Yes, Deemed Exports and Re-Exports of Technology to Nationals of Some Sanctioned Countries/Regions are prohibited under the EAR

A word of caution to our clients, even if you only produce EAR99 products, software, or technology you DO need to be aware of the deemed export rule. Case in point, TSI Global Consulting was recently hired by a manufacturer of EAR99 quality control related testing machinery to create a Technology Control Plan (TCP).  At first take, my response was, why in the world would a company require a technology control plan if they do not manufacture or deal in any commodities, software, or technology that is listed on the Commerce Control List? A deeper review of the CCL quickly brought to light some important caveats to the false “EAR99 is safe from export controls provided such technology is residing in the bowels of our company here in the good ole USA”  fallacy. Specifically, look at the example of the Ukrainian Crimea Sanctions. Part 746.6 (a) (2) of the EAR states:

 

[For purposes of applying the EAR deemed export and deemed re-export requirements for foreign nationals located in or from the Crimea region of Ukraine, the nationality of the foreign national (as determined by accepted methods, such as looking to the passport or other nationality document(s) recognized by the United States Government) is what is used for purposes of determining whether a license is required for a deemed export or deemed reexport.]

 

Yes, what the above clause means is that in practice if you were to have a Ukrainian visitor to your company and you have EAR99 technology (i.e. production and/or development blueprints/drawings etc.) sitting in view on a desk or on an unlocked non-password protected computer that you allow the visitor to use to print out some airline boarding passes, you had better make sure in advance that the visitor is not a resident of the Crimea region of Ukraine. And how do you do that? Unless the Ukrainian passport shows which region of the country they are resident of, we are not quite sure how you would parse that screen out, but yes, it would be a violation of the deemed export rule for that Crimean national to see or even be given access (i.e. use of the computer) to the EAR99 technology on that server. Unless of course you had submitted a license application and obtained a deemed export license from BIS for the visitor in advance. The same basic rule applies to nationals of other sanctioned countries. Take, for example, North Korea. The EAR is silent about deemed exports to N. Korean nationals, however part 746.4(a) says “a license is required to export or reexport any items subject to the EAR to the Democratic People’s Republic of Korea (North Korea),” and yes, that would include deemed exports of EAR99 Technology. We say that with confidence because TSI Global Consulting recently confirmed this in writing from the regulatory division at BIS!

 

Lesson Learned? Yes, EAR99 technology can and is subject to the deemed export rule with respect to nationals of some sanctioned countries and/or regions. You must review the country specific sanctions in Part 746 of the EAR as the regulations differ by sanctioned country but DO make sure to include EAR99 commodities, software and technology into your Technology Control Plan as it applies to foreign nationals of sanctioned countries/regions where the regulations are either silent or if they draw out application of the deemed export rule.

 

For further details contact TSI Global Consulting at 210-757-0618.

 

 

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