BIS Imposes New License Requirements on Most EAR Items (Including Luxury Goods) for Exports and Reexports to North Korea

(BIS is imposing new export and reexport controls on North Korea consistent with United Nations (UN) Resolution 1718, which, among other things, prevents a range of goods from entering or leaving North Korea and imposes an asset freeze and travel ban on persons related to the nuclear-weapon program. The resolution prohibits the provision of large-scale arms, nuclear technology and related training to North Korea, as well as luxury goods, calling upon all States to take cooperative action, including through the inspection of cargo, in accordance with their respective national laws. See ITT's Online Archives or 10/19/06 news, 06101910, for BP summary of UN Resolution 1718.)

BIS Will Review License Applications for All Items Subject to EAR, with Certain Exceptions

Under the final rule, BIS will require a license for the export and reexport to North Korea of all items subject to the EAR, except food and medicines that are not on the CCL, and will review license applications for items as follows:

Luxury goods. BIS states that it will review license applications for the export or reexport of luxury goods to North Korea under a general policy of denial. BIS' examples of luxury goods include luxury automobiles; yachts; gems; jewelry; other fashion accessories; cosmetics; perfumes; furs; designer clothing; luxury watches; rugs and tapestries; electronic entertainment software and equipment; recreational sports equipment; tobacco; wine and other alcoholic beverages; musical instruments; art; and antiques and collectible items including but not limited to rare coins and stamps.

BIS states that the determination of whether an item is a luxury good will be made on a case-by-case basis and in some cases, the end-use or end-user will be relevant to this determination. For example, computer laptops and luxury automobiles will be exempt from the general policy of denial if they are being exported or reexported to organizations legitimately involved in humanitarian relief efforts, other internationally sanctioned efforts, or in the interest of the U.S. Government.

Humanitarian items. BIS states that it will review under a general policy of approval license applications for the export or reexport of humanitarian items other than food or medicine (e.g., blankets, medical supplies, heating oil, and other items meeting subsistence needs) intended for the benefit of the North Korean people. The general policy of approval also extends to agricultural commodities and medical devices that are determined by BIS, in consultation with the interagency license review community, not to be luxury goods.

Arms and related material controlled on the CCL. BIS states that will review license applications for arms and related material controlled on the CCL and items controlled on the multilateral export control regime control lists (the Missile Technology Control Regime, the Nuclear Suppliers Group, the Australia Group, and the Wassenaar Arrangement) under a general policy of denial.

BIS states that although a license is already required to export and reexport to North Korea all items controlled on the CCL for Nuclear Nonproliferation (NP) and Missile Technology (MT) reasons, BIS also will require a license for these items (except for items classified under Export Commodity Classification Number (ECCN) 7A103) in accordance with the President's December 7, 2006 directive regarding implementation of Section 102(b) of the Arms Export Control Act.

Exceptions for License Requirements, Items on Dock for Loading, Etc.

According to BIS, the only license exceptions that remain available for North Korea, as provided in new 15 CFR 746.4(b) are for: (1) items for use by the news media; (2) items for personal or official use by personnel and agencies of the U.S. Government, the International Atomic Energy Agency (IAEA), or the European Atomic Energy Community (Euratom); (3) the export or reexport of gift parcels not containing luxury goods by an individual to an individual or a religious, charitable or educational organization, and the export or reexport by groups or organizations of certain donations to meet basic human needs; (4) operation technology and software for lawfully exported items and sales technology; (5) exports of items by individuals leaving the U.S. as personal baggage; and (6) civil passenger aircraft on temporary sojourn.

BIS also states that items that did not require a license prior to January 26, 2007 for export or reexport to North Korea and that are on dock for loading, on lighter, laden aboard an exporting carrier or en route aboard a carrier to a port of export on January 26, 2007, may be exported or reexported without being subject to this rule if the items are exported or reexported before midnight as of February 9, 2007. Exporters holding valid licenses for export or reexport to North Korea prior to January 26, 2007 are authorized to continue shipments pursuant to the terms and conditions of their licenses.

BIS contact - Joan Roberts (202) 482-4252

BIS final rule (D/N 070111012-7017-01, FR Pub 01/26/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-1180.pdf