On Friday, January 26, 2007, the Bureau of Industry and Security (BIS) reimposed licensing requirements on all exports and reexports to the Democratic People’s Republic of North Korea (North Korea), with the exception of food and medicine not listed on the Commerce Control List (CCL). (Download a PDF of the regulations for ease of reference)

The changes are intended to implement the UN Security Council resolutions (UNSCR 1695 and UNSCR 1718) on North Korea, but in fact impose licensing requirements above those resolutions. Prior to this regulation (from June 19, 2000 until January 26, 2007), exports and reexports of EAR99 items to North Korea did not require a license unless they were to a prohibited end-use or a prohibited end-user.

Since this is a significant change in the regulations affecting North Korea, exporters should consult their compliance manuals and make sure that the description of the controls applicable to North Korea are up to date.

The new export licensing requirement is similar to that imposed on Syria in exempting “food” and “medicine” as those terms are defined under the Export Administration Regulations. The food and medicine must fall under catchall EAR99 — i.e., they cannot appear on the CCL — to qualify for the exemption. The regulations define “food” as “items that are consumed by and provide nutrition to humans and animals, and seeds, with the exception of castor bean seeds, that germinate into items that will be consumed by and provide nutrition to humans and animals. (Food does not include alcoholic beverages.)”

The new export licensing requirement was effective on January 26, 2007, but there was a savings clause for items that were on dock for loading, laden aboard an exporting carrier or en route to a port of export on January 26.

The new regulations also describe BIS licensing policy for license applications for North Korea in a revised part 746.4 as follows:

1. The following license applications will be subject to a policy of denial:
   • Luxury Goods, e.g., luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other alcoholic beverages; musical instruments; art; and antiques and collectible items, including but not limited to rare coins and stamps (See Supplement No. 1 to part 746 for a more complete list);
   • Arms and related materiel;
   • Items specified by UN documents S/2006/814, S/2006/ 815 and S/2006/853 and other items that the UN Security Council or the Sanctions Committee established pursuant to UN Security Council Resolution 1718 has determined could contribute to North Korea’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programs;
   • Items controlled for NP and MT reasons (except ECCN 7A103 items);
   • All regime controlled items (Australia Group, Wassenaar, Nuclear Suppliers Group, Missile Technology Control Regime);
2. The following license applications will be subject to a policy of approval:
   • humanitarian items (e.g., blankets, basic footwear, heating oil, and other items meeting subsistence needs) intended for the benefit of the North Korean people;
   • items in support of United Nations humanitarian efforts;
   • agricultural commodities or medical devices items that are determined by BIS, in consultation with the interagency license review community, not to be luxury goods;
3. The remaining license applications will be approved on a case-by-case basis

The new regulations also limit license exceptions to the following:

1. TMP for items for use by the news media
2. GOV for items for personal or official use by personnel and agencies of the U.S. Government, the International Atomic Energy Agency (IAEA), or the European Atomic Energy Community (Euratom)
3. GFT, but not for luxury goods
4. TSU for operation technology and software for lawfully exported commodities
5. BAG for exports of items by individuals leaving the United States as personal baggage
6. AVS for civil aircraft

If you have any questions about this update, or if you would like additional information, please contact:

Kay C. Georgi
202.857.6293
georgi.kay@arentfox.com

Regan K. Alberda
202.715.8547
alberda.regan@arentfox.com

Michael Burton
202.857.6083
burton.michael@arentfox.com