BIS Preparing for Potentially 'Difficult' Wassenaar Cycle, Official Says

The Commerce Department is unsure whether the multilateral Wassenaar Arrangement will be able to meet in person this year after the regime’s 2020 plenary was canceled, potentially creating more uncertainty surrounding the group’s next batch of multilateral export control proposals. The agency also still has not made a decision on eliminating electronic export filing requirements for shipments to Puerto Rico, but has made some progress on its long-awaited routed export rule, a Commerce official said.

Commerce’s Bureau of Industry and Security had planned to push through multiple multilateral controls at Wassenaar last year, but country representatives couldn’t meet because of COVID-19-related travel restrictions (see 2011090045 and 2004290044). As a result, some proposals have been rolled over to this year.

Although Wassenaar is “putting in a lot of effort” on holding physical meetings ahead of its 2020 plenary, the process has been “very difficult,” Hillary Hess, a BIS official, said during a June 8 Regulations and Procedures Technical Advisory Committee meeting. “I've heard that they will try to figure out a way to do it virtually or hybrid or something,” said Hess, BIS’s regulatory policy director. “I have not heard that they were successful in figuring out” in-person meetings.

BIS has been preparing to virtually present its proposals to the group, which will likely see an uptick in the number of submissions from other member countries because of last year’s COVID-related disruptions. That could lead to some challenges, Hess said. “I know it's an awful lot of work, even in a normal year,” she said. “So to try to do two years' worth I think is going to be really difficult.”

Commerce’s Census Bureau is also still reviewing the changes to Electronic Export Information filing requirements proposed in its September pre-rule, which would reduce the burden on exporters to Puerto Rico (see 2104230025). Census official Shannon Barley told the RPTAC that the agency “continues” to meet with the Bureau of Economic Analysis and the Puerto Rico government about alternate data sets for capturing the EEI information.

While the agency has identified an alternate data source, it doesn’t yet feel comfortable moving forward with it, Barley said. “We definitely are digging more into what is available and how -- if it can be used -- we will try to use it,” she said. “There's not enough to say that those non-EEIs are comparable to what is currently being produced.”

Barley also said there has been progress -- albeit minimal -- on the agency’s routed export rule, which has seen several delays and is expected to include major changes to the process around assigning filing responsibilities to forwarders and address information sharing among parties in routed export transactions (see 2006020049 and 2012080046).

“We actually have had meetings with BIS in the last couple of weeks to kind of iron out the remaining sticking points,” she said. “So not to say that there's going to be [a published rule] coming soon, but the positive is that we are having those conversations.”

The RPTAC meeting also featured a presentation from the Computing Technology Industry Association, which gave a broad overview of their members’ concerns with recent BIS rules and procedures. The technology industry is especially concerned by the agency’s rules on military and military intelligence end-users and end-uses, which is causing significant due-diligence uncertainty (see 2105050048), said Tina Termei, an Amazon lawyer who was speaking on behalf of CompTIA members.

Termei said the rules impose “unreasonable” obligations on companies, which may not have the expertise and resources to conduct the necessary due diligence. “Unlike the United States government that has these resources, that's not what these companies do,” Termei said. “They're not investigators, they are not experts on the complicated world of” military intelligence. She urged BIS to consider making its military end-user list an “exhaustive” list, which could help with compliance.

“Right now, the industry doesn't know what to do with this stuff. There are different interpretations, there are different levels of diligence that companies are following, because not every company has the same resources, money, time and intelligence,” Termei said. “This way, everybody will have the same rule book, which means people and companies can actually follow it. They'll have the list, and they can comply with it.” BIS has pointed to its January guidance on the 2020 MEU rule (see 2101200016) and said it may consider issuing more guidance.

Termei also said CompTIA members have complained about lengthy BIS licensing times, some ranging between six months and a year. “When you are faced with a competitive advantage on going to market first and launching your product first, where days can make a difference, six months to a year is a tremendous timeline,” Termei said. “We absolutely ask that we get more assistance and resources for BIS to expedite its licensing process.”

A BIS spokesperson said the agency's average license processing time during the 2020 fiscal year was 23 days. "Each license application is evaluated on its own merits and decisions are made on the merits," the spokesperson said, adding that BIS reviews applications "in accordance" with its regulations.