Department of Commerce tightens U.S.’s control over shipments to China, Russia, and Venezuela

Attorney Leo Sun

By Hyung Gyu (Leo) Sun

Sun is an associate at Dunlap Bennett & Ludwig’s Richmond Office.

[July 6, 2020] On April 28, 2020, the United States Department of Commerce’s Bureau of Industry and Security (BIS) issued a rule expanding filing requirements for Electronic Export Information (EEI) in the Automated Export System for exports to China, Russia, and Venezuela. The new rule became effective as of June 29, 2020. EEI filings generally collect export transaction information from exporters including names and addresses of parties, the description, quantity, and value of the items, and additional information that may be required depending on the circumstances, such as Export Control Classification Numbers (ECCNs). ECCNs are five-character designations used on the Commerce Control List to identify dual-use items for export control purposes categorizing items based on the nature of the product.

Under prior law, EEI filings were generally required for shipments if an export license is required or the value of the shipment exceeds $2,500. The new rule amended the Export Administration Regulations (EAR) to require an EEI filing for all tangible exports of items described on the Commerce Control List (CCL) if destined to China, Russia, or Venezuela, regardless of their value. The new requirement does not apply to items that are not included on the CCL (i.e., designated as EAR99). It also does not apply to exports under license exception GOV, which authorizes exports and reexports for international nuclear safeguards, U.S. government agencies or personnel, agencies of cooperating governments, international inspections under the Chemical Weapons Convention, and the International Space Station.

In conjunction with another rule BIS issued regarding expanded EAR’s definition of military end use, the new rule on EEI filing is intended to broaden “the United States’ government’s visibility into and ability to deny or impose limitations on exports, reexports, and in-country transfers involving certain items that are destined to military end users and end uses in China, Russia, or Venezuela.” The Department of Commerce stated the new rules were made to “prevent efforts by entities in China, Russia, and Venezuela to acquire U.S. technology that could be used in development of weapons, military aircraft, or surveillance technology through civilian supply chains, or under civilian-use pretenses, for military end uses and military end-users.”

In light of the above, businesses that plan to ship tangible items from the United States to China, Russia, or Venezuela should be familiar with the requisite EEI filing process and be ready to secure correct export jurisdiction and classification information of their items prior to export. If they use freight forwarders or other third-party logistics providers to make EEI filings on behalf of them, they need to ensure that they are providing accurate information concerning their shipments to the third parties. Failure to properly file EEI or provide correct information in the EEI filing would be deemed a violation of federal laws that the U.S. government enforces, and the business owners, not the third-party logistics providers, will likely be held responsible for any non-compliance of the laws.

If you have questions about having compliance procedures, compliance policies, or commercial arrangements in place concerning your exports or reexports, please call us at 703-777-7319 or email clientservices@dbllawyers.com to schedule a consultation.

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