The Department of Commerce’s Bureau of Industry and Security recently published updated guidelines for companies submitting export license applications for their foreign employees.
More specifically, BIS revised the guidelines for preparing export license applications, which are supplemental instructions for applicants submitting deemed export license applications in accordance with the Export Administration Regulation.
Industry is advised to review and follow the guidelines to streamline the application process and avoid processing delays.
Sectors most likely to be affected by this rule are universities, technology firms and manufacturers employing or collaborating with foreign persons.
What Are Deemed Exports and When Do I Need a License for Them?
Pursuant to 22 CFR 743.13, a “release” or transfer of EAR-controlled technology, source code, or information to a foreign national while in the U.S. is “deemed” to be an export to the foreign person’s most recent country of citizenship or permanent residency.
This transfer of information is considered an export, even though the entire “release” of information occurs within the United States.
What this means, in practice, is that EAR-controlled technology may be continuously exported through your company’s day-to-day operations without a single physical shipment of goods.
This can occur through sharing information with a foreign national, including your own employees, via meetings, screen sharing, network drives, drawings, manuals, email and telephone discussions, etc.
Before a deemed export takes place, U.S. companies must first evaluate whether an export license is necessary.
Accordingly, U.S. entities must apply for an export license under the deemed export regulations when: (1) they intend to transfer controlled technologies to foreign nationals in the U.S.; and (2) the transfer of that technology to the foreign national’s home country would require an export license.
Employers must also disclose the need for an export control license to the U.S. Citizenship and Immigration Services when sponsoring foreign employees for certain work-authorized visa statuses (for example, H-1B status).
What’s New in the Guidance?
Supplement 1 to Part 748 provides guidance for filing an EAR license application of any type.
The updated guidance supplements the standard instructions and are specifically for deemed exports to foreign persons.
Under the new guidance, BIS now expects to see the following for all deemed export licenses.
Key Documentation Requirements:
Identity Verification Documents: Separate copies of the foreign applicant’s passport (no blank pages), visa, I-94, and work authorization. Note the validity dates when uploading.
Letter of Explanation: This letter describes the technology proposed for export to allow BIS to evaluate the impact of licensing the export on national security and foreign policy. The letter should include:
- The identity of the foreign person to the transaction, including full name, citizenship, addresses, and identity verification documents.
- The address where the technology or software will be released.
- A detailed description of the technology, as well as the accompanying ECCN.
- An explanation of the technical scope to be transferred or released. including a precise explanation of the foreign person’s job responsibilities as they relate to the export of the technology.
Resume: a detailed resume of the foreign person, including:
- Personal Background Information
- Education Background: a chronological list of degrees earned, schools attended, and dates of attendance.
- Employment History: A chronological list of jobs held, including the name of each employer, job descriptions, and technical skills acquired.
- Military Service: voluntary and/or mandatory
- Special Information: This is an optional section where the applicant can list any particular facts that should be taken into consideration by BIS during the review process.
Technology Control Plan: The control plan should provide a detailed explanation of the procedures and measures already in place or planned to be implemented in order prevent the unauthorized release of technology.
Other Key Parameters
- Standard Rider/Proviso: Any license is valid only if, and as long as, the foreign person maintains a valid visa and the required work authorizations that permit employment in the US.
- Yearly Reporting: Each year from the date of validation a report must be submitted confirming there have been no changes to the immigration or employment status of the covered individual.
- Establish Compliance Procedures: Upon request, the applicant must be able to provide BIS with compliance procedures regarding the release of specific technology or source code.
As manufacturers increasingly address workforce challenges for many different angles (pipeline programs, upskilling existing personnel, technology enhancements and immigration), they must ensure all export compliance requirements are satisfied.
The recent guidance on deemed export license should be reviewed to minimize lead time on required export licenses.
This article first appeared on CBIA's website and is published here with permission.
