New ECCN 0Y521 Becomes Effective Today

BIS published a final rule, in the Federal Register, which comes into effect on April 13, 2012, which is today.  77 Fed. Reg. 22,191 (April 13, 2012).  According to BIS,  the ECCN 0Y521 series will be used for items that warrant control on the CCL but are not yet identified in an existing ECCN.  Additionally, BIS states that ECCN 0Y521  is designed as a “temporary holding classification” and is equivalent to United States Munitions List (USML) Category XXI (Miscellaneous Articles).  As BIS states, it will be temporary as “the U.S. Government works to adopt a control through the relevant multilateral regime(s); to determine an appropriate longer-term control over the item; or determines that the item does not warrant control on the CCL.”

Government Criteria for 0Y521 Inclusion 

ECCN 0Y521 will contain list of items that are “added … by the Department of Commerce, with the concurrence of the Departments of Defense and State, when it identifies an item that should be controlled because it provides a significant military or intelligence advantage to the United States or because foreign policy reasons justify such control.”  The input may also be sought from Technical Advisory Committees.   This items may include “emerging technologies.”  BIS goes on to state that it is NOT the item’s “technical characteristics” but rather “significant military or intelligence advantage to the United States or for foreign policy reasons” which is the criteria for the item’s listing under 0Y521.

Export Restrictions

ECCN 0Y521 items will be subject to a nearly worldwide license requirement (i.e., for every country except Canada) with a case-by-case license review policy, through regional stability (RS Column 1) controls.  The only exception available would be a “GOV exception” under newly created 15 C.F.R. § 740.2(a)(14).

How Will 0Y521 Affect Your Work

Partial answer can be found in the BIS response to the Comment 4 of the Federal Register publication.  77 Fed. Reg. 22,191 (April 13, 2012).  BIS states  the obvious: “if an item that is subject to the EAR is not described in an ECCN on the CCL, including in an existing ECCN 0Y521 entry, the item is an EAR99 item.”  The problem with the statement of course, is somewhat vague description for some ECCNs, which may leave an exporter in the dark.  However, with respect to 0Y521, we know that we it is the (1) intelligence advantage, (2) foreign policy, and not the technical characteristics of the product that make or brake the difference.  Of course, technicalities aside, an export practitioner cannot single handedly decide that the particular product destined for export has intelligence / foreign policy restrictions.  BIS itself admitted that technologies are constantly “emerging.”  U.S. foreign policy is also not staying still.  Accordingly, our leadership in the “Department of Commerce, with the concurrence of the Departments of Defense and State” will make the decision of whether ECCN 0Y521 extends or does not extend to a particular item.  In fact, BIS stated that “[w]ith regard to identifying new items to classify under ECCN 0Y521 entries, the U.S. Government is responsible for identifying such items.”  See Comment 4 Response, 77 Fed. Reg. 22,191.

It is also worth noting that ECCN 0Y521 is NOT indexed as a part of Commerce Control List (CCL) as we know it.  The CCL is listed in the Supplement No. 1 to Part 774.  For accounting reasons mentioned in the response to Comment 7, BIS is creating a whole new Supplement No. 5 to part 774 (i.e. 15 C.F.R. § 774).  Based on 77 Fed. Reg. 22,191, BIS will do away with Supplement No. 4 (i.e. make it “reserved”) and assign Commerce Control List elsewhere within 15 C.F.R. § 774.

EAR Updates

In light of the above, export practitioners may update following reference material:

15 C.F.R. §732.3 (b)(4)

Items subject to temporary CCL controls are classified under the ECCN 0Y521 series (i.e., 0A521, 0B521, 0C521, 0D521 and 0E521) pursuant to § 742.6(a)(7) of the EAR while a determination is being made as to whether classification under a revised or new ECCN or EAR99 designation is appropriate.

