Commerce TAC Considering Proposal for Deemed Export Exception

A Commerce Department technical advisory committee is considering proposing an exception for U.S. deemed export regulations to allow U.S. businesses to better compete with foreign companies. The potential exception, which hasn’t been finalized but was discussed during a July 27 meeting of the Sensors and Instrumentation Technical Advisory Committee, would authorize certain deemed exports to company employees, contractors or interns if the items are for “internal company use.” Committee members said the exception wouldn’t be eligible for deemed exports to foreign nationals from Country Groups E:1 and E:2, which includes Cuba, Iran, North Korea and Syria.

The exception would be useful because other U.S. trading partners, including Wassenaar Arrangement members, don’t have deemed export requirements, which requires U.S. companies to first obtain a license before releasing controlled technology to a foreign national on U.S soil. These requirements place U.S. companies at a disadvantage compared to other Wassenaar members, said Kristine Debaeke, a General Motors export compliance lawyer and SITAC member. The exception may, for example, "help U.S. industry be more competitive compared to the German or the French industry,” Debaeke said during the meeting.

Mark Tolbert, president of TOPTICA Photonics, a high-end laser system manufacturer, also said U.S. deemed export regulations can be a burden. “Especially with emerging technology companies like ours … the workforce limitation is almost crippling In many cases,” Tolbert said. He also said many European countries don’t face the same restrictions. “If we could eliminate or lessen the effect of deemed export [requirements], it would absolutely” help, he said during the meeting.

Debaeke said the most “controversial” part of the potential exception might be the fact that it only excludes foreign nationals from E:1 and E:2 countries. She suggested the State Department might also want to exclude China and other countries subject to military end-user and end-use controls from benefiting from the exception, such as Russia, Venezuela and Myanmar. “We might need to narrow this even more, depending on the feedback we receive,” said SITAC Co-Chair Jennifer O’Bryan, the government affairs director for SPIE, an international society for optics and photonics.

John Varesi, an official in the Bureau of Industry and Security's Sensors and Aviation Division, said the concerns over deemed export requirements are not new. "There has been a desire to lessen the requirements by a number of different groups," he said. “This approach is certainly something that we can try to develop and then put forward."