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§734.1
INTRODUCTION
(a) In this part, references to the Export Adminis-tration
Regulations (EAR) are references to 15CFR chapter VII, subchapter
C. This part de-scribes the scope of the Export
AdministrationRegulations (EAR) and explains certain key termsand
principles used in the EAR. This part pro-vides the rules you need
to use to determinewhether items and activities are subject to
theEAR. This part is the first step in determiningyour obligations
under the EAR. If your item oractivity is not subject to the EAR,
then you do nothave any obligations under the EAR and you donot
need to review other parts of the EAR. If youalready know that your
item or activity is subjectto the EAR, you do not need to review
this partand you can go on to review other parts of theEAR to
determine your obligations. This partalso describes certain key
terms and principlesused in the EAR. Specifically, it includes
thefollowing terms: "subject to the EAR", "itemssubject to the
EAR", "export", and "reexport".These and other terms are also
included in part772 of the EAR, Definitions of Terms, and youshould
consult part 772 of the EAR for the mean-ing of terms used in the
EAR. Finally, this partmakes clear that compliance with the EAR
doesnot relieve any obligations imposed under foreignlaws. (b) This
part does not address any of the provi-sions set forth in part 760
of the EAR, RestrictiveTrade Practices or Boycotts.
(c) This part does not define the scope of legalauthority to
regulate exports, including reexports,or activities found in the
Export AdministrationAct and other statutes. What this part does do
isset forth the extent to which such legal authorityhas been
exercised through the EAR.
§734.2
IMPORTANT EAR TERMS AND PRINCIPLES
(a) Subject to the EAR - Definition
(1) "Subject to the EAR" is a term used in theEAR to describe
those items and activities overwhich BXA exercises regulatory
jurisdictionunder the EAR. Conversely, items and activitiesthat are
not subject to the EAR are outside theregulatory jurisdiction of
the EAR and are notaffected by these regulations. The items
andactivities subject to the EAR are described in§734.2 through
§734.5 of this part. You shouldreview the Commerce Control List
(CCL) and anyapplicable parts of the EAR to determine whetheran
item or activity is subject to the EAR. How-ever, if you need help
in determining whether anitem or activity is subject to the EAR,
see §734.6of this part. Publicly available technology andsoftware
not subject to the EAR are described in§734.7 through §734.11 and
Supplement No. 1 tothis part.
(2) Items and activities subject to the EAR mayalso be
controlled under export-related programsadministered by other
agencies. Items and activi-ties subject to the EAR are not
necessarily ex-empted from the control programs of other agen-cies.
Although BXA and other agencies thatmaintain controls for national
security and foreignpolicy reasons try to minimize overlapping
juris-diction, you should be aware that in someinstances you may
have to comply with more thanone regulatory program. (3) The term
"subject to the EAR" should not beconfused with licensing or other
requirementsimposed in other parts of the EAR. Just becausean item
or activity is subject to the EAR does notmean that a license or
other requirement automat-ically applies. A license or other
requirementapplies only in those cases where other parts ofthe EAR
impose a licensing or other requirementon such items or
activities.
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(b) Export and reexport
(1) Definition of export. “Export” means anactual shipment or
transmission of items subjectto the EAR out of the United States,
or release oftechnology or software subject to the EAR to aforeign
national in the United States, as describedin paragraph (b)(2)(ii)
of this section. See para-graph (b)(9) of this section for the
definition thatapplies to exports of encryption source code
andobject code software subject to the EAR.
(2) Export of technology or software. (Seeparagraph (b)(9) for
provisions that apply to en-cryption source code and object code
software.)“Export” of technology or software, excludingencryption
software subject to “EI” controls,includes:
(i) Any release of technology or software sub-ject to the EAR in
a foreign country; or
(ii) Any release of technology or source codesubject to the EAR
to a foreign national. Suchrelease is deemed to be an export to the
homecountry or countries of the foreign national. Thisdeemed export
rule does not apply to personslawfully admitted for permanent
residence in theUnited States and does not apply to persons whoare
protected individuals under the Immigrationand Naturalization Act
(8 U.S.C. 1324b(a)(3)).Note that the release of any item to any
party withknowledge a violation is about to occur is prohib-ited by
§736.2(b)(10) of the EAR.
(3) Definition of "release" of technology orsoftware. Technology
or software is "released"for export through:
(i) Visual inspection by foreign nationals ofU.S.-origin
equipment and facilities;
(ii) Oral exchanges of information in theUnited States or
abroad; or
(iii) The application to situations abroad of
personal knowledge or technical experienceacquired in the United
States.
(4) Definition of reexport. "Reexport" means anactual shipment
or transmission of items subjectto the EAR from one foreign country
to anotherforeign country; or release of technology or soft-ware
subject to the EAR to a foreign nationaloutside the United States,
as described in para-graph (b)(5) of this section.
(5) Reexport of technology or software. Anyrelease of technology
or source code subject tothe EAR to a foreign national of another
countryis a deemed reexport to the home country orcountries of the
foreign national. However, thisdeemed reexport definition does not
apply topersons lawfully admitted for permanent resi-dence. The
term "release" is defined in paragraph(b)(3) of this section. Note
that the release of anyitem to any party with knowledge or reason
toknow a violation is about to occur is prohibited by§736.2(b)(10)
of the EAR.
(6) For purposes of the EAR, the export orreexport of items
subject to the EAR that willtransit through a country or countries
or be trans-shipped in a country or countries to a new countryor
are intended for reexport to the new country,are deemed to be
exports to the new country.
(7) If a territory, possession, or department of aforeign
country is not listed on the Country Chartin Supplement No. 1 to
part 738 of the EAR, theexport or reexport of items subject to the
EAR tosuch destination is deemed under the EAR to bean export to
the foreign country. For example, ashipment to the Cayman Islands,
a dependentterritory of the United Kingdom, is deemed to bea
shipment to the United Kingdom.
(8) Export or reexport of items subject to theEAR does not
include shipments among any ofthe states of the United States, the
Com-monwealth of Puerto Rico, or the Commonwealthof the Northern
Mariana Islands or any territory,
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dependency, or possession of the United States.These
destinations are listed in Schedule C & E,Classification of
Country and Territory Designa-tions for U.S. Export Statistics,
issued by theBureau of the Census.
(9) Export of encryption source code andobject code
software.
(i) For purposes of the EAR, the export ofencryption source code
and object code softwaremeans:
(A) An actual shipment, transfer, or transmis-sion out of the
United States (see also paragraph(b)(9)(ii) of this section);
or
(B) A transfer of such software in the UnitedStates to an
embassy or affiliate of a foreigncountry.
(ii) The export of encryption source code andobject code
software controlled for “EI” reasonsunder ECCN 5D002 on the
Commerce ControlList (see Supplement No. 1 to part 774 of theEAR),
except for source code eligible for exportunder §§740.13(e) and
740.17(a)(5)(i), includesdownloading, or causing the downloading
of,such software to locations (including electronicbulletin boards,
Internet file transfer protocol, andWorld Wide Web sites) outside
the U.S., or mak-ing such software available for transfer
outsidethe United States, over wire, cable, radio,
electro-magnetic, photo optical, photoelectric or othercomparable
communications facilities accessibleto persons outside the United
States, includingtransfers from electronic bulletin boards,
Internetfile transfer protocol and World Wide Web sites,unless the
person making the software availabletakes precautions adequate to
prevent unautho-rized transfer of such code.
