In today’s Federal Register (Tuesday, September 30th) the Bureau of Industry and Security (BIS) issued a proposed rule to eliminate Part 752 “The Special Comprehensive License” from the EAR. Originally put into place back in 1997, the Special Comprehensive License (SCL) was intended to allow firms to obtain a bulk distribution license which would, for all intents and purposes, allow an applicant to export or re-export to multiple end users in different countries via one bulk license authorization from BIS provided the applicant goes through an extensive process to “prove” to BIS through audits, onsite visits by governments officials and lots of paperwork, that it has developed a highly sophisticated internal compliance program. A track record of good export compliance was (I use the term “was” because I was informed by a BIS export counselor approximately two weeks ago that the agency is no longer accepting applications for the SCL) required prior to applying for a comprehensive license. The SCL required extensive self-policing of export compliance in return for extended privileges from BIS to self-authorize exports and re-exports. On the upside, this license provides distributors with the flexibility to avoid having to apply for multiple validated licenses when distributing a product from a regional distribution center. Reality is, since 1997 BIS has only authorized twelve SCLs and the growing consensus within the agency (and within industry) is that the administrative burden of compliance requirements for qualification outweigh the benefits of this type of license. In addition, new authorizations and license exceptions such as the Strategic Trade Authorization or “STA” limit the usefulness of this type of bulk license.

It appears as if the SCL (Part 752 of the EAR) is about to disappear from the annals of U.S. export regulation. If you have any specific thoughts on the SCL, either “for” or “against” removal of this regulation, BIS is taking comments up until October 30th. My sense is that a “soft decision” has likely already been made within the bowels of BIS, but who knows, perhaps the whopping twelve companies that actually hold an SCL may have some weight on this issue. Feel free to contact TSI Global Consulting for further details.

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