License Exception ‘CIV’ (Civil End-Users §740.5) is soon to be eliminated. CIV authorized exports and reexports of items on the Commerce Control List (CCL) which had a license requirement to the ultimate destinations pursuant to the Commerce Control Country Chart for National Security (“NS”) reasons only; and identified by ‘CIV: Yes’ in the License Exception section of the Export Control Classification Number (“ECCN”), provided that the items were destined to most civil end-uses or civil end-users in Country Group D:1, except North Korea but including China. Some of the items that were entitled to use the CIV Exception included semiconductors, semiconductor production equipment, materials for semiconductor production, telecommunications equipment, radar equipment, civil aircraft engine production equipment and the technologies and software related to several of these items. This new rule is effective on June 29, 2020.
In the fall of 2019, BIS announced in the “Unified Agenda of Regulatory and Deregulatory Actions, it’s plan to eliminate the CIV License Exception from the Export Administration Regulations (EAR). The obvious motivation for such an elimination was, and still is, national security concerns, particularly with the concerns of China’s abuse of the exception in providing such commodities exported in furtherance of the CIV License Exception to the Chinese military.
BIS announced on April 28, 2020, that they will be amending the EAR to remove License Exception CIV from Export Control Classification Numbers and will now require an export license for national security-controlled items on the CCL to countries of national security concern. In effect, the new ruling allows the U.S. government to review transactions to those countries of concern prior to export, reexport, or transfer.
Exporters must take note that with the June 29, 2020 effective date of the Final Rule, all ‘tangible’ items (i.e. parts, components, attachments, and accessories), including technology stored on a USB or computer. and intangible items (i.e. releases or transfers of controlled technology to a foreign person verbally, an electronic means, or providing access to electronic files) will require a license prior to any export, reexport or in-country transfer taking place.
In another initiative within the “Unified Agenda of Regulatory and Deregulatory Actions,” BIS is also reviewing License Exceptions Strategic Trade Authorization (“STA) and Technology and Software Restricted (“TSR”) to remove the availability of the authorizations for certain items. At this time nothing further has been published by the agency but keep watch with Export Solutions for further updates.
For more information on how this change may affect your transactions, contact ESI for a free consultation.
Beverly Demma is a Sr. Consultant for Export Solutions -- a full-service consulting firm specializing in U.S. import and export regulations.