§ 742.4 - National security.

§ 742.4 National security.

(a) License requirements. It is the policy of the United States to restrict the export and reexport of items that would make a significant contribution to the military potential of any other destination or combination of destinations that would prove detrimental to the national security (NS) of the United States. Generally, items on the Commerce Control List in supplement no. 1 to part 774 of the EAR that have a reason for control of NS are those that are also listed on the Wassenaar Arrangement's “List of Dual-use Goods and Technologies,” as well as some items listed on the Wassenaar Arrangement's “Munitions List.” “600 series” items and 9x515 items are also controlled for NS reasons.

(1) National Security column 1 (NS:1). A license is required for exports and reexports to all destinations, except Australia, Canada, or the United Kingdom, for all items in ECCNs on the CCL that include NS Column 1 in the Country Chart column of the “License Requirements” section.

(2) National Security column 2 (NS:2). A license is required to all destinations except those specified in Country Group A:1 (see supplement no. 1 to part 740 of the EAR), for all items in ECCNs on the CCL that include NS column 2 in the Commerce Country Chart column of the “License Requirements” section except those cameras in ECCN 6A003.b.4.b that have a focal plane array with 111,000 or fewer elements and a frame rate of 60 Hz or less.

(3) 6A003.b.4.b. A license is required to all destinations except those specified in Country Group A:1 (see supplement no. 1 to part 740 of the EAR) for those cameras in ECCN 6A003.b.4.b that have a focal plane array with 111,000 or fewer elements and a frame rate of 60 Hz or less and for cameras being exported or reexported pursuant to an authorization described in § 742.6(a)(2)(iii) or (v). The purpose of this control is to ensure that these items do not contribute to the military potential of destinations specified in Country Group D:1 (see supplement no. 1 to part 740 of the EAR) that would prove detrimental to the national security of the United States.

(4) Certain semiconductor manufacturing equipment and associated software and technology. A license is required for exports, reexports, and transfers (in-country) to or within either Macau or a destination specified in Country Group D:5 in supplement no. 1 to part 740 of the EAR of items specified in 3B001.a.4, c, d, f.1.b, j to p; 3B002.b and c; 3D001 (for 3B001.a.4, c, d, f.1.b, j to p, 3B002.b and c); 3D002 (for 3B001 a.4, c, d, f.1.b, j to p, 3B002.b and c); or 3E001 (for 3B001.a.4, c, d, f.1.b, j to p, 3B002.b and c). The license requirements in this paragraph (a)(4) do not apply to deemed exports or deemed reexports.

(5)

(i) Scope. A license is required for national security reasons to export or reexport any item subject to the EAR and specified on the Commerce Control List (supplement no. 1 to part 774) to any destination worldwide when the ECCN includes an NS license requirement that references this paragraph (a)(5) in the license requirement table of the ECCN.

(ii) Deemed export and deemed reexport exclusions. The license requirements in paragraph (a)(5)(i) of this section do not apply to deemed exports or deemed reexports of “technology” or “software” to the extent consistent with paragraphs (a)(5)(ii)(A) and (B) of this section.

(A) Grandfather Exclusion. Except for deemed exports or deemed reexports of “technology” in ECCN 3E905 to foreign persons whose most recent country of citizenship or permanent residency is a destination specified in Country Group D:1 or D:5 in supplement no. 1 to part 740 of the EAR (see GAAFET General License in supplement no. 1 to part 736 general order no. 4), the license requirements in paragraph (a)(5)(i) of this section do not apply to deemed exports or deemed reexports of “technology” or “software,” including for future advancements or versions of the same “technology” or “software,” to employees or contractors already employed by entities subject to this control as of September 6, 2024, and who are not prohibited persons under part 744 of the EAR, e.g., not listed on the Entity List (supplement no. 4 to part 744), Unverified List (supplement no.6 to part 744), Military End-User List (supplement no. 7 to part 744) or listed on the Denied Persons List (https://www.bis.doc.gov). For purposes of this paragraph (a)(5)(ii), the employee need not be a permanent and regular employee as that term is defined in § 734.20(d), e.g., they may be newly hired.