15 C.F.R. § 734.3(c)

“Items subject to the EAR” consist of the items listed on the Commerce Control List (CCL) in part 774 of the EAR and all other items which meet the definition of that term. For ease of reference and classification purposes, items subject to the EAR which are not listed on the CCL are designated as “EAR99.” Items subject to temporary CCL controls are classified under the ECCN 0Y521 series (i.e., 0A521, 0B521, 0C521, 0D521, and 0E521) pursuant to § 742.6(a)(7) of the EAR, while a determination is made as to whether classification under a revised or new ECCN, or an EAR99 designation, is appropriate.

15 C.F.R. § 738.1(a)(3)

Items that warrant control for export or reexport but currently are not permanently classified on the CCL. Items subject to temporary CCL controls are classified under the ECCN 0Y521 series (i.e., 0A521, 0B521, 0C521, 0D521, and 0E521) pursuant to § 742.6(a)(7) of the EAR while a determination is made as to whether classification under a revised or new ECCN, or an EAR99 designation, is appropriate.

15 C.F.R. § 740.2(14)

Items classified under ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521 may only be authorized by License Exception GOV ( § 740.11(b)(2)(ii)) or an item-specific license exception identified in Supplement No. 5 to part 774 for a particular ECCN 0Y521 item.) (Note to Paragraph (a)(14): Item-specific license exception availability is specific to each ECCN 0Y521 entry in Supplement No. 5 to part 774 and may not be used for any other ECCN 0Y521 entries in the Supplement. The U.S. Government makes a determination at the time items are classified under ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521 regarding whether any license exceptions will be available, in addition to License Exception GOV ( § 740.11(b)(2)(ii)).

15 C.F.R. § 742.6(a)(7) & (b)

(7)(a) RS Column 1 license requirements and related policies for ECCN 0Y521 items.

(i) Scope. This paragraph (a)(7) supplements the information in the 0Y521 ECCNs and in Supplement No. 5 to part 774 (Items Classified Under ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521). This paragraph alerts exporters, reexporters and transferors to the procedures that apply to items classified under the 0Y521 ECCNs.

(ii) 0Y521 Items. Items subject to the EAR that are not listed elsewhere in the CCL, but which the Department of Commerce, with the concurrence of the Departments of Defense and State, has determined should be controlled for export because the items provide at least a significant military or intelligence advantage to the United States or for foreign policy reasons are classified under ECCNs 0A521, 0B521, 0C521, 0D521 and 0E521. These items are typically emerging technologies (including emerging commodities, software and technology) that are not yet included in the CCL, so such items are listed on the CCL in 0Y521 ECCNs while the U.S. Government determines whether classification under a revised or new ECCN, or an EAR 99 designation, is appropriate. The list of items classified under a 0Y521 ECCN is limited to those listed in Supplement No. 5 to part 774.

(iii) Requirement to be classified under another ECCN within one calendar year of classification under ECCN 0Y521. Items classified under an ECCN 0Y521 entry must be re-classified under another ECCN within one calendar year from the date they are listed in Supplement No. 5 to part 774 of the EAR. If such re-classification does not occur within that period, classification under an ECCN 0Y521 entry expires, and such items are designated as EAR99 items unless either the CCL is amended to impose a control on such items under another ECCN or the ECCN 0Y521 classification is extended. BIS may extend an item’s ECCN 0Y521 classification for two one-year periods, provided that the U.S. Government has submitted a proposal to the relevant multilateral regime(s) to obtain multilateral controls over the item. Further extension beyond three years may occur only if the Under Secretary for Industry and Security makes a determination that such extension is in the national security or foreign policy interests of the United States. Any extension or re-extension of control of an ECCN 0Y521 item, including the determination by the Under Secretary, shall be published in the Federal Register.

(b) Licensing policy. (1) Applications for exports and reexports described in paragraph (a)(1), (a)(2), (a)(6) or (a)(7) of this section will be reviewed on a case-by-case basis to determine whether the export or reexport could contribute directly or indirectly to any country’s military capabilities in a manner that would alter or destabilize a region’s military balance contrary to the foreign policy interests of the United States.

