Exports, reexports, releases and transfers

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1. Four defined acts

Part 734 of the Export Administration Regulations (EAR) explains key terms, including export and reexport, and part 772 contains these and other defined terms (15 CFR 734.1(a)). Part 734 also defines release and transfer (in-country) (15 CFR 734.15, 15 CFR 734.16). Activities that fall outside the definitions are covered in activities that are not exports.

2. What counts as an export

An export is an actual shipment or transmission out of the United States, including sending or taking an item out of the country in any manner (15 CFR 734.13(a)(1)). The definition is subject to the special rule for encryption software in section 734.17 and the exclusions in section 734.18 (15 CFR 734.13(a)).

Releasing or otherwise transferring technology or source code, but not object code, to a foreign person in the United States is also an export (15 CFR 734.13(a)(2)). The EAR call this a deemed export. Any such release in the United States is a deemed export to the foreign person’s most recent country of citizenship or permanent residency (15 CFR 734.13(b)).

Two spacecraft transfers by a person in the United States are also exports (15 CFR 734.13(a)(3)). One covers a spacecraft subject to the EAR that is not eligible for License Exception Strategic Trade Authorization (STA). Transferring its registration, control or ownership to a person in, or a national of, any other country is an export (15 CFR 734.13(a)(3)(i)). Those are spacecraft that provide space-based logistics, assembly or servicing of any spacecraft. The other is the same transfer of any other spacecraft subject to the EAR to a person in, or a national of, a Country Group D:5 country (15 CFR 734.13(a)(3)(ii)).

An export that will transit one or more countries to a destination identified in the EAR is treated as an export to that destination (15 CFR 734.13(c)).

3. What counts as a reexport

A reexport is an actual shipment or transmission of an item subject to the EAR from one foreign country to another, including sending or taking it to or from those countries in any manner (15 CFR 734.14(a)(1)). The definition is subject to the exclusions in sections 734.18 and 734.20 (15 CFR 734.14(a)).

Releasing or otherwise transferring technology or source code subject to the EAR to a foreign person of a country other than the one where the release takes place is a deemed reexport (15 CFR 734.14(a)(2)). Such a release outside the United States is a deemed reexport to the person’s most recent country of citizenship or permanent residency (15 CFR 734.14(b)). The exceptions in section 734.20 apply.

The spacecraft rules apply in the same way to a person outside the United States (15 CFR 734.14(a)(3)). Transferring registration, control or ownership of a spacecraft not eligible for reexport under STA to a person in, or a national of, any other country is a reexport (15 CFR 734.14(a)(3)(i)). So is the same transfer of any other spacecraft subject to the EAR to a person in, or a national of, a Country Group D:5 country (15 CFR 734.14(a)(3)(ii)). A reexport that will transit other countries to a destination identified in the EAR is treated as a reexport to that destination (15 CFR 734.14(c)).

4. How technology and software are released

Technology and software are released through visual or other inspection by a foreign person of items that reveals technology or source code subject to the EAR (15 CFR 734.15(a)(1)). They are also released through oral or written exchanges with a foreign person of technology or source code, in the United States or abroad (15 CFR 734.15(a)(2)). The exclusions in sections 734.18 and 734.19 apply (15 CFR 734.15(a)).

Any act causing the release of technology or software, through use of access information or otherwise, needs authorization to the same extent as an export or reexport to that person (15 CFR 734.15(b)). That applies whether the release is to the person acting or to another person.

5. Transfer within a country

A transfer (in-country) is a change in end use or end user of an item within the same foreign country (15 CFR 734.16). The term is synonymous with in-country transfer. The definition is subject to section 734.18(a)(3), which covers in-country transfers of technology or software among persons who are not foreign persons, so long as no release to a foreign person or prohibited person results.

6. Encryption software: the special export rule

For encryption source code and object code software, an export means an actual shipment, transfer or transmission out of the United States (15 CFR 734.17(a)(1)). It also means a transfer of such software in the United States to an embassy or affiliate of a foreign country (15 CFR 734.17(a)(2)).

The export of such software controlled for encryption item (EI) reasons under Export Control Classification Number (ECCN) 5D002 includes downloading it, or causing it to be downloaded, to locations outside the United States (15 CFR 734.17(b)(1)). The rule names electronic bulletin boards, internet file transfer protocol and websites as examples. It also includes making the software available for transfer outside the United States over communications facilities accessible to persons outside the country (15 CFR 734.17(b)(2)). That does not apply where the person making it available takes precautions adequate to prevent unauthorized transfer.

Publicly available encryption source code, and the corresponding object code, is not subject to the EAR when the source code meets the additional requirements in section 742.15(b) (15 CFR 734.17(b)(2)).

7. Precautions for internet transfers

For products eligible under section 740.17(b)(2), the precautions for internet transfers include measures such as the following three, subject to the general prohibitions in part 736 (15 CFR 734.17(c)). The rule describes those products as encryption software products, certain encryption source code and general purpose encryption toolkits. First, the access control system checks the address of every system outside the United States, Australia, Canada or the United Kingdom that requests or receives a transfer (15 CFR 734.17(c)(1)). It verifies that none has a domain name or internet address of a foreign government end user, such as .gov, .gouv or .mil.

Second, the system tells every requesting or receiving party that the transfer includes cryptographic software subject to the EAR (15 CFR 734.17(c)(2)). The notice also says that no recipient may export the software without a license or other authorization. Third, every requesting or receiving party must affirmatively acknowledge that the software is not intended for a government end user as defined in part 772 (15 CFR 734.17(c)(3)). The party also acknowledges understanding the export controls and the bar on export without authorization. The Bureau of Industry and Security (BIS) will consider electronic acknowledgments, provided they are adequate to assure legal undertakings similar to written ones.

Key terms

Deemed export	A release of technology or source code to a foreign person in the United States.
Deemed reexport	A release abroad to a foreign person of a third country.
Release	Inspection or exchange that reveals technology or source code to a foreign person.
Transfer (in-country)	A change in end use or end user within the same foreign country.
Access information	Information, such as decryption keys, network access codes and passwords, that allows access to encrypted technology or software in unencrypted form.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

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.

How Sentfore supports this

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