Today, August 31, 2006, the Bureau of Industry and Security (BIS) published the long-awaiting rule removing the licensing requirement for exports and reexports to Libya of items on the Commerce Control List controlled only for anti-terrorism (AT) reasons. A copy of the rule is attached for ease of reference. It is an interim final rule, effective immediately, August 31, 2006. The same rule also makes changes to Iraq licensing requirements for eight (8) ECCNs but the change has limited practical effect as all 8 ECCNs still require a license for Iraq.

Click here for the interim rule as it appears in the Federal Register.

Changes to Libya

In a nutshell, the regulation:

• confirms in the preamble that items that are subject to the Export Administration Regulations ("EAR") but not listed on the Commerce Control List ("CCL") (that is EAR99 items) do not require a license for export or reexport to Libya except as required by the end-user or end-use as set forth in general prohibitions 4 through 10 of the EAR.
• removes the AT export and reexport licensing requirements to Libya for items that are listed on the CCL but are controlled only for AT reasons.
• changes the de minimis rule applicable to Libya, changing the threshold from 10% to 25%. As a result, reexports of foreign items from abroad are subject to the EAR only if the U.S. controlled content in such items exceeds 25%. (Note: there are special rules in encryption, software and technology areas, so if you are using the de minimis rule you should consult counsel).
• retains licensing requirements for all other items on the CCL list, i.e. items controlled for National Security (NS), Nuclear Nonproliferation (NP), Chemical & Biological (CB), Missile Technology (MT), Regional Stability (RS), Crime Control (CC), Encryption (EI), Short Supply (SS) and Chemical Weapons (CW). However, CB, NP, NS, MT, RS, and CC license applications will generally be reviewed on a case-by-case basis.
• adds Libya to country group D:1 (countries of national security concern). Libya remains on country groups D:2 (nuclear), D:3 (chemical & biological) and D:4 (missile technology).
• as a result, license exceptions CIV, APP, TMP, RPL, GOV, GFT, TSU, BAG, AVS, ENC and KMI MAY be available for exports and reexports to Libya, provided of course that all terms and conditions of the license exception can be met.
• adds Libya to Computer Tier 3 thereby permitting exports and reexports of high performance computers under license exception APP. Foreign nationals from Libya also are now eligible to receive without a license certain high performance computer development, production and use technology and source code.
• removes license exception USPL (which allowed the export without a license of certain AT controlled items going with US persons to Libya) as it is no longer relevant.

Export compliance personnel should revise their compliance manuals to reflect these changes. They also should instruct their companies clearly:

1. which products that were previously controlled for export to Libya can now be exported or reexported without a license; and
2. which products still require a license for export or reexport to Libya.

Two important cautionary notes remain:

FIRST, general prohibitions 4 through 10 remain. Thus, any transaction that violates those prohibitions -- and in particular, sales to prohibited end-users and end-uses -- still requires a license.

SECOND, this change applies ONLY to items subject to the Export Administration Regulations (EAR). The rules applicable to items subject to other regulations (such as the International Traffic in Arms Regulations "ITAR", Nuclear Regulatory Commission "NRC", or Department of Energy "DOE") are not changed. Indeed, the Department of State recently issued a note reminding exporters that Libya remains a proscribed destination under Section 126.1 of the ITAR (22 CFR §126.1), and, until there is a Federal Register notice announcing a change in Libya’s status, it continues to be the policy of the State Department to deny all export applications for defense articles and services to Libya.

Changes to Iraq

The changes made to the Iraq rules have limited practical effect. Under the terms of BIS's prior Iraq regulations, items covered by eight export control classification numbers (ECCNs) previously required a license for export or reexport to Iraq, or transfer within Iraq, for anti-terrorism (AT) reasons. These eight items now STILL require a license for export, reexport and transfer, but for regional security (RS) reasons. The items are:

• B999 (Specific processing equipment such as hot cells and glove boxes suitable for use with radioactive materials),
• 0D999 (Specific software for neutronic calculations, radiation transport calculations and hydrodynamic calculations/ modeling),
• 1B999 (Specific processing equipment such as electrolytic cells for fluorine production and particle accelerators),
• 1C992 (Commercial charges containing energetic materials, n.e.s.),
• 1C995 (Certain mixtures and testing kits),
• 1C997 (Ammonium Nitrate),
• 1C999 (Specific Materials, n.e.s.) and
• 6A992 (Optical Sensors, not controlled by 6A002).

The licensing requirement was maintained “to reflect the U.S. Government's position that they could contribute to military capabilities within Iraq and in the region in a manner destabilizing to the region and contrary to the foreign policy interests of the United States.”

For more information, contact Kay Georgi.