SUPPLEMENT NO. 1 TO PART 774—THE COMMERCE CONTROL LIST

CATEGORY 0—NUCLEAR MATERIALS, FACILITIES, AND EQUIPMENT [AND MISCELLANEOUS ITEMS]

 A. SYSTEMS, EQUIPMENT AND COMPONENTS

0A521

Any commodity subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

0A521

Commodities are subject to RS1 controls with no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under § 740.11(b)(2)(ii) of the EAR, or an item-specific license exception identified in Supplement No. 5 to part 774 particular to an item covered under ECCN 0A521. The list of commodities determined to be classified under ECCN 0A521 controls is published in Supplement No. 5 to part 774. The license requirements and licensing policy relating to ECCN 0A521 are set forth in § 742.6(a)(7) of the EAR.

B. TEST, INSPECTION AND PRODUCTION EQUIPMENT

0B521

Any commodity subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

0B521 Commodities are subject to RS1 controls with no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under § 740.11(b)(2)(ii) of the EAR, or an item- specific license exception identified in Supplement No. 5 to part 774 particular to an item covered under ECCN 0B521. The list of commodities determined to be classified under ECCN 0B521 controls is published in Supplement No. 5 to part 774. The license requirements and licensing policy relating to ECCN 0B521 are set forth in § 742.6(a)(7) of the EAR.

C. MATERIALS

0C521

Any material subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

0C521

Materials are subject to RS1 controls with no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under § 740.11(b)(2)(ii) of the EAR, or an item-specific license exception identified in Supplement No. 5 to part 774 particular to an item covered under ECCN 0C521. The list of materials determined to be classified under ECCN 0C521 controls is published in Supplement No. 5 to part 774. The license requirements and licensing policy relating to ECCN 0C521 are set forth in § 742.6(a)(7) of the EAR.

D. SOFTWARE

0D521

Any software subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

0D521

Software is subject to RS1 controls with no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under § 740.11(b)(2)(ii) of the EAR, or an item-specific license exception identified in Supplement No. 5 to part 774 particular to an item covered under ECCN 0D521. The list of software determined to be classified under ECCN 0D521 controls is published in Supplement No. 5 to part 774. The license requirements and licensing policy relating to ECCN 0D521 are set forth in § 742.6(a)(7) of the EAR.

E. TECHNOLOGY

0E521

Any technology subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

0E521

Technology is subject to RS1 controls with no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under § 740.11(b)(2)(ii) of the EAR, or an item-specific license exception identified in Supplement No. 5 to part 774 particular to an item covered under ECCN 0E521. The list of technologies determined to be classified under ECCN 0E521 controls is published in Supplement No. 5 to part 774. The license requirements and licensing policy relating to ECCN 0E521 are set forth in § 742.6(a)(7) of the EAR.

SUPPLEMENT NO. 5 TO PART 774

BIS did not have any specific listings under 0Y521 in 77 Fed. Reg. 22,191 publication, but did provide a sneak preview of what it will look like:

ITEMS CLASSIFIED UNDER ECCNS 0A521, 0B521, 0C521, 0D521 AND 0E521

The following table lists items subject to the EAR that are not listed elsewhere in the CCL, but which the Department of Commerce, with the concurrence of the Departments of Defense and State, has identified warrant control for export or reexport because the items provide at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

Miscalleneous

Additional suggestion that may help, is to update your alert settings with keyword “0Y521,”  because “ECCN 0Y521 controls only become applicable once a final rule is published in the Federal Register adding a description of such an item to Supplement No. 5 to part 774.”  See Comment 4 Response, 77 FR 22191.  Since CCL is reviewed and updated on a continuous basis, one may derive some utility from being informed.

To subscribe to 0Y521 you may take following steps:

1. Go to https://www.federalregister.gov/
2. In the top right corner you will find a search box.  Enter 0Y521 in the search box.
3. The next screen will show a bar with  “Subscribe” button, click on that button.
4. Another small window will pop-up asking you to enter your email.
5. Enter your email and click subscribe.
6. Go to your inbox, and confirm your subscription.
7. Check your inbox regularly.