BIS Officials Discuss Accomplishments, Future Initiatives Regarding "Deemed Exports"

Deemed Export Accomplishments

BIS officials discussed their recent accomplishments under their deemed export program, including:

Automatic six-month extensions for license renewals¹ - According to BIS, existing deemed export licenses that require renewal will receive an automatic six-month extension if a renewal license application and a written request for extension of the validity period of the existing license are submitted to BIS and are received by BIS at least 45 days prior to the expiration of the existing license.

BIS notes that requests for license extensions that are not submitted with a license renewal application will be processed in accordance with 15 CFR 750.7(g)(2) and license renewal applications that are not submitted with a request for a license extension will be processed as expeditiously as possible.

Future deemed export license validity periods tied to visa expiration date¹. BIS states that future deemed export license validity periods will be tied to a foreign national's visa expiration date if that expiration date extends beyond the standard two-year license validity period.

Deemed export license applications solely for technology upgrades will be expedited¹. BIS states that for deemed export license applications that are solely for upgrades to technology already authorized in an existing license, processing will be expedited.

BIS notes that the exporter needs to state specifically that the application is for a technology upgrade of an existing license and to specify what new technology levels are required. The license number of the existing deemed export license must be included on the application and any associated correspondence.

¹ These accomplishments were previously discussed by BIS in its December 2003 document entitled "Deemed Export Process Improvements and Guidance on Renewals and Upgrades" availablefrom the BIS Web site at http://www.bis.doc.gov/DeemedExports/DeemedExpImprovements11_03.htm.

Increased interagency cooperation. BIS officials noted that they have established an electronic link with the Federal Bureau of Investigation (FBI) and that they now provide assistance to Department of State Consular Affairs on disposition of visa applications that involve controlled technology.

Ongoing Deemed Export Issues

BIS officials stated that the following are ongoing deemed export issues:

Office of the Inspector General report. On March 31, 2004, the Department of Commerce's Office of the Inspector General (OIG) issued a report entitled Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S. This report highlights some areas that the OIG states are working well, such as certain aspects of BIS' deemed export outreach program, while also highlighting issues and problems that hamper both BIS' and the U.S. government's efforts to more effectively prevent the transfer of sensitive technology to foreign nationals from countries or entities of concern while they are in the U.S. The OIG notes that BIS has indicated that it has already taken or plans to take action on many of the report's recommendations. The OIG report on deemed exports is available at http://www.oig.doc.gov/oig/reports/2004/BIS-IPE-16176-03-2004.pdf.

Distinguish fundamental research from the release of controlled use, production, or development technology. BIS stated that fundamental research needs to be distinguished from the release of controlled "use," "production," or "development" technology that may need a deemed export license if required for a foreign national to conduct research.

BIS Future Initiatives for Deemed Exports

BIS officials also discussed the initiatives that they hope to work on during the coming year, including:

Work with industry and multilateral export control regime partners to develop new technology and software thresholds for high performance computers and microprocessors;

Continue the development of the Special Intra-Company License (SIL) for intra-company transfers of technology to foreign national employees and foreign operations;

Maintain an aggressive outreach program with added emphasis on the university and research communities; and

Work with multilateral regime partners on both the feasibility and practicality of implementing in-country controls on technology transfer to foreign nationals.

BP Note on Deemed Exports

According to BIS' document entitled "Deemed Export Process Improvements and Guidance on Renewals and Upgrades," a deemed export, as set forth in 15 CFR 734.2 (b), is a "release of technology or software of items subject to the EAR to a foreign national in the United States."

Release of technology or software subject to the Export Administration Regulations (EAR) in a foreign country is not a deemed export.

BIS receives many export license applications for technology transfers to foreign countries that are incorrectly submitted as deemed export license requests, creating an unnecessary administrative burden on exporters and government agencies reviewing these applications, particularly when they are submitted as individual license applications for each employee of a foreign entity. A request for release of controlled technology in a foreign country should be submitted as a license application for export of technology to the foreign country, listing the foreign entity as the ultimate consignee. However, if a foreign entity wishes to disclose technology subject to the EAR to a foreign national of a third country (e.g., technology subject to the EAR is to be released by a UK entity to a Chinese national employed at a facility in the UK), the deemed reexport licensing requirements set forth in 15 CFR 734.2 (b)(5) would apply.