Deemed Exports F.A.Q.

WHAT IS A “RELEASE” OF TECHNOLOGY?

Technology is “released” for export when it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.); when technology is exchanged orally; or when technology is made available by practice or application under the guidance of persons with knowledge of the technology. See §734.2(b)(3) of the Export Administration Regulations (EAR).

WHAT IS “TECHNOLOGY”?

Per Part 772 of the Export Administration Regulations (EAR), “technology” is specific information necessary for the “development,” “production,” or “use” of a product. The General Technology Note states that the “export of technology” is controlled according to the provisions of each Category.” It further states that “technology required for the development, production, or use of a controlled product remains controlled even when applicable to a product controlled at a lower level.” Please note that the terms “required,” “development,” “production,” “use,” and “technology” are all defined in Part 772 of the EAR. Controlled technology is that which is listed on the Commerce Control List.

WHEN DO I NEED TO APPLY FOR AN EXPORT LICENSE FOR TECHNOLOGY UNDER THE “DEEMED EXPORT” RULE?

Assuming that a license is required because the technology does not qualify for treatment under EAR99 and no license exception is available, U.S. entities must apply for an export license under the “deemed export” rule when both of the following conditions are met: (1) they intend to transfer controlled technologies to foreign nationals in the United States; and (2) transfer of the same technology to the foreign national’s home country would require an export license.

HOW DO I KNOW IF A FOREIGN NATIONAL WOULD BE SUBJECT TO THE “DEEMED EXPORT” RULE?

HOW ARE INDIVIDUALS HANDLED WHO ARE PERMANENT RESIDENTS OR CITIZENS OF COUNTRIES OTHER THAN THOSE OF THEIR NATIONALITY?

As noted above in Question 5, if the individual is a naturalized citizen or permanent resident of the United States, the “deemed export” rule does not apply. In other words, he or she is not subject to the provisions of the “deemed export” regulation. For individuals who are citizens of more than one foreign country, or have citizenship in one foreign country and permanent residence in another, as a general policy, the last permanent resident status or citizenship obtained governs. Questions 7 through 11 provide examples of situations involving individuals who are citizens of more than one foreign country, or have citizenship in one foreign country and permanent residence in another. If, for some reason, the status of a foreign national is not certain, then you should ask the Bureau of Industry and Security (BIS), to determine where the stronger ties lie, based on the facts of the specific case. For instance, the status of a foreign national could be uncertain in situations where information may indicate involvement with prohibited entities or activities, for example, missile or nuclear-related end-uses or end-users as identified in Part 744 of the EAR. In response to a request for the status of a foreign national, BIS will look at the foreign national’s family, professional, financial, and employment ties.

WHAT IF THE INDIVIDUAL IS A FOREIGN NATIONAL OF ONE COUNTRY, SAY INDIA, BUT HAS OBTAINED PERMANENT RESIDENCY IN ANOTHER, SAY THE U.K.?

Release of controlled technology to that individual in the U.K. would be treated as if the shipment were being made to the U.K. and licensing requirements, if any, would be the same as for a British national in the U.K.

IF THIS SAME INDIAN FOREIGN NATIONAL TRAVELED TO VISIT FACILITIES IN A THIRD COUNTRY, SAY GERMANY, DO THE LICENSING REQUIREMENTS CHANGE, OR IS THE RELEASE STILL TREATED AS A TRANSFER TO THE U.K. FOR LICENSING PURPOSES?

The Indian national’s U.K. permanent residency status still drives the licensing requirements and releases of technology to him or her would be considered as transfers to the U.K.

WHAT IF THAT SAME INDIAN FOREIGN NATIONAL COMES TO THE UNITED STATES?

As long as the Indian foreign national maintains his or her permanent residency status in the U.K., transfers of technology to that individual would be deemed as transfers to the U.K.

NOW, WHAT ABOUT CHANGES IN NATIONALITY? IF A PERSON WAS A CITIZEN OF INDIA BUT SUBSEQUENTLY BECAME A CITIZEN OF THE U.K., HOW IS THAT PERSON TREATED FOR EXPORT CONTROL PURPOSES?

If the former Indian national becomes a British citizen, transfers of technology would be viewed as transfers to the U.K.

WHAT IF THE INDIAN FOREIGN NATIONAL BECOMES A CITIZEN OF THE U.K. BUT RETAINS HIS OR HER INDIAN CITIZENSHIP, AS WELL? THIS IS THE SITUATION OF PEOPLE WHO HAVE DUAL-CITIZENSHIP.

As a general principle, the last citizenship obtained governs. As is clear in response to Question 10 above, the individual’s most recent citizenship is with the U.K. and releases of technology would be viewed as releases to the U.K.

I HAVE READ ELSEWHERE ON YOUR WEB PAGE THE REQUIREMENTS FOR INFORMATION THAT THE BUREAU OF INDUSTRY AND SECURITY (BIS) WANTS IN ORDER TO PROCESS A “DEEMED EXPORT” LICENSE APPLICATION. I SEE THAT YOU REQUIRE A LOT OF PERSONAL DATA, INCLUDING CITIZENSHIP AND COUNTRY OF ORIGIN. I UNDERSTAND THAT I CANNOT ASK FOR SUCH INFORMATION FROM MY EMPLOYEES UNDER THE EQUAL EMPLOYMENT OPPORTUNITIES COMMISSION (EEOC) RULES. HOW DO I GET THAT INFORMATION?

