ITAR COMPLIANCE TRAINING

EAR- Export Administration Regulations

The Export License Review Process Under the Export Administration Regulations (EAR)

The EAA and the implementing Export Administration Regulations (EAR) establish policies and procedures for the regulation of exports and set out which items need to be licensed for export to which destinations. Many of the current procedures were established by executive orders and regulations. The proposed Act (S. 149) would modify certain procedures and codify them. The Commerce Control List (CCL) currently provides detailed specifications for about 2400 dual-use items including equipment, materials, software, and technology (including data and know-how) likely requiring some type of export license. In many cases, items on the CCL will only require a license if going to a particular country. Yet some products, even if shipped to a friendly nation, will require a license due to the high risk of diversion to an unfriendly destination or because of the controversial nature of the product. The end-use and the end-user can also trigger a restriction. The CCL is periodically updated (with the benefit of significant input from other government agencies) to decontrol broadly available items and to focus controls on critical technologies and on key items in which the targeted countries are deficient. A major revision of the EAR was completed in 1996. It streamlined the licensing process and provided that exporters could follow a step-by-step process to determine whether a license was needed.

The task of the Bureau of Export Administration (BXA) of the Department of Commerce is to provide a complete analysis of each of the 10 to 12 thousand license applications received each year, reviewing not just the item in question but also its stated end use, as well as the reliability of each party to the transaction. (4) Within 9 days of receipt of the license application, BXA must notify the applicant as to whether the application is accepted, denied, in need of more information, or is being referred to other agencies for review. In practice, about 85% of all applications for a license are referred to other government agencies for evaluation, extending the length of the review process.

The current regulations give the Departments of Defense, Energy, and State a direct and equal role in the review of all license application submitted to the BXA. The interagency review process is facilitated by the use of several established interagency groups that provide broad expertise and help give a timely interagency consultation.

When review of a license application by another agency is requested by BXA, regulations give a set time table and procedure for that process. Within 10 days of such referral the receiving agency must advise BXA of any information deficiencies in the application. (Time taken to find such information does not count against the total allowed processing time). Within 30 days of the initial referral the reviewing agency will give BXA a recommendation to grant or deny the license application. If no recommendation is made within the 30-day period the reviewing agency will be deemed to have no objection to the license decision of BXA. If there is interagency disagreement the EAR contains a three tiered dispute resolution process set with explicit time limits for each stage of that process. (5) Disagreements arise on about 6% of all license applications, and approximately 93% of all such disputes are resolved by consensus at the first tier.

BXA's goal is to make a decision on all license applications no latter than 90 days from the date of registration with the BXA. The recent goal of the BXA review process has been to use strict time limits mixed with extensive inter-agency review to assure an expedited, but thorough review process. BXA reports that 96% of all license applications are processed and resolved within the 90-day time limit. (6) Interagency review typically takes less time than allowed in the regulations. But, if an agency needs more time for a thorough review it has the option of "stopping the clock."

BXA's denial of an export license must be explicitly supported by the statutory and regulatory basis for the denial, giving specific considerations and what modifications would allow BXA to reconsider an application. An explicit appeal procedure is specified in the EAR. One possible basis for appeal is an "assessment of foreign availability." If the item in question can be shown to be readily available from a non-U.S. source in sufficient quantity and of comparable quality then a license denial may, in some cases, be reversed.

In deciding the manner in which to restrict exports of goods and technologies, and to which destinations, current policy calls for consideration of several factors: a) the potential contribution of the export to the ability of the recipient to threaten U.S. security interests, (7) b) the importance of the goods or technology to U.S. military forces and the extent to which they "would permit a significant advance in a military system" of a threatening country, (8) c) the likelihood that the recipient will divert the export to another party who poses a threat to U.S. security, and d) the ability of the United States, in conjunction with other countries or multilateral regimes, to prevent the proposed recipient from obtaining identical or similar goods.

Based on the evaluation of these and other criteria, the U.S. government regulates exports using a range of approaches: