Changes to your export processes in dealing with China, Russia and Venezuela

cargo container sunset

On April 28th, 2020, and on June 3rd, the Bureau of Industry Security (BIS) issued changes to their regulations as it pertains to the export of goods for military end-use or military end-users in the People’s Republic of China, Russia or Venezuela. In particular, BIS has amended the Export Administration Regulations (EAR) to expand license requirements on exports, reexports, and transfers (in-country) of these items.

This rule expands the licensing requirements for China to include ‘‘military end-users,’’ in addition to ‘‘military end-use.’’ It broadens the list of items for which the licensing requirements and review policy apply and expands the definition of ‘‘military end-use.’’ Next, it creates a new reason for control and the associated review policy for regional stability for certain items exported to China, Russia, or Venezuela, moving existing text related to this policy.

Finally, it adds Electronic Export Information filing requirements in the Automated Export System for exports to China, Russia, and Venezuela. This rule supports the objectives discussed in the National Security Strategy of the United States.

This is not the time to be complacent in reviewing these changes by thinking “my customers and goods are never sold to the military nor are my products used by the military”. It becomes very important to know several areas of your products and customers. End-use means how will the product be used and the end-user who will ultimately use the product. In addition, these changes cover the re-export of US goods, meaning items that could be diverted to a military end-user. Keeping documents of your reviews of customers and products has always been an excellent practice when it comes to adhering to any US regulation.

This rule expands Electronic Export Information (EEI) filing requirements in the Automated Export System (AES) for exports to China, Russia, or Venezuela. Existing provisions exempt exporters from both filing EEI for many shipments valued under $2,500 (unless an export license is required) and from entering the ECCN in the EEI when the reason for control is only anti-terrorism (AT). To promote transparency with respect to shipments to these destinations, this rule revises §758.1 of the EAR to require filing for items destined to China, Russia, or Venezuela regardless of the value of the shipment, unless the shipment is eligible for License Exception GOV. In addition, even if no license is required to ship an item to those destinations, the EEI filing must include the correct ECCN regardless of reason for control.

You will find the Federal Register notice dated April 28, 2020, here. These changes will be effective for all exports that leave the United States on June 29, 2020, however, only the EEI filing requirement will go into effect on September 27, 2020. If you have any questions please, as always do not hesitate to contact me.