"Deemed Export"
Questions and Answers
UPDATE (11/15/04): Point of clarification on the current policy regarding citizenship policy.
There is no change in the current policy regarding citizenship and permanent residents. The current policy still applies as outlined in questions 6-11 of the deemed export FAQ's.
The recently published Deemed Export license exceptions for both Microprocessors and High Performance Computers contains an error in the policy regarding citizenship and permanent residency. In the preamble under the heading "Deemed Export Revision" second to the last paragraph the last sentence reads, "Applications for foreign nationals with temporary or permanent residence status of a third country (i.e., non-U.S. and a temporary or permanent residence status other than a foreign national’s country of origin) should be based on the foreign national’s country of citizenship." This is not correctly stated, the policy in recognizing the most current citizenship and permanent residency still applies.
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- What is the "deemed export" rule?
- What is a "release" of technology?
- What is "technology"?
- When do I need to apply for an export license for technology
under the "deemed export" rule?
- How do I know if a foreign national would be subject to the
"deemed export" rule?
- How are individuals handled who are permanent residents or
citizens of countries other than those of their nationality?
- What if the individual is a foreign national of one country,
say India, but has obtained permanent residency in another, say the U.K.?
- If this same Indian foreign national traveled to visit facilities
in a third country, say Germany, do the licensing requirements change, or
is the release still treated as a transfer to the U.K. for licensing purposes?
- What if that same Indian foreign national comes to the United
States?
- Now, what about changes in nationality? If a person was
a citizen of India but subsequently became a citizen of the U.K., how is
that person treated for export control purposes?
- What if the Indian foreign national becomes a citizen of
the U.K. but retains his or her Indian citizenship, as well? This is the
situation of people who have dual-citizenship.
- I have read elsewhere on your web page the requirements
for information that the Bureau of Export Administration (BXA) wants in
order to process a "deemed export" license application. I see that you require
a lot of personal data, including citizenship and country of origin. I understand
that I cannot ask for such information from my employees under the Equal
Employment Opportunities Commission (EEOC) rules. How do I get that information?
- What is a "deemed re-export"?
- What technologies are subject to the Commerce Department
controls?
- Is software considered "technology" and is it similarly
controlled?
- What technologies are considered "fundamental research"?
- Are cryptographic technology and software source code "deemed
exports" handled the same way as other technology and software source code?
- At our Canadian subsidiary, we develop semiconductor manufacturing
technologies that are controlled by ECCN 3E001. If we transfer those technologies
to a Chinese national in that facility, do we require U.S. authorization?
What about transferring the same Canadian developed technologies to PRC
nationals at our PRC facility?
- We have several foreign national employees in our firm,
which has several divisions and an administrative area. Two of the divisions,
the Research and Development (R&D) division and the Advanced Manufacturing/Processing
(ADMP) division, work with technical data for advanced materials used in
electronic and jet engine manufacturing which is controlled under ECCNs
2E001, 3E001, and 9E003, and we have several foreign national engineers
working there. None of the other divisions work with controlled technical
data, and we have some foreign national employees in them as well. The divisions
are not co-located. Do I need an export license for all of the foreign national
employees?
- My company wants to employ an Indian foreign national who
spent three years working for an Indian organization that is on the Entity
List. May I do so? Do I require a license?
- An Indian foreign national who is on sabbatical from an
Indian organization that is on the Entity List wants to work with our firm
in our executive training program where we will discuss proprietary technology
which is not controlled to India. We have had an ongoing exchange
of executives and scientists from this organization for years. Do I require
a license?
- Our university has several departments that are conducting
research under contract with private corporations. Some of this research
is controlled "development" technology. We often have researchers (visiting
faculty, post-graduate fellows, and research assistants) who are foreign
nationals working on controlled "development" technology research. Does
the university need to apply for a deemed export license?
- Our university does research under U.S. government sponsorship.
We may have foreign national researchers working on this. Is a deemed export
license required?
1. What is the "deemed export" rule?
An export of technology or source code (except encryption source code) is
"deemed" to take place when it is released to a foreign national within the
United States. See ¤734.2(b)(2)(ii) of the Export Administration Regulations
(EAR). For brevity, these questions and answers refer only to "technology"
but apply equally to source code.
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2. What is a "release" of technology?
Technology is "released" for export when it is available to foreign nationals
for visual inspection (such as reading technical specifications, plans, blueprints,
etc.); when technology is exchanged orally; or when technology is made available
by practice or application under the guidance of persons with knowledge of
the technology. See ¤734.2(b)(3) of the Export Administration Regulations
(EAR).
