Export Control Overview John R Murphy Business Development

Export Control Overview John R. Murphy Business Development Manager Sartomer Company October 4, 2004 Boston, MA

The U. S. Department of Commerce through the Bureau of Industry and Security (BIS) controls the export of most commercial items (products, services and technical data) by means of the Export Administration Regulations (EAR) www. gpo. gov/bis

Other agencies regulate more specialized exports, e. g. , the U. S. Department of State has authority over defense articles and services Majority of U. S. commercial exports do not require a license and are exported under the designation “No License Required” (NLR)

Most BIS regulated items which require an export license are termed “dual-use” having both commercial and military or proliferation applications. Example: Hydroxylterminated polybutadiene resins which are used in the binders of solid rocket propellants as well as in commercial elastomer applications

What is an export? Any item that is sent from the U. S. to a foreign destination, regardless of the means of transport. “Items” Include commodities, software or technology and technical information The release of regulated technology to a foreign national in the U. S. is deemed an export under the EAR

When is a export license required? What are you exporting? Where are you exporting? Who will receive the item? What is the use of the item?

What are you exporting? Does the item have a specific Export Control Classification Number (ECCN)? The ECCN is an alpha-numeric code that describes the item and shows the controls placed on that item. All ECCN’s are listed in the Commerce Control List (CCL)

Commerce Control List Categories 0 = Nuclear Materials, Facilities & Equipment 1 = Materials, Chemicals, etc. 2 = Materials Processing 3 = Electronics 4 = Computers 5 = Telecommunications & Information Security 6 = Sensors and Lasers 7 = Navigation and Avionics 8 = Marine 9 = Propulsion Systems, Space Vehicles and Related Equipment

The Commerce Control List is Subdivided into Product Groups A. B. C. D. E. Systems, Equipment and Components Test, Inspection and Production Equipment Materials Software Technology

Classifying Your Item Proper classification is essential to determining licensing requirements under the EAR. You may classify the item on your own, check with the manufacturer, or request the BIS to determine the ECCN. First determine the proper CCL category then the applicable product group.

Example: Hydroxyl-terminated Polybutadiene (HTPB) Resin Chemical => Category 1 Material => Product Group C Searching the Commerce Control List you find: 1 C 111 Propellants and constituent chemicals for propellants Reason for Control: Missile Technology (Country Chart Column 1) Anti-Terrorism (Country Chart Column 1)

And as a subsection: b. 2 Hydroxyl-terminated polybutadiene (HTPB), other than that controlled by U. S. Munitions List HTPB with OH functionality of 2. 28, hydroxyl value of < 0. 77 meq/g and viscosity @ 30°C of < 47 poise is controlled under the International Traffic in Arms Regulations (ITAR) by the U. S. Department of State

Where are you exporting? Restrictions vary from country to country. The most restricted destinations are the embargoed countries and those designated as supporting terrorist activities. Once the item is classified, the next step is to determine the need for an export license based on the “reasons for control” and the country of ultimate destination.

Supplement No. 1 to Part 738 of the EAR Commerce Country Chart Reason for Control Countries CB CB CB 1 2 3 Canada X X X X Chile China Colombia NS NS 1 2 X X X CB = Chemical & Biological Weapons NS = National Security MT = Missile Technology AT = Anti -Terrorism MT 1 X X X AT 1

What if the “item” contains HTPB as part of the formulation? “Rule of Thumb” 1: If the HTPB can be easily separated or if the item can be used as is in the manufacture of a propellant, then a license is required. Examples: HTPB combined with filler, that can be removed by filtration, or a small amount of plasticizer

“Rule of Thumb” 2: If the HTPB cannot be extracted and the item can not be used as is in a propellant or if the hydroxyl groups have been reacted, then a license is not required. Examples: Reaction of the HTPB to form a polyurethane, a prepolymer or if it is incorporated into a liquid formulation not suitable for binder applications.

Note: Only the BIS can determine if the export of a formulated item containing HTPB in its original form requires a license. A request to the BIS for an Advisory Opinion (see Part 748. 3 of the EAR) is the proper method to ensure that a license is not required in cases of uncertainty.

Who will receive the item? Certain individuals and organizations are prohibited from receiving U. S. exports and others may only receive goods if they have been licensed, even items that do not require a license based on the ECCN and Commerce Country Chart.

What will be the use of the item? Some end-uses are prohibited while others may require a license. For example, you may not export to certain entities involved in the proliferation of weapons of mass destruction and the missiles that deliver them, without specific authorization, regardless of your item

Applying for an Export License If a license is required, the exporter must prepare Form BIS-748 P, “Multipurpose Application Form” and submit it to the BIS for review and approval (Part 748 of the EAR). Applications may be submitted on-line via the Simplified Network Application Process (SNAP) or by mail.

Additional Support Requirement Prior to submission of the license application it is necessary to obtain a signed copy of Form BIS-711, Statement by Ultimate Consignee and Purchaser. www. bxa. doc. gov/licensing/bis 711. pdf

Form BIS-711 This document provides information regarding the end user, application and agreement to not improperly reexport the item. The form is not submitted to the BIS, but is retained in the applicant’s files.

Export License Status Tracking Using the number printed on the license application, the BIS automated System for Tracking Export License Applications (STELA) can used to determine licensing status at 202 -482 -2752

Export Licenses Export licenses from the BIS are valid for a period of two years. Multiple shipments to the parties listed on the license may be made during that time until the total volume permitted under the license is shipped.