United States — Export Controls

The Export Administration Regulations (EAR), codified at 15 C.F.R. Parts 730–774, govern the export, reexport, and transfer (in-country) of items that are "subject to the EAR" — meaning commodities, software, and technology over which the Bureau of Industry and Security (BIS) exercises regulatory jurisdiction. The threshold question in any export-control analysis is whether the item or activity falls within the EAR's scope, because items that are not subject to the EAR carry no obligations under these regulations.

Statutory foundation

The EAR are administered by BIS under the Export Control Reform Act of 2018 (ECRA), 50 U.S.C. 4801–4852, and the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. 1701 et seq. Part 730 of the EAR clarifies that while these statutes grant broad legal authority to regulate exports, the regulations themselves set forth the extent to which that authority has been exercised. The EAR also implement antiboycott provisions requiring regulations that prohibit specified conduct by U.S. persons in furtherance of foreign boycotts against countries friendly to the United States.

Items subject to the EAR — the five categories

15 C.F.R. § 734.3(a) enumerates five classes of items that are subject to the EAR (except for items excluded under § 734.3(b), discussed below):

1. All items in the United States, including those in a U.S. Foreign Trade Zone or moving in transit through the United States from one foreign country to another;

1. All U.S.-origin items, wherever located — U.S.-origin commodities, software, and technology remain subject to the EAR when exported or reexported abroad, unless controlled exclusively by another U.S. federal agency or publicly available (as defined in the EAR);

1. Foreign-made items incorporating controlled U.S.-origin content — foreign-made commodities that incorporate controlled U.S.-origin commodities, foreign-made commodities bundled with controlled U.S.-origin software, foreign-made software commingled with controlled U.S.-origin software, and foreign-made technology commingled with controlled U.S.-origin technology are subject to the EAR in any quantity (§ 734.4(a)) or in quantities exceeding the de minimis thresholds set out in § 734.4(c) and (d);

1. Certain foreign-produced direct products — foreign-produced items that are the direct product of specified U.S.-origin technology, software, or a plant or major component of a plant, as described in § 734.9 (the "foreign direct product" rule); and

1. Certain activities of U.S. persons — for example, activities supporting specified end uses or end users, even when no items are exported.

Items excluded from the EAR

Section 734.3(b) excludes items subject to the exclusive export jurisdiction of other U.S. federal agencies. The most important carve-out is for defense articles and defense services controlled under the International Traffic in Arms Regulations (ITAR), 22 C.F.R. Parts 120–130, administered by the Department of State's Directorate of Defense Trade Controls (DDTC). Other agencies with exclusive jurisdiction over specified exports include the Nuclear Regulatory Commission, the Department of Energy (for certain nuclear technology), and the Drug Enforcement Administration. Items sold, leased, or loaned by the Department of Defense to a foreign country or international organization under the Arms Export Control Act's Foreign Military Sales (FMS) program pursuant to a Letter of Offer and Acceptance are also not subject to the EAR.

"Subject to the EAR" does not equal "license required"

A foundational distinction: the term "subject to the EAR" defines BIS regulatory jurisdiction, not license requirements. As § 734.2(a)(3) states, just because an item or activity is subject to the EAR does not mean that a license or other authorization is automatically required. License requirements are imposed by other parts of the EAR — typically based on the Export Control Classification Number (ECCN) assigned to the item on the Commerce Control List (15 C.F.R. Part 774, Supplement No. 1), the destination country, the end user, and the end use. Many items subject to the EAR — including the majority of commercial goods classified as EAR99 (items that fall under Commerce jurisdiction but are not listed on the CCL) — may be exported to many destinations without a license or under a License Exception.

How to determine jurisdiction

Section 734.6 provides that exporters unsure whether an item is subject to the EAR may request an advisory opinion or a commodity classification determination from BIS. When there is ambiguity over whether an item is subject to the EAR or to the ITAR, exporters may submit a commodity jurisdiction determination request to the Department of State (22 C.F.R. 120.4). As the agency responsible for administering the EAR, BIS has sole authority to determine whether an item or activity is subject to the EAR and what licensing or other requirements apply.

Overlap with other U.S. agencies

Items subject to the EAR may also be controlled under export-related programs administered by other agencies. For example, the Department of the Treasury's Office of Foreign Assets Control (OFAC) administers country-specific and list-based sanctions that can prohibit or restrict exports, reexports, and other dealings even when an EAR license would otherwise permit the transaction. Exporters must comply with both the EAR and any other applicable regulatory program; BIS and other agencies seek to minimize overlapping jurisdiction, but dual compliance obligations are common in practice.

Source: 15 C.F.R. § 734.2 Source: 15 C.F.R. § 734.3 Source: 15 C.F.R. Part 730 — General Information

Once an exporter determines that an item is subject to the EAR, the next operational step is to classify the item by determining whether it is listed on the Commerce Control List (CCL) and, if so, under which Export Control Classification Number (ECCN). This classification drives downstream licensing decisions: whether a license is required, which countries trigger license requirements, and which License Exceptions may be available.

The Commerce Control List — structure and location

The CCL is codified in Supplement No. 1 to 15 C.F.R. Part 774. It enumerates commodities, software, and technology controlled for export, reexport, or transfer (in-country) under the EAR based on technical parameters and reasons for control. Items subject to the EAR that do not meet the specifications of any ECCN on the CCL are designated EAR99 — the residual category for items under Commerce jurisdiction that are not listed on the CCL. The majority of U.S. commercial exports are EAR99 and generally do not require a license, unless they are destined for an embargoed or sanctioned country, a party of concern (such as an entity on the Entity List), or in support of a prohibited end use.

ECCN structure — the five-character alphanumeric code

Each ECCN is a five-character code (for example, 3A001 or 0A501) that categorizes an item by its nature and technical characteristics. The structure is:

• First character (digit 0–9): the category to which the item belongs. The CCL divides controlled items into ten categories:
• 0 – Nuclear Materials, Facilities & Equipment [and Miscellaneous Items]
• 1 – Materials, Chemicals, Microorganisms & Toxins
• 2 – Materials Processing
• 3 – Electronics
• 4 – Computers
• 5 – Telecommunications & Information Security
• 6 – Sensors & Lasers
• 7 – Navigation & Avionics
• 8 – Marine
• 9 – Aerospace & Propulsion

• Second character (letter A, B, C, D, or E): the product group within the category:
• A – "End Items," Equipment, Accessories, Attachments, Parts, Components, and Systems
• B – Test, Inspection, and Production Equipment
• C – Material
• D – Software
• E – Technology

• Third character (digit 0–9): indicates the type of control. Most ECCNs use digits 0–4 to reflect controls adopted under multilateral export-control regimes (Wassenaar Arrangement, Missile Technology Control Regime, Nuclear Suppliers Group, Australia Group, or Chemical Weapons Convention). ECCNs with a third digit of 9 designate items subject to unilateral U.S. controls that are not part of a multilateral regime — these include the "600 series" (former ITAR items transferred to Commerce jurisdiction) and the 9x515 series (spacecraft and related items). Items in 9-series ECCNs typically have worldwide license requirements and more limited License Exception availability.

• Fourth and fifth characters: a sequential two-digit number identifying the specific item within the category and product group.

An ECCN is distinct from — and entirely unrelated to — a Schedule B number (used by the Census Bureau for trade statistics) or a Harmonized Tariff System (HTS) code (used by Customs and Border Protection for tariff classification).

Contents of an ECCN entry

Each ECCN entry on the CCL follows a standardized format set out in 15 C.F.R. § 738.2. The key sections are:

1. Heading — a brief description of the controlled item. If the heading directs the reader to "see List of Items Controlled," the "Items" paragraph in the List of Items Controlled section provides the exclusive, complete list of items the ECCN controls.

1. License Requirements — enumerates the "Reasons for Control" (e.g., National Security (NS), Anti-Terrorism (AT), Regional Stability (RS), Crime Control (CC), United Nations embargo) and provides a Country Chart column identifier (e.g., "NS Column 2" or "AT Column 1"). The exporter uses this identifier to consult the Commerce Country Chart (Supplement No. 1 to Part 738) to determine whether a license is required for the destination in question. The Country Chart displays an "X" in the intersection of a country row and a Reason for Control column when a license is required for that combination.

