International Law Advisory - BIS Amends Microprocessor, Computer Software/Technology Export Regulations

The Commerce Department’s Bureau of Industry and Security (“BIS”) published two new rules on November 5, 2004, enacting a number of modifications to the Export Administration Regulations (“EAR”) relating to the availability of license exceptions for exports of computer technology and software, and microprocessor technology on the Commerce Control List (“CCL”) of the Export Administration Regulations (“EAR”).  The revisions were published in two notices in the Federal Register (69 FR 64483 and 69 FR 64490), which are attached below.

With respect to microprocessors, the new rules expand the authority under License Exception CIV (15 C.F.R. § 740.5) for “deemed” exports of certain microprocessor technology, controlled under ECCNs 3E001 and 3E002, to nationals of countries listed in the Part 740 of the EAR under Country Group D:1 (generally, countries for which BIS has determined a national security risk exists for certain exports).  To qualify for the exception, ECCN 3E001 technology must be limited for use in development or production of processors covered under ECCN 3A001.a.3.c.  In addition, among other specific criteria set forth in the ECCN descriptions, the ECCN 3E001 / 3E002 technology must be used for the development of microprocessors that do not exceed composite theoretical performance levels of 40,000 million theoretical operations per second (“MTOPS”).

With respect to computer technology and software generally, the new regulations implement a number of specific changes, some substantive and others technical in nature.  Notable changes include the following:

1) Authorization for the “deemed” export of computer software / technology to Computer Tier 1 countries has been raised from 150,000 to 190,000 MTOPS.
2) The 22 countries listed in 15 C.F.R. § 740.7(c)(3) are authorized under License Exception CTP to receive technology and software of unlimited composite theoretical performance levels.  This authorization existed under the earlier regulations, but was pursuant to license exception TSR (15 C.F.R. § 740.6).
3) ECCNs 4D001 / 4E001 have been added to License Exception CTP (previously CTP was applicable only to ECCN 4A003).
4) Technology and source code for computers with composite theoretical performance levels of less than or equal to 75,000 MTOPS are eligible for deemed exports under License Exception CTP to foreign nationals of Computer Tier 3 (the previous limit was 28,000 MTOPS).
5) For deemed exports to nationals in certain countries listed in Tier 3, it is now required, prior to relying on License Exception CTP in furtherance of those exports, that the exporter submit to BIS a “Foreign National Review” request, as set forth in revised 15 C.F.R. § 740.5(d)(4) and 740.8(t).

This advisory is a summary of what appear to be the most salient provisions of the new regulations. We urge exporters whose operations are affected by the new rules to examine the two attached register notices carefully, and ensure that export compliance programs are updated.  If you have any specific questions regarding these revisions, please contact Ed Krauland at 202-429-8083 or David Lorello at 202-429-6757.