A Guide for Exporters: Understanding License Exceptions Under U.S. Export Controls
Under U.S. export controls, specific exports, reexports, and transfers of controlled items typically require a license from the Bureau of Industry and Security (BIS). However, 15 CFR Part 740 provides various license exceptions that permit certain transactions without the need to apply for a license. These exceptions can facilitate trade by reducing administrative burdens, but it's crucial to understand which exceptions apply to specific circumstances and to comply with the applicable restrictions.
This article outlines two primary types of license exceptions under Part 740: ECCN-based license exceptions and situation-based license exceptions. It also offers guidance on how to identify and apply for the correct license exception and highlights key considerations when dealing with embargoed countries.
ECCN-Based License Exceptions
ECCN-based license exceptions are based on the specific Export Control Classification Number (ECCN) assigned to an item. These exceptions apply to particular goods, software, or technology, based on the item's ECCN. The following are some commonly used ECCN-based license exceptions:
GBS (Group B Shipment Exception)
This exception allows exports of certain controlled items to Group B countries with less restrictive controls, listed in Supplement No. 1 to Part 740. Group B countries are generally friendly nations where the risk of unauthorized end-use is low.
If the ECCN for your item specifies that the item is eligible for the GBS exception, and the destination country is listed as Group B, this license exception may be applied.
LVS (Limited Value Shipments)
The LVS exception is used for shipments of controlled items that fall below a specified dollar value threshold per ECCN. This is ideal for low-value exports where applying for a license would be burdensome.
Confirm that the ECCN of the item allows the LVS exception and check the value limits in Supplement No. 2 to Part 740 for eligibility.
APP (Computers):
This exception authorizes the export of certain computers and related technology to eligible destinations. It applies to both hardware and associated software when specified in the ECCN.
If the ECCN of a computer product indicates eligibility for the APP exception, and the export meets the specified criteria, this exception can be applied.
TSR (Technology and Software Under Restriction)
TSR allows for the export of certain technologies and software to destinations with which the U.S. has less stringent export controls due to international agreements.
The ECCN of the technology or software must specify eligibility for the TSR exception. Use this exception for exports to destinations where technology transfer risks are minimal.
ENC (Encryption Commodities, Software, and Technology)
The ENC exception applies to specific encryption items and related technology, allowing their export to eligible destinations without a license.
If the ECCN permits, and the item meets encryption classification requirements, the ENC exception can be applied, typically after a one-time notification to BIS.
NAC/ACA (Notified Advanced Computing/Advanced Computing Authorized)
These exceptions cover exports of advanced computing items, particularly for specific notified or authorized uses.
If the ECCN indicates NAC or ACA eligibility, use this exception for advanced computing items approved for export by BIS.
Situation-Based License Exceptions
Unlike ECCN-based exceptions, situation-based exceptions depend on the circumstances or purpose of the export rather than the ECCN. Here are key situation-based exceptions:
STA (Strategic Trade Authorization)
The STA exception facilitates exports to certain partner countries that have committed to high standards of export control. It generally applies to countries in Country Group A:5, listed in Supplement No. 1 to Part 740.
For exports to partner countries where end-use assurances align with U.S. strategic interests, and the ECCN authorizes STA, this exception may simplify the process.
TMP (Temporary Exports and Reexports)
TMP authorizes temporary exports for specific purposes, such as exhibition or demonstration, with the understanding that the items will be returned to the U.S.
Use TMP for items temporarily exported and intended to return to the U.S. or be reexported to a different country, provided the circumstances fall within TMP guidelines.
RPL (Servicing and Replacement of Parts and Equipment)
This exception covers exports for the purpose of repairing, servicing, or replacing previously exported equipment.
Apply RPL for spare parts and equipment maintenance, as long as the exports align with the servicing or replacement guidelines in Part 740.
GOV (Governments, International Organizations, etc.)
The GOV exception allows exports to U.S. government agencies and certain international organizations.
If the export is to a U.S. government agency or an approved international organization, such as the United Nations, the GOV exception may be applicable.
BAG (Baggage)
BAG applies to personal items exported as baggage, typically covering items like personal electronics or other personal effects.
Use the BAG exception when items are exported in checked or carry-on baggage, intended for personal use.
TSU (Technology and Software - Unrestricted)
The TSU exception is for certain software and technology exports not otherwise restricted by the EAR, generally covering publicly available software.
Apply TSU when exporting eligible technology or software, particularly if it is published or publicly available and exempt from the EAR.
How to Identify and Apply for a License Exception
Determine Eligibility
Check the ECCN to see if the item’s description aligns with any ECCN-based license exception.
Review the export’s purpose and destination country to identify if a situation-based license exception is relevant.
Evaluate Embargoed Country Restrictions
For exports to embargoed or sanctioned countries, ensure the exception allows the export and review EAR Part 746 and OFAC regulations. Many exceptions cannot be used for sanctioned destinations or are severely restricted.
Select the Appropriate Exception
If multiple license exceptions apply, choose the one that is easiest to use and best fits the export scenario. For example, if both STA and LVS apply, but STA offers broader coverage, consider applying STA.
Documentation
Keep records of the exception and any supporting documentation, such as ECCN classification and eligibility details, to demonstrate compliance during potential audits.
Conclusion
License exceptions under 15 CFR Part 740 simplify the export process, allowing export control officers to meet compliance requirements more efficiently. By understanding both ECCN-based and situation-based exceptions, exporters can identify and apply the right exceptions, making exports more streamlined while maintaining compliance with U.S. export control regulations.
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Sources Cited
Code of Federal Regulations. "Title 15 CFR Part 740 - License Exceptions." eCFR.gov
Bureau of Industry and Security. "Export Administration Regulations (EAR)." BIS.gov