1. License Exceptions — lists any ECCN-driven License Exceptions (such as LVS, GBS, CIV, or STA) that may authorize the export or reexport without a license. Each License Exception is noted as "Yes" (sometimes with scope limitations) or "N/A." The brief eligibility statement in the ECCN is not exhaustive; the exporter must consult the full text of the License Exception in Part 740 to confirm eligibility.

1. List of Items Controlled — provides:

• Related Controls: cross-references to items controlled under the ITAR (22 C.F.R. Parts 120–130) or by another U.S. agency, or items controlled under a different ECCN.
• Related Definitions: defined terms used in the ECCN, or pointers to Part 772 (Definitions of Terms).
• Items: the technical paragraph(s) specifying the commodities, software, or technology controlled under the ECCN. Items are typically broken into lettered or numbered subparagraphs (e.g., .a, .b, .x). Exporters must read these subparagraphs carefully to confirm that the item meets the enumerated technical parameters — characteristics such as performance thresholds, accuracy specifications, frequency ranges, or "specially designed" status.

The "specially designed" definition — a frequent control parameter

Many ECCNs — especially catch-all .x paragraphs that control non-specific "parts," "components," "accessories," and "attachments" for enumerated items — use the term "specially designed." This is a defined term in 15 C.F.R. § 772.1. The definition has a two-part structure: paragraph (a) enumerates the "catch" criteria (what brings an item within "specially designed" status), and paragraph (b) enumerates the "release" provisions (what excludes an item from "specially designed" status even if it meets the catch criteria). Because applying this definition is fact-intensive and can determine whether an item falls under an ECCN or is EAR99, BIS has published guidance and training videos specifically on the "specially designed" analysis.

CCL Order of Review — the classification workflow

BIS has codified a step-by-step methodology for classifying an item on the CCL in Supplement No. 4 to Part 774, titled "Commerce Control List Order of Review." The Order of Review instructs exporters to:

1. Step 1: Confirm the item is subject to the EAR (i.e., not exclusively controlled by the ITAR or another agency).
2. Step 2: Determine whether the item is described in a 0Y521-series ECCN (items subject to temporary controls pending final classification).
3. Step 3: Determine whether the item is described in a 9x515 ECCN or "600 series" ECCN paragraph (other than a catch-all .x paragraph). Items described in these ECCNs trump other CCL entries because the "600 series" and 9x515 ECCNs describe military and spacecraft items that were once subject to the ITAR.
4. Step 4: If not classified in Step 3, determine whether the item is classified under a 9x515 or "600 series" catch-all paragraph (e.g., .x paragraphs controlling "parts" and "components" "specially designed" for items in that ECCN or the corresponding USML paragraph). This step requires applying the "specially designed" definition in § 772.1.
5. Step 5: Review the remaining ECCNs in the appropriate category and product group to determine whether the item is described in any other ECCN.
6. Step 6: If the item is not described in any ECCN, it is designated EAR99.

The hierarchical priority — 0Y521 series, then 9x515 / 600 series, then other ECCNs — reflects both export-control policy (military and spacecraft items receive stricter treatment) and the regulatory history of the Export Control Reform initiative that transferred thousands of items from the ITAR to the EAR between 2013 and 2020.

Three methods to obtain an ECCN

BIS recognizes three ways for an exporter to determine the correct ECCN for an item:

1. Contact the manufacturer, producer, or developer of the item to request the ECCN. Manufacturers that have previously exported the item likely have already classified it. Exporters should verify that the ECCN is current, as ECCNs may change over time through Federal Register rulemakings.

1. Self-classify using the CCL and the Order of Review. Self-classification requires a technical understanding of the item and familiarity with the structure and format of the CCL. BIS provides a CCL Index (an alphabetical list of item descriptions pointing to candidate ECCNs), training videos, and the "Introduction to Commerce Department Export Controls" guide to assist exporters. Exporters must read the full ECCN entry — including the technical "Items" subparagraphs — to confirm that the item fits the enumerated specifications; reviewing only the heading or the Index is insufficient.

1. Submit a commodity classification request to BIS under 15 C.F.R. § 748.3. Requests are filed online through the Simplified Network Application Process – Redesign (SNAP-R) system, which requires a Company Identification Number (CIN). BIS issues a Commodity Classification determination that binds the agency and provides the exporter with defensible documentation of the item's ECCN. While BIS Outreach and Educational Services can provide oral guidance by phone, only a written classification determination is legally binding.

Interaction with the Commerce Country Chart

Once an item is classified under an ECCN (or designated EAR99), the exporter consults the Commerce Country Chart (15 C.F.R. Part 738, Supplement No. 1) to determine whether a license is required for the destination and transaction. The Country Chart is a matrix: countries are listed in rows, and Reasons for Control (with numbered columns) appear as diagonal headers across the top. An "X" in the intersection of a country row and a Reason for Control column means a license is required for items controlled under that ECCN for that reason, unless a License Exception applies. Each ECCN's "License Requirements" section identifies the applicable Country Chart column identifier(s) (e.g., "NS Column 2"), which the exporter uses to locate the correct column on the Chart.

Items designated EAR99 do not appear on the Country Chart because they have no ECCN-based license requirements. However, EAR99 items may still require a license under other parts of the EAR if they are destined for an embargoed country (Part 746), a denied person or sanctioned entity (Part 744), or in support of certain prohibited end uses such as nuclear, missile, or chemical/biological weapons activities (Part 744).

Classification is exporter responsibility

The EAR place the burden of classification on the exporter, not on BIS. Misclassification — whether inadvertent or willful — can result in violations of the EAR, including civil penalties, denial of export privileges, and criminal prosecution. Exporters are expected to implement and maintain an export-compliance program that includes periodic review of ECCNs to ensure they remain accurate as items evolve and as BIS amends the CCL.

Source: 15 C.F.R. Part 774 — The Commerce Control List Source: 15 C.F.R. § 738.2 — Commerce Control List (CCL) structure Source: Supplement No. 4 to Part 774 — Commerce Control List Order of Review Source: 15 C.F.R. § 748.3 — Classification requests and advisory opinions Source: BIS — Classify Your Item

License Exception Strategic Trade Authorization (STA), codified at 15 C.F.R. § 740.20, authorizes certain exports, reexports, and in-country transfers of controlled items to trusted allied and partner destinations that otherwise require a BIS license. STA is available only where (a) the specific item’s ECCN indicates STA eligibility, (b) the transaction involves a qualifying Country Group A:5 or A:6 destination, and (c) none of the transaction’s license requirements are imposed for reasons precluding STA (such as embargoes, end-use, or end-user controls under Parts 744 or 746).

June 2026 amendment: Missile-Technology UAV carve-in In January 2026, BIS published an interim final rule (effective June 2026) expanding STA eligibility to include certain Missile Technology (MT) controlled unmanned aerial vehicles (UAVs) classified under ECCNs 9A012 and 9A120. Previously, MT-controlled UAVs were categorically excluded from STA; under new § 740.20(c)(1)(ii), specific UAVs in these ECCNs are now eligible for STA for exports, reexports, and in-country transfers to Country Group A:5 destinations—provided all other STA conditions are met. This marks a substantive expansion of STA eligibility and addresses exporters dealing in advanced UAV platforms formerly unable to use STA.

Eligibility summary (as of July 2026):

• Most items must be destined for Country Group A:5 (see Supplement No. 1 to Part 740; 36 trusted partners and allies), with a subset allowed for A:6.
• The specific transaction’s reason(s) for control (as reflected in the ECCN and Commerce Country Chart) must not trigger any restriction that overrides STA (notably no Part 744/746 end-user or end-use bar).
• MT-controlled UAVs under new § 740.20(c)(1)(ii) can newly be exported under STA to A:5 (not to A:6), provided all regulatory conditions are satisfied.
• All longstanding consignee-statement, ECCN-disclosure, prior filing, and recordkeeping requirements remain in force (§ 740.20(d)), as do all special restrictions for “600 series” military/ECCNs and associated “completing the chain” requirements.

