International Law Advisory - Libya Export Regulation

Further to our advisory of April 27, 2004, the following is a summary of the Revision of Export and Reexport Restrictions on Libya (“ BIS revision”), which the Department of Commerce, Bureau of Industry and Security (“ BIS”) is scheduled to publish tomorrow in the Federal Register.  We forwarded you an advance copy of the BIS revision yesterday.

The BIS revision is an interim rule, and BIS has invited parties to submit comments on the rule within the first thirty days after publication of the rule in the Federal Register.

a.         General Comments

The new BIS regulation represents a substantial removal of export-related restrictions vis-à-vis Libya.  Upon implementation, the regulation will authorize export of most U.S.-origin items to Libya without a license.  Furthermore, many of the license exceptions in the Export Administration Regulations (EAR), which previously were inapplicable to Libya, may now be used in cases where a license would otherwise be required.  Among the license exceptions now available is the “temporary export” or “TMP” license exception (15 C.F.R. § 740.9), which authorizes U.S. persons to temporarily export tools of trade.  The TMP exception is a commonly-used exception for companies doing work overseas.

It should be noted, however, that although export restrictions vis-à-vis Libya have been substantially eased, the remaining restrictions nevertheless are significant.   Libya remains one of the most highly-restricted locations in the world from an export perspective (the restrictions imposed by the new regulation are, for example, similar to those currently in place for Syria).  Export licenses are required for most items controlled under the Commerce Control List ( CCL) (15 C.F.R. Part 774), and BIS has instituted a policy of denial for certain items and certain end users.

b.         Items for Which No License Is Required

Under the new regulation, items that do not fall into any specific Export Classification Number (ECCN) on the CCL -- in other words, items classified under the CCL as “EAR99” -- generally may be exported or re-exported to Libya without a license.  That authorization does not apply, however, to exports or re-exports to end users for whom independent export restrictions are in place pursuant to Part 744 of the EAR (colloquially known as the “EPCI” or Enhanced Proliferation Control Initiative).

c.         Licensing Requirements, Policies

A BIS license will be required for the export/re-export of most items on the CCL.  Specifically, a license is required to export to Libya any item on the CCL that is controlled for the following reasons (as reflected in the relevant ECCN classifications):  

• National Security (NS)
• Nuclear Non-Proliferation (NP), column 1
• Chemical an Biological Weapons (CB)
• Missile Technology Control Regime (MT)
• Crime Control (CC), columns 1 and 3
• Regional Stability (RS)
• Anti-Terrorism (AT), column 1
• Encryption (EI)
• Short Supply (SS)
• Chemical Weapons (CW)
• Computers (XP)
• Significant Items (SI)

In a new section of the EAR, 15 C.F.R. § 742.20, BIS sets forth a policy of denial for license requests for certain items including, among other things, items controlled for chemical and biological weapons or missile proliferation reasons, military-related items controlled for national security reasons (e.g. items controlled under NS column 1 or RS column 2 and with an ECCN ending in the numbers “18”), aircraft and helicopter parts (other than those parts necessary to ensure safe civil aviation), ammonium nitrate controlled under ECCN 1C997, commercial charges controlled under ECCN 1C992, and explosive detection equipment controlled under ECCN 2A993.   The new regulations also impose a general policy of denial for all other items subject to a license requirement, if the items are destined for a military end use or end use, police institution or intelligence agency.   License applications for items not subject to a policy of denial will be reviewed on a case-by-case basis.

d.         Available License Exceptions

The new regulation removes Libya from CCL Country Group E:2.  ( Libya remains in Country Groups E:1, D:2, D:3, and D:4).  Accordingly, exports or re-exports to Libya may be eligible for the following license exceptions set forth in part 740 of the EAR:   TMP, GOV, GFT, TSU, BAG, RPL, and AVS.  You will need to check to make sure the general restrictions on use of license exceptions, found in the introduction to Part 740, do not apply to proposed exports to Libya.

e.         De Minimis Rule

The de minimis rule vis-à-vis Libya remains unchanged.  Re-exports to Libya are subject to the EAR, and may require a license (depending on the CCL classification), if the controlled U.S.-origin content of the item exceeds 10 percent.  (See 15 C.F.R. § 734.4.)

f.          Matters Still Within OFAC Jurisdiction

 The Department of Treasury, Office of Foreign Assets Control (OFAC) maintains jurisdiction as to exports and activities relating to Libyan nationals who are listed as Specifically-Designated Nationals.  OFAC also continues to restrict certain travel services vis-à-vis Libya, and continues to restrict Libyan property blocked prior to the issuance of its April 23, 2004 General License (discussed in previous advisories).

Under the new BIS regulation, licenses issued by OFAC prior to the effective date of the BIS regulation remain in effect, and will expire on May 1, 2005 (unless the license itself specifies an expiration date).

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BIS has published a set of “frequently asked questions” relating to the new regulation on its website (www.bis.doc.gov).  Companies should review the regulation carefully, particularly the provisions in 15 C.F.R. § 742.20 setting forth the items subject to a licensing policy of denial.  A number of those items (including, for example, commercial well perforators and certain aircraft equipment) are or could be widely-used in Libya, and companies may want to consider providing comments to BIS on its current posture vis-à-vis those (or other) items.  The fact that BIS has opted accept public commentary prior to finalization of the regulation -- it was not required to do so -- suggests that BIS is open to consider ideas from affected industries.

Exporters should continue to proceed with caution vis-à-vis Libya. If you have any questions regarding the regulation or would like to discuss it in further detail, please contact Ed Krauland (202-429-8083) or David Lorello (202-429-6757).