(B) Deemed export and deemed reexport exclusion —(i) Limited exclusion. There is a limited deemed export or deemed reexport exclusion from the license requirements in this paragraph (a)(5)(i) of this section for the following “software” or “technology” ECCNs unless for foreign persons whose most recent citizenship or permanent residency is a destination specified in Country Group D:1 or D:5: ECCNs 2D910; 2E910; 3D001 (“software” for “EUV” masks and reticles in ECCN 3B001.q); 3D901 (for “software” for quantum items in ECCNs 3A901.b and 3B904 and for scanning electron microscopes (SEM) in ECCN 3B903); 3D907 “software” designed to extract “GDSII” or equivalent data; 3E001 (“technology” for “EUV” masks and reticles in ECCN 3B001.q); and 3E901 (for “technology” for quantum items in 3A901, 3A904, 3B904, 3C907, 3C908, and 3C909, and for SEMs in ECCN 3B903); 3E905 (“technology” according to the General Technology Note for the “development” or “production” of integrated circuits or devices, using “Gate all-around Field-Effect Transistor” (“GAAFET”) structures); and “technology” (for quantum items in ECCNs 4D906 or 4E906).

(ii) Full exclusion. There is a full deemed export or deemed reexport exclusion from the license requirement in this paragraph (a)(5)(i) for “technology” and “software” in ECCNs 3D001, 3D002, and 3E001 for anisotropic dry plasma etch equipment and isotropic dry etch equipment in 3B001.c.1.a and c.1.c.

(b) Licensing policy. Each application is reviewed in light of prevailing policies with full consideration of all aspects of the proposed transaction. When the license application meets the criteria of more than one licensing policy, then the most restrictive licensing policy will be applied. The review generally includes: an analysis of the kinds and quantities of items to be shipped; their military or civilian uses; the unrestricted availability abroad of the same or comparable items; the country of destination; the ultimate end users in the country of destination; and the intended end use.

(1)

(i) Country Group D:1. The policy for national security-controlled items exported or reexported to any destination except a destination specified in Country Group D:1 (see supplement no. 1 to part 740 of the EAR) is to approve applications unless there is a significant risk that the items will be diverted to a destination specified in Country Group D:1. Except for those countries described in paragraphs (b)(5) through (7) and (9) of this section, the general policy for exports and reexports of items to Country Group D:1 (see supplement no. 1 to part 740 of the EAR) is to approve applications when BIS determines, on a case-by-case basis, that the items are for civilian use or would otherwise not make a significant contribution to the military potential of the country of destination that would prove detrimental to the national security of the United States.

(ii) 9x515 and “600 series” items. When destined to a country listed in Country Group D:5 in supplement no. 1 to part 740 of the EAR, however, items classified under 9x515 or “600 series” ECCNs will be reviewed consistent with United States arms embargo policies in 22 CFR 126.1 (International Traffic in Arms Regulations (ITAR)). When destined to the People's Republic of China or a country listed in Country Group E:1 in supplement no. 1 to part 740 of the EAR, items classified under any 9x515 ECCN will be subject to a policy of denial.

(2) License applications for items specified in paragraph (a)(4) of this section will be reviewed consistent with license review policies in § 744.23(d) of the EAR, except applications will be reviewed on a case-by-case basis if no license would be required under part 744 of the EAR.

(3) [Reserved]

(4) Although each proposed transaction is considered individually, items described in Advisory Notes on the Commerce Control List are more likely to be approved than others.

(5) In recognition of efforts made to adopt safeguard measures for exports and reexports, Kazakhstan and Mongolia are accorded enhanced favorable consideration licensing treatment.

(6) The general policy for Laos is to approve license applications when BIS determines, on a case-by-case basis, that the items are for an authorized use in Laos and are not likely to be diverted to another country or use contrary to the national security or foreign policy controls of the United States.