Exclusions and continuing limitations:

• STA remains categorically unavailable for embargoed destinations, D:5/E:1/E:2 country groups, or where any license requirement is imposed for reasons outside the enumerated list in § 740.20(c).
• Most human/zoonotic pathogens, some crime-control items, and items subject to other agencies’ exclusive jurisdiction remain outside STA scope (§ 740.20(b)).
• Exporters must check the ECCN entry itself: many “600 series,” “9x515,” or sensitive items specify "License Exception STA: No" or impose specific additional restrictions on STA use.

Practitioner notes:

• If an exporter relies on STA under the 2026 amendment, the BIS filing and recordkeeping should specifically reference the new UAV eligibility carve-in and the precise ECCN/subparagraph claimed.
• Failure to satisfy all condition and notice requirements remains grounds for violation, regardless of substantive eligibility.

Source: 15 C.F.R. § 740.20 — License Exception STA Source: Federal Register: Expansion of STA Eligibility — MT UAVs, 89 Fed. Reg. 15864 (Jan. 21, 2026)

The de minimis rules, codified at 15 C.F.R. § 734.4, determine whether foreign-made commodities, software, and technology that incorporate controlled U.S.-origin content are subject to the Export Administration Regulations when reexported from a foreign country to another foreign destination. These rules define the extraterritorial reach of the EAR over goods manufactured abroad, and they are the daily operational question for multinational supply chains that source U.S. components and must decide whether a subsequent reexport from — for example — Germany to India requires U.S. regulatory clearance.

The threshold question: two pathways to EAR jurisdiction over foreign-made items

Under 15 C.F.R. § 734.3(a)(3), foreign-made items are subject to the EAR in two ways: (i) those that always remain subject to the EAR regardless of U.S. content level (§ 734.4(a) — the "no de minimis" category), and (ii) those that are subject to the EAR only if their controlled U.S.-origin content exceeds the de minimis threshold applicable to the destination (§ 734.4(c) and (d)). The exporter's task is to classify the U.S.-origin components, calculate their percentage by value in the foreign-made product, identify the destination, and then apply the correct de minimis threshold or determine that no threshold applies.

Items with no de minimis level — always subject to the EAR

15 C.F.R. § 734.4(a) enumerates categories of foreign-made items that remain subject to the EAR regardless of the percentage of U.S.-origin controlled content. The most operationally significant "no de minimis" categories are:

1. Foreign-made commodities that incorporate any quantity of U.S.-origin 9x515 or "600 series" items (former ITAR-controlled military items transferred to Commerce jurisdiction) enumerated in paragraphs .a through .x of a 9x515 or 600 series ECCN, when destined for a Country Group D:5 destination (§ 734.4(a)(4)(i)). Country Group D:5 — which includes China, Russia, and Venezuela, among others — is enumerated in Supplement No. 1 to Part 740. For these sensitive destinations, even a single U.S.-origin 600 series fastener or connector brings the entire foreign-made assembly under EAR jurisdiction.

1. Foreign-made items that incorporate U.S.-origin 9x515 or "600 series" .y items (catch-all paragraphs for parts and components) when destined for Country Group E:1 or E:2, Belarus, China, or Russia (§ 734.4(a)(4)(ii)). E:1 comprises Cuba, Iran, North Korea, and Syria; E:2 is the Crimea region of Ukraine and specified regions of the Donetsk and Luhansk oblasts.

1. Foreign-made items subject to specified Foreign Direct Product (FDP) rules, including the Semiconductor Manufacturing Equipment (SME) FDP rule (§ 734.4(a)(8)) and the Footnote 5 (advanced integrated circuits) FDP rule (§ 734.4(a)(9)), which apply to foreign-made equipment containing U.S.-origin semiconductors or ICs when destined for China, Macau, or Country Group D:5 destinations.

1. Specified encryption items, high-performance computers, and military commodities as enumerated in § 734.4(a)(1), (a)(2), (a)(3), and (a)(5). For example, foreign-made technology that incorporates U.S.-origin encryption technology controlled under ECCN 5E002 is subject to the EAR in any quantity (§ 734.4(a)(2)).

When an item falls into a "no de minimis" category, the entire foreign-made product is treated as subject to the EAR and the exporter must determine — using the product's classification, the destination, and the Commerce Country Chart — whether a license is required or a License Exception applies. The de minimis calculation is simply not performed.

The 10% de minimis rule for most destinations

15 C.F.R. § 734.4(c) establishes a 10% threshold for reexports to any country in the world (except those subject to the 25% rule, discussed below). Foreign-made items are not subject to the EAR when:

1. The foreign-made commodity incorporates controlled U.S.-origin commodities or is bundled with controlled U.S.-origin software valued at 10% or less of the total value of the foreign-made commodity; or

1. The foreign-made software incorporates controlled U.S.-origin software valued at 10% or less of the total value of the foreign-made software; or

1. The foreign technology is commingled with or drawn from controlled U.S.-origin technology valued at 10% or less of the total value of the foreign technology.

If the foreign-made item's controlled U.S. content is at or below 10% and the item is not in a "no de minimis" category, the item is not subject to the EAR and may be reexported without regard to the EAR's licensing requirements. (It may, however, remain subject to the export-control laws of the country from which it is being exported and to U.S. sanctions administered by the Office of Foreign Assets Control under separate authority.)

Special procedural requirement for technology de minimis claims

Before relying on the 10% de minimis exclusion for foreign-made technology commingled with controlled U.S.-origin technology, the exporter must file a one-time report with BIS (§ 734.4(c)(3)). The report describes the scope and nature of the foreign technology, its fair market value, the valuation methodology, and the destination countries to which the foreign technology will be reexported when U.S.-origin controlled content exceeds 10% (Supplement No. 2 to Part 734, paragraph (b)). The report does not require end-use or end-user information. BIS has thirty days to review; if BIS does not contact the exporter within that window, the exporter may rely on the calculation unless and until BIS instructs otherwise. This reporting obligation applies only to technology; no advance report is required for commodities or software.

The 25% de minimis rule for destinations outside Country Groups E:1 and E:2

15 C.F.R. § 734.4(d) establishes a higher 25% threshold for reexports to countries other than those in Country Group E:1 (Cuba, Iran, North Korea, Syria) or E:2 (Crimea region and specified areas of Ukraine). For these non-embargoed destinations, foreign-made items are not subject to the EAR when:

1. The foreign-made commodity incorporates controlled U.S.-origin commodities or is bundled with U.S.-origin software valued at 25% or less of the total value; or

1. The foreign-made software incorporates controlled U.S.-origin software valued at 25% or less; or

1. The foreign technology is commingled with or drawn from controlled U.S.-origin technology valued at 25% or less.

In practice, this means that for the majority of commercial destinations — the European Union, United Kingdom, Canada, Japan, India, Mexico, Brazil, and other non-embargoed countries — the threshold is 25%, whereas for embargoed destinations (E:1 and E:2), the stricter 10% threshold applies. The one-time technology report requirement (described above) also applies before relying on the 25% exclusion for technology.

Software-specific limitations — controlled software requires independent EAR analysis

The de minimis exclusion for foreign-made software under paragraphs (c) and (d) only applies to software that is (i) listed on the Commerce Control List and controlled solely for Anti-Terrorism (AT) reasons, or (ii) designated EAR99 (§ 734.4(c)(3) and (d)(3)). For all other software — software controlled for National Security, Encryption Items, or any other reason — the exporter must perform an independent assessment of whether the foreign-made software by itself (not just its U.S.-origin components) is subject to the EAR. This carve-out reflects BIS policy that controlled software commingled with U.S.-origin software may itself become subject to the EAR under § 734.3(a)(3) regardless of percentage, and the de minimis safe harbor does not apply.

