Did You Know About the China Military End Use Rule (Part 744.21 of the EAR)

15 CFR Part 744.21 states that all items subject to the EAR which are listed in Supplement 2 to Part 744 may not, without a BIS validated export license, be exported, re-exported or transferred to the Peoples Republic of China if you have knowledge that the item is intended entirely or in part, for military end use.  It should be noted that some very common ECCN line items are subject to the China Military end use rule, including such things as commercial aircraft parts falling under ECCN 9A991 (as well as software 9D991 and technology 9E991), navigation/direction finding equipment classified under 7A994, some telecommunication equipment classified under 5A991, some select computers falling under 4A994 and marine underwater cameras and equipment falling under 8A992.

These are all very lightly controlled items listed on the Commerce Control List (CCL) so if all you do is a quick customary check of the CCL it is very easy to inaccurately conclude that these items are NLR to civil or military end users and end uses worldwide with the exception of the five countries noted in Group E (Cuba, N. Korea, Sudan, Syria and Iran). Wrong conclusion…… Our advice is the use caution when applying the EAR and its various sections to a particular export transaction. Simply referencing the ECCN descriptions as noted on the CCL can easily bring forth false conclusions when making license determinations. The items noted above and many more listed in Supplement 2 to Part 744 are controlled for export, re-export and transfer to China if you have knowledge that they are destined for a military end use. And keep in mind that the EAR defines “knowledge” or reason to know if a very broad manner (see Part 772 of the EAR). At TSI Global Consulting we had a case earlier this year related to a client that was exporting a marine camera (ECCN 8A992) for underwater surveying by Chinese researchers operating in a civil capacity, thus their transaction was indeed NLR, as long as it is never transferred for military end use. Our suggestion to the client was to obtain an end use statement ensuring no transfer within China for military end use/civil use only. Our overall advice: Use caution when making license determinations. Check all relevant sections of the EAR and beware of the China Military End Use Rule. For more information on the China Military end use rule, contact TSI Global Consulting at 210-757-0618

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