get trained on how to use the equipment does that require a deemed export license ? Answer: No – being taught how to operate a purchased piece of equipment is not considered use technology. A deemed export license is not needed.
  5. I have determined the research being conducted at my university is fundamental research and foreign nationals are involved in the research. My university is collaborating with a foreign university on this effort and as part of this collaboration we need to export the controlled pathogen involved. Does the fundamental research exclusion authorize this export without a license? Answer: No, fundamental research only applies to technology. Deemed exports only applies to release to a foreign national of technology and source code in Products Group D and E on the Commerce Control List. Material commodities including systems, equipment, and components (Product Group A), test inspection and production equipment (Product Group B) and raw materials (Product Group C – pathogens are controlled in ECCNs 1C351 and 1C352) would require authorization for export and may require a license depending on the recipient university’s country.

Guidelines for Foreign National License Applications

  1. Introduction

BIS has prepared these guidelines for exporters to use in submitting license applications for foreign nationals pursuant to the "deemed export" rule.

Section 734.2(b)(ii) of the Export Administration Regulations (EAR) defines "export" to include a release of technology or software to a foreign national and considers such release to be a "deemed export" to the home country of the foreign national. Licenses are required for release of controlled technology or software to a foreign national only if a license is required for the export of such items to the home country. License applications, when submitted, are reviewed by BIS under the licensing policies that apply to the actual export of the technology or software in question to the country of the foreign national.

The "deemed export" rule is most often encountered in the employment context where a company will release controlled technology or software to a foreign national. These guidelines are designed for the employment situation, and may not be fully applicable to license applications submitted for releases to foreign nationals in other contexts. It is important to note that the "deemed export" rule does not apply to the release to persons lawfully admitted for permanent residence in the United States, and does not apply to persons who are "protected individuals" under the Immigration and Naturalization Act (8 U.S.C. 1324b(a)(3)).

The basis guidance for filling out license applications is set forth in Part 748 of the EAR. The following guidelines supplement the basic guidance and are intended to facilitate processing of applications involving the "deemed export" rule. BIS encourages companies to follow these guidelines to assist us in processing your license application more efficiently. Due to regulatory time limits for processing license applications, it is in the interest of each exporter to provide all information needed to analyze the transaction when the application is submitted.

Applications under the "deemed export" rule should include the basic information included in the Form BIS-748P (Section II), a letter of explanation (Section III A), and a resume (Section III B).

    1.  
        1.  
            1.  
            2. Resume
            3. The license application should include a resume containing the information set forth below. Accurate and complete information is essential to the application. Such information is considered in the licensing process to assess the risk that the technology or software in question would be diverted to unauthorized uses or users. Any gaps need to be fully explained. Incomplete information is likely to delay the processing of the application.

              (i) Personal background information

              BIS requires name and place of birth. If the foreign national holds dual citizenship from other countries, please list the countries and the national’s legal status.

              (ii) The educational and vocational background.

              The college degrees earned by each candidate, dates of attendance, the schools attended, the name, address, cities, and countries for each school. If the candidate did not attend college, please list the name, address, and location of the high school or technical school attended, and degree obtained, if any.

              (iii) Employment history

              Please list in chronological order the jobs held by each applicant since graduation. This should include: the name of the employer, street address, and city. There should also be a brief description of the tasks performed on each job and the technical skills acquired.

              (iv) Military service

              Please list the dates and place of service, the rank attained, and activities performed.

              (v) Special information

              This optional section is for the applicant to list any special considerations that they believe BIS should take into account in reviewing the application. For example, the applicant may want to cite the "unique" technical skills of the foreign national candidate and explain the benefits that would result from the individual becoming a permanent employee.

              Foreign Nationals - Application Checklist

                1. Have you properly noted supporting documentation in Blocks 6 and 7?
                1. Have you described the specific end-use in Block 21?
                1. Have you provided the appropriate data in the letter of explanation and the personal resume covering the background information?
                1. If there are multiple foreign nationals, have you listed the end-users on Form BIS-748P-B?
                1. Make sure you sign the application.

                Attachment #1

                Standard License Conditions for Applications Involving Foreign Nationals

                The Bureau of Industry and Security’s policy is to approve "deemed export" license applications provided: 1) the EAR licensing policy applicable to the technology or software allows approval of the application to the home country of the foreign national: 2) there is no unacceptable risk that the items in question will be diverted to unauthorized uses or users; and 3) the applicant agrees to comply with the applicable conditions related to the licenses.

                The standard conditions set forth in this attachment cover technical data and software pertaining to items listed in the Commerce Control List. BIS may attach these and other conditions to a license when approved.

                Standard License Conditions for Deemed Export cases

                1. As outlined and/or constrained by the conditions placed on this license, the applicant is authorized to release to the foreign national technology and software controlled under the following ECCNs: 1E001, 1E002, 1E101, 1E102, 1E103, 1E104, 1E201, 1E202, 1E203, 1E350, 1E351, 2D001, 2D002, 2D101, 2E001, 2E002, 2E003, 3E001, 3E002, 4D002, 4D003, 4E001 5E001, 6E001, 7E001, 9E001 (as applicable) for the applicant’s commercial products. The transfer of controlled technology and software shall be limited to the minimum needed by the foreign national in his/her role as described in the license application. Any further request for access to controlled technical data or software subject to the Export Administration Regulations (EAR) not authorized under this license would require the prior approval of the U.S. Government.

