International Law Advisory - BIS Issues EAR Amendment Easing Libya Export Controls, Modifying Iraq Controls

Today, the Department of Commerce, Bureau of Industry and Security (BIS) issued a regulation amending the Export Administration Regulations (EAR) to ease restrictions on the export and reexport of U.S.-origin goods and technology to Libya. See 71 Fed. Reg. 51714. 

This measure is in furtherance of the Department of State’s removal of Libya’s designation as a state sponsor of terrorism earlier this summer (see 71 Fed. Reg. 39,696 (July 13, 2006), and essentially completes the process of easing special export controls restrictions against Libya that was initiated in April 2004, when the Bush Administration lifted the general Libyan trade embargo (which had been in place since the 1980s).

Today’s regulation essentially removes all special export controls that previously had been applicable to Libya.  Products that are controlled under the EAR Commerce Control List (“CCL”) only for anti-terrorism (“AT”) reasons will no longer require a license for Libya (subject to the general end user / end use restrictions set forth in Part 744 of the EAR).  In addition, Libya has been removed from Country Group E:1, which renders exports and reexports to Libya eligible for a wide range of license exceptions in Part 740 of the EAR, many of which previously were inapplicable or very limited for Libya.  Removal of the Country Group E:1 designation also raises the “de minimis” thresholds for Libya:  reexports to Libya of foreign-origin products incorporating less than 25% U.S. content (as compared to 10% under the earlier regulations) are no longer subject to the EAR.

These changes will substantially ease the licensing burden for companies doing business in Libya.  Previously, it had been necessary to apply for licenses on a case-by-case basis to export or reexport a wide variety of standard office products to Libya, including standard personal computers and popular software products such as Oracle, Microsoft Office and Microsoft Windows.  Such items now will either have no license requirement at all or will fall squarely within pre-existing license exceptions (including, most notably, License Exception ENC, which covers encryption software that has been submitted for BIS review).  Export controls do remain for Libya on a variety of other products in the CCL, including items that are subject to export controls for reasons apart from anti-terrorism concerns.  Those restrictions are not, however, particular to Libya; although Libya remains subject to comparatively strict export controls, similar controls apply to a wide range of other countries (by way of example, Libya export controls are now similar to those that are applicable to Iraq, and to many central Asian, African, and Eastern European countries). The EAR does retain, however, the “installed base” provisions whereby BIS requires a report or license prior to engaging in activities including exports involving items that were previously exported illegally to Libya.  It should also be noted that Libya remains a proscribed destination under Section 126.1 of the International Traffic in Arms regulations; accordingly, exports and reexports of ITAR-controlled munitions items to Libya continue to be restricted.

In addition to amending the Libya export controls, today’s regulation also makes a minor change to the Iraq export controls regulations, to take into account the fact that Iraq also is no longer designated as a state sponsor of terrorism (Iraq had been removed from the terrorism sponsors list in 2004).  The following export control classification numbers (“ECCNs”), which had been controlled for Iraq for AT reasons, are now controlled for regional stability (“RS”) reasons, although only to Iraq:  0B999, 0D999, 1B999, 1C992, 1C995, 1C997, 1C999, 6A992.  Accordingly, licenses continue to be required for those items, albeit for a different policy reason than what had previously been indicated in the EAR.

These changes to the EAR are effective as of today, although the regulation has been issued as an interim regulation with a one-month notice and comment period (any comments must be provided to BIS by October 2, 2006).  Should you have any questions regarding today’s regulation, please contact Ed Krauland at 202-429-8083 or David Lorello at +44-20-7367-8007.