The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published a new rule to streamline the support documentation requirements for license applications under the Export Administration Regulations (EAR). This new rule provides clarity to exporters and reduces administrative burdens for license applicants.
For certain license applications, BIS requires that the applicant obtain support documentation, such as an Import Certificate, an End-User Statement, or a Statement by Ultimate Consignee and Purchaser. Prior to the new rule, many license applications where the value of the exports exceeded $5,000 required a letter or form certifying the disposition or use of the product, signed by the consignee and purchaser. Other types of transactions required alternative support documentation. These requirements have been both a cause of frustration and confusion for U.S. exporters.
BIS’s new rule removes several of the former requirements, and clearly defines the following three scenarios where support documentation will be needed on a going-forward basis:
- People’s Republic of China (PRC) End-User Statement: A PRC End-User Statement, issued by China’s Ministry of Commerce, is required for license applications involving exports to China of: certain cameras requiring a license and valued at more than $5,000; computers requiring a license; and any other commodities requiring a license where the total value exceeds $50,000. When the commodities to be exported to China are valued at $75,000 or less and are for servicing previously exported items, a Statement by Ultimate Consignee and Purchaser can be substituted for the PRC End-User Statement.
- Transactions Involving “600 Series Major Defense Equipment”: For license applications to countries other than China, BIS has limited the requirement to obtain a Statement by Ultimate Consignee and Purchaser to only those transactions involving 600 Series (i.e., military items moved from control under the International Traffic in Arms Regulations to the EAR) Major Defense Equipment, regardless of value. This includes specified military items with a nonrecurring research and development cost of more than $50 million or a total production cost of more than $200 million.
- Firearms Convention (FC) Import Certificate: As under the prior rule, an FC Import Certificate or an equivalent official document issued by the government of the importing country is required for license applications for firearms and related commodities destined for member countries of the Organization of American States (OAS). These items include commodities classified under Export Control Classification Numbers 0A984 (certain shotguns and related parts and components), 0A986 (shotgun shells and specially designed parts and components), and 0A987 (optical sighting devices for firearms and related components).
A license applicant may submit an application for any of these three scenarios prior to receipt of a copy of the support document, unless BIS specifically informs the applicant otherwise. However, the license holder cannot actually ship the item until it receives a copy of the support document.
BIS has retained discretion to require applicants to obtain support documents for other types of sensitive transactions on a case-by-case basis. Nonetheless, the new support documentation rule simplifies the EAR’s requirements for license applications and provides welcome relief to many U.S. exporters.