Where Industry and Security Intersect
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The Office of Exporter Services (OEXS) is responsible for providing education and compliance seminar programs and implementing general export control policy within BXA's Export Administration organization. In this capacity, OEXS develops BXA's outreach seminar program to educate the exporting community on controls, regulations, and licensing. OEXS also provides advice on a broad range of export issues, including licensing and documentation requirements for export transactions and special country policies. OEXS helps implement the Enhanced Proliferation Control Initiative (EPCI) End-User Verification process through which U.S. exporters are informed of proliferation concerns. It develops Internal Control Program Guidelines and Export Management System Guidelines that companies use to ensure exports are consistent with the Export Administration Regulations (EAR). Finally, OEXS administers International Cooperative Licenses to facilitate the export of items needed to fulfill U.S. obligations in international cooperative programs and organizations.
Industry counseling remains an essential component of BXA's mission. Through a variety of outreach programs, BXA promotes an understanding of U.S. export control laws that enhance compliance and facilitates U.S. international competitiveness. OEXS accomplishes its outreach and counseling activity through its headquarters in Washington, D.C., and its Western Regional Office in Orange County and Silicon Valley, California. The regional offices are located in the fastest growing, high-technology regions in the United States, and are within commuting distance of more than 10 percent of the total U.S. population.
In FY 2001, the resources of the Exporter Counseling Division and the Export Seminar Staff will be combined into a new office called the Outreach and Educational Services Division. This merger enhances training and educational services by integrating a large portion of BXA's outreach functions into one office. Also effective at the beginning of FY 2001, the Special Licensing and Compliance Division will become the Export Management and Compliance Division (EMCD), a title more accurately describing the office's current and planned responsibilities.
BXA is committed to providing the business community with information regarding changes in export policy and licensing procedures by offering a program of seminars and workshops that educate and inform. An important aspect of this program is its alliance with a variety of industry trade associations, universities and colleges, state and local governments, and nonprofit international business related organizations. This alliance furthers BXA's goal of maintaining a cooperative relationship with industry.
OEXS' outreach program to the domestic and international business communities encourages compliance with the EAR and increased government-industry interaction on export licensing policy. During FY 2000, through a variety of programs offered in various locations around the United States, we continued to instruct and assist both new and seasoned exporters. In addition to providing basic and advanced level courses, we also provided specialized workshops on topics of specific interest, e.g., in commercial encryption licensing, chemical weapons regulations export management systems and freight forwarder programs.
In FY 2000, OEXS conducted 43 export compliance seminars and participated in numerous trade-related events. Through our overseas program, we continue to instruct foreign exporters and governments on U.S. export controls. No overseas seminars were held in FY 2000 but several are scheduled for FY 2001.
BXA's thirteenth annual Update Conference on Export Controls and Licensing attracted 815 representatives from the exporting community from around the globe. The annual conference is BXA's premiere event and the Commerce Department's largest event in the Washington, D.C. area. The conference brings high-level government officials and industry representatives together to discuss the significant changes in export control policies that have taken place.
BXA's Update West conference in California attracted more than 500 industry participants. During the program, Commerce Department officials and representatives from the interagency community discussed major developments, including encryption export control liberalizations, technical data and software controls, export management systems, proliferation controls, and other pertinent export issues.
As BXA's front line unit in providing exporter services, OEXS plays a major role in guiding exporters through complex licensing transactions. Our regulatory specialists provide one-on-one counseling 11 hours a day through meetings, telephone counseling sessions, responses to e-mail and fax inquiries. In addition, the BXA web site provides exporters continual access to timely information and services.
OEXS enhances its customer service initiatives through the development of brochures and export control-related publications. To support our diverse customer base, some of these publications have been translated and published into other languages. In FY 2000, the English version of the "Introduction to Export Controls" brochure was revised in an easy-to-read format as part of the Administration's "Plain English" initiative. The "Helpful Hints for Completing the Multipurpose Application Form BXA-748P" was also updated to include information related to electronic license submission through the Simplified Network Application Process (SNAP) system.
SNAP is a Web-based system that allows exporters to submit export and re-export license applications, high performance computer notices, and commodity classification requests directly to BXA through a secure environment via the Internet. As more and more exporters gravitate to SNAP, we have seen a gradual decrease in the number of applications submitted electronically using the Export License Application and Information Network (ELAIN). We have also experienced a marked decline in the receipt of paper applications. SNAP submissions represented 77 percent of all received electronic submissions and 61percent of all received applications (paper and electronic).
In FY 2000, BXA developed a new prototype to allow the electronic submission of technical specifications and supporting documentation. BXA hopes to complete testing and have this system fully operational by July 2001. Currently, technical specifications and other forms of supporting documentation can only be submitted by telefax or express mail.