The information we normally request derives from a curriculum vitae/resume or from company background checks. The information that BIS may request as part of the license application process is requested in order to determine whether BIS should authorize the release of such controlled sensitive technology. The hiring of foreign nationals is not prohibited or regulated by the Export Administration Regulations (EAR). The EAR does not regulate employment matters. The justification for the “deemed export” rule is that there is no more effective way of disclosing sensitive technical information (e.g., design know-how) than to work side-by-side in a laboratory or on the production floor of a company.

WHAT TECHNOLOGIES ARE SUBJECT TO THE COMMERCE DEPARTMENT CONTROLS?

Generally, technologies subject to the Export Administration Regulations (EAR) are those which are in the United States or of U.S. origin, in whole or in part. Most are proprietary. Technologies which tend to require licensing for transfer to foreign nationals are also dual-use (i.e., have both civil and military applications) and are subject to one or more control regimes, such as National Security, Nuclear Proliferation, Missile Technology, or Chemical and Biological Warfare.

Foreign technology with U.S.-origin technology commingled to a degree above a de minimis level is considered to be subject to the EAR. Technologies which may require an export license are those which are subject to the EAR and which are listed in the Commerce Control List, see Parts 734, 738, and 774 of the EAR.

Some technologies are under the exclusive jurisdiction of another agency of the U.S. government and are not subject to the EAR. These include defense services which are under the jurisdiction of the State Department and technology related to the production of special nuclear materials which is under the jurisdiction of the Energy Department.

Still other technologies do not require any authorization because they are already “publicly available.” These include patent applications; publicly available technology and software (other than software and technology controlled as encryption items) that are already published or will be published; technology which arises during or as a result of fundamental research; or technology which is educational. See Part 734 of the EAR for details.

IS SOFTWARE CONSIDERED “TECHNOLOGY” AND IS IT SIMILARLY CONTROLLED?

The Export Administration Regulations (EAR) definitions distinguish between software and technology. Software is one of the groups within each of the categories of items listed on the Commerce Control List (CCL). Software which is delineated on the CCL is controlled.

WHAT TECHNOLOGIES ARE CONSIDERED “FUNDAMENTAL RESEARCH”?

“Fundamental research” is basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community. It is distinguished from proprietary research and from industrial development, design, production, and product utilizations, the results of which ordinarily are restricted for proprietary and/or specific national security reasons. Normally, the results of “fundamental research” are published in scientific literature, thus making it publicly available. Research which is intended for publication, whether it is ever accepted by scientific journals or not, is considered to be “fundamental research.” A large segment of academic research is considered “fundamental research.” Because any information, technological or otherwise, that is publicly available is not subject to the Export Administration Regulations (EAR) (except for encryption object code and source code in electronic form or media) and thus does not require a license, “fundamental research” is not subject to the EAR and does not require a license. Please see §734.8 for a full discussion.

WHAT TECHNOLOGIES ARE CONSIDERED “FUNDAMENTAL RESEARCH”?

ARE EXPORTS AND “DEEMED EXPORTS” OF ENCRYPTION ITEMS HANDLED THE SAME WAY AS OTHER TECHNOLOGY ITEMS?

Exports of encryption technology and software source code are subject to the same regulatory requirements as other exports of technology and software source code.  However, many “deemed exports” of encryption technology and software source code are authorized under License Exception ENC (EAR Part 740.17). also

WE HAVE SEVERAL FOREIGN NATIONAL EMPLOYEES IN OUR FIRM, WHICH HAS SEVERAL DIVISIONS AND AN ADMINISTRATIVE AREA. TWO OF THE DIVISIONS, THE RESEARCH AND DEVELOPMENT (R&D) DIVISION AND THE ADVANCED MANUFACTURING/PROCESSING (ADMP) DIVISION, WORK WITH TECHNICAL DATA FOR ADVANCED MATERIALS USED IN ELECTRONIC AND JET ENGINE MANUFACTURING WHICH IS CONTROLLED UNDER ECCNS 2E001, 3E001, AND 9E003, AND WE HAVE SEVERAL FOREIGN NATIONAL ENGINEERS WORKING THERE. NONE OF THE OTHER DIVISIONS WORK WITH CONTROLLED TECHNICAL DATA, AND WE HAVE SOME FOREIGN NATIONAL EMPLOYEES IN THEM AS WELL. THE DIVISIONS ARE NOT CO-LOCATED. DO I NEED AN EXPORT LICENSE FOR ALL OF THE FOREIGN NATIONAL EMPLOYEES?

MY COMPANY WANTS TO EMPLOY AN INDIAN FOREIGN NATIONAL WHO SPENT THREE YEARS WORKING FOR AN INDIAN ORGANIZATION THAT IS ON THE ENTITY LIST. MAY I DO SO? DO I REQUIRE A LICENSE?

If he or she is properly documented for work in the United States, you may employ him or her. You must apply for an export license if you intend to release technology listed on the Commerce Control List which would require a license for export to India.