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The interagency advisory committee, which has the responsibility to review the activities of entities that may pose a proliferation risk, met last month to review the activities of Bharat Electronics, Ltd. (BEL)
This review was prompted by the concern that the very broad requirement of requiring a license for all items to all BEL destinations, which became effective May 16, 1997, was having a negative impact on the legitimate commercial transactions between U.S. companies and BEL without providing any nonproliferation benefit.
The committee reviewed, in detail, the licenses that had been received, the final disposition of these licensees, the commercials activities of BEL and new intelligence information. Based upon this review, the committee decided to modify the export licensing requirements for BEL. A new rule appears in the October 1 Federal Register.
The new rule modifies the licensing requirements by focusing on more advanced technology destined for two specific BEL locations where there is an unacceptable risk of diversion to proliferation activities.
Under the new rule, a license will be required to BEL located in Bangalore and Hyderbad for those items that have a commodity classification other than EAR 99. This eliminates the need for licenses for items such as food products, clothing, household goods, and consumer electronics. A license would be required for any item, including EAR 99 items, if the exporter knows that it will be used in any proliferation activities.
This modification will allow the U.S. government to focus limited resources on those transactions which could contribute to the proliferation of weapons of mass destruction and their delivery systems. Exporters should refer to the specific regulatory guidance provided in the October 1 Federal Register publication to determine your responsibilities under this new rule.
Since February of this year, the Federal Register has published several Commerce Department rules which added entities to the Entity List, a listing of foreign end users involved in proliferation activities. The Entity List is based on the Enhanced Proliferation Control Initiative (EPCI), which has been implemented in the Export Administration Regulations. General Prohibition Five of the EAR prohibits exports to certain end-users or end-uses without a license. BXA maintains, in the form of Supplement 4 to the Part 744, an "Entity List" to provide notice informing the public of certain entities subject to such licensing requirements.
These end users have been determined to present an unacceptable risk of diversion to developing weapons of mass destruction or the missiles used to deliver those weapons. Publishing this list puts exporters on notice that any products sold to these end users may present concerns and will require a license from the Bureau of Export Administration. While this list will assist exporters in determining whether an entity poses proliferation concerns, it is not comprehensive. It does not relieve exporters of the responsibility to determine the nature and activities of their potential customers using BXA's Know Your Customer and Red Flags guidance.
Interagency groups involved in the export control process reviewed the activities of the published entities of concern and determined that exports to these entities would create an unacceptable risk of use in or diversion to prohibited proliferation-related activities. Publishing this entities list allows the U.S. government to identify for U.S. businesses some of the organizations and companies that may be involved in proliferation activities.
The development of a list of entities of concern arises from the EPCIinitiative begun in 1990 to stem the spread of missile technology as well as nuclear, chemical and biological weapons. Under EPCI the Commerce Department can impose licensing requirements on exports and reexports of normally uncontrolled goods and technology where there is an unacceptable risk of use in or diversion to activities related to nuclear, chemical or biological weapons or missile proliferation, even if the end user is not primarily weapons-related.
The Bureau of Export Administration requires an export license for otherwise uncontrolled items subject to the Export Administration Regulations before allowing shipments to these end users because of risk use in or diversion to prohibited proliferation activities.
The Export Administration Regulations (EAR) provide that the Bureau of Export Administration may inform exporters, individually or through amendment to the EAR, that a license is required for exports or reexports to certain entities. The EAR contains a list of such entities, known as the Entity List.
In April of 2002 the Bureau of Export Administration (BXA) changed its name to the Bureau of Industry and Security(BIS). For historical purposes we have not changed the references to BXA in the legacy documents found in the Archived Press and Public Information.