BIS Corrects Effective Date of Final Rule on China VEUs to October 19, 2007

BIS' correction changes the effective date of the final rule to October 19, 2007 (from November 19, 2007).

(On June 19, 2007, BIS issued a final rule which created a new authorization for VEUs located in eligible destinations to which commodities, software and technology (except those controlled for missile technology (MT) or crime control (CC) reasons) may be exported, reexported or transferred without a license.)

Eligible China VEUs, Items and Destinations for Each Listed

This final rule will amend 15 CFR Part 748, Supplement 7 by listing 1) the China VEUs, 2) the eligible items (by Export Control Classification Number) for each China VEU, and 3) the eligible destinations for each China VEU.

The names of the China VEUs are (see final rule for the eligible items and destinations for each of these VEUs):

Applied Materials China, Ltd.

BHA Aerocomposite Parts Co. Ltd.

National Semiconductor Corporation

Semiconductor Manufacturing International Corporation

Shanghai Hua Hong NEC Electronics Company, Ltd.

Authorization VEU Expected to Facilitate Exports to Civilian End-Users in China

In its final rule, BIS states that approving the five end-users as VEUs is expected to facilitate exports to civilian end-users in China. BIS adds that it anticipates that approval of these five companies as VEUs should significantly reduce the value of trade that requires a license for export or reexport to China. In addition, authorization VEU will eliminate the burden on exporters and reexporters of preparing license applications and on BIS for processing such applications.

BIS Notes that On-Site Reviews of VEUs May be Warranted

According to the final rule, to ensure appropriate facilitation of exports and reexports, on-site reviews of the VEUs may be warranted pursuant to the EAR. If such reviews are warranted, BIS will inform China's Ministry of Commerce.

(Although China was the only eligible destination when BIS issued its June 2007 final rule, in early October 2007, BIS issued a final rule making India eligible for Authorization VEU.

According to the BIS final rule, in order to be eligible for authorization VEU, exporters, reexporters, and potential VEUs must adhere to various conditions and restrictions, including (partial list): (1) VEUs must be approved by the End-User Review Committee and listed in 15 CFR Part 748, Supplement 7; (2) requests for authorization as a VEU must be submitted as an advisory opinion request; (3) items obtained under authorization VEU may be used only for civil end-uses; (4) certifications must be obtained from the VEU prior to initial export/reexport regarding end-use and compliance with VEU requirements; (5) etc.

See ITT's Online Archives or 06/28/07 news, 07062815, for BP summary which highlighted BIS' final rule on Authorization VEU. See ITT's Online Archives or 10/03/07 news, 07100330, for BP summary on India's eligibility for Authorization VEU. See ITT's Online Archives or 10/22/07 news, 07102220, for original BP summary of BIS' final rule approving 5 China End-Users as VEUs.)

- written comments may be submitted on a continuing basis

BIS contact - Michael Rithmire (202) 482-6105

BIS correction notice (D/N 070817469-7596-01, FR Pub 10/24/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/Z7-20642.pdf

BIS final rule (D/N 070817469-7596-01, FR Pub 10/19/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-20642.pdf.

BIS' press release on the final rule (dated 10/18/07) available at http://www.bis.doc.gov/news/2007/china10182007.htm