Stop Using License Exception TSR Now!: You Need to Get a New TSR Written Assurance

BIS Expands Controls on Foreign-Made Products and Changes TSR Written Assurance

In the July 30, 2010, Federal Register the Bureau of Industry and Security (BIS) published a revision to the Export Administration Regulations (EAR) that does two things.  First, it changes the requirements for what has to be in the written assurance for exports and reexports under License Exception TSR.  Second, it changes the destination countries for which the EAR asserts jurisdiction for foreign-made direct products of US technical data or software.

The two changes are parallel in that they change the target country list from Country Group D:1 plus Cuba to Country Group D:1 and E:1.  Country Group E:1 is Cuba, Iran, North Korea, Sudan and Syria, so the new rule effectively adds Iran, North Korea, Sudan and Syria to the target country list for the TSR written assurance and the foreign direct product control.

Before you export or reexport under License Exception TSR, you have to get the TSR written assurance from the recipient of the technical data or software you are sending.  The TSR written assurance effectively is a written agreement in which the recipient agrees not to transfer your technical data or software, or items it makes using your technical data or software, to the target country list.

So, your action item is:  If you have a TSR written assurance that includes the former target country list D:1 and Cuba) you may not use it as the basis for any more TSR exports and reexports.  You have to get a new TSR written assurance that identifies the target countries as D:1 and E:1.  (As a practical matter I recommend you list the countries instead of just citing the country groups but that is up to you.)  If you use TSR and your written assurance has the former target country list, you are violating the EAR.

In some very narrow circumstances the EAR controls foreign-made products (in the EAR foreign means non-US) because the foreign party makes a foreign item directly from using US technical data or software to produce them in very rare instances.  Specifically, such foreign products outside the US are controlled only when all three of these things are true:

1. The technical data or software requires TSR or a license for export/reexport; and
2. The foreign-made item is subject to “national security” controls on the CCL; and
3. The foreign-made item is going to Country Group D:1 or E:1.

The second key change changes the target country list from D:1 and E:2 to D:1 and E:1, which adds Iran, North Korea, Syria, and Sudan to the countries for which the EAR asserts jurisdiction on certain foreign-made direct products of US technical data or software.  Even though there are four new countries on the target country list, the EAR “foreign-made direct product control” still rarely asserts jurisdiction over foreign-made items.