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Special Comprehensive Export License Authorization to be Eliminated Under BIS Proposal

Tuesday, September 30, 2014
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security is proposing to amend the Export Administration Regulations by removing the special comprehensive license authorization. Comments on this proposal are due no later than Oct. 30.

Sandler, Travis & Rosenberg and Sandler & Travis Trade Advisory Services will hold a webinar Oct. 23 to review the mechanics of determining when export licenses are required and obtaining them. Click here for more information or to register.

According to the BIS, the SCL authorizes, among other things:

- exports and reexports of multiple shipments of all items subject to the EAR, with the exception of items prohibited by statute or regulation (e.g., items controlled for missile technology and short supply reasons) and items identified as being of significant strategic and proliferation concern;

- exports and reexports of multiple shipments of items to all destinations, except to embargoed and terrorist supporting and countries that BIS may designate on a case-by-case basis;

- possible authorization by prior approved consignees abroad of servicing, support services, stocking spare parts, maintenance, capital expansion, scientific data acquisition support, reselling and reexporting items in the form received, and other activities, on a case-by-case basis;

- exports and reexports of items for a period of four years; and

- exports and reexports by an SCL holder to approved consignees and directly to the consignees’ customers, the end-users (known as drop shipping).

However, BIS states, the purposes served by an SCL and the advantages it provided have been overtaken by changes to the EAR. In addition, BIS has issued fewer than a dozen SCLs, which, along with the low volume of trade under SCLs, are further indicators that the present and future value of an SCL is outweighed by the burdens exporters experience in applying for and administering it.

Under this proposal, all SCLs would expire one year from the date of publication of a final rule or on the expiration date of the SCL under the particular terms of the license, whichever is earlier. During that transition period, which could be up to one year, BIS will not accept amendments, including renewals, to outstanding SCLs. After the publication of the final rule, SCL holders could choose to apply for four-year individual licenses for exporting and reexporting items under the EAR or use available license exceptions. Finally, the applicable recordkeeping requirements under 15 CFR part 762 will continue to apply to SCL transactions until the applicable retention requirements are fulfilled.

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