U'S' Department of Commerce Bureau of Industry and Security

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U.S. Department of CommerceBureau of Industry
and Security
Proposed Revisions to Export Controls for the
Peoples Republic of China
September 14, 2006
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Proposed RulePublished July 6, 2006

• This rule proposes clarifications and changes to
  U.S. export control policy toward the PRC.
• All changes are designed to facilitate
  commercial, civilian trade while preventing
  exports that would make a material contribution
  to PRC military.
• Written comments must be received by November 3,
  2006.

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License Review Standard for National Security
Controlled Items EAR Section 742.4(b)(7)

• Proposed rule clarifies that it is U.S. policy to
  approve exports of items controlled on the
  Commerce Control List for reasons of national
  security (i.e., Wassenaar Controls) for civil
  applications.
• The policy is to generally deny exports that will
  contribute to advancement of Chinas military
  capabilities.

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Authorization Validated End-User New EAR Section
748.15

• The proposed rule creates a new authorization for
  validated end-users in the PRC.
• This authorization VEU would allow certain
  exports to specified end-users without individual
  licenses.
• Designed to facilitate regular commercial trade
  with end-users in the PRC with an established
  record of engaging only in civil activities, and
  a strong record of compliance with U.S. export
  controls.

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Authorization Validated End User New EAR Section
748.15

• Request for VEU status is submitted through an
  advisory opinion and must include a list of
  proposed controlled items for export.
• Agencies will review prospective candidates and
  items.
• Eligible end-users and corresponding items will
  be listed in the new Supplement 7 to Part 748
• any exporter will be able to ship eligible items
  to these validated end-users.
• There will be certification, recordkeeping and
  reporting requirements for exporters and
  re-exporters.
• Exporters, reexporters and end-users will be
  audited on a routine basis.

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Military End-Use ControlNew EAR Section 744.21

• The proposed rule adds a license requirement for
  47 ECCNs when the exporter knows that the export
  is destined for a military end-use in China.
• Review policy will be case by case to determine
  whether the export would make a material
  contribution to PRC military capabilities
  contrary to U.S. national security.
• Currently, all exports to China must be screened
  for weapons of mass destruction (WMD) use and
  denied persons.

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End-User Certificate RequirementsEAR Section
748.10

• The proposed rule expands the requirement for
  exporters to obtain end-use certificates from the
  PRC Ministry of Commerce.
• All items that require a license to the PRC for
  any reason and exceed a total value of 5,000
  would require an end-use certificate.
• End-Use Certificates facilitate the ability to
  conduct end-use visits, which in turn facilitate
  exports of controlled goods to the PRC.

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Comment Period

• Comment period on this proposed rule is open
  until November 3.
• BIS is particularly interested in
• information on availability, from China or
  elsewhere, of the additional 47 ECCNs subject to
  the military end-use control.
• comments on the definition of military end-use.

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Impact

• Based on BIS analysis to date
• the VEU could free several hundred million
  dollars in exports from individual license
  requirements
• the military end-use control will impact a
  minimal amount of trade.