This post was written by Joelle E.K. Laszlo. Research assistance for this post was provided by former Reed Smith Intern Henry R. Barnes.
The Export Control Reform Initiative currently underway will transform the cumbersome U.S. export controls regime into a streamlined system featuring a single control list, a single licensing agency, a single information technology system, and a single primary enforcement coordination agency. Until that dream of a reality comes true, the Administration’s serial short- and medium- term changes will have to suffice.
The latest is the Strategic Trade Authorization (“STA”) license exception. Effective immediately, License Exception STA allows for the export, reexport, and in-country transfer of specified goods to “low risk” countries. Specifically, under 15 C.F.R. § 740.20(c)(1), licenses will not be required for exports to any of 36 countries of certain sensitive technologies that are subject to control for any of six reasons (national security, chemical or biological weapons, nuclear nonproliferation, regional stability, crime control and/or significant items). The sensitive technologies eligible for License Exception STA include submersible vehicles, radar systems, source code, and high tech cameras.
Under 15 C.F.R. § 740.20(c)(2), a second group of eight destinations is eligible for export, reexport, and transfer (in-country) of a shorter list of less-sensitive technologies. Specifically, under the this part of the STA license exception, technologies controlled only for national security reasons are eligible for export to Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, and Taiwan.
The STA license exception applies only to goods for which the Export Administration Regulations (“EAR”) already impose the obligation to receive a license before export, reexport, or transfer (in-country). The license exception is not available for items controlled for other reasons like encryption, short supply, surreptitious listening, missile technology, chemical weapons, and human rights reasons. A user of the STA license exception are required to furnish its consignee with the Export Control Classification Number (“ECCN”) of any items shipped under the exception, maintain written records of shipments, and notify the consignee that the shipment is made pursuant to the license exception. Exporters of software source code must follow separate conditions for STA license exception use that include explicitly notifying the end user, in writing, of the restrictions on further release of the software.
The STA license exception is only a first and a small step in the long reformation process to come, and it may not be among the best. Even if the license exception applies to a given shipment, compliance with its conditions will not going be easy – exporters using the exception must keep thorough records, train employees, and possibly modify business practices. Those able to manage the conditions of License Exception STA, however, will also reap its substantial benefits.
Research and drafting assistance for this post was provided by Reed Smith Summer Associate Julya Vekstein.