De minimis and direct product rules for the 600 series

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1. Two ways foreign items become subject to the EAR

A foreign-made item can be subject to the Export Administration Regulations (EAR) because of the U.S.-origin content it incorporates, or because it was made with U.S.-origin technology or software. The de minimis rules govern the first route (15 CFR 734.4), and the foreign direct product rules govern the second (15 CFR 734.9). Both contain provisions written for the 600 series (15 CFR 734.4(a)(6) and 15 CFR 734.9(d)).

2. The general de minimis levels

Under the general rules, certain reexports of foreign-made items are not subject to the EAR when made to any country in the world (15 CFR 734.4(c)). For foreign-made commodities, that is where the controlled U.S.-origin commodities incorporated are valued at 10% or less of the total value of the foreign-made commodity (15 CFR 734.4(c)(1)). A higher level applies for reexports to countries other than those in Country Group E:1 or E:2 (15 CFR 734.4(d)). There, the controlled U.S.-origin content may be valued at 25% or less of the total value (15 CFR 734.4(d)(1)). Both levels are subject to the exclusions in paragraph (a) of the section, among other limits.

3. No de minimis level for the 600 series in D:5

One rule covers foreign-made items that incorporate U.S.-origin 9x515 or 600 series items enumerated or otherwise described in paragraphs .a through .x of an entry. There is no de minimis level for those items when destined for a country in Country Group D:5 (15 CFR 734.4(a)(6)(i)).

For .y content, a separate rule applies (15 CFR 734.4(a)(6)(ii)). There is no de minimis level for foreign-made items that incorporate U.S.-origin 9x515 or 600 series .y items when destined for a country in Country Group E:1 or E:2. The same rule applies to Belarus, the People’s Republic of China and Russia.

A related rule covers foreign-made military commodities (15 CFR 734.4(a)(5)). There is no de minimis level for those that incorporate one or more of the commodities described in Export Control Classification Number (ECCN) 0A919.a.1, when destined for a country in Country Group D:5. The defined term military commodity excludes software, technology and items in the 600 series (15 CFR 772.1). Military aircraft entry 9A610 points to ECCN 0A919 for foreign-made military commodities that incorporate more than a de minimis amount of U.S.-origin 600 series content (ECCN 9A610).

4. Software, technology and the calculation

U.S.-origin software is not eligible for the de minimis exclusion and is subject to the EAR when exported or reexported separately (15 CFR 734.4(c)(1)). For foreign-made commodities with bundled U.S.-origin software, the 10% de minimis exclusion applies only to software on the Commerce Control List with an anti-terrorism only reason for control, or to EAR99 software (15 CFR 734.4(c)(1)). For all other software, an independent assessment of whether the software by itself is subject to the EAR must be performed.

Before relying on the de minimis rules for foreign-made technology, a one-time report must be filed (15 CFR 734.4(d)(3)). The person relying on the rules is responsible for making the necessary calculations to determine whether the de minimis provisions apply (15 CFR 734.4(e)). The method used to determine the percentage of U.S. content in foreign software or technology must be documented and retained in the person’s records (15 CFR 734.4(g)). Separately, certain exports from abroad by U.S.-owned or controlled entities may be prohibited under certain rules of the Office of Foreign Assets Control notwithstanding the de minimis provisions (15 CFR 734.4(a)(7)).

5. The 600 series direct product rule

Foreign-produced items located outside the United States can be subject to the EAR in more than one way (15 CFR 734.9). They are subject when they are a direct product of specified technology or software, or are produced by a complete plant or major component of a plant that is itself such a direct product (15 CFR 734.9). Direct product means the immediate product, including processes and services, produced directly by the use of technology or software (15 CFR 772.1). A major component of a plant means equipment essential to the production of an item, including testing equipment (15 CFR 734.9(a)(1)(i)).

Under the 600 series rule, a foreign-produced item is subject to the EAR if it meets both a product scope and a country scope (15 CFR 734.9(d)). The product scope has two branches. Under the first, the item is the direct product of U.S.-origin technology or software specified in a 600 series ECCN. The item must itself be specified in a 600 series ECCN or ECCN 0A919 (15 CFR 734.9(d)(1)(i)). Under the second, the item is produced by a complete plant or major component of a plant that is the direct product of U.S.-origin 600 series technology. The item must also be specified in a 600 series ECCN (15 CFR 734.9(d)(1)(ii)).

The country scope is met when the item is destined to a country in Country Group D:1, D:3, D:4, D:5, E:1 or E:2 (15 CFR 734.9(d)(2)). A note explains that ECCN 0A919 is included because it includes the direct product of 600 series technology or software (15 CFR 734.9(d)). The 9x515 rule, by comparison, applies when the destination is in Country Group D:5, E:1 or E:2 (15 CFR 734.9(c)(2)).

6. Subject to the EAR is not the same as licensed

Not all transactions involving foreign-produced items that are subject to the EAR require a license (15 CFR 734.9). The license requirements that apply to the foreign-produced item should be determined separately. The model certificate described in supplement no. 1 to part 734 is not required under the EAR (15 CFR 734.9(a)(2)). The Bureau of Industry and Security may inform persons that items are subject to the EAR under the section, but the absence of notice does not excuse compliance (15 CFR 734.9(a)(3)). How 600 series items are licensed is covered in license review policy for 600 series items.

Key terms

De minimis	The share of controlled U.S. content at or below which a foreign-made item is not subject to the EAR.
No de minimis level	The rule that sets no de minimis threshold for listed 600 series content and destinations.
Direct product	The immediate product of using specified technology or software.
Major component of a plant	Equipment essential to production, including testing equipment.
Country scope	Country Groups D:1, D:3, D:4, D:5, E:1 and E:2 for the 600 series rule.

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This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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