Calculating controlled U.S.-origin content — the valuation methodology

The percentage calculation is driven by Supplement No. 2 to Part 734, which provides detailed valuation guidance. The core steps are:

1. Identify the ECCN of each U.S.-origin item incorporated into the foreign-made product.

1. Determine which U.S.-origin items would require a BIS license if exported or reexported in the form in which you received them to the foreign-made product's destination. Consult the Commerce Country Chart (Supplement No. 1 to Part 738) and Part 746 (embargoes) for this determination. U.S.-origin items that can be exported to that destination No License Required (NLR) or under License Exception GBS (shipments to Country Group B) are not counted as controlled U.S. content. Items subject only to short-supply controls are also excluded.

1. Value the controlled U.S.-origin content. Use the fair market value of the U.S.-origin items — typically the price you paid for those items in an arm's-length transaction. If the foreign manufacturer and buyer are affiliated and transact at below-market prices, use fair market values that would be charged to unaffiliated customers in the same foreign market. If actual transaction data are unavailable, derive fair market value using comparable market prices or cost-of-production plus overhead and profit (Supplement No. 2, paragraph (a)).

1. Value the foreign-made product. For commodities, use the fair market value of the finished foreign-made item. For software, you may estimate future sales value.

1. Calculate the percentage: (Total value of controlled U.S.-origin content ÷ Total value of foreign-made item) × 100.

The exporter is responsible for making the calculation (§ 734.4(e)) and must document the methodology and retain records — including whether values are actual arm's-length market prices or derived from comparable transactions or costs of production — for five years in accordance with Part 762 recordkeeping requirements (§ 734.4(g)).

U.S.-origin content is "incorporated" only if essential, customarily included, and reexported with the foreign item

Supplement No. 2, paragraph (a), specifies that U.S.-origin controlled content is considered "incorporated" for de minimis purposes only if the U.S.-origin item is: (i) essential to the functioning of the foreign equipment, (ii) customarily included in sales of the foreign equipment, and (iii) reexported with the foreign-produced item. A spare-parts kit or separate accessory that is not bundled with the end product at the time of reexport would not be "incorporated" under this test.

OFAC and WMD obligations override the de minimis rules

Section 734.4(a)(7) expressly provides that the de minimis provisions do not shield transactions from Office of Foreign Assets Control (OFAC) sanctions. Under certain OFAC rules, exports from abroad by U.S.-owned or controlled entities may be prohibited notwithstanding a de minimis exclusion under the EAR. In addition, the de minimis rules do not relieve U.S. persons of the obligation to refrain from supporting the proliferation of weapons of mass destruction and missiles under 15 C.F.R. § 744.6. An item that falls below the de minimis threshold and is therefore not subject to the EAR may still violate OFAC sanctions or WMD-proliferation prohibitions if it supports a prohibited end use or end user.

Interplay with General Prohibition Two

The de minimis rules implement General Prohibition Two in 15 C.F.R. § 736.2(b)(2), which prohibits the reexport or export from abroad of foreign-made items incorporating more than a de minimis amount of controlled U.S. content when the item itself would require a license for the control reason and destination. Once the exporter determines that a foreign-made item exceeds the de minimis threshold (or has no de minimis level), the item is subject to the EAR, and the exporter must classify the foreign-made item itself, consult the Country Chart, and determine whether a license is required or a License Exception applies. The percentage of U.S. content determines jurisdiction; the classification of the foreign-made item and the destination determine license requirements.

Recent regulatory expansions — semiconductor and advanced-IC carve-outs

BIS has progressively narrowed the availability of de minimis treatment for items containing advanced semiconductors and semiconductor manufacturing equipment when destined for China and certain other destinations. The Semiconductor Manufacturing Equipment FDP rule (§ 734.4(a)(8), effective March 2022 and expanded in subsequent rulemakings) eliminates de minimis treatment for foreign-made equipment meeting specified parameters in ECCNs 3B001 and 3B002 when the equipment contains U.S.-origin integrated circuits and is destined for Macau or Country Group D:5. The Footnote 5 FDP rule (§ 734.4(a)(9), effective October 2022) eliminates de minimis for certain Category 3B equipment containing U.S.-origin ICs when destined for entities with a "Footnote 5" designation on the Entity List or for facilities in Macau or D:5 producing advanced-node integrated circuits. Exporters dealing in semiconductor-production equipment or high-performance computing items should review these carve-outs carefully, as they frequently override what would otherwise be a 25% de minimis safe harbor.

Practical compliance: the two-question workflow

Trade-compliance teams typically approach de minimis determinations as a two-question workflow:

1. Is there a de minimis level for this item to this destination? Check § 734.4(a) "no de minimis" categories (600 series to D:5/E:1/E:2, SME/Footnote 5 FDP, encryption, specified computers). If the item is in a "no de minimis" category, skip the calculation; the foreign-made item is subject to the EAR.

1. If a de minimis level exists, is the U.S. content at or below the threshold? Identify controlled U.S. content, calculate the percentage, apply the 10% (for E:1/E:2) or 25% (for all other) rule, and — for technology — file the one-time report before relying on the exclusion.

Failure to perform this analysis correctly is a frequent source of EAR violations, because exporters outside the United States often assume that goods manufactured abroad are not subject to U.S. law. When BIS investigates, the agency will reconstruct the bill of materials, assign ECCNs to each U.S.-origin component, calculate the percentage, and apply the de minimis rules retroactively. Exporters who cannot produce contemporaneous valuation records face both penalties for the unlicensed reexport and penalties for recordkeeping violations.

Source: 15 C.F.R. § 734.4 — De minimis U.S. content Source: 15 C.F.R. Part 734, Supplement No. 2 — Guidelines for De Minimis U.S. Content Calculations Source: 15 C.F.R. § 736.2(b)(2) — General Prohibition Two (De minimis reexports)

The foreign direct product (FDP) rules, codified at 15 C.F.R. § 734.9, extend U.S. export-control jurisdiction over certain foreign-produced items manufactured outside the United States when those items are the "direct product" of specified U.S.-origin technology, software, or production equipment. Unlike the de minimis rules — which ask whether a foreign-made item incorporates U.S. components above a threshold percentage — the FDP rules impose EAR jurisdiction based on the production lineage of the item: what technology, software, or plant equipment was used to design or manufacture it.

Structural overview — multiple distinct FDP rules BIS has consolidated and expanded the FDP provisions in § 734.9, including several focused on national security, military, and entity/end-use targeting. As of December 2024, the major FDP rules include:

• The National Security FDP rule (15 C.F.R. § 734.9(b))
• The 9x515 FDP rule (§ 734.9(c))
• The "600 series" FDP rule (§ 734.9(d))
• Entity List-focused FDP rules (§ 734.9(e))
• Specialized FDP rules for Russia, Belarus, and China concerning advanced computing and semiconductor manufacturing (§ 734.9(f)–(k))

NEW: The AI Model Weights FDP Rule (§ 734.9(l)) — Effective December 5, 2024 A substantial amendment in December 2024 added the AI Model Weights FDP rule, explicitly targeting foreign-produced closed-weight AI model weights trained using advanced chips or equipment that are direct products of U.S.-origin technology or software. This provision appears at § 734.9(l) and is intended to regulate the export and reexport of powerful AI model weights even when physically located entirely overseas, so long as they are produced using U.S.-controlled technology, software, or manufacturing equipment.

• Product scope: The rule applies to foreign-produced items classified under new ECCN 4E091 (and certain other ECCNs) that are the direct product of specified U.S. technology, software, or plant equipment; notably, it applies to closed-weight AI model weights meeting explicit computational thresholds (e.g., weights trained with at least 10²⁶ computational operations).
• Destination/end-user scope: It triggers additional licensing requirements for exports and reexports to all countries except the United States and specified allied destinations, and attaches strict controls for transfer or release to entities not covered by new License Exception AIA (Artificial Intelligence Authorization) or where the model will not be released as an open-weight (publicly available) model.
• Operational effect: This expansion materially broadened EAR extraterritorial reach into AI supply chains, closing prior gaps regarding sophisticated model weights produced entirely abroad. For closed-weight models caught by this rule, a BIS license is required unless a License Exception applies. Open-weight (publicly available) models and transactions benefitting U.S./allied-headquartered entities covered by AIA may be exempt.
• Effective date and citation: The AI Model Weights FDP rule amendments were published at 89 Fed. Reg. 96810 (Dec. 5, 2024) and codified at 15 C.F.R. § 734.9(l).

