On February 24, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule announcing amendments to the Export Administration Regulations (EAR) that revise export licensing policy toward the Russian Federation and Yemen due to foreign policy and national security concerns, such as proliferation. The amendment to the rule re-aligns the EAR’s “Country Group” designations for Russia and Yemen in light of these concerns.
The EAR “Country Group” designations establish export licensing requirements based on the country of destination for the export or re-export from the United States of an export-controlled item. The final rule moves Russia from the more favorable export licensing treatment of Country Groups A:2 (Missile Technology Control Regime) and A:4 (Nuclear Suppliers Group) to the more restrictive Country Groups D:2 (Nuclear) and D:4 (Missile Technology). Yemen has also been moved from Country Group B to Country Group D:1 (National Security). These changes to the designations reflect the U.S. government’s concerns regarding diversion of U.S.-origin items in Russia and Yemen for unauthorized purposes, such as for prohibited end uses or prohibited end users.
BIS also notes that Russia has not been cooperative in permitting BIS to conduct pre-license checks or post-shipment verifications of U.S.-origin items. As such, BIS also revised the licensing policy of exports to Russia to a “presumption of denial” when the items are controlled for export due to concerns of: (i) proliferation of chemical and biological weapons; (ii) nuclear nonproliferation; and (iii) missile technology under the EAR.
Due to these changes, certain license exceptions are no longer available for Russia and Yemen. Additionally, licenses are now required for Russia and Yemen for exports, reexports and transfers of certain controlled items. Certain transactions also may be subject to stricter licensing review policies or other EAR prohibitions. The rule announced that this is the first measure related to BIS’s larger effort to the realign and restructure the Country Groups, meaning that there are likely to be other changes in the near future.