How EAR license exceptions work

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1. What a license exception is

Under the Export Administration Regulations (EAR), a license exception is an authorization in part 740 that allows exports or reexports, under stated conditions, of items that would otherwise need a license (15 CFR 740.1(a)). It covers items that would otherwise need a license under General Prohibition One, Two, Three or Eight, as shown in one or more Export Control Classification Numbers (ECCNs) on the Commerce Control List (CCL). It also covers items that would need a license under the embargo policies in part 746.

Any license exception that authorizes reexports also authorizes in-country transfers, if the terms and conditions for reexports under it are met (15 CFR 740.1(a)).

2. Where license exceptions do not reach

For General Prohibition Six, on embargoed destinations, part 746 must be consulted to determine which license exceptions are available (15 CFR 740.1(a)). Items controlled for short supply reasons have their own license exceptions in part 754. For General Prohibition Five, part 744 should be consulted. Where General Prohibitions Four, Seven, Nine or Ten apply, no license exceptions are available.

Part 740 also sets restrictions on all license exceptions (15 CFR 740.2(a)). For example, no license exception may be used where authorization to use one has been suspended or revoked, or the export does not qualify (15 CFR 740.2(a)(1)). Nor may one be used where a party to the transaction is on the Unverified List (15 CFR 740.2(a)(17)).

3. Certification, symbols and filing

Using a license exception is a certification that its terms, provisions and conditions have been met (15 CFR 740.1(b)). Part 758 covers clearance of shipments and documenting the use of license exceptions. Each license exception has a three-letter symbol used for export clearance (15 CFR 740.1(c)).

Any required Electronic Export Information (EEI) filing must show the license code for the license exception symbol, such as the symbols LVS (shipments of limited value), GBS or CIV, and the correct ECCN (15 CFR 740.1(d)). Items temporarily in the United States that meet the provisions of License Exception TMP (temporary imports, exports, reexports and transfers) in section 740.9(b)(3) are excepted. A destination control statement may be needed on commercial documents under section 758.6 (15 CFR 740.1(e)). Records of transactions under any license exception must be kept under part 762 (15 CFR 740.1(f)). What the filing must contain is covered in what the EEI filing must show.

4. License Exception GBS

License Exception GBS, for shipments to Country Group B countries, authorizes exports and reexports to Country Group B, except Sudan and Ukraine (15 CFR 740.4). It applies to commodities where the Commerce Country Chart shows a license requirement to the ultimate destination for national security reasons only. The commodities must be marked GBS Yes on the CCL. Section 743.1 sets reporting requirements for certain commodities exported under GBS.

5. License Exception TSR: scope

License Exception TSR, for technology and software under restriction, permits exports and reexports of technology and software marked TSR Yes on the CCL (15 CFR 740.6(a)). It applies where the Commerce Country Chart shows a license requirement to the ultimate destination for national security reasons only. The technology or software must be going to Country Group B, except Sudan and Ukraine. A written assurance is required from the consignee before export or reexport.

6. The assurance for technology

Technology may not be exported or reexported under TSR until the importer gives a written assurance covering four points (15 CFR 740.6(a)(1)). Each applies unless there is a Bureau of Industry and Security (BIS) license or license exception. The importer will not reexport or release the technology to a national of a country in Country Groups D:1, E:1 or E:2 (15 CFR 740.6(a)(1)(i)). It will not export to those groups a foreign-produced direct product of the technology that is subject to national security controls on the CCL (15 CFR 740.6(a)(1)(ii)).

If the direct product is a complete plant or a major plant component, the importer will not export to those groups the direct product of the plant or of its major components (15 CFR 740.6(a)(1)(iii)). That applies where the product is subject to national security controls on the CCL or is subject to the International Traffic in Arms Regulations (ITAR). For technology under ECCN 3E069, three destination categories are named: Country Group D:5, destinations under the regional stability control in ECCN 3A999, and Macau. The importer will not reexport the technology to them, or release it to their nationals (15 CFR 740.6(a)(1)(iv)).

7. The assurance for software and its form

For software, the importer must give a written assurance on two points (15 CFR 740.6(a)(2)). It will not reexport or release the software, or its source code, to a national of a country in Country Groups D:1, E:1 or E:2 (15 CFR 740.6(a)(2)(i)). Nor will it export to those groups a foreign-produced direct product of the software subject to national security controls on the CCL (15 CFR 740.6(a)(2)(ii)).

The assurance may be a letter or other written communication from the importer, including by facsimile (15 CFR 740.6(a)(3)). It may instead be built into a licensing agreement, but only if the agreement says the assurance will be honored after the agreement expires. Without the assurance, TSR does not apply and a license is required. The license application must then explain why the assurance could not be obtained.

8. Other routes and reporting

The TSR requirements do not apply to technology or software exported under other license exceptions (15 CFR 740.6(a)(4)). Nor do they apply to technology or software in an application for the foreign filing of a patent provided the filing is in accordance with U.S. Patent Office regulations. Section 743.1 sets reporting requirements for certain exports under TSR (15 CFR 740.6(b)). No report is needed for releases of technology or source code to foreign nationals in the United States under TSR.

Key terms

License exception	An authorization in part 740 to export without a license under stated conditions.
GBS	The exception for shipments to Country Group B of national security items.
TSR	The exception for technology and software under restriction.
Written assurance	The importer’s undertaking required before a TSR export.
Country Group B	The country group to which GBS and TSR exports may go, except Sudan and Ukraine.

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.

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