(iii) Subject to the General Prohibitions de-scribed in part 736
of the EAR, such precautionsfor Internet transfers of products
eligible for ex-port under §§740.17 (a)(2) (encryption software
products), (a)(5)(ii) (certain encryption sourcecode) and
(a)(5)(iii) (encryption toolkits) shallinclude such measures
as:
(A) The access control system, either throughautomated means or
human intervention, checksthe address of every system outside of
the U.S. orCanada requesting or receiving a transfer andverifies
such systems do not have a domain nameor Internet address of a
foreign government end-user (e.g. “.gov,” “.gouv,” “.mil” or
similar ad-dresses);
(B) The access control system provides everyrequesting or
receiving party with notice that thetransfer includes or would
include cryptographicsoftware subject to export controls under
theExport Administration Regulations, and anyonereceiving such a
transfer cannot export the soft-ware without a license or other
authorization; and
(C) Every party requesting or receiving atransfer of such
software must acknowledge affir-matively that the software is not
intended for useby a government end-user, as defined in part
772,and he or she understands the cryptographic soft-ware is
subject to export controls under the Ex-port Administration
Regulations and anyonereceiving the transfer cannot export the
softwarewithout a license or other authorization. BXAwill consider
acknowledgments in electronic formprovided they are adequate to
assure legal under-takings similar to written acknowledgments.
§734.3
ITEMS SUBJECT TO THE EAR
(a) Except for items excluded in paragraph (b) ofthis section,
the following items are subject to theEAR:
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(1) All items in the United States, including in aU.S. Foreign
Trade Zone or moving intransitthrough the United States from one
foreigncountry to another;
(2) All U.S. origin items wherever located;
(3) U.S. origin parts, components, materials orother commodities
incorporated abroad intoforeign-made products, U.S. origin software
com-mingled with foreign software, and U.S. origintechnology
commingled with foreign technology,in quantities exceeding de
minimis levels as de-scribed in §734.4 and Supplement No. 2 of
thispart;
(4) Certain foreign-made direct products of U.S.origin
technology or software, as described in§736.2(b)(3) of the EAR. The
term "direct prod-uct" means the immediate product
(includingprocesses and services) produced directly by theuse of
technology or software; and
(5) Certain commodities produced by any plantor major component
of a plant located outside theUnited States that is a direct
product of U.S.-origin technology or software, as described
in§736.2(b)(3) of the EAR.
(b) The following items are not subject to theEAR:
(1) Items that are exclusively controlled for ex-port or
reexport by the following departments andagencies of the U.S.
Government which regulateexports or reexports for national security
or for-eign policy purposes:
(i) Department of State. The InternationalTraffic in Arms
Regulations (22 CFR part 121)administered by the Office of Defense
TradeControls relate to defense articles and defenseservices on the
U.S. Munitions List. Section 38 ofthe Arms Export Control Act (22
U.S.C. 2778).
(ii) Treasury Department, Office of Foreign
Assets Control (OFAC). Regulations adminis-tered by OFAC
implement broad controls andembargo transactions with certain
foreign coun-tries. These regulations include controls on ex-ports
and reexports to certain countries (31 CFRchapter V). Trading with
the Enemy Act (50U.S.C. app. section 1 et seq.), and
InternationalEmergency Economic Powers Act (50 U.S.C.1701, et
seq.)
(iii) U.S. Nuclear Regulatory Commission(NRC). Regulations
administered by NRC controlthe export and reexport of commodities
related tonuclear reactor vessels (10 CFR part 110).Atomic Energy
Act of 1954, as amended (42U.S.C. part 2011 et seq.).
(iv) Department of Energy (DOE).Regulations administered by DOE
control theexport and reexport of technology related to
theproduction of special nuclear materials (10 CFRpart 810). Atomic
Energy Act of 1954, asamended (42 U.S.C. section 2011 et seq.).
(v) Patent and Trademark Office (PTO).Regulations administered
by PTO provide for theexport to a foreign country of
unclassifiedtechnology in the form of a patent application oran
amendment, modification, or supplementthereto or division thereof
(37 CFR part 5). BXAhas delegated authority under the
ExportAdministration Act to the PTO to approve exportsand reexports
of such technology which is subjectto the EAR. Exports and
reexports of suchtechnology not approved under PTO regulationsmust
comply with the EAR.
(2) Prerecorded phonograph records reproducingin whole or in
part, the content of printed books,pamphlets, and miscellaneous
publications,including newspapers and periodicals; printedbooks,
pamphlets, and miscellaneous publicationsincluding bound newspapers
and periodicals;children's picture and painting books; newspaperand
periodicals, unbound, excluding waste; musicbooks; sheet music;
calendars and calendar
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blocks, paper; maps, hydrographical charts,atlases, gazetteers,
globe covers, and globes(terrestrial and celestial); exposed and
developedmicrofilm reproducing, in whole or in part, thecontent of
any of the above; exposed anddeveloped motion picture film and
soundtrack;and advertising printed matter exclusively
relatedthereto.
(3) Publicly available technology and software,except software
controlled for EI reasons underECCN 5D002 on the Commerce Control
List,that:
(i) Are already published or will be publishedas described in
§734.7 of this part;
(ii) Arise during, or result from, fundamentalresearch, as
described in §734.8 of this part;
(iii) Are educational, as described in §734.9of this part;
(iv) Are included in certain patentapplications, as described in
§734.10 of this part.
Note to paragraphs (b)(2) and (b)(3) of thissection: A printed
book or other printed materialsetting forth encryption source code
is not itselfsubject to the EAR (see §734.3(b)(2)).
However,notwithstanding §734.3(b)(2), encryption sourcecode in
electronic form or media (e.g., computerdiskette or CD ROM) remains
subject to the EAR(see §734.3(b)(3)).
(4) Foreign made items that have greater than thede minimis U.S.
content based on the principlesdescribed in §734.4 of this
part.
(c) "Items subject to the EAR" consist of theitems listed on the
Commerce Control List (CCL)in part 774 of the EAR and all other
items whichmeet the definition of that term. For ease ofreference
and classification purposes, i temssubject to the EAR which are not
listed on theCCL are designated as "EAR99."
§734.4DE MINIMIS U.S. CONTENT
(a) There is no de minimis level for the exportfrom a foreign
country of a foreign-madecomputer exceeding 28,000 MTOPS
containingU.S.-origin controlled semiconductors (other thanmemory
circuits) classified under ECCN 3A001or high speed interconnect
devices (ECCN4A003.g) to Computer Tier 3 and 4 countriesdescribed
in §742.12 of the EAR.
(b) There is no de minimis level for itemscontrolled for EI
reasons under ECCNs 5A002,5D002 and 5E002 absent written
authorizationfrom BXA. Exporters may, as part of aclassification
request, ask that software controlledunder ECCN 5D002 and eligible
for export underthe "retail" or "source code" provisions of
licenseexception ENC, and parts and componentscontrolled under ECCN
5A002, be made eligiblefor de minimis treatment. The review of
deminimis eligibility will take into account nationalsecurity
interests.
