Comments on: Don’t Believe Everything You Read in Newsweek

By: Clif Burns

Clif Burns — Wed, 24 Feb 2010 01:38:09 +0000

Technology, which needs to be included in de minimis calculations, would not be controlled to Syria unless listed in an ECCN and so could be excluded from the content calculations where otherwise required, as I read it.

By: Jeff Schwartz

Jeff Schwartz — Tue, 23 Feb 2010 21:35:33 +0000

Clif,

Your response to Avid is helpful, but I think your readers might beneift from a further clarification of the rule at hand.

Simply stated: If an item requires an export license if exported directly from the US to a given desetination, it is “controlled content” for purposes of the de minimis calculation when reexporting items to that destination. This potentially includes EAR 99 content.

Note, then, that EAR99 content is always “controlled” when the destination at issue in the reexport transaction is a sanctioned country under the EAR and that sanctioned country is subject to an export license requirement for all items subject to the EAR when shipped from the US (e.g. Iran, Cuba, Syria). I think this is now clear from the revised de minimis rule and was also implicit in the previous version of that rule. Also, BIS has adhered to this interpretation for quite some time (e.g. see p. 28 of this BIS presentation from 2007: http://www.buyusa.gov/france/fr/dualuseprogram.pdf ).

Lastly, I note that the only items subject to the EAR that do not require an export license to Syria are food and medicines not on the Commerce Control List (i.e. EAR99 food and medicines). Thus, the only US origin content that could be ignored when doing a de minimis calculation for Syria would be EAR 99 food/drugs. No aircraft parts (or other technology) could be excluded, even if EAR99.

It appears Mr. Tabler had it right!

By: John Pisa-Relli

John Pisa-Relli — Fri, 19 Feb 2010 22:50:22 +0000

Smarter folks than me have weighed in with perceptive obsevations, but I have just one admittedly gratuitous comment: Why would you believe *anything* you read in Newsweek? OK, back to my foxhole….

By: Clif Burns

Clif Burns — Thu, 18 Feb 2010 19:08:25 +0000

@avid reader: I think you’re right that what is “controlled” for these purposes does look to the country embargoes in Part 746 as well. But not all items are controlled to Syria even under part 746 — food, medicine and non-CCL technology among them. So the value of U.S.-origin non-CCL technology wouldn’t be included in the 10% calculation. But upon reflection it may well be that as a practical matter most items would be controlled and that a blanket 10% rule for all U.S. content, although not a correct statement of the rule, practically reaches the same result.

By: Clif Burns

Clif Burns — Thu, 18 Feb 2010 16:43:51 +0000

@Malcolm: The parts are ECCN 9A991 but are still subject to the 10% de minimis rule. If less than 10% of the content of the components of the part are U.S. origin goods controlled for export to Syria, the de minimis rule applies.

Your point about safety of flight issues is an extremely good point because I am aware that a number of license have been granted for export of aircraft parts to Syria for precisely that reason.

By: Malcolm Campbell

Malcolm Campbell — Thu, 18 Feb 2010 16:33:27 +0000

Aircraft parts generally fall under ECCN 9A991. These are controlled to Syria (anti-terrorism). Parts and Components related to Safety of Civil Aviation and Safe operation of Commercial Aircraft will be considered for a license to Syria on a case by case basis.
Don’t understand why “most of the civil fleet” is grounded, when mandatory grounding is usually a safety of flight issue, and there is a possible license available.

By: Avid reader

Avid reader — Thu, 18 Feb 2010 15:52:10 +0000

I’m an avid reader of the blog and think the quality, relevance and timeliness of the posts are absolutely top-notch.

On this specific point, I think that, although the EAR is not completely clear, the BIS takes the view that essentially all US-origin items subject to the EAR count towards the 10% de minimis calculation for non-US origin items to be exported to Syria. They take the view that it is not just items on the Commerce Control List (CCL) that count towards the 10% de minimis level. I went back and found a presentation made by a BIS presenter at Update 2008 that specifically makes this point.

I suppose that in applying this interpretation, BIS looks to the language in Supp. No. 2 to Part 734 that defines the scope of what is “controlled” for purposes of the de minimis calculation by reference to the embargoes described in Part 746 (as well as to the Commerce Country Chart, which largely ties to the CCL). Part 746 in turn references General Order No. 2 in Supp. No. 1 to Part 736 which provides that most items subject to the EAR (and not just CCL items) require a license for export to Syria.