The United States imposes export controls to protect national security interests and participates in various multilateral arms control regimes to prevent the proliferation of weapons of mass destruction. The Bureau of Industry and Security (BIS) administers U.S. laws, regulations and policies governing the export and reexport of sensitive consistent controlled commodities and technologies. “Consistent” refers to items or technologies that have both civilian commercial and military applications. BIS implements U.S. export controls on “Consistent” and commercial items.
The primary goal of BIS is to protect U.S. national security interests and promote economic and foreign policy objectives. BIS also enforces antiboycott laws, coordinates with U.S. agencies and other countries on export control, nonproliferation and strategic trade issues, and assists U.S. exporters in complying with export control regulations, international arms control agreements and export licensing procedures. The Office of Exporter Services provides information on BIS programs, offers seminars on complying with the EAR and licensing requirements and procedures, and presents an annual Update Conference as an outreach program to industry. The Office of Export Administration processes applications to license exports, re-exports and deemed exports (technology transfers to foreign nationals in the United States). The Office of Export Enforcement is staffed with approximately 100 Special Agents and investigates allegations of illegal exports of dual-use goods and technologies. BIS Special Agents are also posted as attaches (Export Control Officers) in Beijing, Hong Kong, New Delhi, Moscow and the United Arab Emirates.
A license requirement is imposed on the export and reexport of certain commodities and technologies controlled for dual-use purposes to end-users in China. In some cases, an end-use check, which can take the form of either a Pre-License Check (PLC) or Post-Shipment Verification (PSV), is also required. During the 2004 Joint Commission on Commerce and Trade (JCCT), BIS signed an Exchange of Letters on End-Use Visit Understanding (EUVU) with the Chinese Ministry of Commerce (MOFCOM). This Exchange of Letters establishes procedures for arranging end-use visits in China and for these visits to be conducted jointly by MOFCOM and the BIS Export Control Officer. Implementation of the EUVU helps ensure that the intended recipients of U.S. exports of controlled dual-use items are using these commodities for their intended purposes and facilitates licensing determinations. U.S. exporters are required to obtain an End User/End-Use Statement from MOFCOM for all transactions valued over $50,000 as part of the license application process.
In June 2007 the U.S. government published a regulation introducing changes to export control policy towards China. This regulation, known as the “China Policy Rule”, established a new Validated End-User (“VEU”) program, to facilitate exports to certain customers in China. Companies that qualify for VEU are authorized to receive certain U.S.-controlled items without requiring individual export licenses; in October 2008 BIS published in the Federal Register the names and locations of five companies in China that have been authorized to received certain controlled items under VEU. In January 2009 BIS and MOFCOM reached agreement on procedures for conducting on-site reviews relating to the VEU, thus paving the way for full implementation of this innovative program. Application for VEU is voluntary and can be made by an end-user in China or by a U.S. exporter on behalf of a customer in China. Interested companies can apply by submitting a request for an advisory opinion to BIS. The “China Policy Rule” also introduced new controls on certain specific items when destined for military end-uses in China. This focused list of items covers 20 product categories across 31 entries on the Commerce Control List and includes militarily useful items such as depleted uranium, inertial navigation systems and avionics, aircraft and aircraft engines, lasers, underwater cameras and propulsion systems and related technologies and software. Lastly, the “China Policy Rule” raised the threshold requirement for obtaining MOFCOM End-User/End-Use Statements from USD5000 to USD50,000 with the exception of certain commodities in category 6A003, which will still require End-User/End-Use Statements for exports valued at USD5000 and above. U.S. exporters can obtain information about regulations that may apply to the sale of their goods to China by requesting an advisory opinion from BIS. The advisory opinion will provide information on commodity classification as well as any applicable restrictions on exporting to China.
In 1990 the U.S. Congress passed P.L. 101-246, commonly referred to as the “Tiananmen Sanctions”, which restrict the export and re-export of crime control and crime detection equipment and instruments listed in the EAR to China’s police agencies. The Tiananmen Sanctions also prohibit the export of commodities on the U.S. Munitions List. These restrictions apply regardless of the end-user in China and the sale of these items to third parties as a means of circumventing the Tiananmen Sanctions is also prohibited. A Presidential waiver may be required for certain exports and the waiver must include a certification that the specific proposed export would not be detrimental to interests nor substantially contribute to improving China’s military, space launch or missile capabilities or weapons development programs.
Exporters are urged to check lists identifying specific end-users (persons, companies and entities) that are under U.S. government sanctions or for whom export licenses may be required. Information on these lists, which include the Entity List, Unverified List, Denied Persons List, Specially Designated Nationals List and Debarred List, is available on the BIS website at www.bis.doc.gov. In some cases exports and re-exports to parties named on these lists may be prohibited and U.S. exporters who engage in transactions with listed parties may themselves become subject to administrative and criminal penalties.
The “Unverified List” names companies for who BIS have been unable to conduct Pre-License Checks or Post-Shipment Verifications. The list notifies U.S. exporters that involvement of a listed person or company as party to a proposed transaction constitutes a “red flag” as described in the guidance set forth in Supplement No. 3 to 15 CFR part 732 of the EAR. Under that guidance, the “red flag” requires heightened scrutiny by the exporter before proceeding with a transaction in which a listed person or company is party.
Additionally, the U.S. Department of State also imposes sanctions relating to proliferation of weapons of mass destruction and arms control. On June 28, 2005, President Bush signed Executive Order 13382, which amended E.O. 12938 by providing sanctions against entities that finance and support proliferation activities. Chinese entities have been sanctioned under this Executive Order as well as under the Iran Nonproliferation Act of 2000 (P.L. 106-178), Iran-Iraq Arms Nonproliferation Act of 1992, and Executive Order 12938, as amended (E.O. 13094, E.O. 13882).
Other agencies also regulate more specialized items, for example; the U.S. Department of State administers U.S. export control regulations covering defense items and services that appear on the U.S. Munitions List, including satellites and related technologies.