!(c)Except as provided in paragraph (a) and (b)of this section
for certain computers and itemscontrolled for EI reasons, the
following reexportsare not subject to the EAR when made to eitheran
embargoed country listed in part 746 of the
EAR or to a terrorist-supporting country listed inCountry Group
E:1 (see Supplement No. 1 topart 740 of the EAR):
(1) Reexports of a foreign-made commodityincorporating
controlled U.S.- origin commoditiesvalued at 10% or less of the
total value of theforeign-made commodity;
(2) Reexports of foreign-made softwareincorporating controlled
U.S.-origin softwarevalued at 10% or less of the total value of
theforeign-made software; or
(3) Reexports of foreign technology commingledwith or drawn from
controlled U.S.-origintechnology valued at 10% or less of the
total
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value of the foreign technology.
(d) Except as provided in paragraph (a) of thissection for
certain computers, for all othercountries not included in paragraph
(b) of thissection the following reexports are not subject tothe
EAR:
(1) Reexports of a foreign-made commodityincorporating
controlled U.S.-origin commoditiesvalued at 25% or less of the
total value of theforeign-made commodity;
(2) Reexports of foreign-made softwareincorporating controlled
U.S.-origin softwarevalued at 25% or less of the total value of
theforeign-made software; or
(3) Reexports of foreign technology commingledwith or drawn from
controlled U.S.-origintechnology valued at 25% or less of the
totalvalue of the foreign technology.
(e) For purposes of determining de minimislevels, technology and
source code used to designor produce foreign-made commodities or
softwareare not considered to be incorporated into suchforeign-made
commodities or software.Commodities subject only to short
supplycontrols are not included in calculating U.S.content.
(f) You are responsible for making the necessarycalculations to
determine whether the de minimisprovisions apply to your situation.
SeeSupplement No. 2 to part 734 for guidanceregarding calculation
of U.S. controlled content.
(g) See §770.3 of the EAR for principles thatapply to commingled
U.S.-origin technology andsoftware.
(h) Notwithstanding the provisions of paragraphs(c) and (d) of
this section, U.S.-origin technologycontrolled by ECCN 9E003a.1
through a.12, and.f, and related controls, and encryption
softwarecontrolled for “EI” reasons under ECCN 5D002
or encryption technology controlled for “EI”reasons under ECCN
5E002 do not lose theirU.S.-origin when redrawn, used, consulted,
orotherwise commingled abroad in any respect withother software or
technology of any other origin.Therefore, any subsequent or similar
software ortechnology prepared or engineered abroad for thedesign,
construction, operation, or maintenance ofany plant or equipment,
or part thereof, which isbased on or uses any such U.S.-origin
software ortechnology is subject to the EAR.
§734.5
ACTIVITIES OF U.S. AND FOREIGN PERSONS SUBJECT TO THE EAR
The following kinds of activities are subject tothe EAR:
(a) Certain activities of U.S. persons related tothe
proliferation of nuclear explosive devices,chemical or biological
weapons, missiletechnology as described in §744.6 of the EAR,and
the proliferation of chemical weapons asdescribed in part 745 of
the EAR.
(b) Activities of U.S. or foreign personsprohibited by any order
issued under the EAR,including a Denial Order issued pursuant to
part766 of the EAR.
(c) Technical assistance by U.S. persons withrespect to
encryption commodities or software asdescribed in §744.9 of the
EAR.
§734.6
ASSISTANCE AVAILABLE FROM BXAFOR DETERMINING LICENSING AND
OTHER REQUIREMENTS
(a) If you are not sure whether a commodity,software,
technology, or activity is subject to theEAR, or is subject to
licensing or other
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requirements under the EAR, you may ask BXAfor an advisory
opinion, classification, or adetermination whether a particular
item oractivity is subject to the EAR. In many instances,including
those where the item is speciallydesigned, developed, configured,
adapted, ormodified for military application, the item mayfall
under the licensing jurisdiction of theDepartment of State and may
be subject to thecontrols of the International Traffic in
ArmsRegulations (22 CFR parts 120 through 130)(ITAR). In order to
determine if the Departmentof State has licensing jurisdiction over
an item,you should submit a request for a commodityjurisdiction
determination to the Department ofState, Office of Defense Trade
Controls.Exporters should note that in a very limitednumber of
cases, the categories of items may besubject to both the ITAR and
the EAR. Therelevant departments are working to eliminate
anyunnecessary overlaps that may exist.
(b) As the agency responsible for administeringthe EAR, BXA is
the only agency that has theresponsibility for determining whether
an item oractivity is subject to the EAR and, if so, whatlicensing
or other requirements apply under theEAR. Such a determination only
affects EARrequirements, and does not affect the applicabilityof
any other regulatory programs.
(c) If you need help in determining BXAlicensing or other
requirements, you may askBXA for help by following the
proceduresdescribed in §748.3 of the EAR.
§734.7
PUBLISHED INFORMATION AND SOFTWARE
(a) Information is "published" when it becomesgenerally
accessible to the interested public inany form, including:
(1) Publication in periodicals, books, print,electronic, or any
other media available forgeneral distribution to any member of the
publicor to a community of persons interested in thesubject matter,
such as those in a scientific orengineering discipline, either free
or at a pricethat does not exceed the cost of reproduction
anddistribution (See Supplement No. 1 to this part,Questions A(1)
through A(6));
(2) Ready availability at libraries open to thepublic or at
university libraries (See SupplementNo. 1 to this part, Question
A(6));
(3) Patents and open (published) patentapplications available at
any patent office; and
(4) Release at an open conference, meeting,seminar, trade show,
or other open gathering.
(i) A conference or gathering is "open" if alltechnically
qualified members of the public areeligible to attend and attendees
are permitted totake notes or otherwise make a personal record(not
necessarily a recording) of the proceedingsand presentations.
(ii) All technically qualified members of thepublic may be
considered eligible to attend aconference or other gathering
notwithstanding aregistration fee reasonably related to cost
andreflecting an intention that all interested andtechnically
qualified persons be able to attend, ora limitation on actual
attendance, as long asattendees either are the first who have
applied orare selected on the basis of relevant scientific or
technical competence, experience, orresponsibility (See Supplement
No. 1 to this part,Questions B(1) through B(6)).
(iii) "Publication" includes submission ofpapers to domestic or
foreign editors or reviewersof journals, or to organizers of open
conferencesor other open gatherings, with the understandingthat the
papers will be made publicly available iffavorably received. (See
Supplement No. 1 tothis part, Questions A(1) and A(3)).
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(b) Software and information is published whenit is available
for general distribution either forfree or at a price that does not
exceed the cost ofreproduction and distribution. See SupplementNo.
1 to this part, Questions G(1) through G(3).
(c) Notwithstanding paragraphs (a) and (b) ofthis section, note
that encryption softwarecontrolled under ECCN 5D002 for “EI”
reasonson the Commerce Control List (refer toSupplement No. 1 to
part 774 of the EAR)remains subject to the EAR (refer to
§§740.13(e)and 740.17(a)(5)(i) of the EAR for release underLicense
Exception).
