The post Exporting 600 Series Items Under License Exceptions appeared first on Export Compliance Training Institute.
]]>If you export 600 series hardware, software or technology, you should expect to be applying for licenses, but there are a number of situations when items may be authorized for export without a license.
In the broadest of these, nearly all 600 series items are eligible for export No License Required (NLR) to Canada. It’s one of the benefits of having the items subject to the EAR rather than the ITAR – which contains no such blanket authorization. In addition, some 600 series ECCNs include paragraphs which are significantly less controlled. This is most commonly the case with items captured by a 600 series .y paragraph such as 0E606.y, 3A611.y or 9D610.y, which are eligible for NLR to all but a handful of countries.
But even if NLR is not available, there are still several license exceptions to consider before sharpening your license application pencil.
Part 740 of the EAR enumerates nearly 20 license exceptions which authorize exports meeting certain conditions. Seven of these can be applied to 600 series ECCNs – though never to destinations in Country Group D:5 (Supplement No. 1 to Part 740 of the EAR).
Before exploring whether your transaction may qualify for an individual license exception, be sure to review EAR 740.2 for general restrictions that apply to all license exceptions.
Here’s an overview of seven applicable license exceptions for military items subject to the EAR, beginning with those that get the most use:
License Exception STA: Strategic Trade Authorization
- License Exception STA is a useful authorization that may well authorize your export, reexport, or transfer of military goods so long as the destination is within a preferred group of about 40 countries.
This exception isn’t limited to 600 series items, but it’s used most often for them. There are a number of qualifying conditions, including some that are specific to 600 series ECCNs:
a. It only applies for exports and reexports to destinations in Country Group A:5. STA does not authorize 600 series items to destinations in Country Group A:6, which is a common error in understanding the rule. (A:6 countries are eligible destinations for some other items under STA.)
b. The item must be a qualifying item. While many 600 series items are, there are two primary sources to look for things that don’t qualify: the detailed description of the STA exception (Section 740.20) and a “Special Conditions for STA” alert in the text of the ECCN itself.
c. The end-user must be a military, law enforcement, customs, correctional, firefighting or search-and-rescue agency of an A:5 country government; the item must be for the benefit of an A:5 (or U.S.) government; or the U.S. Government must have otherwise authorized the end-use.
d. The foreign parties involved need to have been previously approved through some kind of U.S. government export license. This approval process does not have to have come through BIS, which has ultimate oversight of the EAR; it may have come through the State Department’s oversight of the ITAR – as long as a vetting has already taken place.
While STA is one of the most useful license exceptions, it imposes a rigorous set of compliance requirements, including:
- An obligation to provide the ECCN to the consignee (which is not something the EAR ordinarily requires);
- A prior consignee statement that in most cases includes an agreement by the consignee to allow an end-use check to ensure the item is being used only as promised;
- Notifying the consignee each time a shipment is made under STA; and
- Filing each shipment through the Automated Export System (AES).
Finally, while STA is the most commonly used license exception for exporting 600 series items, be aware that uses of STA are also commonly targeted for audit by the BIS.
License Exception GOV: Governments
- If you are shipping directly to the U.S. Government or certain non-U.S. governments, consider License Exception GOV.
The GOV exception has several provisions, but only two are available for 600 series items.
The most commonly used is for exports, reexports and in-country transfers to all agencies of the U.S. government. It essentially says you can send most items to embassies, military bases and other outposts of the U.S. government, worldwide, without an export license.
The exception can also apply to certain exports by contractors on behalf of the U.S. government, though there are limitations to assure the item is necessary for work that’s under contract, and that it doesn’t enter the trade of the country where it’s shipped.
Less often used is the provision allowing 600 series (and other items) to be exported to “cooperating governments” and NATO. For 600 series items, countries which are in both Country Groups A:1 and A:5 are eligible destinations. This includes most NATO member states, as well places like Australia, India, South Korea, and Sweden.
This part of the GOV exception is easier to apply than STA when exporting 600 series items, as long as the export goes directly to the government agency without passing through any other consignee.
License Exception LVS: Shipments of limited value
- Authorizes the export and reexport of eligible commodities as identified by dollar-value limit (LVS) associated with an item’s ECCN.
The exception is available for destinations in Country Group B. The general $1,500 LVS order value limit for 600 series items often makes this exception difficult to use. The rule specifies that an order can’t be divided into multiple shipments to get around the LVS; and it limits the annual value of shipments to a given consignee to 12 times the LVS value limit.
License Exception TMP: Temporary imports, exports, reexports, and transfers (in-country)
- Authorizes various temporary exports and reexports; exports and reexports of items temporarily in the United States; and exports and reexports of beta test software.
License Exception TMP has more provisions than any other license exception, some of which are highly tailored. Each provision has its own limitations, some of which can be quite useful in scenarios in which either (a) an item is to be temporarily exported or reexported (usually for up to a year), or (b) an item has only temporarily entered the U.S.
License Exception RPL: Servicing and replacement of parts and equipment
- Authorizes exports and reexports of 600 series parts, components, accessories and attachments “only to replace, on a one-for-one basis [items] that were … lawfully exported from the United States, or lawfully reexported.”
The export of such replacement parts must be made by the party that exported or reexported the original item, or by a party that has confirmed the existence of appropriate authority for the original transaction.
License Exception TSU: Technology and software – unrestricted
- Authorizes exports and reexports of operation technology and software; sales technology and software; and release of technology and source code in the United States by U.S. universities to their bona fide and full-time regular employees.
Not all the provisions of this exception are available for 600 series items. The most common uses of this exception for 600 series items include:
- Exporting instructions and documentation needed to use another item that has already been authorized for export;
- Information to support a sales process, quotation, bid, or offer to sell, lease, or otherwise supply any item. Allowed exports are limited to types that are customarily provided in such a sales environment, and they cannot disclose enough information to allow use of the technology beyond a purchase decision. This exception may help companies respond to requests for quotes and proposals quickly, and, unlike many other exceptions, does not have an equivalent under the ITAR.
License Exception BAG: Baggage
- Authorizes individuals leaving the United States – whether for temporary travel, long-term relocation, or as crew on international carriers – to take certain controlled items as baggage that are intended only for personal use or serve as professional tools of the trade.
This isn’t a blanket exception; it doesn’t apply to all 600 series items, and any items exported under Exception BAG must either be consumed while outside the United States or brought back upon the individual’s return.
Do you have questions about applying license exceptions to 600 series items? Visit hqqq.district4promotions.com to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminars, live seminars and live webinars and browse our catalog of 80-plus on-demand webinars, visit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.
Scott Gearity is President of ECTI, Inc.
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