Special Libya Update: US Relaxes Export Controls

What Happened & What You Need to Do

On August 31, 2006, the Commerce Department published regulations that move Libya off the small list of countries subject to severe US export and reexport controls. Generally speaking, the Export Administration Regulations (EAR) now treat Libya similar to countries such as the PRC, Russia, and Armenia.Here is the summary of the specifics you need to know about how Commerce changed the EAR:

1. You may use No License Required (NLR) to export and reexport items controlled for anti-terrorism (AT) reasons to Libya. Generally speaking, items in ECCNs that end with 99x no longer require licenses for Libya. Here are some examples of items newly eligible for NLR for Libya:
   • Commercial aircraft parts and technical data in ECCNs 9A991 and 9E991
   • Computers including virtually PCs in 4A994
   • Encryption software including products such as Windows in 5A992
   • A wide range of telecomm. hardware in 5A991 such as WAN/LAN items
   • A wide range of electronics equipment in 3A992
   • A wide range of integrated circuits in 3A991 such as memory chips and procesors
   • Disposable underwater cameras purchased at 7-11 and classified as 8A992
   • Lifejackets and rubber boats in 8A992
2. Libya moves from the 10% to 25% deminis level. Formerly, foreign-made items with more than 10% US content were subject to EAR jurisdiction when destined to Libya. Now foreign-made items are subject to US jurisdiction if they have more than 25% US content.
3. Commerce took Libya out of Country Group E:2, which means Libya now is eligible for a bunch of new license exceptions that formerly you could not use for Libya.
   These license exceptions include:
   • RPL (formerly partially available for Libya) now authorizes replacement parts for aircraft and nation security controlled items; replacing equipment; and servicing items for Libya
   • TMP now authorizes a wide range of temporary exports and reexports
   • TSU (formerly partially available) now authorizes sales data, software bug fixes, publicly available encryption source code/related object code.
   • BAG for personal baggage
   • ENC for encryption items
   • CIV for the small set of eligible items when destined to civil use/user

For the details of the changes, read the Federal Register notice at: edocket.access.gpo.gov (pdf)

As of 10:30 AM Washington, DC time on September 1, 2006, the online complete EAR that is linked to the Bureau of Industry and Security (BIS) web site has not been updated. So, do NOT go to www.access.gpo.gov/bis/ear/ear_data.html to see a revised EAR with the Libya changes built in. Give BIS a few days. The best way to check to see if the online EAR has been updated is to go to Supplement No 1 to Part 740 and see if Libya is still shown as being in Country Group E:2.

I suggest you print out the Federal Register notice and carry it around with you this weekend and glance at it when you get a chance. Speaking of glances, you will get weird glances from people if you do that.

So, what does this mean for export compliance people?

1. If you have licenses for Libya for items that no longer require licenses, stop using the licenses. It generally will make your life easier. If you continue to use a license, all items you export/reexport on the license will be subject to all of the conditions on the license including reporting requirements, verification, and whatever else. If you are going to stop use a license, go ahead and make sure you take care of filing reports to BIS and doing anything the license requires that you do.
2. Practice saying this: “Cuba, Iran, North Korea, Sudan, and Syria.” You may also want to practice saying this: “That does not need a license except for Cuba, Iran, North Korea, Sudan, and Syria.” Libya is no longer in the group of countries excluded from most EAR situations that allow exports/reexports without US approval. Get used to it. Practice saying it. Rejoice in it. Just sit at your desk and repeat over and over, “Most commercial aircraft parts require a license only for Cuba, Iran, North Korea, Sudan and Syria.” Don’t worry, nobody will bother you. (As a brief side bar, I see one possible downside with the Libya change, especially for American export control nerds like me. Libya, with its similarly-sounding “i”and “y”in its name can be tricky to spell. Now that us export control nerds will not be constantly spelling Libya as we write export procedures, memos, emails and license applications, I have to predict that in a few years, every time we have to spell Libya, we will always hesitate and think to ourselves, “It is Lybia or Libya?” Or maybe its just me…
3. Revise your export compliance classification matrix, procedures, training materials and other things to reflect the change. Train your people on the change. And, go to the sales guy who complained last March that he could have had a $20 million deal with Libya if it weren’t for the darned regulations and tell him to make the sale. Or maybe tell him to come with a new excuse when he whines about not making sales.
4. One thing not to do: Do not remind me that I recently said it might be a while before Commerce implements the new Libya relaxation. I did, however, stake my reputation on my prediction that the change would come out this year.

So that’s about it for the new Libya rule.

But, I cannot stop myself from mentioning the change to the Iraq provisions in the EAR that Commerce put in the same Federal Register notice. It seems that a few years ago Commerce lost the legal authority to impose anti-terrorism controls on Iraq. Despite that, the EAR continued to require licenses for AT reasons for certain items. Well, Commerce just revised the EAR to remove the AT-based controls on shipments of those items to Iraq. AND, Commerce then change the EAR so those same items now require a license for regional stability reasons. Very tricky.