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3. What is "technology"?
Per Part 772 of the Export Administration Regulations (EAR), "technology"
is specific information necessary for the "development," "production," or
"use" of a product. The General Technology Note states that the "export of
technology.is controlled according to the provisions of each Category." It
further states that "technology required for the development, production,
or use of a controlled product remains controlled even when applicable to
a product controlled at a lower level." Please note that the terms "required,"
"development," "production," "use," and "technology" are all defined in Part
772 of the EAR. Controlled technology is that which is listed on the Commerce
Control List.
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4. When do I need to apply for an export license
for technology under the "deemed export" rule?
Assuming that a license is required because the technology does not qualify
for treatment under EAR99 and no license exception is available, U.S. entities
must apply for an export license under the "deemed export" rule when both
of the following conditions are met: (1) they intend to transfer controlled
technologies to foreign nationals in the United States; and (2) transfer of
the same technology to the foreign national's home country would require an
export license.
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Foreign Nationals
5. How do I know if a foreign national would be subject
to the "deemed export" rule?
Any foreign national is subject to the "deemed export" rule except a foreign
national who (1) is granted permanent residence, as demonstrated by the issuance
of a permanent resident visa (i.e., "Green Card"); or (2) is granted U.S.
citizenship; or (3) is granted status as a "protected person" under 8 U.S.C.
1324b(a)(3). This includes all persons in the U.S. as tourists, students,
businesspeople, scholars, researchers, technical experts, sailors, airline
personnel, salespeople, military personnel, diplomats, etc. As noted, one
exception to this general statement is a "protected person." "Protected persons"
include political refugees and political asylum holders. Be aware that individuals
seeking "protected person" status must satisfy all of the terms and conditions
that are fully set forth in 8 U.S.C. 1324b(a)(3). It should be emphasized
that although the deemed export rule may be triggered, this does not necessarily
mean that a license is required. For example, the technology may be EAR99
or license exception eligible.
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6. How are individuals handled who are permanent
residents or citizens of countries other than those of their nationality?
As noted above in Question 5, if the individual is a naturalized citizen
or permanent resident of the United States, the "deemed export" rule does
not apply. In other words, he or she is not subject to the provisions of the
"deemed export" regulation. For individuals who are citizens of more than
one foreign country, or have citizenship in one foreign country and permanent
residence in another, as a general policy, the last permanent resident status
or citizenship obtained governs. Questions 7 through 11 provide examples of
situations involving individuals who are citizens of more than one foreign
country, or have citizenship in one foreign country and permanent residence
in another. If, for some reason, the status of a foreign national is not certain,
then you should ask the Bureau of Export Administration (BXA), to determine
where the stronger ties lie, based on the facts of the specific case. For
instance, the status of a foreign national could be uncertain in situations
where information may indicate involvement with prohibited entities or activities,
for example, missile or nuclear-related end-uses or end-users as identified
in Part 744 of the EAR. In response to a request for the status of a foreign
national, BXA will look at the foreign national's family, professional, financial,
and employment ties.
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7. What if the individual is a foreign national of
one country, say India, but has obtained permanent residency in another, say
the U.K.?
Release of controlled technology to that individual in the U.K. would be
treated as if the shipment were being made to the U.K. and licensing requirements,
if any, would be the same as for a British national in the U.K.
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8. If this same Indian foreign national traveled
to visit facilities in a third country, say Germany, do the licensing requirements
change, or is the release still treated as a transfer to the U.K. for licensing
purposes?
The Indian national's U.K. permanent residency status still drives the licensing
requirements and releases of technology to him or her would be considered
as transfers to the U.K.
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9. What if that same Indian foreign national comes
to the United States?
As long as the Indian foreign national maintains his or her permanent residency
status in the U.K., transfers of technology to that individual would be deemed
as transfers to the U.K.
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10. Now, what about changes in nationality? If
a person was a citizen of India but subsequently became a citizen of the U.K.,
how is that person treated for export control purposes?
If the former Indian national becomes a British citizen, transfers of technology
would be viewed as transfers to the U.K.
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11. What if the Indian foreign national becomes
a citizen of the U.K. but retains his or her Indian citizenship, as well?
This is the situation of people who have dual-citizenship.
As a general principle, the last citizenship obtained governs. As is clear
in response to Question 10 above, the individual's most recent citizenship
is with the U.K. and releases of technology would be viewed as releases to
the U.K.
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12. I have read elsewhere on your web page the
requirements for information that the Bureau of Export Administration (BXA)
wants in order to process a "deemed export" license application. I see that
you require a lot of personal data, including citizenship and country of origin.
