International Law Advisory - BIS Revises Export Regulations Related to India

September 23, 2004

Yesterday the United States Department of Commerce, Bureau of Industry and Security (“BIS”) amended the Export Administration Regulations (“EAR”) to implement certain of the “Next Steps in Strategic Partnership” (“NSSP”) with India. A copy of the Federal Register notice, published at 69 Fed. Reg. 56693 (August 22, 2004), is attached. The amendments remove an Indian company from the Entity List, and ease the license requirements for exports to certain Indian companies and for certain types of products.

The NSSP was entered into by the United States and India in November, 2001 with the intention of strengthening bilateral cooperation, deepening ties of commerce and friendship between the two countries, and increasing stability in Asia. On January 12, 2004, President Bush and former Indian Prime Minister Vajpayee announced the “next steps” in this effort. These consist of a series of reciprocal steps, including “expanded engagement on nuclear regulatory and safety issues and missile defense, ways to enhance cooperation in peaceful uses of space technology, and steps to create the appropriate environment for successful high technology commerce.”

To that end, BIS has taken three specific actions:

BIS has removed the Indian Space Research Organization (“ISRO”) Headquarters from the Department of Commerce Entity List. This action removes the existing license requirements in Supplement No. 4 to Part 744 of the EAR for ISRO Headquarters; however, it does not relieve exporters from their other obligations under other sections of Part 744.
The seven ISRO subsidiaries on the Entity List have not been removed from the list; however, BIS has eliminated the license requirement for all items shipped to those entities that are classified as EAR99, or for which the third through fifth digits of the ECCN are “999” (e.g., “1C999”).
BIS has established a presumption of approval for shipments of all items not controlled for nuclear proliferation (“NP”) reasons going to the “balance of plant” portion of Indian nuclear facilities subject to International Atomic Energy Agency (“IAEA”) safeguards. This amendment affects shipments to the following nuclear facilities: Rajasthan 1 & 2, and Tarapur 1 & 2. According to BIS, “balance of plant” refers to “the part of a nuclear power plant used for power generation (e.g., turbines, controllers, or power distribution)” but does not cover the nuclear reactor.

BIS urged exporters and reexporters to remain cognizant of their obligations under General Prohibition 5, which prohibits the knowing export or reexport without a license of any item subject to the EAR to an end-user or end-use that is prohibited by part 744 of the EAR. BIS also advised exporters and reexporters to consult the “‘Know Your Customer’ Guidance and Red Flags,” found at Supplement No. 3 to part 732 of the EAR, when shipping to India.

We will continue to keep you apprised of sanctions and export control developments. If you have any questions, please feel free to contact Ed Krauland at 202.429.8083 or Meredith Rathbone at 202.429.6437.