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New Export License Requirement for Epoxy System

Monday, November 16, 2015
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security has issued an interim final rule classifying the XBS Epoxy System, which is designed to obfuscate critical technology components against X-ray and terahertz microscopy imaging attempts, under Export Control Classification Number 0C521.

The ECCN 0Y521 series identifies items that warrant control on the Commerce Control List but are not yet identified in an existing ECCN. The XBS Epoxy System is being added to this series because it provides a significant military or intelligence advantage to the U.S. or because foreign policy reasons justify such control. This item will remain so classified until Nov. 16, 2016, unless it is reclassified under a different ECCN or under an EAR99 designation or the 0Y521 classification is extended. In the meantime the U.S. government will work to determine whether it is appropriate to submit a proposed control to the applicable export control regime for potential multilateral control.

By adding the XBS Epoxy System as an ECCN 0Y521 item this rule imposes a license requirement for exports and reexports of this item to all destinations except Canada, with a case-by-case license review policy, through regional stability (RS Column 1) controls. The only license exception available for this item is for exports, reexports and transfers (in country) made by or consigned to a department or agency of the U.S. government.

This rule also removes references to aircraft wing folding systems software and related technology listed, prior to this rule, as entries No. 3 0D521 and No. 2 0E521, respectively, in Supplement No. 5 to part 774. BIS explains that these references are obsolete because the U.S. government adopted a control through the relevant multilateral regime(s); as a result, the wing fold system software is now controlled by ECCN 9D001 and the technology is controlled by ECCN 9E003.j.

This rule is effective as of Nov. 16 and comments (on the addition of the 0C521 item only) are due by Jan. 15, 2016.

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