On December 23, 2020, the Bureau of Industry and Security Published a Final Rule creating a new Supplement 7 to Part 744 Military End User (MEU) list. The list contains names and addresses of one hundred and two entities [57 in China and 45 in Russia] that BIS has determined to be military end users thus requiring a licensing for all items listed in Supplement 2 to Part 744 of the EAR that are exported, re-exported or transferred (in country) to these entities in China, Russia or Venezuela. In the announcement BIS makes a point of noting that this is just the first tranche of entities to be listed in the new Supplement 7; that it does NOT make up a complete list of entities that are subject to the Part 744.21 rule, and that exporters are responsible for doing their own due diligence in making military end user/end use determinations.
In recent weeks TSI Global Consulting has advised several clients who have been impacted by this new expanded Part 744.21 rule. In most cases, due to very high compliance risk, we are advising our clients who have lined up business for export to China or Russia of products listed in Supplement 2 to Part 744, to either apply for a license (which has a high probability of denial) or to hold off on export to these countries until either a) BIS provides more clarity on the application of this newly enhanced regulation or b) the export control regulatory environment surrounding MEU’s is more favorable and entails less export compliance risk. For further details please contact TSI Global Consulting.