I. Background

• On July 30, 2004, the President signed an Executive Order terminating the national emergency declared in Executive Order 12722, revoking it and certain related Executive Orders. Among other things, the termination of the national emergency ends the Department of the Treasury's authority to maintain export controls pursuant to those Executive Orders. By virtue of this action, export licensing jurisdiction reverted from the Department of the Treasury’s Office of Foreign Assets Control (OFAC) to BIS. Also on July 30, 2004, BIS published a rule defining the new licensing policy and requirements for Iraq.

• The rule is designed to address two significant foreign policy goals with respect to Iraq. In particular, the rule furthers the goal of ensuring that exports and reexports of controlled items destined to civil infrastructure rebuilding do not suffer undue licensing delays. At the same time, in furtherance of applicable UNSC Resolutions and U.S. foreign policy interests, the rule revises section 746.3 of the Export Administration Regulations (15 CFR parts 730-799) (EAR) and retains substantial restrictions on exports to Iraq destined for inappropriate end-users or end-uses. In addition, the rule addresses certain transactions involving the transfer of items subject to the EAR within Iraq.

II Transfer License Requirements and Policy

• A BIS license is required to transfer, within Iraq, items controlled for export or reexport to Iraq.
• Applicants must also request a license from the Department of Commerce before transferring items subject to the EAR within Iraq to military end-users or end-uses (except for transfers required to the Interim Government of Iraq or the Multinational Force in Iraq), proliferation activities, designated terrorists or terrorist organizations, or officials of the former Iraqi regime, as described in part 742 and 744 of the EAR.
• To request authorization to transfer, submit a letter to BIS’s Office of Exporter Services at the following address: Office of Exporter Services, U.S. Department of Commerce, P.O. Box 273, Washington, DC 20044. Envelopes containing transfer authorization requests should be marked “TRANSFER LICENSE”.
• Letters must include all details of the proposed transaction, including but not limited to the names and contact information of the applicant, the entity in possession of the item(s), and the proposed consignee; a description, the ECCN(s), quantity and monetary value of the item(s) proposed for transfer; information on the original export or reexport authorization; and the reason for transfer.
• Requests for transfer licenses will be reviewed on a case-by-case basis.

III License Requirements and Policy

A. CCL and EAR99 License Requirements

BIS’s licensing requirements and policy for exports and reexports to Iraq and transfers within Iraq are summarized below. For additional information, see Sections 742, 744 and 746 of the EAR.

• Items subject to the EAR but not listed on the Commerce Control List (CCL) (i.e., EAR99 items) will generally not be subject to a license requirement except pursuant to the end-user and end-use controls set forth in part 744 of the EAR and revised section 746.3 of the EAR.

• Items controlled only for anti-terrorism (AT) reasons on the CCL, except for items controlled under eight Export Control Classification Numbers (ECCNs), will also not be subject to a licensing requirement, except for the end-use and end-user requirements noted above.

• The eight ECCNs controlled for AT reasons only for which there are licensing requirements are: 0B999 (Specific processing equipment such as hot cells and glove boxes suitable for use with radioactive materials), 0D999 (Specific software for neutronic calculations, radiation transport calculations and hydrodynamic calculations/modeling), 1B999 (Specific processing equipment such as electrolytic cells for fluorine production and particle accelerators), 1C992 (Commercial charges containing energetic materials, n.e.s.), 1C995 (Certain mixtures and testing kits), 1C997 (Ammonium Nitrate), 1C999 (Specific Materials, n.e.s.) and 6A992 (Optical Sensors, not controlled by 6A002).

• Items controlled by the multilateral export control regimes (i.e., items controlled for national security (NS), missile technology (MT), chemical and biological weapons (CB), and nuclear nonproliferation (NP) reasons on the CCL) require a license to Iraq, as do items controlled for crime control (CC) and regional stability (RS) reasons.

• Additionally, certain other categories of items controlled for reasons not included on the Country Chart (e.g., encryption (EI), short supply (SS), and Chemical Weapons (CW)) require a license for export or reexport to Iraq, as do items controlled for UN reasons.

B. CCL and EAR99 Licensing Policy

With the exception of SIRL applications, license applications for the export or reexport to Iraq or transfer within Iraq will be reviewed on a case-by-case basis under the licensing policies defined in parts 742, 744 or elsewhere in the EAR. Certain additional Iraq specific parameters, as noted below, will also be considered.

Reason for Control: Chemical and Biological Weapons(CB):

• Applications for exports, reexports and transfers of items contributing to the building of Iraqi civil infrastructure will be reviewed on a case-by-case basis.
• There will be a general policy of denial for all other applications for CB-controlled items.
• Additional information on the licensing policy for items controlled on the CCL for CB reasons is found in Section 742.2 of the EAR.