§734.8
INFORMATION RESULTING FROM FUNDAMENTAL RESEARCH
(a) Fundamental research
Paragraphs (b) through (d) of this section and§734.11 of this
part provide specific rules thatwill be used to determine whether
research inparticular institutional contexts qualifies
as"fundamental research". The intent behind theserules is to
identify as "fundamental research"basic and applied research in
science andengineering, where the resulting information
isordinarily published and shared broadly withinthe scientific
community. Such research can bedistinguished from proprietary
research and fromindustrial development, design, production,
andproduct utilization, the results of which ordinarilyare
restricted for proprietary reasons or specificnational security
reasons as defined in §734.11(b)of this part. (See Supplement No. 1
to this part,Question D(8)). Note that the provisions of
thissection do not apply to encryption softwarecontrolled under
ECCN 5D002 for “EI” reasonson the Commerce Control List (refer
to§§740.13(e) and 740.17(a)(5)(i) of the EAR forrelease under
License Exception).
(b) University based research
(1) Research conducted by scientists, engineers,or students at a
university normally will beconsidered fundamental research, as
described inparagraphs (b)(2) through (6) of this
section.("University" means any accredited institution ofhigher
education located in the United States.)
(2) Prepublication review by a sponsor ofuniversity research
solely to insure that thepublication would not inadvertently
divulgeproprietary information that the sponsor hasfurnished to the
researchers does not change thestatus of the research as
fundamental research.However, release of information from a
corporatesponsor to university researchers where theresearch
results are subject to prepublicationreview, is subject to the EAR.
(See SupplementNo. 1 to this part, Questions D(7), D(9),
andD(10)).
(3) Prepublication review by a sponsor ofuniversity research
solely to ensure thatpublication would not compromise patent
rightsdoes not change the status of fundamentalresearch, so long as
the review causes no morethan a temporary delay in publication of
theresearch results. (4) The initial transfer of information from
anindustry sponsor to university researchers issubject to the EAR
where the parties have agreedthat the sponsor may withhold from
publicationsome or all of the information so provided.
(SeeSupplement No. 1 to this part, Question D(2)).
(5) University based research is not considered"fundamental
research" if the university or itsresearchers accept (at the
request, for example, ofan industrial sponsor) other restrictions
onpublication of scientific and technical informationresulting from
the project or activity. Scientificand technical information
resulting from theresearch will nonetheless qualify as
fundamentalresearch once all such restrictions have expired orhave
been removed. (See Supplement No. 1 tothis part, Question D(7) and
D(9)).
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(6) The provisions of §734.11 of this part willapply if a
university or its researchers acceptspecific national security
controls (as defined in§734.11 of this part) on a research project
oractivity sponsored by the U.S. Government. (SeeSupplement No. 1
to this part, Questions E(1) andE(2)).
(c) Research based at Federal agencies orFFRDCs
Research conducted by scientists or engineersworking for a
Federal agency or a FederallyFunded Research and Development
Center(FFRDC) may be designated as "fundamentalresearch" within any
appropriate system devisedby the agency or the FFRDC to control the
releaseof information by such scientists and engineers.(See
Supplement No. 1 to this part, QuestionsD(8) and D(11)).
(d) Corporate research
(1) Research conducted by scientists or engineersworking for a
business entity will be considered"fundamental research" at such
time and to theextent that the researchers are free to
makescientific and technical information resultingfrom the research
publicly available withoutrestriction or delay based on proprietary
concernsor specific national security controls as defined
in§734.11(b) of this part.
(2) Prepublication review by the company solelyto ensure that
the publication would compromiseno proprietary information provided
by thecompany to the researchers is not considered tobe a
proprietary restriction under paragraph (d)(1)of this section.
However, paragraph (d)(1) of thissection does not authorize the
release ofinformation to university researchers where theresearch
results are subject to prepublicationreview. (See Supplement No. 1
to this part,Questions D(8), D(9), and D(10)). (3) Prepublication
review by the company solelyto ensure that publication would
compromise no
patent rights will not be considered a proprietaryrestriction
for this purpose, so long as the reviewcauses no more than a
temporary delay inpublication of the research results.
(4) However, the initial transfer of informationfrom a business
ent ity to researchers is notauthorized under the "fundamental
research"provision where the parties have agreed that thebusiness
entity may withhold from publicationsome or all of the information
so provided.
(e) Research based elsewhere
Research conducted by scientists or engineerswho are not working
for any of the institutionsdescribed in paragraphs (b) through (d)
of thissection will be treated as corporate research, asdescribed
in paragraph (d) of this section. (SeeSupplement No. 1 to this
part, Question D(8)).
§734.9
EDUCATIONAL INFORMATION
“Educational information” referred to in§734.3(b)(3)(iii) of
this part is not subject to theEAR if it is released by instruction
in catalogcourses and associated teaching laboratories ofacademic
institutions. Dissertation research isdiscussed in §734.8(b) of
this part. (Refer toSupplement No. 1 to this part, Question
C(1)through C(6)). Note that the provisions of thissection do not
apply to encryption softwarecontrolled under ECCN 5D002 for “EI”
reasonson the Commerce Control List (refer to §§740.13(e) and
740.17(a)(5)(i) of the EAR for releaseunder License Exception).
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§734.10
PATENT APPLICATIONS
The information referred to in §734.3(b)(3)(iv) ofthis part
is:
(a) Information contained in a patent applicationprepared wholly
from foreign-origin technicaldata where the application is being
sent to theforeign inventor to be executed and returned tothe
United States for subsequent filing in the U.S.Patent and Trademark
Office;
(b) Information contained in a patent application,or an
amendment, modification, supplement ordivision of an application,
and authorized forfiling in a foreign country in accordance with
theregulations of the Patent and Trademark Office,37 CFR part 51;
or
(c) Information contained in a patent applicationwhen sent to a
foreign country before or withinsix months after the filing of a
United Statespatent application for the purpose of obtaining
thesignature of an inventor who was in the UnitedStates when the
invention was made or who is aco-inventor with a person residing in
the UnitedStates.
§734.11
GOVERNMENT-SPONSORED RESEARCHCOVERED BY CONTRACT CONTROLS
(a) If research is funded by the U.S. Government,and specific
national security controls are agreedon to protect information
resulting from theresearch, §734.3(b)(3) of this part will not
apply
to any export or reexport of such information inviolation of
such controls. However, any exportor reexport of information
resulting from theresearch that is consistent with the
specificcontrols may nonetheless be made under thisprovision.
(b) Examples of "specific national securitycontrols" include
requirements for prepublicationreview by the Government, with right
to withholdpermission for publication; restrictions
onprepublication dissemination of information tonon-U.S. citizens
or other categories of persons;or restrictions on participation of
non-U.S.citizens or other categories of persons in theresearch. A
general reference to one or moreexport control laws or regulations
or a generalreminder that the Government retains the right
toclassify is not a "specific national securitycontrol". (See
Supplement No. 1 to this part,Questions E(1) and E(2).)
§734.12
EFFECT ON FOREIGN LAWS AND REGULATIONS
Any person who complies with any of the licenseor other
requirements of the EAR is not relievedof the responsibility of
complying with applicableforeign laws and regulations. Conversely,
anyperson who complies with the license or otherrequirements of a
foreign law or regulation is notrelieved of the responsibility of
complying withU.S. laws and regulations, including the EAR.
