BIS Announces Modifications, Additions, to Validated End-User Program

WASHINGTON, D.C. – The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) today published a Federal Register notice modifying the list of approved end-users and eligible items for the People’s Republic of China (PRC) under Authorization Validated End-User (VEU). This final rule amends the Export Administration Regulations (EAR) to add a new entity to the list of end-users in the PRC approved to receive exports, reexports and transfers of certain items under Authorization VEU (Section 748.15 of the EAR), and adds and revises eligible items and destinations for two existing VEU authorizations. As a result of this modification, there are six VEUs approved in China and a total of twenty eligible facilities. Since October 2007, over $19 million of high technology items have been shipped from the United States to the PRC under Authorization VEU.

"The VEU program is an important initiative that promotes secure civilian high technology trade and we are pleased to expand the program in China. We look forward to more additions to the VEU program in the coming months," said Acting Under Secretary for Industry and Security Daniel O. Hill.

In the rule, BIS added Aviza Technology China to the list of validated end-users found in Supplement No. 7 to part 748 of the EAR. Five of Aviza Technology China’s facilities are now qualified to receive items controlled under three specific product categories without individual licenses under Authorization VEU. Additional product categories and an additional qualified facility were added to the existing entry for Applied Materials China, Ltd., and additional product categories were added to the entry for BHA Aerocomposites Parts Co. Ltd. Finally, as a result of a change of name, the entry for "BHA Aerocomposites Parts Co. Ltd." was re-titled "Boeing Tianjin Composites Co. Ltd."

BACKGROUND

In a final rule published in the Federal Register on June 19, 2007, BIS revised and clarified U.S. export control policy for the PRC, establishing Authorization VEU and identifying the PRC as the initial eligible destination for this authorization.  BIS published the names of the first five end-users in the PRC that were approved to receive certain specified items under Authorization VEU on October 19, 2007. 

Foreign companies that are approved as validated end-users are eligible to receive specified items under the general authorization "Authorization VEU" instead of under individual transaction-specific licenses.  Companies in China participating in VEU must pass a rigorous national security review and agree to strict follow-on compliance obligations prior to qualification, including agreeing to on-site reviews.  Qualification for VEU benefits both the foreign participants and U.S. exporters by allowing categories of exports instead of requiring review of individual transactions.  The VEU program is in the national interest because it makes U.S. products more competitive for foreign companies that have a strong track record of civilian end-uses and compliance with U.S.  dual-use export controls.  This allows the U.S. government to focus more precisely on exports where the foreign customer is less well-known.

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