I understand that I cannot ask for such information from my employees under
the Equal Employment Opportunities Commission (EEOC) rules. How do I get that
information?
The information we normally request derives from a curriculum vitae/resume
or from company background checks. The information that BXA may request as
part of the license application process is requested in order to determine
whether BXA should authorize the release of such controlled sensitive technology.
The hiring of foreign nationals is not prohibited nor regulated by the Export
Administration Regulations (EAR). The EAR does not regulate employment matters.
The justification for the "deemed export" rule is that there is no more effective
way of disclosing sensitive technical information (e.g., design know-how)
than to work side-by-side in a laboratory or on the production floor of a
company. Our web page guidance[PDF]
is designed to assist you in pointing out the types of relevant information
that BXA examines in connection with the license application review.
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13. What is a "deemed re-export"?
The term "deemed re-export" is often used to indicate the transfer of controlled
U.S. technology to a third-country national overseas. As an example, a U.S.
exporter transfers its controlled proprietary technology to a firm in country
A. The firm in country A, in turn, will employ an individual from country
B who is not a permanent resident of country A, nor of the United States,
and who will need the controlled proprietary technology to perform his or
her assigned duties. If the U.S. exporter intends to transfer the controlled
technology to the country B national who is now an employee of the country
A firm, the U.S. exporter is responsible for obtaining any required deemed
export license, as if it were transferring the technology to country B. If
the country A firm intends to transfer the controlled technology that it received
from the United States to the country B national, then the country A firm
is responsible for obtaining any required deemed re-export license from BXA.
Please see ¤734.2(b)(4) of the Export Administration Regulations (EAR).
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Technology
14. What technologies are subject to the Commerce
Department controls?
Generally, technologies subject to the Export Administration Regulations
(EAR) are those which are in the United States or of U.S. origin, in whole
or in part. Most are proprietary. Technologies which tend to require licensing
for transfer to foreign nationals are also dual-use (i.e., have both civil
and military applications) and are subject to one or more control regimes,
such as National Security, Nuclear Proliferation, Missile Technology, or Chemical
and Biological Warfare.
Foreign technology with U.S.-origin technology commingled to a degree above
a de minimis level is considered to be subject to the EAR. Technologies which
may require an export license are those which are subject to the EAR and which
are listed in the Commerce Control List, see Parts 734, 738, and 774 of the
EAR.
Some technologies are under the exclusive jurisdiction of another agency
of the U.S. government and are not subject to the EAR. These include defense
services which are under the jurisdiction of the State Department and technology
related to the production of special nuclear materials which is under the
jurisdiction of the Energy Department.
Still other technologies do not require any authorization because they are
already "publicly available." These include patent applications; publicly
available technology and software (other than software and technology controlled
as encryption items) that are already published or will be published; technology
which arises during or as a result of fundamental research; or technology
which is educational. See Part 734 of the EAR for details.
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15. Is software considered "technology" and is
it similarly controlled?
The Export Administration Regulations (EAR) definitions distinguish between
software and technology. Software is one of the groups within each of the
categories of items listed on the Commerce Control List (CCL). Software which
is delineated on the CCL is controlled.
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16. What technologies are considered "fundamental
research"?
"Fundamental research" is basic and applied research in science and engineering
where the resulting information is ordinarily published and shared broadly
within the scientific community. It is distinguished from proprietary research
and from industrial development, design, production, and product utilizations,
the results of which ordinarily are restricted for proprietary and/or specific
national security reasons. Normally, the results of "fundamental research"
are published in scientific literature, thus making it publicly available.
Research which is intended for publication, whether it is ever accepted by
scientific journals or not, is considered to be "fundamental research." A
large segment of academic research is considered "fundamental research." Because
any information, technological or otherwise, that is publicly available is
not subject to the Export Administration Regulations (EAR) (except for encryption
object code and source code in electronic form or media) and thus does not
require a license, "fundamental research" is not subject to the EAR and does
not require a license. Please see ¤734.8 for a full discussion.
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17. Are cryptographic technology and software source
code "deemed exports" handled the same way as other technology and software
source code?
No, they are not. The encryption regulation published on January 14, 2000,
changed the deemed export rule for encryption technology. The authorization
for encryption technology was updated to allow some encryption technology
under License Exception ENC. ENC is now also allowed for foreign employees
of U.S. companies coming to the United States to work. However, ENC would
not cover employees of a Romanian firm, for example, working at a U.S. company.