This recent amendment is not merely clerical but constitutes a substantial regulatory expansion, warranting close attention for anyone in the global AI, semiconductor, or cloud-computing supply chains.

Source: 15 C.F.R. § 734.9 — Foreign-Direct Product (FDP) Rules Source: 89 Fed. Reg. 96810 (Dec. 5, 2024) — AI Model Weights FDP Rule Source: BIS Newsroom — AI Model Weights FDP Rule Press Release

A "deemed export" or "deemed reexport" occurs when controlled technology or software source code subject to the Export Administration Regulations is released to a foreign national — even when the release occurs entirely within the United States (deemed export) or when a foreign national in one country receives technology while holding citizenship or permanent residency in a different foreign country (deemed reexport). No physical shipment is required; the act of disclosing, transferring, or making available controlled technical information to a foreign person triggers EAR jurisdiction and, if the technology would require a license to be exported to that person's country of nationality or permanent residence, a BIS license is required before the release. This rule is the threshold compliance question for U.S. employers, universities, and research institutions with foreign-national employees or students who may access controlled technology in laboratories, design facilities, or production environments.

Statutory and regulatory foundation

The deemed-export and deemed-reexport rules are codified at 15 C.F.R. § 734.13(a)(2) and 15 C.F.R. § 734.14(a)(2), respectively. Under § 734.13(a)(2), an "export" includes "[r]eleasing or otherwise transferring 'technology' or source code (but not object code) to a foreign person in the United States (a 'deemed export')." The parallel provision at § 734.14(a)(2) defines a "reexport" to include "[r]eleasing or otherwise transferring 'technology' or source code subject to the EAR to a foreign person of a country other than the foreign country where the release or transfer takes place (a deemed reexport)."

Under 15 C.F.R. § 734.13(b), any release in the United States of technology or source code subject to the EAR to a foreign person is deemed to be an export to the foreign person's most recent country of citizenship or permanent residency. Similarly, § 734.14(b) provides that any release outside of the United States of technology or source code subject to the EAR to a foreign person of another country is a deemed reexport to the foreign person's most recent country of citizenship or permanent residency. The regulatory shorthand — "deemed" — reflects the policy that releasing know-how to a foreign national is functionally equivalent to shipping the technology to that person's home country, because the individual may return home or otherwise transfer the knowledge onward.

What is a "release" of technology or source code?

15 C.F.R. § 734.15 defines the term "release" for purposes of the EAR. Technology or source code is released through:

1. Visual or other inspection by a foreign person of items that reveal technology or source code subject to the EAR (for example, reading technical drawings, blueprints, specifications, or observing a controlled production process); or

1. Oral or written exchanges with a foreign person of technology or source code in the United States or abroad (for example, technical discussions, training sessions, presentations, or sharing design documentation by email or on a shared server).

Any act that causes the release of technology or software through the use of "access information" (such as a password or encryption key) or otherwise requires an authorization to the same extent as an authorization would be required for the export or reexport of the technology or software itself (§ 734.15(b)). This means that granting a foreign national login credentials to a network drive, source-code repository, or cloud environment that houses controlled technology is itself a deemed export if the foreign national obtains access to the controlled information.

Who is a "foreign person" for deemed-export purposes?

The EAR define "foreign person" at 15 C.F.R. § 772.1 to include any natural person who is not a U.S. person. A "U.S. person" (also defined at § 772.1) is:

• Any individual who is a U.S. citizen;
• Any individual who is a lawful permanent resident of the United States (a "green card" holder); or
• Any individual who is a protected individual under the Immigration and Nationality Act, 8 U.S.C. § 1324b(a)(3) (which includes refugees and asylees granted protection under 8 U.S.C. § 1324b(a)(3)).

Foreign nationals present in the United States on temporary visas — H-1B, L-1, F-1 (student), J-1 (exchange visitor), O-1 (extraordinary ability), TN (NAFTA / USMCA professional), E-2 (treaty investor), and others — are not U.S. persons and therefore are foreign persons for deemed-export purposes. The fact that the individual is authorized to work in the United States, holds a valid visa, and is employed by a U.S. company does not exempt the individual from deemed-export controls. The only exemptions are for lawful permanent residents, naturalized U.S. citizens, and protected individuals under 8 U.S.C. § 1324b(a)(3).

Country of deemed export — citizenship and permanent residence

Both § 734.13(b) and § 734.14(b) specify that the deemed export or deemed reexport is to the foreign person's most recent country of citizenship or permanent residency. BIS guidance clarifies that when a foreign national holds dual or multiple citizenships, the most recently acquired citizenship or permanent residency governs for licensing purposes. When an individual is a citizen of one foreign country and holds permanent residency in a different foreign country (other than the United States), BIS generally treats the deemed export or deemed reexport as occurring to the most recently obtained status.

For example, a foreign national who is a citizen of China and has obtained permanent residency in Canada (but is not a U.S. permanent resident or citizen) would be deemed to receive a technology release to Canada if Canadian permanent residency is the most recent status. The exporter or employer must inquire into the individual's citizenship and permanent-residency history to determine the correct destination for licensing analysis. BIS does not regulate the hiring of foreign nationals or the employment relationship itself — the EAR impose no prohibition on employing foreign persons — but the release of controlled technology to such persons is the regulated event.

License requirement analysis — the two-question test

Once a release of technology or source code to a foreign person is identified, the employer or releasing party must determine whether a BIS license is required. The analysis follows two steps:

1. Is the technology or source code subject to the EAR? The technology must be "subject to the EAR" under § 734.3. U.S.-origin technology and software source code are generally subject to the EAR unless they fall within an exclusion (for example, technology exclusively controlled by the ITAR, technology in the public domain under § 734.3(b)(3), or technology resulting from fundamental research under § 734.8).

1. Would an export of this technology to the foreign person's country of citizenship or permanent residence require a license? Consult the Commerce Control List (15 C.F.R. Part 774) to determine the technology's Export Control Classification Number (ECCN), then consult the Commerce Country Chart (Supplement No. 1 to Part 738) to determine whether that ECCN and destination combination triggers a license requirement. If the technology is classified as EAR99 (not listed on the CCL) or if a License Exception such as TSR (Technology and Software Restricted, § 740.6) applies, no deemed-export license is required. If the technology is controlled and the destination requires a license — for example, controlled dual-use technology and a Country Group D:5 destination such as China or Russia — then a deemed-export license must be obtained from BIS before the foreign national is granted access to the technology.

The licensing policy applied by BIS to a deemed-export application is the same policy that would apply to an actual export of the technology or software to the foreign person's home country. If BIS would deny a license for an export of the technology to that country (for example, because the country is embargoed, the technology is controlled for national-security reasons and the destination is on a restricted list, or the end use raises proliferation concerns), BIS will deny the deemed-export license. Conversely, if BIS licensing policy for that technology and destination is favorable, the deemed-export license will generally be approved, subject to license conditions.

Technology subject to deemed-export controls — "E" ECCNs and controlled software source code

Deemed-export licensing most frequently arises for technology controlled under "E" (technology) ECCNs on the Commerce Control List. Technology ECCNs — such as 1E001 (materials technology), 2E001 (materials-processing technology), 3E001 (electronics technology), 4E001 (computers technology), 5E001 (telecommunications technology), 6E001 (sensors technology), and 7E001 (navigation technology) — control specific technical information, know-how, procedures, and data necessary for the "development," "production," or "use" of controlled commodities. When a foreign national employee or student will access technical drawings, specifications, process documentation, design data, or test procedures that fall within an "E" ECCN, and the technology is controlled for export to that person's home country, a deemed-export license is required.

Software source code (but not object code) is also subject to deemed-export controls under § 734.13(a)(2). BIS treats source code as technology for deemed-export purposes because source code embodies the design and functionality of the software in human-readable form. Foreign nationals who will access, modify, review, or collaborate on software source code classified under a "D" (software) ECCN must be authorized under a deemed-export license if the source code would require a license for export to their home country. Object code — compiled, executable software — is not subject to deemed-export controls under § 734.13(a)(2), although it may be subject to export controls when actually shipped or transmitted abroad.

