By: John Black
It’s been a couple of years since the Commerce Department revised the Export Administration Regulation (EAR) to add EAR section 744.21 export license requirements on exports of certain items to specific “military end use” in China. I have observed a fairly consistent pattern of misunderstanding of this rule, and those who misunderstand may be divided into two groups: 1) Those people who think the you can’t export anything to the Chinese military; and 2) Those who don’t do anything to comply with the rule.
OK, let’s address this problem. The first thing you should learn about the so called China military end-use rule is that it rarely applies to exports or reexports to China. This rule applies only to items in ECCNs listed in Supplement No. 2 to EAR Part 744, which is a relatively small sub-set of the items subject to EAR jurisdiction. For example, EAR99 is not in Supp. 2 so the China military end use rule does not apply to EAR99 items. The rule is also narrow because the EAR definition of “military end-use” is narrow—it’s a narrower definition than maybe your common sense assumptions about what military end-use is. For example, certain exports to the Chinese military are not defined to be exports to “military end-use.”
I am not going to give you a full blown tutorial on the China military end use rule, but if you are not sure if your specific items are covered by the rule or you are not sure what “military end-use” really is, read my detailed tutorial on the China military end-use rule at http://hw-navi.com/news/2007/06/20/the-dust-settles-a-bit-on-new-export-restrictions-on-china/#more-87
While the first problem seems to be that people overestimate the actual licensing requirements imposed by the rule, the second problem is that a good number of people still are not doing anything to comply with the rule. Quite simply, companies should screen all exports and reexports of items in Supp. 2 to 744 to China to determine if they are destined for a “military end-use.” This screening should be documented for exports and reexports in a manner similar to how you document your screening for prohibited sensitive/prohibited nuclear end-use screening—for example, on your export compliance checklist. Complying with this rule also means that you must regularly train all keep people about this rule (probably when you implement compliance procedures and then when you do your annual export compliance awareness training).
The last thing I will say is that you export compliance experts should read through this rule occasionally as a refresher so you can remind yourself about the scope of the rule, force yourself to think about the rule and see if you can think of any new problems it might create for you this year that you didn’t think about the last time you read it—for example, you might notice that the rule doesn’t stop you from sending a 9A991 civil aircraft hydraulic pump to a Chinese entity for “military end-use,” but it does prohibit you from sending 9E991 technical data to the same Chinese entity for “military end-use.”
So, take a minute today and read the China military end use rule in EAR 744.21. Then, set your Blackberry, your PDA, your Outlook, or just your own brain so that every year on November 16 you spend 15 minutes revisiting the rule. If all of us do that and read the rule every November 24 from now on…just think about it, it will be a powerful thing man.