License Processing Overview

1. License Processing Overview Presented by: Bernard Kritzer Director, Office of National Security and Technology Transfer Controls Bureau of Industry and Security U.S. Department of CommerceWashington, D.C.

2. Overview • Legal Basis for Export Regulation • Organization of the Department of Commerce’s Bureau of Industry and Security • Elements of an effective licensing process • Steps of the U.S. licensing process • Roles of the individuals and agencies involved in the process • Timeline that the U.S. has set for processing license applications

3. Export Administration Act of 1979 • Basis for governmental control of designated U.S. exports • Provides authority “to regulate exports, improve the efficiency of export regulation, and minimize interference with the ability to engage in commerce”

4. Organization of the Bureau of Industry and Security Department of Commerce Bureau of Industry and Security Office of the Undersecretary NEC * EA** EE*** * NEC = Nonproliferation and Export Control** EA = Export Administration *** EE = Export Enforcement

5. Office of Export Administration (EA) • Office of Nonproliferation Controls and Treaty Compliance • Office of National Security and Technology Transfer Controls • Office of Exporter Services • Office of Strategic Industries and Economic Security

6. Admin. Enforcement Export Control System LicenseProcessing LegalAuthority Communication with Industry Admin. Admin.

7. ECASS Licensing Process Verify Classification Submit Application Registration Decision Conduct technical & policy review ConductInteragency Review

8. Step 1: Submitting the Application • Exporter attempts to classify the item • Fills out application • Submits application to the DOC by mail or electronically

9. Step 2: Registration ECASS • Make sure application is complete • Log into Export Control Automated Support System (ECASS) • Forward application to appropriate licensing Office

10. Step 3: Verifying the Classification and Requirement for a License Ensure that the application contains enough information to make the classification and licensing decision Compare specifications to the commodity entry requirements Application may be returned without action if it lacks information necessary for verifying classification or if a license is not required

11. Check appropriateness for end use and end users Send for review by the Nonproliferation Center of the CIA Check licensing history for approvals or denials Check nonproliferation credentials of importing country Step 4: Conducting a Technical Review of the Proposed Transaction

12. Evaluating the Appropriateness of the Transaction for the Stated End Use and End User • Check that the item and stated end use are a logical match • Evaluate information supplied by Export Enforcement

13. Checking History of Licensing Approvals/Denials • Check the ECASS database for past denials of license for export to the end user • Past approvals can serve as precedents for future approvals

14. What are “Deemed Exports” • The Export Administration Regulations (EAR) define a deemed export as the release of technology or source code subject to the EAR to a foreign national in the United States. Part 734.2(b)(2)(ii). • Such release is “deemed” to be an export to the home country of the foreign national. • Situations that can involve release of U.S technology or software include: - Tours of laboratories - Foreign national employees involved in certain research, development, and manufacturing activities - Foreign students or scholars conducting research - Hosting of foreign scientist

15. “Deemed Export” Policy Concerns • Deemed exports are an important part of the overall mission of BIS to control exports and reexports of sensitive U.S. technology to countries of concern. • The current deemed export rule was established in 1994 to address national security issues relating to the transfer of sensitive technologies to certain foreign nationals working on controlled technology within the U.S. • At the same time, foreign nationals play a vital role in U.S. industry and academia, contributing to the strength of our industrial base and our high-technology advantage, and ultimately our national security. • Foreign countries seek to illegally acquire controlled U.S. technology that could be diverted to the development of weapons programs.

16. Is the country a member of the regime that monitors transfers of this commodity? Is there an agreement for cooperation for civil uses of the commodity? Are the country’s actions, statements, policies in support of nonproliferation? Does the government of the importing country cooperate with nonproliferation policies in general? Does the importing country intend to become a member of any of the regimes? Nonproliferation Credentials of Importing Country

17. Four Multilateral Regimes • Wassenaar Arrangement • Missile Technology Control Regime • Nuclear Suppliers Group • Australia Group/ Chemical Weapons Convention

18. Wassenaar Arrangement (WA) • Controls conventional arms (munitions items) and related dual-use goods and technologies… • Admits new members by consensus of current members based on applicant’s: status as producer/exporter of conventional arms/industrial equipment; adherence to non-proliferation regimes; adherence to a fully effective export control system. • Monitors transfers of sensitive goods to countries of concern and provides a forum for members to share information. • Has a Dual-Use List that includes a Basic, Sensitive, and Very Sensitive List.

19. Missile Technology Control Regime (MTCR) • Exists to control the transfer of technology and equipment for ballistic and cruise missiles, space launch vehicles, and other unmanned delivery systems. • Accepts new members based on whether prospect: • Would strengthen international non-proliferation efforts. • Demonstrates a sustained and sustainable commitment to non-proliferation. • Has a legally based effective export control system. • Has two administrative documents: the Guidelines and the Annex. • The Annex outlines the dual-use items that are controlled. • Has a No Undercut policy and Catch-All policy

20. Nuclear Suppliers Group (NSG) • Controls exports of dual-use items that have nuclear weapons utility. • Accepts new members based on a specific criteria. • Has several governing documents: Guidelines and Annex. • The Guidelines provide the Basic Goal and considerations for whether or not to authorize an export. • Annex includes a Basic List and a Trigger List. • Has a No Undercut Policy and Catch-All policy.

21. AG/CWC Summary Australia Group/ Chemical Weapons Convention AG CWC • Informal international control regime to promote non-proliferation of chemical and biological weapons, manufacturing facilities & equipment and related technology. • Accepts new members based on a specific criteria. • Controlling documents include the Guidelines and Common Control Lists. • No Undercut and Catch-All policy • Complementary to CWC. • International treaty to control chemicals and chemicals weapons. • Any country can join by acceding to the Convention and ratifying it through their National process. • Controlling documents include the Articles and Annexes. • Annex of Chemicals lists the controlled items. Subset of AG Common Control List of Chemical Precursors.

22. Step 5: Interagency Review • All license applications require interagency review • Obtains the perspectives of different agencies during the review process of a license application

23. N Y N Y N Y Dispute Resolution Process President Decision EARB Decision ACEP Decision OC Tracking System

24. Step 6: Decision to Applicant • Applicants are notified of licensing decision by mail or electronically • If license is denied, the exporter has 20 days to rebut the decision

25. Day 90 The President Day 85 EARB Day 69 ACEP OC Day 53 Dept. of Defense Dept. of State Dept. of Energy Export ApplicationSubmitted to Dept.of Commerce Day 9 Day 1 Licensing Deadlines Intelligence Day 39

26. Export License Processing • In fiscal year 2005, we received 17,129 license applications • Average processing time was 31 days • BIS reviewed license application covering transactions with a total value of approximately $36 billion • BIS approved 14,100 license applications, returned 2,380 applications without action, and denied 239 applications. • The highest number of approvals under one commodity classification was for thermal imaging and light intensifying cameras (ECCN 6A003), with 2,413 approved applications

27. Documentation Requirements • Exporters must keep records and copies of the export license for 5 years • Records include all support documentation for export

28. The licensing process is grounded in laws and regulations Exporter is responsible for submitting application and supporting documentation Two major steps of license processing: verification of classification and consideration of end-use/end-user U.S. system considers opinions of different agencies System created to resolve interagency disputes Timeframes established for making licensing decisions Summary and Conclusion