Can you Really Rely on the Destination Control Statement?

Over the past month, our firm has been engaged by a reseller of electronic components to assist their company in making license determinations for a wide range of integrated circuits and microprocessors falling under various subcategories of ECCN 3A001. Our word to the wise is “use caution” when evaluating and exporting items under this ECCN. The ECCN is subject to National Security (NS) column II export controls. However, if the IC’s are radiation hardened (i.e. ECCN 3A001.a.1.a) and “usable in missiles” than they are also subject to missile technology controls. Missile technology controls also apply if the components are designed for military use and operable under extreme temperature ranges. And additional carve outs exist for a few components that are controlled for nuclear proliferation (NP). But even if not radiation hardened, made to military specifications or controlled for NP, the sticky issue surrounds re-export controls. Our client is exporting to South Korea, a country that is not subject to National Security column II export controls and the particular IC’s and microprocessors they are exporting are for civilian use and not subject to the carve outs for missile technology or nuclear proliferation. That makes their exports eligible for NLR status when exported to their customers in South Korea provided end use is in South Korea. The issue then becomes what about re-exports? With the exception of our close European allies and a few others, the vast majority of countries are subject to National Security Column II export controls. And that means that these ICs, microprocessors and electronic components would require a re-export license from BIS if they were to be re-exported in same condition by our client’s buyer in S. Korea to most countries in the world. The question than becomes can you rely on a Destination Control Statement to protect your potential liability in such a scenario? The answer is a bit ambiguous. While not required within the U.S. Export Administration Regulations (EAR), our suggestion in a case like this, is to obtain a separate written assurance or end user statement from the foreign ultimate consignee that such components are for end use in South Korea (or the country that is not subject to NS Column II controls), that they may be subject to BIS licensing for re-export and that no re-exports will be made prior to ensuring compliance with the U.S. Export Administration Regulations.  

For more information on re-export licenses and/or making license determinations for electronic components falling under ECCN 3A001 please contact our office.

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