Tuesday, August 3, 2010

BIS Clarifies Country Scope of Direct Product Rule

(World Trade Interactive)

The Bureau of Industry and Security has issued a final rule that, effective July 30, clarifies the scope of the “direct product rule” set forth in the Export Administration Regulations. BIS is also making parallel revisions or clarifications to written assurances required under license exception TSR (Technology and Software Restricted), information required on the license application for national security controlled technology, and the instructional steps in the EAR that provide guidance on how to apply the direct product rule.

Under the direct product rule, foreign-made items are subject to the EAR and require an export license or license exception if they are (a) located outside of the U.S., (b) subject to national security controls under the EAR, (c) the direct product of U.S.-origin software or technology that requires a written assurance as a supporting document for a license or as a pre-condition for the use of license exception TSR, and (d) being re-exported to a destination in a country of national security concern or a terrorist supporting country. Read more here.