Fundamental research exclusion — the university and research institution carve-out

The deemed-export rule does not apply to the release of technology that results from fundamental research, as defined at 15 C.F.R. § 734.8. Fundamental research is "basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community, as distinguished from research the results of which are restricted for proprietary reasons or specific U.S. Government access and dissemination controls." Technology that arises from fundamental research is not subject to the EAR under § 734.3(b)(3) (publicly available technology and software) and § 734.8.

To qualify for the fundamental-research exclusion, the university or research institution must demonstrate that:

• The research is basic or applied (not product development);
• The results are intended to be published or otherwise shared broadly in the scientific community;
• There are no restrictions on the participation of foreign nationals in the research; and
• There are no publication restrictions imposed by the sponsor or the institution (other than limited prepublication review periods solely to protect patentable inventions or to ensure that sponsor-proprietary information is not inadvertently disclosed).

If a university sponsors research under a contract that restricts publication, limits the participation of foreign nationals, or subjects the research to sponsor approval before publication, the research is not fundamental research and the deemed-export rule applies. Many federally sponsored university projects (for example, those funded by DARPA or DOE) include clauses reserving government review or restricting dissemination, which can remove the project from fundamental-research status. Universities and principal investigators must review the terms of each sponsored-research agreement to determine fundamental-research eligibility.

Deemed-export license application procedure and BIS guidance

An exporter seeking authorization to release controlled technology or source code to a foreign national must file a license application through the Simplified Network Application Process – Redesign (SNAP-R) system. BIS updated its Guidelines for Preparing Export License Applications Involving Foreign Persons in September 2024 (published on the BIS website at bis.doc.gov). The updated guidelines specify that:

• Applicants should submit one foreign person per license application (BIS will return applications listing multiple foreign persons without action);
• The application must include identity verification documents: legible copies of the foreign person's passport (excluding blank pages), visa, I-94 arrival/departure record, and work authorization or equivalent (for deemed reexports). All documents must be current and valid;
• A letter of explanation must describe: the identity of the foreign person (full name, citizenship, addresses), the address where the technology or source code will be released, a detailed description of the technology and its ECCN, the technical scope to be transferred, and a precise explanation of the foreign person's job responsibilities as they relate to the technology;
• A detailed resume of the foreign person, including chronological education history and employment history with employer names, job descriptions, and technical skills acquired;
• An overview of the applicant's internal Technology Control Plan (TCP) describing the procedures and measures in effect or to be implemented to prevent release of authorized technology or source code to foreign persons who are not authorized under the license or an available License Exception.

BIS reviews deemed-export applications under the same licensing policies that apply to exports of the technology or software to the foreign person's home country. Processing times are governed by the same statutory deadlines as other license applications (generally, BIS aims to act within 90 days for most cases, though complex cases or those requiring interagency review may take longer).

License conditions for deemed-export authorizations

When BIS approves a deemed-export license, it typically attaches standard license conditions that:

• Limit the release of technology and software to the minimum needed by the foreign national in the job role described in the license application;
• Require the license holder to obtain prior BIS approval before the foreign national may access any controlled technology or source code beyond the scope authorized by the license;
• Prohibit the foreign national from removing, exporting, reexporting, or retransferring the authorized technology or source code from the United States (or the foreign country where the deemed reexport occurs) without separate BIS authorization;
• Require the license holder to maintain records of the technology released and to notify BIS if the foreign national's employment terminates or the foreign national departs the United States (for deemed exports) or the releasing country (for deemed reexports).

License holders must comply with all conditions; failure to do so is a violation of the EAR subject to civil penalties, denial of export privileges, and potential criminal prosecution.

Deemed reexport — technology releases to third-country nationals abroad

A deemed reexport arises under 15 C.F.R. § 734.14(a)(2) when controlled technology or source code is released outside the United States to a foreign national whose most recent country of citizenship or permanent residency is different from the country where the release occurs. For example:

• A U.S. company's subsidiary in Germany employs an engineer who is a citizen of China. The subsidiary releases U.S.-origin controlled technology to the Chinese national in Germany. This is a deemed reexport to China (the foreign person's country of citizenship) even though the physical release occurs in Germany.
• A British company receives U.S.-origin technology under a BIS license and then releases that technology in the United Kingdom to an employee who is a citizen of India. This is a deemed reexport to India even though the release occurs in the UK.

Deemed reexports are subject to the same license requirements as deemed exports: if a license would be required to export the technology from the United States to the foreign person's home country, a license is required for the deemed reexport. The difference is procedural — the deemed-reexport license application is filed by the foreign entity (or by the U.S. parent on behalf of the foreign entity), and the supporting documentation must include the foreign national's identity and work-authorization documents applicable to the foreign country where the release will occur.

Section 734.20 exception — releases within a single corporate entity under certain conditions

15 C.F.R. § 734.20 provides a narrow exception to deemed-reexport licensing for certain technology releases within the same legal entity to third-country nationals abroad, subject to conditions. This exception applies when the foreign subsidiary is wholly owned or controlled by the releasing entity and the technology is released solely for use within that entity's operations, not for reexport to third parties. Exporters relying on § 734.20 must review its terms carefully; the exception is highly fact-specific and does not apply when the foreign national will have access to technology that can be easily extracted or when the release would undermine the purposes of the EAR.

Overlap with visa-sponsorship obligations — USCIS disclosure requirements

U.S. employers sponsoring foreign nationals for work-authorized visa status — particularly H-1B, O-1, E-2, and TN classifications — must disclose to U.S. Citizenship and Immigration Services (USCIS) whether the employment will require an export license under the EAR or the ITAR. On certain USCIS forms (for example, Form I-129, Petition for a Nonimmigrant Worker), the employer must certify whether the position involves access to export-controlled technology or technical data and whether a license is required or has been obtained. Employers that falsely certify "no" when a deemed-export license is required risk both USCIS denial of the visa petition and BIS enforcement action for an unlicensed deemed export. Conversely, employers that affirmatively disclose the need for a deemed-export license and file for BIS authorization before the foreign national begins work demonstrate compliance with both immigration and export-control laws.

Common compliance scenarios

University research laboratories: A U.S. university employs a graduate student from Iran on an F-1 visa to conduct research in a laboratory that uses controlled encryption technology (ECCN 5E002). The encryption technology is controlled for export to Iran for national-security and anti-terrorism reasons. Because the graduate student is not a U.S. person and the technology would require a license for export to Iran, the university must obtain a deemed-export license before the student may access the technology — unless the research qualifies as fundamental research under § 734.8 (no publication restrictions, no restrictions on foreign-national participation, results intended to be published), in which case the technology is not subject to the EAR and no license is required.

Manufacturing employer with foreign engineers: A U.S. aerospace manufacturer employs a design engineer from China on an H-1B visa. The engineer will work on avionics systems classified under ECCN 7E004 (navigation and avionics technology). Because China is in Country Group D:5 and ECCN 7E004 is controlled for national-security reasons, a license is required for exports of 7E004 technology to China. The employer must file a deemed-export license application and obtain BIS approval before the Chinese national may access the avionics design data. The license application will include the engineer's resume, passport and visa, a detailed description of the 7E004 technology, and the employer's Technology Control Plan. BIS will review the application under its licensing policy for exports of avionics technology to China (which is generally a policy of denial or case-by-case review with conditions).

Software developers and source-code access: A U.S. software company employs a developer from Russia on an O-1 visa. The developer will contribute to software source code classified under ECCN 5D002 (information-security software). Because Russia is in Country Group D:5 and 5D002 is controlled for encryption and national-security reasons, a license is required for exports of 5D002 source code to Russia. The company must obtain a deemed-export license for the Russian national before granting access to the 5D002 source-code repository.

No license required — EAR99 technology and License Exception TSR: A U.S. electronics manufacturer employs an engineer from India on an H-1B visa. The engineer will work on consumer-electronics products whose design technology is classified as EAR99 (not on the Commerce Control List). Because EAR99 technology does not require a license for export to India (a non-embargoed destination), no deemed-export license is required. Alternatively, if the technology is controlled but eligible for License Exception TSR (technology and software restricted to Country Group B destinations, which includes India), the employer may rely on TSR in lieu of filing a license application, provided the conditions of § 740.6 are met.

