On August 21, 2008, the US Bureau of Industry and Security ("BIS") published a final rule concerning export and re-export requirements for persons and entities on the Entity List.
The changes are effective immediately. The point of the amendments are as follows.
- A newly-established End-User Review Committee ("Committee"), consisting of various US government departments., will have the discretion to add a party to, remove a party from, or modify a party's designation on the Entity List.
- Changes will be made to the Entity List where there is reasonable cause to believe, based on specific facts, that an entity has been involved in, or poses a risk of being involved in, activities that are contrary to the national security or foreign policy interests of the United States.
Note that BIS has stated "US persons" will not be placed on the Entity List under this new procedure. Thus, the Entity List restricts only foreign persons from receiving EAR-controlled items that are exported from the United States or re-exported from abroad.
- BIS now will have the authority to impose foreign policy export and re-export licensing requirements, limit the availability of license exceptions, and establish a license application review policy for export and re-exports to designated entities.
License exceptions will not be available to designated parties named on the Entity List unless specifically noted.
- These amendments reflect BIS's policy statements that US export controls should not only focus on certain countries, but also target individual persons or entities of concern with more effective and specific controls.
The new rule could severely disrupt business with foreign companies. To minimize that risk, US exporters should be particularly vigilant in ensuring they know their foreign customers.