                2. The validity period of this license is limited to two (2) years from the date of issuance providing the end-user maintains a valid visa and does not violate the work restrictions, if any, associated with the visa class or any other work authorization issued by DHS.

                3. The applicant shall maintain a record of when the foreign national obtains his/her permanent resident status (i.e., green card), or changes his/her visa status (i.e, between B-1, L-1, F-1, H-1B, etc.), or leaves the company prior to obtaining permanent resident status. The applicant shall maintain this information on file and provide it on request to the Deemed Exports and Electronics Division, Bureau of Industry and Security, 14th St. & Pennsylvania Avenue NW, Washington DC, 20230.

                4. Prior to transfer of technology, the applicant shall inform the foreign national in writing of all license conditions and his/her responsibility not to disclose, transfer or re-export any controlled technology, without prior U.S. Government approval. The foreign national will certify in writing that he/she has been advised of and understands the terms and conditions of this license and that he/she will not disclose, transfer or re-export any licensed technology without authorization from BIS, if such authorization is required under the EAR.

                5. The applicant will establish procedures to ensure compliance with the conditions of this license, particularly those regarding limitations on access to technology by foreign nationals. The applicant's key export control management officials will ensure that the foreign national complies with conditions 1- 5. A copy of such procedures will be provided to DOC/BIS.

                Attachment #2

                Standard License Conditions for 3E001/3E002 Technologies for Deemed Exports.

                1. As outlined and/or constrained by the conditions placed on this license, the applicant is authorized to release to the foreign national technology and software controlled under the following ECCNs: A) Design technology controlled under 3E001 (for items controlled under 3A001.a.3 only) and 3E002. The transfer of controlled technology and software shall be limited to the minimum needed by the foreign national as described in the license application. Any further request for access to controlled technical data or software subject to the Export Administration Regulations (EAR) not authorized under this license would require the prior approval of the Department of Commerce's Bureau of Industry and Security (BIS).

                2. ECCN 3E001/3E002 technical data transferred to the end-user shall not be in advance of the international technology roadmap for semiconductors 65 nanometers technology node.

                3. Involvement in the design of information technology products with an adjusted peak performance (APP) level above 0.4 Weighted TeraFLOPS (WT), or components to support aggregation above 0.4 WT, is not authorized. "Use" of computers with an APP above the current Tier III use levels (0.75 WT) must be controlled and monitored to ensure that only job-related work is performed.

                4. No access to technology for the design, development or production of x-ray, e-beam, euv, or laser lithography equipment.

                5. The transfer of manufacturing process software and technology for integrated circuits is limited to the minimum required to enable design engineers to coordinate with process engineers on circuit layout, design/design rules, and lithography design, to achieve process/production compatibility.

                6. Access is limited to most technology, including Bi-polar, Bi-MOS, Bi-CMOS, and CMOS. Access to compound semiconductor technology (e.g., gallium arsenide (GaAs)) and silicon-on-sapphire (SoS) is not authorized. Access to silicon-on-insulator (SoI) is limited to development and production of integrated circuits for commercial applications. Release of SoI technology will not include that for the design or development of integrated circuits that are radiation hardened to the degree defined in the International Traffic in Arms Regulations (ITAR) Part 121.1, Category XV (d).

                7. The applicant will ensure that the foreign national does not have access to controlled technology required for the design or development of analog-to-digital converters controlled by ECCN 3A001.a.5.a.4 or ECCN 3A001.a.5.a.5.

                8. Access to radiation hardened integrated circuits and technology associated with their

                development or production, as defined by ECCN 3A001.a.1 and 3E001 is not authorized.

                9. No access to technology for the design or development of items controlled by ECCN 3A001.b.2 or ECCN 3A001.b.4.

                10. Access to optical computer technology or neutral network technology is not authorized.

                11. The validity period of this license is limited to two (2) years from the date of issuance providing the end-user maintains a valid visa and does not violate the work restrictions, if any, associated with the visa class, or any other work authorization issued by DHS.

                12. The applicant shall maintain a record of when the foreign national obtains his/her permanent resident status (i.e., green card), or changes his/her visa status (i.e, between B-1, L-1 F-1, H-1B, etc.), or leaves the company prior to obtaining permanent resident status. The applicant shall maintain this information on file and provide it on request to the Deemed Exports and Short Supply Division, Bureau of Industry and Security, 14th St. & Pennsylvania Avenue NW, Washington DC, 20230.

                13. Prior to transfer of technology, the applicant shall inform the foreign national in writing of all license conditions and his/her responsibility not to disclose, transfer or re-export any controlled technology, without prior U.S. Government approval. The foreign national will certify in writing that he/she has been advised of and understands the terms and conditions of this license and that he/she will not disclose, transfer or re-export any licensed technology without authorization from BIS, if such authorization is required under the EAR.