Enforcement and penalties

Releasing controlled technology or source code to a foreign national without the required deemed-export or deemed-reexport license is a violation of the EAR. BIS has levied significant civil penalties against universities, research institutions, and commercial employers for unlicensed deemed exports — including cases involving foreign-national employees who accessed controlled technology in laboratories, production facilities, or cloud-based development environments. Penalties can reach the greater of $368,136 per violation (adjusted annually for inflation) or twice the value of the transaction, and BIS may impose denial orders prohibiting the violator from participating in export transactions. Willful violations can result in criminal prosecution under 50 U.S.C. § 4819, with fines up to $1,000,000 per violation and imprisonment up to 20 years.

Compliance programs at universities, research institutions, and commercial employers should include:

• Pre-hire or pre-access screening of foreign nationals to identify citizenship and permanent-residency status and determine whether deemed-export authorization is required;
• Technology inventories that classify controlled technology and source code by ECCN and map which foreign nationals may access each classification;
• Technology Control Plans that document access restrictions, physical and electronic controls, training requirements, and periodic audits;
• Coordination between HR, legal, export-compliance, and IT to ensure that visa sponsorship, export licensing, and system-access provisioning proceed in the correct sequence (BIS license approval before technology access is granted); and
• Training for principal investigators, lab managers, and engineering supervisors on recognizing deemed-export scenarios and the procedures for obtaining authorization.

Source: 15 C.F.R. § 734.13 — Export Source: 15 C.F.R. § 734.14 — Reexport Source: 15 C.F.R. § 734.15 — Release Source: BIS — What is a deemed export? Source: BIS — Guidelines for Foreign National License Applications

The Bureau of Industry and Security (BIS) sets out ten core rules known as the "General Prohibitions" (GPs) at 15 C.F.R. § 736.2. These are the risk map for U.S. export controls: every proposed export, reexport, or in-country transfer subject to the EAR must be screened against these forbidden acts. A single misstep—regardless of license status—can result in a violation. Each Prohibition operates independently.

Summary of the Ten General Prohibitions (GPs):

1. Exports and Reexports of Controlled Items (§ 736.2(b)(1)): You may not export or reexport items listed on the Commerce Control List (CCL) without BIS license or exception, as required by the item’s ECCN, destination, end user, and end use.
2. Reexports of Foreign-made Items Incorporating U.S. Content Above de minimis (§ 736.2(b)(2)): Foreign-made items with more than de minimis controlled U.S. content (per § 734.4) may not be exported/reexported without authorization if the item would require a license if of U.S. origin.
3. Foreign-Produced Direct Products (§ 736.2(b)(3)): Prohibits export/reexport of foreign-made items that are direct products of specified U.S. technology or software, or major components thereof, to certain destinations/end uses without the required license. (See also § 734.9 for details.)
4. Entity List Prohibition (§ 736.2(b)(4)): No person may export or reexport any item subject to the EAR to any person or entity listed on the BIS Entity List, except as authorized by BIS.
5. End-Use and End-User Controls (§ 736.2(b)(5)): Prohibits export/reexport if the exporter knows (or is informed) the item will be used for nuclear, missile, or chemical/biological weapons, or in sanctioned end uses/end users—even if an export license is not otherwise required.
6. Denial Orders (§ 736.2(b)(6)): Prohibits any export, reexport, or service by or for a person subject to a denial order, including facilitating violations indirectly.
7. Embargoed Destinations and Services (§ 736.2(b)(7)): Exports or reexports to embargoed or otherwise restricted countries/regions (e.g., Iran, Cuba, North Korea, Syria, Crimea, some others) are prohibited absent a license or exception.
8. In-Transit Shipments and Items to Embargoed Destinations (§ 736.2(b)(8)): No in-transit shipment or transshipment through the United States or a third country may be diverted to a destination requiring a license, or to embargoed or sanctioned destinations, without appropriate authorization.
9. Violation of Any Order, License or License Exception (§ 736.2(b)(9)): Engaging in any transaction that violates the terms or conditions of an EAR license, license exception, or BIS order is prohibited.
10. Proceeding with Transactions with Knowledge of a Violation (§ 736.2(b)(10)): Prohibits proceeding with an export, reexport, or other activity subject to the EAR when you know that a violation has occurred or is about to occur—or facilitating such transactions—including financing or support.

Operational notes: Several prohibitions attach only if the exporter has "knowledge" (as defined in § 772.1) of the relevant facts, while others are strict liability. Most common violations include: missing a required license for reexports incorporating U.S. content, failing to screen parties against the Entity or Denied Persons Lists, and breaches of embargo or denial orders. Each transaction must be analyzed individually against the GPs, and compliance programs must track changes as BIS frequently updates Entity List, embargoes, and applicable exceptions.

Source: 15 C.F.R. § 736.2 — General Prohibitions

Under the Export Administration Regulations (EAR), compliance does not end with ECCN or destination screening: exporters must also assess end-user and end-use controls codified at 15 C.F.R. Part 744. These provisions, including the Entity List, Denied Persons List, Military End User (MEU) List, and WMD, missile, and nuclear end-use prohibitions, can trigger BIS license requirements or outright prohibitions even for EAR99 items.

Key Controls and Regulatory Locations (2026):

• The Entity List (Supp. No. 4 to Part 744) enumerates foreign parties for whom additional license requirements and presumption of denial or case-by-case review policies apply (see § 744.11(a)-(b)). BIS policy remains especially stringent for PRC technology and proliferation-related actors.
• The Denied Persons List (Supp. No. 2 to Part 764) is an absolute bar—no EAR-regulated activities may involve a listed party under any circumstances (§ 764.3(a)).
• The MEU List (Supp. No. 7 to Part 744) triggers licensing for specified items to military end users in Russia, China, Burma, or Venezuela (§ 744.21). For certain countries/items, BIS applies a policy of denial, especially for China and Russia (§ 744.21(e)).
• WMD, missile, and nuclear prohibitions: §§ 744.2–744.5 require a license (with strong denial policy) for any transaction where the exporter has “knowledge” (as defined in § 772.1) that an item will be used in nuclear explosive activities, unsafeguarded nuclear facilities, missile/rocket/UAV proliferation, or chemical/biological weapons. This applies even to EAR99 items.

Significant 2025–2026 Material Amendments:

• The Affiliates Rule (Interim Final Rule, Sep. 30, 2025) expanded 744-based controls to foreign affiliates/parties owned ≥50% by listed actors. However, the rule has been suspended since Nov. 10, 2025 and that suspension is extended through Nov. 9, 2026. The Affiliates Rule will not apply until at least Nov. 10, 2026, unless further extended or reactivated. Exporters should check future Federal Register releases for timing.
• Supplements to Part 744 (e.g., Supplements 2, 4, 5, 7) were materially updated in June 2026, with expanded lists, new procedural notes, and clarifications (notably, changes to MEU and Entity List scopes and Unverified List procedures).

“Is Informed” and Knowledge-Based Prohibitions (§ 744.11): BIS may inform exporters by direct notice or publication that certain end users or activities require a license. Once “informed,” the obligation attaches regardless of public list status. "Knowledge" includes actual, reason-to-know, or deliberate ignorance.

Operational Workflow and Risks:

• All transaction parties—purchaser, consignee, end user—must be screened against current Entity, Denied Persons, MEU, and the Unverified List.
• Documentation and recordkeeping are required under Part 762 for at least five years.
• EAR99 classification does not exempt items from Part 744-based controls.
• Lists and procedural supplements are updated frequently; exporters must use the latest eCFR and BIS-issued lists.

Recent changes to supplements and rule effective dates:

• Supplements to Part 744 were last updated in June 2026 (see eCFR links for official text).
• The Affiliates Rule is suspended through November 9, 2026; practitioners should monitor for its reactivation or further extensions.

