# Presentation: 767224

## U.S. Department of CommerceBureau of Industry and Security 

**U.S. Department of Commerce****Bureau of Industry and Security**

**Proposed Revisions to Export Controls for the People’s Republic of China**

**September 14,**** ****2006**

## Proposed Rule:Published July 6, 2006

- This rule proposes clarifications and changes to U.S. export control policy toward the PRC.
- All changes are designed to facilitate commercial, civilian trade while preventing exports that would make a material contribution to PRC military.
- Written comments must be received by November 3, 2006.

## License Review Standard for National Security Controlled Items EAR Section 742.4(b)(7)

- Proposed rule clarifies that it is U.S. policy to approve exports of items controlled on the Commerce Control List for reasons of national security (i.e., Wassenaar Controls) for *civil applications.*
- The policy is to generally deny exports that will contribute to advancement of China’s military capabilities.

**Notes:**
Although the Export Administration Act (EAA) expired on August 20, 2001, the Department of Commerce is acting under the authority conferred by Executive Order No. 13222 of August 17, 2001, as extended by the Notice of August 7, 2003. Therein, the President, by reason of the expiration of the Act, invoked his authority, including authority under the International Emergency Economic Powers Act (IEEPA), to continue in effect the system of controls that had been maintained under the Act.

## Authorization Validated End-User New EAR Section 748.15

- The proposed rule creates a new authorization for validated end-users in the PRC.
- This authorization VEU would allow certain exports to specified end-users without individual licenses.
- Designed to facilitate regular commercial trade with end-users in the PRC with an established record of engaging only in civil activities, and a strong record of compliance with U.S. export controls.

## Authorization Validated End User New EAR Section 748.15

- Request for VEU status is submitted through an advisory opinion and must include a list of proposed controlled items for export.
- Agencies will review prospective candidates and items.
- Eligible end-users and corresponding items will be listed in the new Supplement 7 to Part 748;
- _any exporter_ will be able to ship eligible items to these validated end-users.
- There will be certification, recordkeeping and reporting requirements for exporters and re-exporters.
- Exporters, reexporters and end-users will be audited on a routine basis.

## Military End-Use ControlNew EAR Section 744.21

- The proposed rule adds a license requirement for 47 ECCNs *when the exporter knows that the export is destined for a military end-use* in China.
- Review policy will be case by case to determine whether the export would make a material contribution to PRC military capabilities contrary to U.S. national security.
- Currently, all exports to China must be screened for weapons of mass destruction (WMD) use and denied persons.

## End-User Certificate RequirementsEAR Section 748.10

- The proposed rule expands the requirement for exporters to obtain end-use certificates from the PRC Ministry of Commerce.
- All items that require a license to the PRC for any reason and exceed a total value of $5,000 would require an end-use certificate.
- End-Use Certificates facilitate the ability to conduct end-use visits, which in turn facilitate exports of controlled goods to the PRC.

## Comment Period

- Comment period on this proposed rule is open until November 3.
- BIS is particularly interested in:
- information on availability, from China or elsewhere, of the additional 47 ECCNs subject to the military end-use control.
- comments on the definition of military end-use.

## Impact

- Based on BIS analysis to date...
- the VEU could free several hundred million dollars in exports from individual license requirements;
- the military end-use control will impact a minimal amount of trade.