                14. The applicant will establish procedures to ensure compliance with the conditions of this license, particularly those regarding limitations on access to technology by foreign nationals. The applicant's key export control management officials will ensure that the foreign national complies with conditions 1- 13. A copy of such procedures will be provided to DOC/BIS.

                1. Review your application carefully to ensure that requirements in Sections I and III have been met.
          1. Letters of Explanation
          2.  

            (i) The identities of all parties to the transaction

            For individuals, BIS requires their full names, their citizenship, passport number, permanent address (in their home country), local U.S. address (if they are in the U.S.), visa type with date and place issued, and I-94 number and date issued.

            (ii) The exact project location where the technology or software will be used.

            The location the foreign national (FN) will be working . If you anticipate transferring the FN within the normal two year period of the license, list the transfer location, as well. If the FN will be on a rotational program through several locations, all should be listed.

            (iii) The type of technology or software.

            The type of technology will be based on the type of product the firm designs, develops, fabricates, manufactures, produces, or otherwise has contact with. It will have an Export Control Classification Number (ECCN) and can normally be described in a couple of lines.

            Example: The foreign national will be working in the development and production of "whatis" widgets, which are listed on the Commerce Control List under ECCN 3A001 and will be in charge of the manufacturing line which uses machinery classified under ECCN 3B002, 3B003, and 3B004. Technology for the development, and use of such items are classified under ECCN 3E001.

            (iv) The form in which the data or software will be released.

            Technology or software is released for export through: 1) visual inspection by foreign nationals of U.S.-origin equipment and facilities; 2) oral exchanges of information in the United States or abroad; and 3) the application to situations abroad of personal knowledge or technical experience acquired in the United States (Section 734.2(b)(3)).

            (v) The uses for which the data or software will be employed.

            The applicant should identify the uses for which the foreign national will employ the technology or software. They generally include design, development, and production of items.

            (vi) An explanation of the process, product, size and output capacity of all items to be produced with the technology or software, if applicable, or other description that delineates, defines, and limits the controlled technology or software to be transmitted (the technical scope).

            This, along with paragraph III above, is the critical section of the letter of explanation. Within the context of the applicant’s business, this should explain precisely the FN’s job responsibilities in what they will be doing with the controlled technology or software they will have received. It should explain what products/services he will be working with, and what benefit the applicant intends to derive from the FN in terms of product improvements, production line benefits, new technical processes and/or other services. This information may include, but not necessarily be limited to: the products he will be working with, the industrial processes he will be working with, the improvements/designs/services he is expected to provide in the product design/production cycle, the work environment he will be working in (factory floor, design team, experimental laboratory, etc.), and the kind of interaction he will have with others who have controlled technical knowledge.

            (vii) The availability abroad of comparable foreign technology or software.

            Here, a brief statement is all that is required, and you may simply state, N/A.

            (viii) The applicant’s internal Technology Control Plan.

            The applicant should describe any measures it intends to undertake to prevent unauthorized access by foreign nationals to controlled technology or software. The measures may include the applicant’s internal control program to prevent unauthorized access to controlled technologies or software.

      1. Technical Information
      2. In addition to the basic information included in Form 748-P, applications to transfer controlled technology to a foreign national should include: A) a letter of explanation; and B) a personal resume, as set forth below:

    • Basic Requirements

     

    In addition to the instructions included with the license application, form BIS-748P, we recommend the following when completing the form:

    Block 2: Telephone Provide the telephone extension of the applicant to be contacted.

    Block 6: Documents Submitted Check the box labeled "letter of explanation". Check the box labeled "other" and add resume.

    Block 7: Documents on File Certify retention of required documents.

    Block 9: Special Purpose Transfer of controlled technology to foreign national pursuant to Section 734.2(b)(ii) of the EAR.

    Block 14: Applicant No acronyms. No P.O. Box Numbers.

    Blocks 16, 17, 18, 19 No acronyms. No P.O. Box numbers

    (Purchaser, Ultimate Consignee, (geographical location may be used in lieu

    Intermediate Consignee, End-User) of the street address). Provide English

    translations of names.

    Block 19: End-User Provide evidence of the United States immigration status of the end-user. Enter full address in the United States and list the foreign national’s home country in the country box.

    List additional end-users on the End-User Appendix, Form BIS-748P-B.

    Block 21: Specific End-Use Specify how the controlled technology and/or software that the foreign national receives is to be used in the employ of the applicant. This section should include a one sentence description of the end-use. For example, "for research purposes" is not sufficient. Explain the nature of the research.

    Block 22(j): Technical Description Identify the item in Commerce Control List terms, the Export Control Classification Number (ECCN), not by trade name.

    List additional specifications, where appropriate.

    Block 23: Dollar Value List dollar value for transfer, usually a nominal $1 per foreign national, per license.

    Block 24: Additional Information Request license validity period consistent with Visa time frame.