15 CFR 732.2 - Steps regarding scope of the EAR.
|Updated to:||January 2013|
Title 15: Commerce and Foreign TradeSUBTITLE B: Regulations Relating to Commerce and Foreign Trade (Continued) CHAPTER VII: BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE SUBCHAPTER C: EXPORT ADMINISTRATION REGULATIONS PART 732: STEPS FOR USING THE EAR 732.2 - Steps regarding scope of the EAR. Steps 1 though 6 are designed to aid you in determining the scope of the EAR. A flow chart describing these steps is contained in Supplement No. 2 to part 732. (a) Step 1: Items subject to the exclusive jurisdiction of another Federal agency. This step is relevant for both exports and reexports. Determine whether your item is subject to the exclusive jurisdiction of another Federal Agency as provided in ? 734.3 of the EAR. (1) If your item is subject to the exclusive jurisdiction of another Federal agency, comply with the regulations of that agency. You need not comply with the EAR and may skip the remaining steps. (2) If your item is not subject to the exclusive jurisdiction of another federal agency, then proceed to Step 2 in paragraph (b) of this section. (b) Step 2: Publicly available technology and software. This step is relevant for both exports and reexports. Determine if your technology or software is publicly available as defined and explained at part 734 of the EAR. Supplement No. 1 to part 734 of the EAR contains several practical examples describing publicly available technology and software that are outside the scope of the EAR. The examples are illustrative, not comprehensive. Note that encryption software classified under ECCN 5D002 on the Commerce Control List (refer to Supplement No.1 to Part 774 of the EAR) is subject to the EAR even if publicly available, except for publicly available encryption object code software classified under ECCN 5D002 when the corresponding source code meets the criteria specified in ? 740.13(e) of the EAR. (1) If your technology or software is publicly available, and therefore outside the scope of the EAR, you may proceed with the export or reexport if you are not a U.S. person subject to General Prohibition Seven. If you are a U.S. person, go to Step 15 at ? 732.3(j) of this part. If you are a U.S. person and General Prohibition Seven concerning proliferation activity of U.S. persons does not apply, then you may proceed with the export or reexport of your publicly available technology or software. Note that all U.S. persons are subject to the provisions of General Prohibition Seven. (2) If your technology or software is not publicly available and you are exporting from the United States, skip to the Step 7 in ? 732.3(b) of this part concerning the general prohibitions. (3) If you are exporting items from a foreign country, you should then proceed to Step 3 in paragraph (c) of this section and the other steps concerning the scope of the EAR. (c) Step 3: Reexport of U.S.-origin items. This step is appropriate only for reexporters. For an item in a foreign country, you should determine whether the item is of U.S. origin. If it is of U.S.-origin, skip to Step 7 in ? 732.3(b) of this part. If it is not of U.S. origin, then proceed to Step 4 in paragraph (d) of this section. (d) Step 4: Foreign-made items incorporating controlled U.S.-origin items. This step is appropriate only for items that are made outside the United States and not currently located in the United States. Special requirements and restrictions apply to foreign-made items that incorporate U.S.-origin encryption items (see ? 734.4(a)(2), (b), and (g) of the EAR). (1) Determining whether your foreign made item is subject to the EAR. Using the guidance provided in Supplement No. 2 to part 734 of the EAR, determine whether controlled U.S.-origin items are incorporated into the foreign-made item and are above the de minimis level set forth in ? 734.4 of the EAR. (2) If no U.S.-origin controlled items are incorporated or if the percentage of incorporated U.S.-origin controlled items are equal to or below the de minimis level described in ? 734.4 of the EAR, then the foreign-made item is not subject to the EAR by reason of the de minimis rules, and you should go on to consider Step 6 regarding the foreign-produced direct product rule. (3) If the foreign-made item incorporates more than the de minimis level of U.S.-origin items, then that item is subject to the EAR and you should skip to Step 7 at ? 732.3 of this part and consider the steps regarding all other general prohibitions, license exceptions, and other requirements to determine applicability of these provisions to the foreign-made item. (e) [Reserved] (f) Step 6: Foreign-made items produced with certain U.S. technology for export to specified destinations. This step is appropriate for foreign-made items in foreign countries. (1) If your foreign-produced item is described in an entry on the CCL and the Country Chart requires a license to your export or reexport destination for national security reasons, you should determine whether your item is subject to General Prohibition Three (Foreign-Produced Direct Product Reexports) (? 736.2(b)(3) of the EAR). Your item is subject to the EAR if it is captured by General Prohibition Three (Foreign-Produced Direct Product Reexports), and that prohibition applies if your transaction meets each of the following conditions: (i) Country scope of prohibition. Your reexport destination for the foreign-produced direct product is a destination in Country Group D:1 or E:1 (see Supplement No. 1 to part 740 of the EAR) (reexports of foreign-produced direct products to other destinations are not subject to General Prohibition Three); (ii) Scope of technology or software used to create direct products subject to the prohibition. Technology or software that was used to create the foreign-produced direct product, and such technology or software that was subject to the EAR and required a written assurance as a supporting document for a license or as a precondition for the use of License Exception TSR in ? 740.6 of the EAR (reexports of foreign-produced direct products created with other technology and software are not subject to General Prohibition Three); and (iii) Scope of direct products subject to the prohibition. The foreign-produced direct products are subject to national security controls as designated on the proper ECCN of the Commerce Control List in part 774 of the EAR (reexports of foreign-produced direct products not subject to national security controls are not subject to General Prohibition Three). (2) License Exceptions. Each License Exception described in part 740 of the EAR overcomes this General Prohibition Three if all terms and conditions of a given License Exception are met by the exporter or reexporter. (3) Subject to the EAR. If your item is captured by the foreign-produced direct product control at General Prohibition Three, then your export from abroad is subject to the EAR. You should next consider the steps regarding all other general prohibitions, License Exceptions, and other requirements. If your item is not captured by General Prohibition Three, then your export from abroad is not subject to the EAR. You have completed the steps necessary to determine whether your transaction is subject to the EAR, and you may skip the remaining steps. Note that in summary, items in foreign countries are subject to the EAR when they are: (i) U.S.-origin commodities, software and technology unless controlled for export exclusively by another Federal agency or unless publicly available; (ii) Foreign-origin commodities, software, and technology that are within the scope of General Prohibition Two (Parts and Components Reexports), or General Prohibition Three (Foreign-Produced Direct Product Reexports). (However, such foreign-made items are also outside the scope of the EAR if they are controlled for export exclusively by another Federal agency or publicly available.) [61 FR 12740, Mar. 25, 1996] Editorial Note: For Federal Register citations affecting ? 732.2, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.fdsys.gov.