The CCL contains dual-use items (i.e., hardware, software and technology) that may have both a commercial/civil and a military use subject to the EAR. Items are identified by an Export Control Classification Number (ECCN).
The US BIS provides an overview of US dual-use export control basics through the Introduction to Commerce Department Export Controls.
The US BIS operates with so-called “Reasons for Control”. Using the Reasons for Control with the US BIS Country Chart Supplement No. 1 to Part 738 Commerce Country Chart, it becomes apparent that Reasons for Control in fact decrease the effects of export control. Each individual country is controlled for one or several reasons. The more controls added to a particular country, the less may be exported without a license. The Country Groups are:
Group A: Regime Members
Group B: Less Restricted
Group D: Countries of Concern
Group E: Terrorist Supporting
The “Reasons for Control” are:
CB Chemical & Biological Weapons
CC Crime Control
CW Chemical Weapons Convention
EI Encryption Items
FC Firearms Convention
MT Missile Technology
NS National Security
NP Nuclear Nonproliferation
RS Regional Stability
SS Short Supply
UN United Nations Embargo
SI Significant Items
SL Surreptitious Listening
Reasons for Control are described further in US BIS EAR Part 738. While Reasons for Control rstricts trade, a number of License Exceptions may limit some of the negative effect. At present, these License Exceptions are available:
§740.3 Shipments of limited value (LVS).
§740.4 Shipments to Country Group B countries (GBS).
§740.5 Civil End-users (CIV).
§740.6 Technology and software under restriction (TSR).
§740.7 Computers (APP).
§740.8 Reserved (Formerly: Key management infrastructure – KMI).
§740.9 Temporary imports, exports, and reexports (TMP).
§740.10 Servicing and replacement of parts and equipment (RPL).
§740.11 Governments, international organizations, and international inspections under the Chemical Weapons Convention (GOV).
§740.12 Gift parcels and humanitarian donations (GFT).
§740.13 Technology and software–unrestricted (TSU).
§740.14 Baggage (BAG).
§740.15 Aircraft and vessels (AVS).
§740.16 Additional permissive reexports (APR).
§740.17 Encryption commodities and software (ENC).
§740.18 Agricultural commodities (AGR).
§740.19 Consumer Communications Devices (CCD).
§740.20 Strategic Trade Authorizations (STA).
De-minimis for US exporters.
US Exporters need to recognise the importance of deminimis for non-US manufacturers integrating US components in to foreign technology. The most likely consequence of ignoring the de minimis rules is that non-US manufacturers will design out US components.
US exporters recognising and working the US de minimis rules – applicable worldwide to anyone utilising controlled US technology – will undoubtedly increase sales/exports. The reason is simple: Non-US manufacturers outside the US often do not have the resources to closely study US export control legislation in such detail that they understand and feel comfortable with these laws. When US exporters openly and immediately informs of ECCN numbers and available License Exceptions including variations of License Exceptions such as ENC Restricted versus ENC Unrestricted or retail versus mass market, foreign importers feel comfortable and assured that they will not violate any extraterritorial US export control laws.
US exporters ignoring the US de minimis rules will be designed out of non US productions simply because, it is the most cost-effective when alternative components are available on the market.
The existence of US export control laws is definitely becoming more and more recognised outside the US but the applicability of the rules is both discussed and disputed by many. Quite significant resources may be required for foreign manufacturers in assuring compliance with US export control laws, which leads a number of non-US manufacturers to actively design out US components.
Over the years, I have personally met numerous US manufacturers failing to inform about ECCN numbers and a few of these were quite unwilling to inform about ECCNs and the equally important information regarding applicable license exceptions – when requested to do so. It is time-comsuming, it is costly, and it is too risky for non-US manufacturers to deal with such companies.
The above is not criticism of the average US manufacturer. Many US companies work with the customers regarding US export laws. It is a call for the ignorant companies to wake up – otherwise, Asian, African, European and South American manufacturers will take your business from you.