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December 22, 2014

BIS Expands Military End-Use and End-User Control for Microprocessors

On December 17, 2014, the U.S. Department of Commerce, Bureau of Industry Security (BIS) amended the microprocessor military end-use and end-user control of § 744.17 of the Export Administration Regulations (EAR) by: 1) broadening the definition of “microprocessors” and adding associated software/technology to its scope, 2) expanding its restrictions to “in-country” transfers, and 3) creating a prohibition on the use of license exceptions for exports, re-exports, and in-country transfers of such items, with the exception of the License Exception GOV.

  1. Definition of Microprocessors: The term, “microprocessors,” now includes microprocessor microcircuits, microcomputer microcircuits, and microcontroller microcircuits with a processing speed of 5 GFLOPS or greater and an arithmetic logic unit possessing an access width of 32 bit or more, including those incorporating an “information security” functionality. 

    In addition, end-use and end-user restrictions are no longer limited to commodities, but now include associated software and technology used to produce or develop the microprocessors.
  2. In-Country Transfers: The amendment places restrictions on in-country transfers even when a license to a certain destination is obtained.  This expansion is intended to control transfers to prohibited military-end uses and end-users in-country.
  3. Prohibition on the Use of License Exception: The provisions of § 744.17 of the EAR supersede any license exception or “No License Required” (NLR) designation, except that it does not apply when the aforementioned transactions are “for” or “on behalf” of the U.S. Government or cooperating agencies, in accordance with § 740.11 of the EAR. 

A person or entity is prohibited from exporting, reexporting, or transferring (in-country) microprocessors or related software and technology, without a license, if at the time of such a transaction, that individual or entity knows, has reason to know, or is informed by BIS (either by specific notice or through an amendment to the regulations) that such items are for a “military end use” or “military end-user” in those countries listed in Country Group D:1.  There is a presumption of denial for license applications subject to this provision.

Shipments that are no longer eligible for the license exception and/or eligible for export, reexport, or in-country transfer without a license may proceed to their destination as long as the shipment was made pursuant to an actual order to a destination and on “dock for loading, on lighter, laden aboard a carrier, or en route aboard a carrier to a port” on December 17, 2014.  Pursuant to this savings clause, such a shipment must be exported, reexported, or transferred before midnight on February 17, 2015.
If you have any questions about the microprocessor military end-use and end-user control in the EAR, please do not hesitate to contact us. 

Source: Federal Register (click here for more information).