1 Regulations issued by the Patent and TrademarkOffice in 37 CFR
part 5 pro vide for the ex port to a
foreign country o f unclassified technical data in the
form of a patent app lication or an a mendm ent,
modification, or supplement thereto or division there of.
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QUESTIONS AND ANSWERS - TECHNOLOGY AND SOFTWARE SUBJECT TO THE
EAR
This Supplement No. 1 contains explanatoryquestions and answers
relating to technology andsoftware that is subject to the EAR. It
is intendedto give the public guidance in understanding howBXA
interprets this part, but is only illustrative,not comprehensive.
In addition, facts orcircumstances that differ in any material
wayfrom those set forth in the questions or answerswill be
considered under the applicable provisionsof the EAR. Exporters
should note that theprovisions of this supplement do not apply
toencryption software (including source code)transferred from the
U.S. Munitions List to theCommerce Control List consistent with
E.O.13026 of November 15, 1996 (61 FR 58767) andpursuant to the
Presidential Memorandum of thatdate. See §742.15 of the EAR. This
Supplementis divided into nine sections according to topic
asfollows:
Section A: Publication of technology andexports and reexports of
technology that hasbeen or will be published.
Section B: Release of technology at
conferences.
Section C: Educational instruction.
Section D: Research, correspondence, and
informal scientific exchanges.
Section E: Federal contract controls.
Section F: Commercial consulting.
Section G: Software.
Section H: Availability in a public library.
Section I: Miscellaneous.
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Section A: Publication
Question A(1): I plan to publish in a foreignjournal a
scientific paper describing the results ofmy research, which is in
an area listed in the EARas requiring a license to all countries
exceptCanada. Do I need a license to send a copy to mypublisher
abroad?
Answer: No. This export transaction is notsubject to the EAR.
The EAR do not covertechnology that is already publicly available,
aswell as technology that is made public by thetransaction in
question (§§734.3 and 734.7 ofthis part). Your research results
would be madepublic by the planned publication. You wouldnot need a
license.
Question A(2): Would the answer differdepending on where I work
or where I performedthe research?
Answer: No. Of course, the result would bedifferent if your
employer or another sponsor ofyour research imposed restrictions on
itspublication (§734.8 of this part).
Question (A)3: Would I need a license to sendthe paper to the
editors of a foreign journal forreview to determine whether it will
be acceptedfor publication?
Answer: No. This export transaction is notsubject to the EAR
because you are submittingthe paper to the editors with the
intention thatthe paper will be published if favorably re-ceived
(§734.7(a)(4)(iii) of this part).
Question A(4): The research on which I will bereporting in my
paper is supported by a grantfrom the Department of Energy (DOE).
The grantrequires prepublication clearance by DOE. Doesthat make
any difference under the Export
Administration Regulations?
Answer: No, the transaction is not subject tothe EAR. But if you
published in violation ofany Department of Energy controls you
haveaccepted in the grant, you may be subject toappropriate
administrative, civil, or criminalsanctions under other laws.
Question A(5): We provide consulting serviceson the design,
layout, and construction ofintegrated circuit plants and production
lines. Amajor part of our business is the publication forsale to
clients of detailed handbooks andreference manuals on key aspects
on the designand manufacturing processes. A typical cost
ofpublishing such a handbook and manual might be$500; the typical
sales price is about $15,000. Isthe publication and sale of such
handbooks ormanuals subject to the EAR?
Answer: Yes. The price is above the cost ofreproduction and
distribution (§734.7(a)(1) ofthis part). Thus, you would need to
obtain alicense or qualify for a License Exceptionbefore you could
export or reexport any ofthese handbooks or manuals.
Question A(6): My Ph.D. thesis is on technology,listed in the
EAR as requiring a license to alldestinations except Canada, which
has never beenpublished for general distribution. However,
thethesis is available at the institution from which Itook the
degree. Do I need a license to sendanother copy to a colleague
overseas?
Answer: That may depend on where in theinstitution it is
available. If it is not readilyavailable in the university library
(e.g., by filingin open stacks with a reference in the catalog),it
is not "publicly available" and the export orreexport would be
subject to the EAR on thatground. The export or reexport would not
be
subject to the EAR if your Ph.D. research qualified as
"fundamental research" under §734.8
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of this part. If not, however, you will need toobtain a license
or qualify for a LicenseException before you can send a copy out of
thecountry.
Question A(7): We sell electronically recordedinformation,
including software and databases, atwholesale and retail. Our
products are availableby mail order to any member of the
public,though intended for specialists in various fields.They are
priced to maximize sales to persons inthose fields. Do we need a
license to sell ourproducts to foreign customers?
Answer: You would not need a license forotherwise controlled
technology or software ifthe technology and software are made
publiclyavailable at a price that does not exceed the costof
production and distribution to the technicalcommunity. Even if
priced at a higher level, theexport or reexport of the technology
or softwaresource code in a library accessible to the publicis not
subject to the EAR (§734.7(a) of thispart).
Section B: Conferences
Question B(1): I have been invited to give apaper at a
prestigious international scientificconference on a subject listed
as requiring alicense under the EAR to all countries, exceptCanada.
Scientists in the field are given anopportunity to submit
applications to attend.Invitations are given to those judged to be
theleading researchers in the field, and attendance isby invitation
only. Attendees will be free to takenotes, but not make electronic
or verbatimrecordings of the presentations or discussions.Some of
the attendees will be foreigners. Do Ineed a license to give my
paper?
Answer: No. Release of information at an openconference and
information that has beenreleased at an open conference is not
subject tothe EAR. The conference you describe fits the
definition of an open conference (§734.7(a) ofthis part).
Question B(2): Would it make any difference ifthere were a
prohibition on making any notes orother personal record of what
transpires at theconference?
Answer: Yes. To qualify as an "open"conference, attendees must
be permitted to takenotes or otherwise make a personal
record(although not necessarily a recording). If notetaking or the
making of personal records isaltogether prohibited, the conference
would notbe considered "open".
Question B(3): Would it make any difference ifthere were also a
registration fee?
Answer: That would depend on whether the feeis reasonably
related to costs and reflects anintention that all interested and
technicallyqualified persons should be able to
attend(§734.7(a)(4)(ii) of this part).
Question B(4): Would it make any difference ifthe conference
were to take place in anothercountry?
Answer: No.
Question B(5): Must I have a license to send thepaper I propose
to present at such a foreignconference to the conference organizer
forreview?
Answer: No. A license is not required underthe EAR to submit
papers to foreign organizersof open conferences or other open
gatheringswith the intention that the papers willbedelivered at the
conference, and so made publicly available, if favorably received.
The
submission of the papers is not subject to theEAR
(§734.7(a)(4)(iii) of this part).
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Question B(6): Would the answers to any of theforegoing
questions be different if my work weresupported by the Federal
Government?
Answer: No. You may export and reexport thepapers, even if the
release of the paper violatesany agreements you have made with
yourgovernment sponsor. However, nothing in theEAR relieves you of
responsibility forconforming to any controls you have agreed toin
your Federal grant or contract.
Section C: Educational Instruction
Question C(1): I teach a university graduatecourse on design and
manufacture of veryhigh-speed integrated circuitry. Many of
thestudents are foreigners. Do I need a license toteach this
course?
