On January 15, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim final rule implementing further provisions of the Export Control Reform Act of 2018 by: (i) imposing additional export license requirements under the Export Administration Regulations (EAR) in connection with certain military-intelligence end uses and end users; (ii) clarifying that license requirements under the EAR apply even when the items at issue are not subject to the EAR; (iii) establishing restrictions on transactions intended to circumvent license requirements for listed entities; and, (iv) expanding the scope of activities subject to chemical and biological weapons and rocket systems and unmanned aerial vehicles end-use controls. Overall, these regulations implement new controls on any U.S. technologies and specific activities of U.S. persons who may be supporting foreign military-intelligence end uses and end users in China, Cuba, Russia, and Venezuela, as well as in terrorist-supporting countries. They also enhance controls to prevent U.S. persons from supporting unauthorized weapons of mass destruction (WMD) programs including weapons delivery systems and production facilities.
These controls are intended to prevent U.S. persons from supporting certain foreign military-intelligence services through activities such as brokering the sale of foreign-origin items or providing maintenance, repair, or overhaul services. BIS will also expand license requirements for military-intelligence end uses and end users in China, Russia, and Venezuela beyond specifically listed items subject to existing military end-use and end-user (MEU) controls to apply to all items subject to the EAR. BIS is adding a new restrictions for exports, reexports, and transfers (in-country) to certain military-intelligence end uses or end users, specifically targeting the following foreign military-intelligence organizations:
- Cuba’s Directorate of Military Intelligence (DIM) and Directorate of Military Counterintelligence (CIM)
- China’s Intelligence Bureau of the Joint Staff Department
- Iran’s Islamic Revolutionary Guard Corps Intelligence Organization (IRGC-IO) and Artesh Directorate for Intelligence (J2)
- North Korea’s Reconnaissance General Bureau (RGB)
- Russia’s Main Intelligence Directorate (GRU)
- Syria’s Military Intelligence Service
- Venezuela’s General Directorate of Military Counterintelligence (DGCIM)
The interim final rule also establishes license requirements for specific activities of U.S. persons even when the items at issue are not subject to the EAR. For example, the new regulation has a general prohibition on U.S. persons offering, without a license, support for the design, development, production, operation, installation, maintenance, repair, overhaul, or refurbishing of nuclear explosive devices in or by any country subject to certain nuclear end-use restrictions. Similar restrictions on specific activities of U.S. persons have been added to cover “support” (a defined term in the regulations) for missiles, chemical or biological weapons, chemical weapons precursors and the aforementioned military-intelligence end use or a military-intelligence end user. No license exceptions will apply to these new prohibitions, and BIS will deny any export licenses if such support “would make a material contribution to the end uses and end users” identified as prohibited. License applications for a U.S. person to support a military-intelligence end use or end user will be reviewed with a presumption of denial.
Under the new regulations BIS may also inform persons that an export license is required because there is an “unacceptable risk that the export, reexport, or transfer (in-country) is intended to circumvent the license requirement imposed on an entity listed [on the Entity List], or because the transaction involves an “unacceptable risk that the party is acting as an agent, front, or shell company.” Finally, BIS is also revising end-use controls related to chemical and biological weapons, rocket systems, and unmanned aerial vehicles (UAVs) to ensure that any U.S. activity related to the operation, installation, maintenance, overhaul, repair, or refurbishing of such weapons, rocket systems, or UAVs triggers a catch-all export license requirement under the EAR.
This interim final rule will become effective on March 16, 2021. Public comments on the rule may be submitted via the Federal rulemaking portal (www.regulations.gov) on Docket No. BIS-2020-0044.