Exporters to Venezuela and Russia Beware: BIS Adds Venezuela and Russia to the ‘Military End Use’ and ‘Military End User’ Controls

On November 7, 2014, the Department of Commerce’s Bureau of Industry and Security (BIS) amended its Export Administration Regulations (EAR) to impose license requirements on the export, re-export, or transfer (in-country) of certain items to or within Venezuela when intended for a “military end use” or “military end user.” BIS had imposed these military end use/end user controls on exports, reexports, and transfers of certain items to Russia on September 17, 2014. As a practical matter, these changes will require affected companies to implement additional procedures to prevent the sale of relatively low level items that previously did not require a license to prohibited military end uses and end users in Russia and Venezuela.

Part 744.21(f) of the EAR regulations defines “military end use” as an item that is incorporated into one of the following:

• A military item described on the US Munitions List (USML) (22 CFR part 121, International Traffic in Arms Regulations);
• A military item described on the Wassenaar Arrangement Munitions List;
• Items classified under ECCNs ending in “A018” or under “600 series” ECCNs; or for the “use,” “development,” or “production” of military items described on the USML or the Wassenaar Arrangement Munitions List, or items classified under ECCNs ending in “A018” or under “600 series” ECCNs.

Part 744.21(g) of the EAR regulations defines “military end user” as “the national armed services (army, navy, marine, air force, or coast guard), as well as the national guard and national police, government intelligence or reconnaissance organizations, or any person or entity whose actions or functions are intended to support ‘military end uses’ as defined in paragraph (f) of this section.”

Items subject to this license requirement are listed in Supplement No. 2 to § 744 of the EAR. The items covered in Supplement No. 2 include ECCNs such as 4A994 (computers), 5A991 (basic telecommunications equipment), 7A994 (commercial GPS, aircraft navigation), 9A991 (commercial aircraft and engines) — in short, items that are controlled only for anti-terrorism (AT) reasons and do not currently require a license to Venezuela. A full list of the items subject to the new license requirements can be found here.

Items that meet the following requirements do not require a license under the new regulations:

• Transactions involving the export, re-export, or transfer of items to or within Venezuela if the contracts for such transactions were signed prior to November 7, 2014.
• Shipments of items that were under a previously applicable license exception or without a license (i.e., No License Required [NLR]) but are now subject to the new license requirement if:
  • (1) The items are on dock, on lighter, aboard an exporting carrier, or en route aboard a carrier to a port of export, on November 7, 2014; and
  • (2) The items are exported or re-exported before midnight on December 8, 2014.

These changes, effective November 7, 2014, boost the US Government’s ability to prevent exports that would enhance the military capability of Venezuela. This expansion of BIS military end-use/end-user controls to Venezuela comes hard on the heels of a similar expansion, on September 17, for Russia, bringing to four (Iraq, China, Russia, and Venezuela) the countries subject to military end-use controls. Exporters should use care, however, as the military end-use/end-user controls for Russia and Venezuela are broader than those for China and Iraq: China does not have a military end-user control (just military end-use) and the definition for military end-user for Iraq is far narrower than that employed for Russia and Venezuela.

Arent Fox has significant experience in helping companies navigate and comply with US sanctions laws and export controls. If you have any questions regarding the above, please contact Kay C. Georgi or Julia A. Lacovara with Arent Fox’s International Trade practice.