Answer: No. Release of information byinstruction in catalog
courses and associatedteaching laboratories of academic
institutions isnot subject to the EAR (§734.9 of this part).
Question C(2): Would it make any difference ifsome of the
students were from countries towhich export licenses are
required?
Answer: No.
Question C(3): Would it make any difference if Italk about
recent and as yet unpublished resultsfrom my laboratory
research?
Answer: No.
Question C(4): Even if that research is funded bythe
Government?
Answer: Even then, but you would not bereleased from any
separate obligations you haveaccepted in your grant or
contract.
Question C(5): Would it make any difference if I
were teaching at a foreign university?
Answer: No.
Question C(6): We teach proprietary courses ondesign and
manufacture of high-performancemachine tools. Is the instruction in
our classessubject to the EAR?
Answer: Yes. That instruction would notqualify as "release of
educational information"under §734.9 of this part because
yourproprietary business does not qualify as an"academic
institution" within the meaning of§734.9 of this part. Conceivably,
however, theinstruction might qualify as "release at an
openseminar, or other open gathering" under§734.7(a) of this part.
The conditions forqualification of such a seminar or gathering
as"open", including a fee "reasonably related tocosts (of the
conference, not of producing thedata) and reflecting an intention
that allinterested and technically qualified persons beable to
attend," would have to be satisfied.
Section D: Research, Correspondence, andInformal Scientific
Exchanges
Question D(1): Do I need a license in order for aforeign
graduate student to work in mylaboratory?
Answer: Not if the research on which theforeign student is
working qualifies as"fundamental research" under §734.8 of
thispart. In that case, the research is not subject tothe EAR.
Question D(2): Our company has entered into acooperative
research arrangement with a researchgroup at a university. One of
the researchers inthat group is a PRC national. We would like
toshare some of our proprietary information withthe university
research group. We have no way ofguaranteeing that this information
will not get
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into the hands of the PRC scientist. Do we needto obtain a
license to protect against thatpossibility?
Answer: No. The EAR do not cover thedisclosure of information to
any scientists,engineers, or students at a U.S. university in
thecourse of industry-university researchcollaboration under
specific arrangementsbetween the firm and the university,
providedthese arrangements do not permit the sponsor towithhold
from publication any of theinformation that he provides to the
researchers.However, if your company and the researchershave agreed
to a prohibition on publication,then you must obtain a license or
qualify for aLicense Exception before transferring theinformation
to the university. It is importantthat you as the corporate sponsor
and theuniversity get together to discuss whetherforeign nationals
will have access to theinformation, so that you may obtain
anynecessary authorization prior to transferring theinformation to
the research team.
Question D(3): My university will host aprominent scientist from
the PRC who is anexpert on research in engineered ceramics
andcomposite materials. Do I require a licensebefore telling our
visitor about my latest, as yetunpublished, research results in
those fields?
Answer: Probably not. If you performed yourresearch at the
university, and you were subjectto no contract controls on release
of theresearch, your research would qualify as"fundamental
research" (§734.8(a) of this part).Information arising during or
resulting fromsuch research is not subject to the EAR(§734.3(b)(3)
of this part).
You should probably assume, however, thatyour visitor will be
debriefed later aboutanything of potential military value he
learnsfrom you. If you are concerned that giving suchinformation to
him, even though permitted,could jeopardize U.S. security
interests, the
Commerce Department can put you in touchwith appropriate
Government scientists whocan advise you. Write to Department
ofCommerce, Bureau of Export Administration,P.O. Box 273,
Washington, DC 20044.
Question D(4): Would it make any difference ifI were proposing
to talk with a PRC expert inChina?
Answer: No, if the information in questionarose during or
resulted from the same"fundamental research."
Question D(5): Could I properly do some workwith him in his
research laboratory inside China?
Answer: Application abroad of personalknowledge or technical
experience acquired inthe United States constitutes an export of
thatknowledge and experience, and such an exportmay be subject to
the EAR. If any of theknowledge or experience you export in this
wayrequires a license under the EAR, you mustobtain such a license
or qualify for a LicenseException.
Question D(6): I would like to correspond andshare research
results with an Iranian expert inmy field, which deals with
technology thatrequires a license to all destinations exceptCanada.
Do I need a license to do so?
Answer: Not as long as we are still talkingabout information
that arose during or resultedfrom research that qualifies as
"fundamental"under the rules spelled out in §734.8(a) of
thispart.
Question D(7): Suppose the research in questionwere funded by a
corporate sponsor and I hadagreed to prepublication review of any
paperarising from the research?
Answer: Whether your research would stillqualify as
"fundamental" would depend on the
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nature and purpose of the prepublication review.If the review is
intended solely to ensure that yourpublications will neither
compromise patentrights nor inadvertently divulge
proprietaryinformation that the sponsor has furnished to you,the
research could still qualify as "fundamental."But if the sponsor
will consider as part of itsprepublication review whether it wants
to holdyour new research results as trade secrets orotherwise
proprietary information (even if yourvoluntary cooperation would be
needed for it todo so), your research would no longer qualify
as"fundamental." As used in these regulations it isthe actual and
intended openness of researchresults that primarily determines
whether theresearch counts as "fundamental" and so is notsubject to
the EAR.
Question D(8): In determining whether researchis thus open and
therefore counts as"fundamental," does it matter where or in
whatsort of institution the research is performed?
Answer: In principle, no. "Fundamentalresearch" is performed in
industry, Federallaboratories, or other types of institutions,
aswell as in universities. The regulationsintroduce some
operational presumptions andprocedures that can be used both by
thosesubject to the regulations and by those whoadminister them to
determine with someprecision whether a particular research
activityis covered. Recognizing that common andpredictable norms
operate in different types ofinstitutions, the regulations use the
institutionallocus of the research as a starting point forthese
presumptions and procedures.Nonetheless, it remains the type of
research,and particularly the intent and freedom topublish, that
identifies "fundamental research,"not the institutional locus
(§734.8(a) of thispart).
Question D(9): I am doing research onhigh-powered lasers in the
central basic-researchlaboratory of an industrial corporation. I
am
required to submit the results of my research forprepublication
review before I can publish themor otherwise make them public. I
would like tocompare research results with a scientificcolleague
from Vietnam and discuss the results ofthe research with her when
she visits the UnitedStates. Do I need a license to do so?
Answer: You probably do need a license(§734.8(d) of this part).
However, if the onlyrestriction on your publishing any of
thatinformation is a prepublication review solely toensure that
publication would compromise nopatent rights or proprietary
informationprovided by the company to the researcher yourresearch
may be considered "fundamentalresearch," in which case you may be
able toshare information because it is not subject tothe EAR. Note
that the information will besubject to the EAR if the
prepublication reviewis intended to withhold the results of
theresearch from publication.
Question D(10): Suppose I have already clearedmy company's
review process and am free topublish all the information I intend
to share withmy colleague, though I have not yet published?
Answer: If the clearance from your companymeans that you are
free to make all the infor-mation publicly available without
restriction ordelay, the information is not subject to theEAR.
(§734.8(d) of this part)
Question D(11): I work as a researcher at aGovernment-owned,
contractor-operated researchcenter. May I share the results of my
unpublishedresearch with foreign nationals without concernfor
export controls under the EAR?
