Late last month, the U.S. Department of Commerce's Bureau of Industry and Security ("BIS") issued a final rule amending the Export Administration Regulations ("EAR") to facilitate certain exports and reexports from the United States to India. The rule is intended to implement portions of the two countries' June 7, 2016, Joint Statement: The United States and India—Enduring Global Partners in the 21st Century ("Joint Statement"), which, among other things, recognized the United States and India as major defense partners. As part of that recognition, the United States committed to continue to: (i) work toward facilitating technology-sharing with India to a level commensurate with that of its closest allies and partners; and (ii) facilitate the export of goods and technologies, consistent with U.S. law, for projects, programs, and joint ventures in support of official U.S.–India defense cooperation.
Further reflecting India's commitment to preventing proliferation of weapons of mass destruction and their means of delivery, shortly after issuance of the Joint Statement, India joined the Missile Technology Control Regime ("MTCR"), which aims at limiting the spread of ballistic missiles and other unmanned delivery systems that could be used for chemical, biological, and nuclear attacks. In preparation for its entry into the MTCR, India was required to strengthen its export controls, thereby potentially making it easier for other MTCR countries, such as the United States, to justify transferring sensitive technology to India.
The January 2017 amendments to the EAR implement two significant measures to facilitate such transfers. First, the amendments to the EAR establish a general policy of approval for license applications relating to exports or reexports to or transfers within India of items subject to the EAR and controlled only for national security or regional stability reasons.
Second, BIS amended the end-use and end-user provisions of its Validated End User ("VEU") program, which enhances high-technology civilian trade between the United States and VEU-eligible countries (currently China and India), to allow for items obtained under the program in India to be used for either civil or military end uses, except for items that are for use in nuclear, missile, or chemical or biological weapons activities. Use of the program reduces the licensing burden on industry by allowing U.S. exporters to ship designated items to preapproved entities under a general authorization instead of individual export licenses. Entities in India that are approved to participate in the VEU program will: (i) receive shipments of designated items subject to the EAR on an expedited basis; and (ii) have more certainty and reliability regarding the receipt of items subject to the EAR that are included in their VEU authorizations.
We will continue to follow developments relating to U.S. export control policy with respect to India and are available to assist companies in applying for licenses for exports and reexports to India or in obtaining VEU status.