In FY 2000, BXA received 10,701 license applications. This 15 percent decrease from the 12,650 applications received in FY 99 was a direct result of BXA and the Administration's streamlining intended to refocus controls on the most critical items. During the year, liberalizations and decontrols for encryption products and computers decreased the licensing requirements for these items and thereby helped these industries maintain their global technological lead. As a result of these liberalizations and decontrols, applications for encryption products declined 56 percent between FY 1999 and FY 2000. Equally significant was the removal of 51 Indian entities from the Entities List, thereby allowing more normal trade relations with those parties which is reflected in the large decline in rejected applications for exports to India and Pakistan in comparison to FY 1999. (See Chart 1 and Chart 2 on page 18)
In FY 2000, BXA completed review of 11,039 applications (this includes cases received before FY 2000 but completed during the fiscal year). The greatest number-of-approvals in FY 2000 under one commodity classification was for EAR99 items with 1,019 approvals. Overall, we approved 8,861 applications, returned 1,779 applications without action, and denied 398 applications. This decrease in denied applications (down from 1,160 denials in FY 1999) is a direct result of the changes on the Entities List for Indian and Pakistani entities. (See Chart 3 on page 19.)
By the end of FY 2000, we had reduced the quarterly average processing time for non-referred cases from 23 days in the first quarter to 11 days in the fourth. The yearly average processing time for non-referred applications was 15 days.
A challenge remains to reduce the average processing time for cases that undergo interagency review. In FY 2000, 83 percent of all completed licensing decisions were referred, with an average processing time of 43 days. BXA continues to work with other agencies to negotiate delegations of authority which increase the number of applications we can review without referral. At the same time, we continue to work on developing standard conditions on specific categories of cases (e.g., deemed exports, night vision, etc.) that are acceptable to all agencies. With more than 99 percent of all approved applications being approved with conditions, having pre-approved conditions across-the-board will significantly reduce the time to craft an agreement acceptable to the exporter, BXA, and other reviewing agencies. (See Chart 4 on page 19. Also see Chart 5, Chart 6 and Chart 7 on page 20.)
The Department of Commerce, both by executive order and existing agency practice, refers certain applications, based on their level of technology, the appropriateness of the items for the stated end-use, and the country of destination, to other agencies for review and recommendation. The principal referral agencies are the Departments of Defense, Energy, and State. Since the transfer of jurisdiction of commercial encryption products to Commerce, the Department of Justice and the National Security Agency (NSA) have had a role in the license review process for encryption license applications.
Under Executive Order 12981, applications that are in dispute among the agencies are referred to the Operating Committee (OC), which includes representatives of the Departments of Defense, Energy, State, and is chaired by the Department of Commerce. Prior to such dispute resolution, certain license applications can be discussed on a consultative basis at State Department-chaired working-level, interagency groups that review cases subject to specific concerns. Nuclear nonproliferation cases are reviewed by the Subgroup on Nuclear Export Controls; missile technology cases are reviewed at the Missile Technology Export Controls interagency group, and chemical/biological weapons control cases are reviewed at the SHIELD.
Under Executive Order 12981, the role of the OC was expanded to include the review of all license applications for which reviewing departments and agencies are not in agreement. The Commerce Chair considers the recommendations of the reviewing agencies and informs them of the Chair's decision within 14 days after receipt of the agency recommendations. Agency recommendations are required to be submitted within 30 days of receipt of the original referral from Commerce. Any reviewing agency may appeal the decision of the Chair of the OC to the Chair of the Advisory Committee on Export Policy (ACEP), which is an Assistant Secretary-level body chaired by Commerce's Assistant Secretary for Export Administration. Its principal members come from the agencies listed above. In the absence of a timely appeal, the Chair's decision will be final.
An agency must appeal a matter to the ACEP within five days of the OC's final decision. Appeals must be in writing from an official appointed by the President with consent of the Senate, or an officer properly acting in such capacity, and must cite both the statutory and regulatory bases for the appeal. Decisions of the ACEP are based on a majority vote. Any dissenting agency may appeal the decision to the Export Administration Review Board (EARB), a Cabinet-level group composed of the Secretaries of Defense, Energy and State with the Secretary of Commerce as the Chair, by submitting a letter from the head of the agency. In the absence of a timely appeal, the majority vote decision of the ACEP is final.
The Chair of the Joint Chiefs of Staff and the Director of Central Intelligence have non-voting rights as members of the EARB. Export applications considered by the EARB are resolved by a majority vote, and any agency may appeal the decision to the President. In the absence of a timely appeal, the decision of the EARB is final.
Executive Order 12981 reduced the time permitted to process a license application to 90 calendar days from the day it is submitted. After that time, final action is taken on the application or it is escalated to the President for a decision.