(7)

(i) For Burma, Cambodia, the People's Republic of China (PRC), Nicaragua, and Venezuela, all applications will be reviewed to determine the risk of diversion to a military end user or military enduse. There is a general policy of approval for license applications to export, reexport, or transfer items determined to be for civil end users for civil end uses. There is a presumption of denial for license applications to export reexport, or transfer items that would make a material contribution to the “development,” “production,” maintenance, repair, or operation of weapons systems, subsystems, and assemblies, such as, but not limited to, those described in supplement no. 7 to this part, of Burma, Cambodia, China, or Venezuela.

(ii) The following factors are among those that will be considered in reviewing license applications described in paragraph (b)(7)(i) of this section:

(A) The appropriateness of the export, reexport, or transfer for the stated end use;

(B) The significance of the item for the weapon systems capabilities of the importing country;

(C) Whether any party is a 'military end user' as defined in § 744.21(g) of the EAR;

(D) The reliability of the parties to the transaction, including whether:

(1) An export or reexport license application has previously been denied;

(2) Any parties are or have been engaged in unlawful procurement or diversion activities;

(3) The parties are capable of securely handling and storing the items; and

(4) End-use checks have been and may be conducted by BIS or another U.S. Government agency on parties to the transaction;

(E) The involvement of any party to the transaction in military activities, including activities involving the “development,” “production,” maintenance, repair, or operation of weapons systems, subsystems, and assemblies;

(F) Government strategies and policies that support the diversion of exports from their stated civil end use and redirection towards military end use; and

(G) The scope and effectiveness of the export control system in the importing country.

(iii) The review will also include an assessment of the impact of a proposed export of an item on the United States defense industrial base and the denial of an application for a license that would have a significant negative impact, as defined in section 1756(d)(3) of the Export Control Reform Act of 2018 (50 U.S.C. 4815(d)(3)), on such defense industrial base.

(8) For India, there is a general policy of approval for license applications to export, reexport, or transfer items, including “600 series” items, for civil or military end uses in India, for ultimate end use by the Government of India, for reexport to countries in Country Group A:5, or for return to the United States, so long as such items are not for use in nuclear, “missile,” or chemical or biological weapons activities.

(9) For the Russian Federation and Belarus, all applications will be reviewed in accordance with the licensing policy set forth in § 746.8(b) of the EAR.

(10) License review policy for items specified in paragraph (a)(5). License applications to export or reexport items described in paragraph (a)(5)(i) of this section to destinations specified in Country Group A:1, A:5, and A:6, see supplement no. 1 to part 740 of the EAR, will be reviewed with a presumption of approval. License applications to export or reexport items described in paragraph (a)(5)(i) of this section to destinations specified in Country Groups D:1 or D:5 of supplement no. 1 to part 740 of the EAR will be reviewed under a presumption of denial. License applications to export or reexport items described in paragraph (a)(5)(i) of this section to any other destination will be reviewed on a case-by-case basis, unless subject to a more restrictive NS policy in this section.

(c) Contract sanctity. Contract sanctity provisions are not available for license applications reviewed under this section, except for applications for items in paragraph (a)(4) of this section. For paragraph (a)(4), contract sanctity provisions are available for contracts signed before October 18, 2023.

(d) License exceptions. Certain license exceptions are available only for national security items, such as License Exceptions GBS (see § 740.4 of the EAR) and TSR (see § 740.6 of the EAR), but other license exceptions may also be available for national security items, such as License Exception STA (see § 740.20 of the EAR) or license exceptions based on the facts of the transaction, such as License Exceptions TMP (see § 740.9 of the EAR) or GOV (see § 740.11 of the EAR). See part 740 of the EAR for a full list of license exceptions and § 740.2 of the EAR for license exception restrictions that apply to every license exception.

[61 FR 12786, Mar. 25, 1996]

Editorial Note

Editorial Note:

For Federal Register citations affecting § 742.4, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.