BIS Amendment to EAR Revises Basis, Procedure for UVL Inclusion
The Commerce Department’s Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR), effective Jan. 21 (see 13121836), to implement changes that address past industry concerns over how to conduct business with end users that raise "red flags" because they are on the unverified list (UVL). BIS said the changes will help it verify the bona fides of parties to export transactions, and allow more visibility into transactions where bona fides couldn't be verified.
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The first of the changes implemented in this final rule requires exporters to file an Automated Export System (AES) record for all exports in a transaction involving a UVL end-user. "Under current regulations, an AES filing is only required if an export license is also required or if the transaction is above a certain value,” said BIS. "The rule implements a requirement to submit an AES filing for all exports, regardless of value or destination, if a person involved in the transaction as described above is listed on the UVL.”
This final rule also suspends license exceptions for exports, reexports, and transfers (in-country) of U.S.-origin items to end-users listed on the UVL. “The change increases U.S. Government insight into certain transactions involving such persons of items on the Commerce Control List,” said BIS. The suspension is consistent with current EAR license regulations, said BIS. This final rule also requires exporters to obtain a signed and dated UVL statement from an UVL listed end-user before proceeding with any export, reexport, or transfer (in-country) involving a UVL listed end-user and when an item is subject to EAR but does not require a license under the EAR. The statement must certify the end-use, end-user and country of ultimate destination for the exported items, and include complete contact information (e.g., shipping address, corporate address, intended end user address, etc.).
This final rule also adds the UVL to the EAR and removes all persons previously listed on the UVL. BIS will periodically make changes to the UVL and publish the changes in the Federal Register. The rule also adds a UVL overview to EAR that includes the conditions it imposes with respect to exports, reexports, and transfers (in-country) to listed persons, the criteria for revising the UVL, and the procedures for requesting removal or modification of a UVL entry. This final rule also modifies procedures for requesting removal of a person listed on the UVL. BIS Deputy Assistant Secretary for Export Enforcement will make the decisions over UVL changes, based on the demonstration of bona fides.
By removing lack of cooperation as a basis for adding end-users to the UVL, this final rule also eliminates ambiguity for listing persons on the UVL, said BIS. The EAR amendments implemented through this final rule apply to foreign persons involved export, reexport, and transfer (in-country) subject to the EAR that BIS, or BIS surrogate, officials fail to verify the bona fides of the end-user because a pre-license check (PLC) or a post-shipment verification (PSV), or other end-use check, cannot be completed. The reasons for failure to complete the mentioned tasks include the inability to demonstrate the “disposition” of items during an end-use check, the authenticity of an end-user cannot be verified and lack host government cooperation. These reasons are considered outside U.S. government control, according to BIS.
Affiliation with a person on the UVL will also no longer serve as “dispositive criterion” for justifying inclusion of the affiliate on the UVL, said BIS. Should BIS discover an end-user has an affiliation with a UVL end-user, BIS will initiate an end-use check on an export, reexport, or transfer (in-country) to which that person was a party, rather than proceeding to add the end-user to the UVL. All license requirements for exports, reexports, or transfers (in-country) of EAR subject items continue to apply, said BIS.
This final rule follows the proposal that appeared in the Federal Register on Sept. 11 (see 13091011). The proposal solicited one comment, but BIS dismissed a change recommended by the commenter.