On 16 June 2011 the Commerce Department's Bureau of Industry and Security (BIS) issued a final rule implementing a new License Exception Strategic Trade Authorization (License Exception STA) under the Export Administration Regulations (EAR). The final rule relaxes licensing requirements for the export, reexport, and in-country transfer of specified items to destinations that pose a relatively low risk of unauthorized end-uses, if the conditions of the license exception are met. The new license exception was created in order to partially implement President Obama's August 2009 directive to reform the U.S. export control system.

License Exception STA authorizes the unlicensed export, reexport, and in-country transfer of many items on the EAR's Commerce Control List (CCL) to a group of 36 countries in Western Europe and other key allies. License Exception STA also authorizes the unlicensed export, reexport, and in-country transfer of certain other, less sensitive items on the CCL to an additional group of eight countries. We note that License Exception STA also may be used for deemed exports; that is, the license exception permits releases of certain controlled technology and source code to foreign nationals of eligible countries. Certain CCL categories are ineligible for this new license exception, regardless of the destination country. 

Exporters should review this rule carefully, as certain exports, reexports, or in-country transfers that previously required a license may no longer require prior authorization from BIS under the new License Exception STA.

  1. Eligible exports, reexports, and in-country transfers under License Exception STA

License Exception STA, which is set forth in § 740.20 of the EAR, establishes two different categories of items eligible for unlicensed export, reexport, or in-country transfer to eligible countries. Whether a particular Export Control Classification Number (ECCN) listed on the CCL is eligible for export, reexport, or in-country transfer under License Exception STA depends on the item, its reason for control, and the destination country, as follows:

  1. Europe and other key allies: ECCNs controlled for national security (NS), chemical, or biological weapons, nuclear nonproliferation, regional stability, crime control, and/or significant items now can be exported or reexported to 36 countries, including Europe and other key allies. The 36 countries that are eligible for unlicensed transfers of these ECCNs are Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
  2. Other favored countries: ECCNs that are controlled only for NS reasons can be exported to Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, or Taiwan, in addition to the countries listed above. However, certain highly-controlled ECCNs that otherwise are eligible for License Exception STA may not be exported, reexported, or transferred to these eight countries. These exempt ECCNs include a note in the CCL that states that they are not eligible for License Exception STA for export, reexport, or in-country transfer to the eight countries.
  3. Rest of world: All other remaining countries not identified in one of the two categories above, including China and Russia, are not eligible for License Exception STA. The use of License Exception STA is optional, and does not preclude exporters from applying for a license or from using any other license exceptions set forth in the EAR. However, items that have been shipped pursuant to License Exception STA are ineligible for subsequent reexport or retransfer under License Exception APR.
  1. Certain items ineligible for License Exception STA

License Exception STA may not be used for the following categories of exports and re-exports:

  1. Items controlled for short supply, surreptitious listening, missile technology, or chemical weapons reasons
  2. Items controlled for encryption reasons
  3. Certain equipment designed for law enforcement and torture, certain types of arms, and certain  pathogens and toxins
  4. Certain technology related to the development of items controlled for missile technology reasons
  5. Certain gas turbine engine-related software and technology
  6. Items that require a license because of a specific end-use or end-user set forth in Part 744 of the EAR (such as a proliferation end-use or exports to parties on the Entity List)
  7. Transactions requiring a license under Part 746 of the EAR – Embargoes and other Special Controls (such as exports to countries subject to an arms embargo or comprehensive embargo under the EAR)
  8. Items subject to the export control jurisdiction of another agency such as the U.S. Department of State (for military items), the U.S. Department of Energy, or the Nuclear Regulatory Commission (for nuclear goods and technologies).
  1. Conditions on exports, reexports, and transfers under License Exception STA

Exporters and reexporters making use of License Exception STA must fulfill certain conditions:

  1. Notification of ECCNs: Exporters and reexporters must provide the ECCNs for each of the items exported under License Exception STA to the consignees that receive the item. Once furnished, the ECCN that applies to any item is not required to be refurnished if the exporter or reexporter makes subsequent transfers of the same item. 
  2. Prior Consignee Statement: The exporter, reexporter, or transferor must obtain a Prior Consignee Statement from their consignee describing the items to be shipped, acknowledging the receipt of ECCNs, and agreeing to comply with certain conditions prior to the shipment (e.g., a written assurance). The required form of this statement is set forth in Section 740.20(d)(2) of the EAR. This Prior Consignee Statement must be kept on file by the exporter, reexporter, or transferor for five years, and must contain certain assurances that the consignee is aware that the items are being shipped pursuant to License Exception STA and of the resulting conditions that apply to their retransfer.
  3. Shipment notifications: The exporter, reexporter, or transferor also must notify consignees regarding each shipment that is made pursuant to License Exception STA. This notice must specify the items that have been shipped pursuant to License Exception STA, or state that the entire shipment is made pursuant to the license exception. However, a single notification will sufficiently cover multiple shipments of the same items between the same parties, provided that the shipment does not include any additional items classified under different ECCNs are being shipped under License Exception STA.
  4. Deemed export notifications: Exporters making deemed exports of technology or source code to eligible foreign nationals under License Exception STA must provide a one-time notification to the foreign national recipient regarding restrictions on further release of the technology or source code at issue. A copy of the notification must be retained by the party making the release and the recipient of the release. The notification may be in a separate document or included in a document such as a contract or a nondisclosure agreement.
  5. Recordkeeping: Companies must maintain a log of all exports, reexporters, or in-country transfers made under License Exception STA and identify the specific consignee statement associated with each shipment. This log need not be submitted to BIS, and instead should be maintained in the records of the company making the transfer.