Reason for Control: Nuclear Nonproliferation (NP):

• Applications for exports, reexports and transfers of items contributing to the building of Iraqi civil infrastructure will be reviewed on a case-by-case basis.
• Applications for the export, reexport or transfer of isotopes for medical, industrial or agricultural purposes will be reviewed on a case-by-case basis.
• There will be a general policy of denial of applications for subsystems or components or any nuclear weapons research, development, support, or manufacturing facilities that do not contribute to the building of Iraqi civil infrastructure.
• Additional information on the licensing policy for items controlled on the CCL for NP reasons is found in Section 742.3 of the EAR.

Reason for Control: National Security (NS):

• Applications for exports, reexports and transfers of items contributing to the building of Iraqi civil infrastructure will be reviewed on a case-by-case basis
• There will be a general policy of denial of applications for items for the production, research, design, development, support, maintenance or manufacture of Iraqi weapons of mass destruction or ballistic missiles (for Iraq, defined as those with a range of 150 km or greater) or arms and related matériel.
• Additional information on licensing requirements for items controlled on the CCL for NS reasons is found in Section 742.4 of the EAR.

Reason for Control: Missile Technology (MT):

• Applications for exports, reexports and transfers of items contributing to the building of Iraqi civil infrastructure will be reviewed on a case-by-case basis.
• There will be a general policy of denial of applications for major parts, repair and production facilities related to ballistic missiles with a range greater than 150 kilometers.
• Additional information on the licensing requirements for items controlled on the CCL for MT reasons is found in Section 742.5 of the EAR.

Reason for Control: Anti-terrorism (AT):

• Items controlled to Iraq for anti-terrorism (AT) reasons will be reviewed on a case-by-case basis to determine if they will contribute to the building of Iraqi civil infrastructure.
• Applications for items controlled for AT reasons determined not to contribute to the building of Iraqi civil infrastructure will be subject to a general policy of denial.

Reason for Control: Crime Control(CC), United Nations (UN) andArms-related Items

• Consistent with the United Nations Security Council embargo on Iraq, there will be a general policy of denial for the export, reexport or transfer of arms-related items subject to the EAR if the items will make a material contribution to the production, research, design, development, support, maintenance or manufacture of Iraqi weapons of mass destruction, ballistic missiles or arms and related matériel.
• Also consistent with the United Nations Security Council embargo, there will be a general policy of denial for the export, reexport or transfer of items controlled for CC reasons on the CCL.
• Arms-related items controlled on the CCL include items on the International Munitions List (i.e., equipment, software and technology ending in any ECCN ending with “018" on the CCL), demilitarized aircraft, shotgun shells and equipment for manufacturing thereof, military steel helmets, etc.
• Additional guidance on the export and reexport of crime control items is found in §742.7 of the EAR.

Specific licensing policy for items destined for Iraq civil or military nuclear activity:

• License applications for the export or reexport to Iraq or transfer within Iraq of items for Iraqi civil nuclear or military nuclear activity, except for isotopes for medical, industrial or agricultural purposes, will be subject to a policy of denial.

Specific licensing policy for items subject to the United Nations Arms Embargo

• License applications for the export or reexport to Iraq or transfer within Iraq of the following items will be subject to a general policy of denial if the items will make a material contribution to the production, research, design, development, support, maintenance or manufacture of Iraqi weapons of mass destruction, ballistic missiles or arms and related matériel:

- - machine tools controlled for national security (NS) or nuclear non-proliferation (NP) reasons;

- - items controlled for crime control (CC) reasons;

- - items controlled United Nations (UN) reasons; and

- - items under ECCNs that end in the number “018".

Similarly, items subject to the “military end-use” or the “military end-user”license requirement noted below will be subject to a general policy of denial.

C. License Requirements: Catch-all Controls, Military End-use, Terrorist and Terrorist Entities, Officials of the Former Iraqi Regime

“Catch-all Controls”

• All items subject to the EAR require a license for export or reexport to Iraq if, at the time of the export or reexport, you know, have reason to know, or are informed by BIS that the item will be, or is intended to be, used in Iraq for a “military end-use”or by a “military end-user”as defined in §746.3 of the EAR.
• This license requirement does not apply to exports or reexports of items for the official use by personnel and agencies of the U.S. Government or items to the Interim Government of Iraq or the Multinational Force in Iraq .
• All items subject to the EAR require a license for export or reexport to Iraq if, at the time of the export or reexport, you know, have reason to know, or are informed by BIS that the item will be, or is intended to be, used in Iraq by a designated terrorist or a terrorist organization.
• Existing license requirements established pursuant to the Enhanced Proliferation Control Initiative (EPCI) in part 744 of the EAR also apply.
• The EPCI requirements apply to the export or reexport of any item subject to the EAR, if, at the time of export or reexport, you know, have reason to know, or are informed by BIS that the item will be used in the design, development, production or use of weapons of mass destruction.
• License requirements also apply to the transfer of items subject to the EAR within Iraq to military end-users or end-uses (except for transfers required to the Interim Government of Iraq or the Multinational Force in Iraq ), proliferation activities, designated terrorists or terrorist organizations, or officials of the former Iraqi regime, as described in part 742 and 744 of the EAR.