Answer: That is up to the sponsoring agencyand the center's
management. If your researchis designated "fundamental research"
withinany appropriate system devised by them tocontrol release of
information by scientists and
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engineers at the center, it will be treated as suchby the
Commerce Department, and the researchwill not be subject to the
EAR. Otherwise, youwould need to obtain a license or qualify for
aLicense Exception, except to publish or otherwisemake the
information public (§734.8(c) of thispart).
Section E: Federal Contract Controls
Question E(1): In a contract for performance ofresearch entered
into with the Department ofDefense (DOD), we have agreed to
certainnational security controls. DOD is to have ninetydays to
review any papers we proposed beforethey are published and must
approve assignmentof any foreign nationals to the project. The
workin question would otherwise qualify as"fundamental research"
section under §734.8 ofthis part. Is the information arising during
orresulting from this sponsored research subject tothe EAR?
Answer: Under §734.11 of this part, any exportor reexport of
information resulting fromgovernment-sponsored research that
isinconsistent with contract controls you haveagreed to will not
qualify as "fundamentalresearch" and any such export or
reexportwould be subject to the EAR. Any such exportor reexport
that is consistent with the controlswill continue to be eligible
for export andreexport under the "fundamental research" ruleset
forth in §734.8(a) of this part. Thus, if youabide by the specific
controls you have agreedto, you need not be concerned about
violatingthe EAR. If you violate those controls andexport or
reexport information as "fundamentalresearch" under §734.8(a) of
this part, you may
subject yourself to the sanctions provided forunder the EAR,
including criminal sanctions, inaddition to administrative and
civil penalties forbreach of contract under other law.
Question E(2): Do the Export AdministrationRegulations restrict
my ability to publish theresults of my research?
Answer: The Export AdministrationRegulations are not the means
for enforcing thenational security controls you have agreed to.If
such a publication violates the contract, youwould be subject to
administrative, civil, andpossible criminal penalties under other
law.
Section F: Commercial Consulting
Question F(1): I am a professor at a U.S.university, with
expertise in design and creationof submicron devices. I have been
asked to be aconsultant for a "third-world" company thatwishes to
manufacture such devices. Do I need alicense to do so?
Answer: Quite possibly you do. Applicationabroad of personal
knowledge or technicalexperience acquired in the United
Statesconstitutes an export of that knowledge andexperience that is
subject to the ExportAdministration Regulations. If any part of
theknowledge or experience your export orreexport deals with
technology that requires alicense under the EAR, you will need to
obtaina license or qualify for a License Exception.
Section G: Software2 Question G(1): Is the export or reexport
ofsoftware in machine readable code subject to the
2 Exporters should note that these provisions do
not apply to software controlled under the
Internationa l Traffic in Arm s Regulation s (e.g., certain
encryption software).
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EAR when the source code for such software ispublicly
available?
Answer: If the source code of a softwareprogram is publicly
available, then the machinereadable code compiled from the source
code issoftware that is publicly available and thereforenot subject
to the EAR.
Question G(2): Is the export or reexport ofsoftware sold at a
price that does not exceed thecost of reproduction and distribution
subject tothe EAR?
Answer: Software in machine readable code ispublicly available
if it is available to acommunity at a price that does not exceed
thecost of reproduction and distribution. Suchreproduction and
distribution costs may includevariable and fixed allocations of
overhead andnormal profit for the reproduction anddistribution
functions either in your company orin a third party distribution
system. In yourcompany, such costs may not include recoveryfor
development, design, or acquisition. In thiscase, the provider of
the software does notreceive a fee for the inherent value of
thesoftware.
Question G(3): Is the export or reexport ofsoftware subject to
the EAR if it is sold at a priceBXA concludes in a classification
letter to besufficiently low so as not to subject it to theEAR?
Answer: In response to classification requests,BXA may choose to
classify certain software asnot subject to the EAR even though it
is sold ata price above the costs of reproduction anddistribution
as long as the price is nonethelesssufficiently low to qualify for
such aclassification in the judgment of BXA.
Section H: Available in a Public Library
Question H(1): Is the export or reexport ofinformation subject
to the EAR if it is available ina library and sold through an
electronic or printservice?
Answer: Electronic and print services for thedistribution of
information may be relativelyexpensive in the marketplace because
of thevalue vendors add in retrieving and organizinginformation in
a useful way. If suchinformation is also available in a library --
itselfaccessible to the public -- or has been publishedin any way,
that information is "publiclyavailable" for those reasons, and
theinformation itself continues not to be subject tothe EAR even
though you access theinformation through an electronic or
printservice for which you or your employer pay asubstantial
fee.
Question H(2): Is the export or reexport ofinformation subject
to the EAR if the informationis available in an electronic form in
a library at nocharge to the library patron?
Answer: Information available in an electronicform at no charge
to the library patron in alibrary accesible to the public is
informationpublicly available even though the library paysa
substantial subscription fee for the electronicretrieval
service.
Question H(3): Is the export or reexport ofinformation subject
to the EAR if the informationis available in a library and sold for
more than thecost of reproduction and distribution?
Answer: Information from books, magazines,dissertations, papers,
electronic data bases, and
other information available in a library that isaccessible to
the public is not subject to theEAR. This is true even if you
purchase such abook at more than the cost of reproduction
anddistribution. In other words, such informationis "publicly
available" even though the author
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makes a profit on your particular purchase for theinherent value
of the information.
Section I: Miscellaneous
Question I(1): The manufacturing plant that Iwork at is planning
to begin admitting groups ofthe general public to tour the plant
facilities. Weare concerned that a license might be required ifthe
tour groups include foreign nationals. Wouldsuch a tour constitute
an export? If so, is theexport subject to the EAR?
Answer: The EAR define exports and reexportsof technology to
include release through visualinspection by foreign nationals of
U.S.-originequipment and facilities. Such an export orreexport
qualifies under the "publicly available"provision and would not be
subject to the EARso long as the tour is truly open to all
membersof the public, including your competitors, andyou do not
charge a fee that is not reasonablyrelated to the cost of
conducting the tours.Otherwise, you will have to obtain a license,
orqualify for a License Exception, prior topermitting foreign
nationals to tour yourfacilities (§734.7 of this part).
Question I(2): Is the export or reexport ofinformation subject
to the EAR if the informationis not in a library or published, but
sold at a pricethat does not exceed the cost of reproduction
anddistribution?
Answer: Information that is not in a libraryaccessible to the
public and that has not beenpublished in any way, may nonetheless
become"publicly available" if you make it bothavailable to a
community of persons and if yousell it at no more than the cost of
reproductionand distribution. Such reproduction anddistribution
costs may include variable andfixed cost allocations of overhead
and normalprofit for the reproduction and distributionfunctions
either in your company or in a third
party distribution system. In your company,such costs may not
include recovery fordevelopment, design, or acquisition costs of
thetechnology or software. The reason for thisconclusion is that
the provider of theinformation receives nothing for the
inherentvalue of the information.
Question I(3): Is the export or reexport ofinformation
contributed to an electronic bulletinboard subject to the EAR?
Answer: Assume each of the following:
1. Information is uploaded to an electronicbulletin board by a
person that is the owner ororiginator of the information;
2. That person does not charge a fee to thebulletin board
administrator or the subscribersof the bulletin board; and
3. The bulletin board is available forsubscription to any
subscriber in a givencommunity regardless of the cost
ofsubscription.
