Obama Administration Loosens Export Controls With the Addition of the Strategic Trade Authorization (STA) License Exception
The Department of Commerce’s Bureau of Industry and Security (BIS) recently unveiled the final version of a new license exception added to the Export Administration Regulations (EAR). Part of the Obama Administration’s Export Control Reform Initiative, the STA License Exception authorizes the export, reexport and in-country transfer of specified controlled items and technology to a limited number of countries. This new license exception is the result of a multi-agency determination that certain controlled items and technology may be exported to a limited group of countries where the risk of diversion to unauthorized destinations, parties and uses is low. BIS estimates that the new STA License Exception will replace over 3,000 licenses issued per year. The exception does not modify any of the EAR’s General Prohibitions against unlicensed exports to proscribed end users, ends uses or destinations.
The STA License Exception provides two authorizations. One authorization permits exports, reexports and in-country transfers to 36 specified countries for items and technology that are controlled for any, or all, of the following six reasons: national security (NS), chemical or biological weapons (CB), nuclear nonproliferation (NP), regional stability (RS), crime control (CC), or significant item (SI). The second authorization permits the export, reexport and in-country transfer to eight additional countries for less sensitive items, which are subject only to the national security (NS) control.
Certain conditions must be met, however, when relying on the STA License Exception. For example, exporters must notify the consignee in writing that the shipment is made pursuant to License Exception STA and they must furnish the consignee with the Export Control Classification Number (ECCN) for each item that is transferred under the exception. In addition, exporters, reexporters and transferors must obtain a written statement from the consignee containing certain acknowledgements and assurances that the item will not be reexported or transferred to any destination, end use or end user prohibited by the EAR. The written statement required from the consignee is set forth in its entirety in the governing provision of the EAR. Other conditions also apply.
Despite its conditions, there are advantages for deemed exports, which often arise when foreign nationals are hired by U.S. organizations that produce or develop controlled items and technology. The new STA License Exception explicitly authorizes deemed exports as long as the transferor notifies the person receiving the controlled technology that there are restrictions on further release. The notification must be in writing and can be included in a contract or nondisclosure agreement.
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