The development of a list of entities of concern through the "Is Informed" process arose from the Enhanced Proliferation Control Initiative (EPCI) announced in 1990 to stem the spread of missile technology and nuclear, chemical, and biological weapons. Under EPCI, BXA can impose licensing requirements on exports and re-exports of goods and technology that normally do not require an export license when 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.
Before an entity is added to the "Entity List," all proliferation activities are extensively evaluated by a BXA-chaired interagency group. This group has 14 days to determine if exports to a particular entity present an unacceptable risk of use in or diversion to missile, chemical, and biological weapons and nuclear-related proliferation activities. If a positive determination is made, the committee then decides if a licensing requirement should be imposed for otherwise "uncontrolled" items being exported to that entity. Decisions are made by a majority vote. Agencies that disagree with the majority vote may escalate the decision to the ACEP.
The major revision to the Entities List in FY 2000, was the removal of 51 Indian entities from the List, and the modification of the licensing policy for EAR99 items to Indian and Pakistani government, private and parastatal entities from a presumption of denial to a presumption of approval.
Special Comprehensive License
OEXS offers an alternative licensing mechanism for exporters who routinely make high volume shipments of pre-approved items to pre-approved destinations, end-uses, and end-users. A special license was established for these exporters to use in lieu of submitting individual applications. The increased flexibility and reduced paperwork burden on exporters and re-exporters allow U.S. firms to improve delivery timing, which gives them an edge in the new global economy.
This licensing option, titled the Special Comprehensive License (SCL), is available to experienced exporters who are reliable and have a strong corporate commitment to the development and maintenance of an Internal Control Program (ICP). Because BXA does not review each individual transaction authorized by an SCL, parties to the SCL must have the mechanisms in place to ensure that each export and re-export made under an SCL meets all the terms and conditions of the license and are in accordance with all applicable provisions of the EAR.
The SCL may authorize a number of activities, i.e., servicing, export and re-export of capital equipment, and/or exporting items for the purpose of resale and re-export. Currently, BXA has authorized 13 companies to facilitate exports and re-exports through the SCL.
International Cooperative Licenses
The Commerce Department has established licenses that assist in the effective and efficient implementation of the Export Administration Act (EAA), as described under section 4(a)(4) of the EAA. BXA has established three U.S. agency-held licenses to fulfill U.S. government roles in international cooperative projects. These licenses are crafted after the SCL structure and paperwork requirements and require an Internal Control Program.
Internal Control Programs
An Internal Control Program (ICP) is a mandatory requirement of the SCL and International Cooperative License. Each license holder crafts its ICP to ensure that its export and reexport procedures comply with the requirements of the license and the EAR. Elements of the ICP include customer screening, auditing, training, and record keeping. OEXS revises and distributes ICP Guidelines as well as other tools that can be used by the SCL holders in the implementation of their programs. One such tool is the SCL Holder Review Module that can be used by the companies to audit their own programs. This Module was used as the basis for development of the EMS Review Module to be used by companies that do not hold SCLs. The Review Modules are available to exporters for download from the Export Management System Compliance portion of the BXA Web site (www.bxa.doc.gov).
OEXS counsels exporters and consignees who participate in this procedure to develop and refine their ICP on an ongoing basis. The ICP has been the standard model for use by multinational companies worldwide since its implementation in 1985 and is now being requested by other countries to use as a model for establishing similar programs.
Systems Reviews
Consistent with the provisions of Section 4 of the EAA, BXA conducts periodic reviews of all active Special Comprehensive Licenses. The purpose of these reviews is to evaluate the adequacy of the mandatory ICPs implemented by SCL holders and consignees, and to ensure compliance with the EAR and the terms of the license. Systems Reviews are viewed not only as a compliance activity but also as an educational opportunity, since guidance is provided to the SCL holder and consignees at the time of the reviews. (See Chart 8 on page 21.)
Export Management System Guidelines
An Export Management System (EMS) is an optional compliance program that companies may implement, in order to ensure compliance with the EAR and to prevent sales to end-users of concern. Establishing an EMS can greatly reduce the risk of inadvertently exporting to a prohibited end-use/user. BXA published the first EMS Guidelines in September 1992.
The EMS Guidelines include both Administrative and Screening Elements that are beneficial in developing a foundation for a compliance program within an individual firm. Through the various screening elements and checklists within the Guidelines, companies can develop ways to know their customers. The Guidelines provide suggestions for how exporters can comply with the General Prohibitions described in Part 736 of the EAR.
OEXS counsels firms on the development of EMS programs that are customized to their specific business activities. One-on-one counseling and review of draft programs have taken place at the Department of Commerce. OEXS also conducts EMS workshops and seminars to educate the export community on the various tools available that can assist them in complying with the EAR.
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.