Military End-Use

• A BIS license is required for the export, reexport or transfer of items subject to the EAR if, at the time of the export, reexport or transfer, you know, have reason to know, or are informed by BIS that the item will be, or is intended to be, used in Iraq for a “military end-use”or by a “military end-user”.
• This license requirement does not apply to exports, reexports or transfers of items for the official use by personnel and agencies of the U.S. Government or of items to the Interim Government of Iraq or the Multilateral Force in Iraq .

Terrorist and Terrorist Entities

• A BIS license is required for the export, reexport or transfer of items subject to the EAR if, at the time of the export, reexport or transfer, you know, have reason to know, or are informed by BIS that the item will be, or is intended to be, used in Iraq by a designated terrorist or terrorist organization.
• Information on designated terrorists or terrorist organizations is found in sections 744.12, 744.13, and 744.14 of the EAR.

Officials of the Former Iraqi Regime

• Section 744.18 of the EAR defines BIS’s policy and license requirements regarding former Iraqi leaders and their associates. These persons are named pursuant to Executive Order 13315 of August 28, 2003 (“Blocking Property of the Former Iraqi Regime, its Senior Officials and Their Family Members, and Taking Certain Other Options”)(link).
• The Department of the Treasury maintains license requirements on transactions involving persons designated in or pursuant to Executive Order 13315. To avoid duplication, U.S. persons are not required to seek separate BIS authorization for an export, reexport, or transfer , to a person identified in section 744.18 of any item subject to both the EAR and regulations maintained by OFAC. You should consult with OFAC concerning transactions subject to OFAC licensing requirements.
• U.S. persons must request a license from BIS prior to the export, reexport, or transfer to a person identified in section 744.18 of any item subject to the EAR but not subject to regulations maintained by OFAC .
• Non-U.S. persons must seek a license from BIS for the export from abroad, reexport, or transfer , to a person identified in section 744.18 of any item subject to the EAR.

D. Licensing Policy: Catch-all Controls, Military End-use, Terrorist and Terrorist Entities, Officials of the Former Iraqi Regime

“Catch-all Controls”

• All license applications for items subject to the EAR destined to be used in Iraq for a “military end-use”or by a “military end-user” as defined in §746.3 of the EAR, will be reviewed under a general policy of denial.
• All license applications for items subject to the EAR destined to be used in Iraq for a terrorist or a terrorist organization will be reviewed under a general policy of denial.

Terrorist and Terrorist Entities

• All license applications for items subject to the EAR destined to be used in Iraq by a terrorist or a terrorist organization will be reviewed under a general policy of denial.

Officials of the Former Iraqi Regime

• All license applications for items subject to the EAR destined to be used in Iraq by a person designated in or pursuant to Executive Order 13315 will be reviewed under a general policy of denial.

E. License Requirements: Deemed Exports

• As cited in §734.2(b)(ii) of the EAR, any release of technology or source code to a foreign national in the United States is deemed to be an export to the home country of that foreign national.
• This license requirement does not apply to Iraqi nationals who have established permanent residency in the United States or to persons protected under the Immigration and Naturalization Act [8 USC 1324(b)(a)(3)].

F. Licensing Policy: Deemed Exports

• License applications for the deemed export of technology or source code to Iraqi nationals in the United States will be reviewed on a case-by-case basis.

G. De minimis

• With the publication of BIS’s new rule, the de minimis level for Iraq has been amended to provide generally that reexports of items to Iraq from abroad are subject to the EAR only when U.S.-origin controlled content in such items exceeds 25% (as opposed to the previous 10%).

H. License Exceptions

• Iraq is in Country Groups D:1, D:2, D:3 and D:4.
• As a result, the following License Exceptions may be available in whole or in part: CIV, CTP, TMP, RPL, GOV, GFT, TSU, BAG, AVS, ENC and KMI.
• Remember that a specific transaction is eligible for a License Exception only if it satisfies all of the terms and conditions of the relevant License Exception and is not excluded by any of the restrictions that apply to all license exceptions, as set forth in part 740 of the EAR.
• License Exceptions are not available for use for the transfer of items within Iraq .

IV. Special Iraq Reconstruction Licenses

• BIS’s rule defines the “Special Iraq Reconstruction License” (SIRL) in part 747 of the EAR. SIRLs authorize exports and reexports to Iraq , and transfers within Iraq , of items in furtherance of civil reconstruction projects that are funded by the United States Government or by the United Nations, the World Bank, and the International Monetary Fund, or their affiliated entities (i.e., International Bank for Reconstruction and Development, International Finance Corporation, and United Nations Development Programme). SIRLs are also available for projects funded by other entities that the U.S. Government may designate.
• All items subject to the EAR except items controlled for missile technology (MT), nuclear nonproliferation (NP), or chemical and biological weapons (CB) reasons on the CCL are eligible for export, reexport or transfer under a SIRL.