BIS Amends License Review Policy for Certain Exports to China, Venezuela, Russia

The Bureau of Industry and Security revised its license review policy for items controlled for national security reasons and destined for China, Venezuela and Russia (see 2010230007), the agency said in a final rule released Oct. 28. The rule, which takes effect Oct. 29, said BIS and other “reviewing agencies” will determine whether those exports will make a “material contribution” to the weapons systems of the countries before approving the shipments.

Specifically, BIS said it will determine case by case whether the exports materially contribute to the “‘development,’ ‘production,’ maintenance, repair, or operation” of the “weapons systems capability” of the three countries. BIS said its license determination will include an “illustrative list of factors” to “provide more guidance to exporters on information to be included with their license applications” and help BIS evaluate those applications.

Factors include “appropriateness” of the export “for the stated end use,” the item's “significance” for weapons systems capabilities of the importing country, whether any party in the transaction qualifies as a military end-user under the Export Administration Regulations and the involvement of any parties in military activities. BIS also will consider whether the importing country's government uses strategies to divert exports from their intended end-use to military uses, the “scope and effectiveness” of the importing country's export control system and “impact of a proposed export of an item” on the U.S. defense industrial base, including any “negative” impacts that could result from denying the export.

The agency will also review the “reliability” of parties in the transaction, including whether export licenses have previously been denied, the parties have previously conducted illegal procurement or diversions activities, and the parties are “capable of securely handling and storing the items.” It also will review whether end-use checks on the parties have been conducted or may be conducted by BIS or other U.S. agencies.

BIS said it will continue to apply a presumption of denial license policy for exports that would make a material contribution to Chinese, Venezuelan or Russian weapons systems. But the agency stressed that it has a presumption of approval policy for exports destined for civil end users or for civil end uses in the three countries. BIS in June expanded licensing and due diligence requirements for certain exports to China, Venezuela and Russia (see 2004270027), which created frustrations and challenges for industry (see 2007090075).