U. S. Bureau of Industry and Security - Encryption - What changes have been made to License Exception ENC?

Home >Policies and Regulations >Encryption > What changes have been made to License Exception ENC?

What changes have been made to License Exception ENC?

This rule amends License Exception ENC (section 740.17 of the EAR) by establishing a new procedure for encryption registration and self-classification reports. Exporters are required to register with BIS before exporting encryption items controlled under License Exception ENC sections 740.17(b)(1), (b)(2) and (b)(3). Exports of items described under sections 740.17(a) and 740.17(b)(4) will continue to be authorized without registration or classification request.

Paragraph 740.17(b)(1) has been revised to accommodate the new registration procedure and to authorize exports and reexports of less sensitive encryption items following an encryption registration with subsequent submission of an annual self-classification report. Items eligible for exports and reexports under LE ENC (b)(1) are low-end- and non-network infrastructure items that fall under the old 740.17(b)(3) and low-level encryption items that fall under the old 740(b)(1)(ii). The authorization for immediate export and reexport to Supp. 3 countries following registration, the old 740.17(b)(1)(i), is now contained in the new 740.17(b)(1), (b)(2) and (b)(3) based on the performance and properties of the item. Paragraph 740.17(b)(3) has been revised to contain specified commodities, software and components: i.e., specified components (chips, libraries, modules, and development kits), items with “non-standard cryptography” and cryptographic enabling commodities and software. The following table summarizes the changes to 740.17.

LE ENC	Old	New
740.17(a)(1)	Internal “development” or “production” of new products	Internal “development” or “production” of new products
740.17(a)(2)	Exports and reexports to “U.S. Subsidiaries”	Exports and reexports to “U.S. Subsidiaries”
740.17(b)(1)(i)	Immediate exports and reexports to Supp 3 countries	Encryption registration: new authorization for items covered under the old (b)(3) and old (b)(1)(ii).
740.17(b)(1)(ii)	Immediate exports and reexports of low-level encryption items	Items in the old (b)(1)(ii) are now under the new (b)(1)
740.14(b)(2)	High-end network infrastructure products	High-end network infrastructure products Includes authorization for immediate exports and reexports to Supp 3 countries. Includes technology for “non-standard cryptograpy”
740.17(b)(3)	Other than high-end infrastructure products	Specified commodities, software and components. Some old (b)(2) items are now in the new (b)(3). Most old (b)(3) items are now in the new (b)(1). Includes authorization for immediate exports and reexports to Supp 3 countries. Includes encryption items that provide or perform “non-standard cryptography”
740.17(b)(4)	Items excluded from review requirements	Items excluded from review requirements. Ancillary encryption items are now decontrolled under the new Note 4.

The new section 740.17 retained all of the License Exception provisions of the old section 740.17, though the locations of some of the provisions have been moved. Exporters who have received completed encryption commodity classification determinations prior to publication of this rule are covered by the grandfathering provision set forth in paragraph 740.17(f). The items are eligible under the appropriate paragraph of License Exception ENC using the CCATS previously issued by BIS, without any encryption registration, new classification by BIS, or self-classification reporting, provided the cryptographic functionality of the item has not changed. Exporters are still required to comply with semi-annual sales reporting requirements, as required.

This rule authorizes immediate exports of encryption source code that are not License Exception TSU eligible to non-government end-users in any country, except countries listed in Country Group E:1 in Supplement No. 1 to part 740 of the EAR. Exporters are no longer required to submit copies of their encryption source code to BIS and ENC Encryption Request Coordinator for review.

Encryption technology classified under ECCN 5E002 that are not technology for cryptanalytic items, non-standard cryptography, or open cryptographic interfaces may now be exported and reexported under License Exception ENC (paragraph 740.17(b)(2)(iv)(B) of the EAR) to any non-government end-user located in a country not listed in Country Groups D:1 or E:1 of Supplement No. 1 to part 740 of the EAR.