These foreign nationals are not "employees" of the U.S. company. As far as
encryption source and object code are concerned, while in the United States,
foreign nationals may use any type of encryption source code and object code.
The only deemed export authorization required for encryption relates to encryption
technology and when a U.S. person intends to provide technical assistance
to foreign nationals using source code. (Please note that Export Administration
Regulations (EAR) licensing requirements may apply for transfers of encryption
software in the United States to an embassy or affiliate of a foreign country.)
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More direct hypothetical situations
18. At our Canadian subsidiary, we develop semiconductor
manufacturing technologies that are controlled by ECCN 3E001. If we transfer
those technologies to a Chinese national in that facility, do we require U.S.
authorization? What about transferring the same Canadian developed technologies
to PRC nationals at our PRC facility?
You may require a license if the technologies are considered to be of U.S.
origin. If the technologies developed in your Canadian facility are commingled
with or drawn from controlled U.S.-origin technology, you must decide the
extent of the mix to determine if U.S. re-export controls apply. Depending
on the percentage of the controlled-U.S. technology component, a license may
be required for the transfer of that technology to the Chinese national, whether
he or she is at your Canadian or PRC facilities. Please see ¤734.4(c)(3),
(d)(3), and (e) of the Export Administration Regulations (EAR). Also, the
EAR (Supp. 2 to 734, (b)) requires that you file a one-time review of your
technology before you can use the de minimis exclusion. We strongly suggest
that you consult with BXA on this question.
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19. We have several foreign national employees
in our firm, which has several divisions and an administrative area. Two of
the divisions, the Research and Development (R&D) division and the Advanced
Manufacturing/Processing (ADMP) division, work with technical data for advanced
materials used in electronic and jet engine manufacturing which is controlled
under ECCNs 2E001, 3E001, and 9E003, and we have several foreign national
engineers working there. None of the other divisions work with controlled
technical data, and we have some foreign national employees in them as well.
The divisions are not co-located. Do I need an export license for all of the
foreign national employees?
Probably not. Your firm would likely need a license for those foreign national
engineers and technical people who work in the R&D and ADMP divisions
with the controlled technologies. Your firm would probably not need licenses
for those individuals who do not normally come into contact with the controlled
technologies, such as those in the administrative area. However, you should
review the job descriptions of all your foreign national employees. For example,
technical managers and technical training personnel who are NOT at the sensitive
divisions may need access to the controlled technologies in order to do their
jobs, and so you may need to have deemed export licenses for technology transfer
to them.
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20. My company wants to employ an Indian foreign
national who spent three years working for an Indian organization that is
on the Entity List. May I do so? Do I require a license?
If he or she is properly documented for work in the United States, you may
employ him or her. You must apply for an export license if you intend to release
technology listed on the Commerce Control List which would require a license
for export to India.
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21. An Indian foreign national who is on sabbatical
from an Indian organization that is on the Entity List wants to work with
our firm in our executive training program where we will discuss proprietary
technology which is not controlled to India. We have had an ongoing
exchange of executives and scientists from this organization for years. Do
I require a license?
Yes, you are required to apply for a deemed export license. Under the sanctions
imposed by the U.S. Government, any export which includes transfers of technology
to foreign nationals requires a license to organizations on the Entity List.
Because the Indian foreign national is still employed by the organization
that is on the Entity List, a technology transfer to him or her is considered
a technology transfer to the employer organization. Note that the sanctions
apply to any technology subject to the Export Administration Regulations (EAR).
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22. Our university has several departments that
are conducting research under contract with private corporations. Some of
this research is controlled "development" technology. We often have researchers
(visiting faculty, post-graduate fellows, and research assistants) who are
foreign nationals working on controlled "development" technology research.
Does the university need to apply for a deemed export license?
It depends. You need to look at the research and the contract terms for release
of the results of the research. If there are no conditions placed on the research,
and it is the intent of the research team to publish its findings in scientific
literature, then it is considered "fundamental research," and no license is
required. If the contract requires that the private corporation review the
findings of the research team with the intent of controlling what results
are to be released in open literature, then the research is considered proprietary,
and a license is required.
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23. Our university does research under U.S. government
sponsorship. We may have foreign national researchers working on this. Is
a deemed export license required?
Under the Export Administration Regulations (EAR), U.S. government sponsored
research is handled very much like corporate sponsored research. It may be
"fundamental research", or it may be proprietary (See Question 22). See ¤¤
734.8 and 734.11 of the EAR for details. In addition, some U.S. government
data my be subject to separate restrictions on dissemination such as security
classification.
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