Such information is "publicly available" andtherefore not
subject to the EAR even if it is notelsewhere published and is not
in a library. Thereason for this conclusion is that the
bulletinboard subscription charges or line charges arefor
distribution exclusively, and the provider ofthe information
receives nothing for theinherent value of the information.
Question I(4): Is the export or reexport ofpatented information
fully disclosed on the publicrecord subject to the EAR?
Answer: Information to the extent it isdisclosed on the patent
record open to thepublic is not subject to the EAR even thoughyou
may use such information only after paying
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a fee in excess of the costs of reproduction anddistribution. In
this case the seller does receive afee for the inherent value of
the technical data;however, the export or reexport of
theinformation is nonetheless not subject to the EARbecause any
person can obtain the technologyfrom the public record and further
disclose orpublish the information. For that reason, it
isimpossible to impose export controls that denyaccess to the
information.
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CALCULATION OF VALUES FOR DE MINIMIS RULES
(a) Use the following guidelines in determiningvalues for
establishing exemptions or forsubmission of a request for
authorization:
(1) U.S. content value.
(i) U.S. content value is the delivered cost tothe foreign
manufacturer of the U.S. origin parts,components, or materials.
(When affiliated firmshave special arrangements that result in
lowerthan normal pricing, the cost should reflect "fairmarket"
prices that would normally be charged tosimilar, unaffiliated
customers.)
(ii) In calculating the U.S. content value, donot include parts,
components, or materials thatcould be exported from the United
States to thenew country of destination without a
license(designated as "NLR") or under LicenseException GBS (see
part 740 of the EAR) orunder NLR for items classified as EAR99.
(2) The foreign-made product value is thenormal selling price
f.o.b. factory (excludingvalue added taxes or excise taxes).
(3) To determine the value of the U.S.-origincontrolled content,
you should classify the U.S.-origin content on the Commerce Control
List,determine those items that would require a licensefrom BXA for
reexport to the ultimate destinationof the foreign-made product if
such parts,components, or materials were reexported to
thatdestination in the form received, and divide thetotal value of
the controlled U.S. parts,components, and materials incorporated
into theforeign-made item by the sale price of theforeign-made
item.
(4) If no U.S. parts, components or materialsare incorporated or
if the incorporated U.S. parts,components, and materials are below
the de
minimis level, then the foreign-made item is notsubject to the
EAR by reason of §734.4 of thispart, the classification of a
foreign-made item isirrelevant in determining the scope of the
EAR,and you should skip Step 4 in §732.2(d) and goon to consider
Step 6 in §732.2(f) of the EARregarding the foreign-produced direct
productrule.
Note to paragraph (a) - U.S. origin peripheral oraccessory
devices that are merely rack mountedwith or cable connected into
foreign equipmentare not deemed to be incorporated componentseven
though intended for use with products madeabroad. Rather, such
items are treated as U.S.items that retain their identity and
remain subjectto the EAR.
(b) One-time report prior to reliance upon the deminimis
exclusion.
(1) Report requirement. Before you may relyupon the de minimis
exclusion for foreignsoftware and technology commingled with
U.S.software or technology, you must file a one-timereport for the
foreign software or technology.The report must include the
percentage of U.S.-content by value and a description of
yourcalculations including relevant values,assumptions, and the
basis or methodologies formaking the percentage calculation. The
threecriteria important to BXA in its review of yourreport will be
the export price of the U.S.-content,the assumption regarding
future sales of software,and the choice of the scope of foreign
technology.Your methodologies must be based upon theaccounting
standards used in the operation ofyour business, and you must
specify that standardin your report. Regardless of the
accountingsystems, standard, or conventions you use in theoperation
of your business, you may notdepreciate the fair market values
reported orotherwise reduce the fair market values by other
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accounting conventions such as depreciation.You may rely upon
the de minimis exclusion fromthe commingled rule only to the extent
you havereported the relevant calculations, values,assumptions, and
the basis or methodologies forthe calculations. These values may be
historic orprojected. You may rely on projected values onlyto the
extent that and for so long as they remainconsistent with your
report or future valuesreduce the U.S.-content under your
reportedassumptions, basis, and methodologies. You arenot required
to file the above report if you do notchoose to take advantage of
the de minimisexclusion from the commingled rule.
(2) Export price. The report must include adescription of the
U.S.-content including itsclassification on the Commerce Control
List, itsperformance characteristics and features, and themethod of
calculating its fair market value. Thefair market value shall be
the arms-lengthtransaction price, if it is available. If an
arms-length transaction price is unavailable, then thereport will
describe the valuation method chosento calculate or derive the fair
market value. Suchmethods may include comparable market pricesor
costs of production and distribution. This ruledoes not require
calculations based upon any oneaccounting system or U.S. accounting
standards.However, you must specify the acceptedaccounting
standards you have chosen, and cost-based methods of valuation must
be based uponrecords you maintain in the normal course ofbusiness.
You should also indicate whetherreported values are actual
arms-length marketprices or derived from comparable transactions
orcosts of production, overhead, and profit. Forexample, if you
chose to make calculations underthe transfer pricing rules of the
United StatesInternal Revenue Code at section 482, your
reportshould indicate that this is the source for yourmethodology,
and you should also indicate whichof the several methodologies in
these transferpricing rules you have chosen.
(3) Future software sales. For calculations of
U.S.-content in foreign software, you shallinclude your estimate
of future software sales inunits and value along with the rationale
and basisfor those estimates in the report. Unlike
partsincorporated into commodities, the cost of U.S.software code
will be attributed or allocated tothe future sales of foreign-made
softwareincorporating the U.S. code, to determine thepercentage of
U.S. controlled content. In makingthis calculation for foreign-made
software, youmust make an estimate of future software sales ofthat
foreign software if it is commingled with orincorporated with the
U.S. code. The value of theU.S. code commingled with or
incorporated intothe foreign made software shall be divided by
thetotal selling price of all foreign-made softwareunits already
sold, plus the total selling price ofall foreign-made software
units estimated forfuture sales.
(4) Foreign technology and software. Forcalculations of
U.S.-content in foreign technologyand software, you shall include
in the report adescription of the foreign technology or softwareand
a description of its fair market value alongwith the rationale and
basis for the selection andvaluation of such foreign software or
technology.The report does not require information
regardingdestinations and end users for reexport. Thepurpose of the
report is solely to permit the U.S.Government to evaluate the
reasonableness ofU.S.-content calculations.
(5) Report and wait. If you have not beencontacted by BXA
concerning your report withinthirty days after filing the report
with BXA, youmay rely upon the calculations in your report andthe
de minimis exclusions for software andtechnology for so long as you
are not contactedby BXA. BXA may contact you concerning yourreport
to inquire of you further or to indicate thatBXA does not accept
the assumptions or rationalefor your calculations. If you receive
such acontact or communication from BXA, you maynot rely upon the
de minimis exclusions forsoftware and technology in §734.4 of this
part
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until BXA has indicated whether or not you maydo so in the
future. You must include in yourreport the name, title, address,
telephone number,
and facsimile number of the person BXA maycontact concerning
your report.