Source: 15 C.F.R. Part 744 — Control Policy: End-User and End-Use Based Source: Federal Register: Affiliates Rule Suspension Notice (Nov. 6, 2025) Source: 15 C.F.R. § 772.1 — Definitions "knowledge" Source: 15 C.F.R. Part 762 — Recordkeeping Source: eCFR Part 744 Supplements as of June 2026

Under the Export Administration Regulations (EAR), most items subject to the EAR require an individual BIS license for export, reexport, or transfer (in-country)—unless an express exemption applies. The principal alternative is a "License Exception": a published regulatory provision, codified at 15 C.F.R. Part 740, that authorizes certain transactions without an individual license when specified conditions are met. License Exceptions have proliferated and evolved in recent years; as of June 2026, BIS has added several new exceptions, expanding the regulatory framework and operational eligibility.

What is a License Exception? License Exceptions are regulatory authorizations, not waivers or informal permissions. Each is published in detail at Part 740, with a unique short name (e.g., LVS for Limited Value Shipments, TMP for Temporary Exports, RPL for Replacements, GOV for Government End Use, TSU for Technology and Software-Unrestricted, etc.), and many new exceptions have been added in the past 1–2 years. The exceptions are transaction-specific: an exporter bears the burden to confirm eligibility for each export, reexport, or transfer, considering all parties, destination, end use, and item classification. Use of a License Exception is always optional—an exporter may choose to apply for an individual license even if an exception applies, but may not ignore transaction-specific requirements once an exception is invoked (§ 740.1(c)).

Current Framework and Notable Recent Additions (as of June 2026) Eligibility for a License Exception is determined in a stepped workflow:

1. Confirm the item is subject to the EAR under § 734.3.
2. Classify the item by ECCN or EAR99 status on the Commerce Control List (CCL; Part 774).
3. Determine what, if any, license requirement is triggered for the destination, end user, and end use (see Country Chart, Part 738; Part 744; Part 746 embargoes).
4. Check the applicable ECCN and Part 740 to see if a License Exception is indicated (“Yes”), noting many exceptions are only available for certain paragraphs/categories or technologies.
5. Read the full regulatory text of the License Exception. Each exception has specific eligibility criteria, recordkeeping, destination, and use restrictions (often with special rules for 600-series and 9x515 ECCNs). These are not interchangeable.

Principal License Exceptions (as of 2026):

• LVS: Shipments of Limited Value (§ 740.3)
• TMP: Temporary exports, reexports, or transfers (§ 740.9)
• RPL: One-for-one replacements or servicing (§ 740.10)
• GOV: U.S. Government agencies, international agencies (§ 740.11)
• TSU: Technology and Software-Unrestricted (§ 740.13)
• TSR: Technology and Software Restricted (§ 740.6)
• ENC: Encryption Items (§ 740.17)
• STA: Strategic Trade Authorization (§ 740.20)
• ACE: Authorized Cybersecurity Exports (§ 740.22) — Added 2023–2024
• MED: Medical Devices (§ 740.23) — Added 2024
• IEC: Implemented Export Control (§ 740.24)
• HBM: High Bandwidth Memory (§ 740.25)
• RFF: Restricted Fabrication “Facility” (§ 740.26)
• AIA: Artificial Intelligence Authorization (§ 740.27)
• ACM: Advanced Compute Manufacturing (§ 740.28)
• LPP: Low Processing Performance (§ 740.29)

Other exceptions include BAG (baggage, § 740.14), APR (Authorized Reexports, § 740.16), CCD (Consumer Communications Devices, § 740.19), CIV (Civil End Users, § 740.5—highly limited), and more. Always confirm the current eCFR or Federal Register for any amendments.

Documentation and Recordkeeping Exporters must maintain detailed records substantiating eligibility and use of a License Exception—including the ECCN, destination, end-user information, relevant exception paragraph, and justification—for at least five years, per 15 C.F.R. Part 762. Many exceptions have explicit notification, consignee-statement, or government-reporting requirements.

Caveats and limitations License Exceptions are not available for embargoed destinations (E:1 countries—Cuba, Iran, North Korea, Syria), except as specifically provided in a License Exception. Entity List parties, military end-use/end user controls, and WMD controls (Part 744) often override License Exception eligibility.

Recent amendments (2024–2026) and material changes Between 2024 and 2026, BIS promulgated multiple new License Exceptions (ACE, MED, IEC, HBM, RFF, AIA, ACM, LPP) to address cybersecurity, AI, semiconductor, and healthcare sector exports. Coverage and eligibility for these exceptions are highly specific; for example, ACE is targeted to cybersecurity items with limited end-use in highly controlled countries, and HBM and ACM relate to advanced computing hardware subject to both U.S. and multilateral controls. Exporters must review textual eligibility and pay special attention to exclusionary criteria in each new section.

Source: 15 C.F.R. Part 740 — License Exceptions

This update reflects the addition of License Exceptions ACE (§ 740.22), MED (§ 740.23), IEC (§ 740.24), HBM (§ 740.25), RFF (§ 740.26), AIA (§ 740.27), ACM (§ 740.28), and LPP (§ 740.29), as promulgated by BIS between 2023 and 2026. Practitioners should consult the latest regulations to confirm availability and scope.

A BIS export license application must be submitted electronically through the Simplified Network Application Process – Redesign (SNAP-R) portal, except in rare cases specifically allowed by BIS. This mechanism is codified at 15 C.F.R. Part 748 and detailed in BIS’s online guidance. To file, an exporter must first obtain a Company Identification Number (CIN) through SNAP-R. This registration process ties licensing activity, correspondence, and notifications to a specific legal entity and its designated personnel.

Filing requirements and structure Each application requires detailed information, including:

• Applicant and company contact details;
• Precise ECCN(s) for the item(s) (or a rationale for EAR99 designation);
• Full description of the item(s), including technical specifications and quantities to be exported;
• Names and addresses for each party in the transaction chain: applicant, ultimate consignee, purchaser, and any intermediate consignees;
• Country of ultimate destination, including any transshipment points;
• A description of end use and end user supported by narrative and—in many cases—an end-user statement; and
• Attachments such as technical data sheets or contracts if requested by BIS for complex or sensitive cases.

For applications involving deemed exports (technology or source code releases to foreign nationals within the US), BIS requires supporting documentation about the foreign person, including citizenship, visa or residency status, and a technology control plan summary, as described in agency guidance and 15 C.F.R. § 748.8.

Review workflow and typical timelines Upon receipt in SNAP-R, license applications undergo an initial completeness check by BIS licensing officers. In straightforward cases, BIS may process the license internally. Applications involving sensitive items (e.g., high-performance electronics, encryption items), destinations (Country Groups D:1, D:5, E:1/E:2), or end users with proliferation or military ties are forwarded for interagency review by the Departments of State, Defense, Energy, or Treasury under § 750.3. Statutory license action deadlines are set by the Export Control Reform Act and implementing regulations, generally targeting a decision within 90 days barring complications or interagency dispute.

Applicants are notified of requests for additional information (“snags”), and failure to respond can result in Return Without Action (RWA) status. Final outcomes are license approval (with or without conditions), RWA, or denial. All communication, including status notifications and official license documents, is managed through the SNAP-R portal. Exporters are responsible for complying precisely with licensing conditions and must retain the records as required under 15 C.F.R. Part 762.

Common issues noted by BIS Per BIS’s published guidance and FAQ, mistakes that lead to delays or denials include:

• Incomplete or unclear end-use or end-user descriptions;
• Missing, inconsistent, or incorrect ECCNs;
• Omitting required supporting documentation for the parties or item involved;
• Delays in responding to requests for additional information;
• Failing to keep required records for five years after a license decision.

Staying tightly matched to documentary and procedural requirements—and responding promptly to BIS communications—are central to avoiding unnecessary process delays or compliance violations.

Source: 15 C.F.R. Part 748 — Applications (Procedures and Requirements) Source: BIS — SNAP-R Online System Source: BIS FAQ: Export License Requirements and Procedures

The Bureau of Industry and Security (BIS) maintains a Voluntary Self-Disclosure (VSD) process under 15 C.F.R. § 764.5 for parties that identify potential violations of the Export Administration Regulations (EAR). This process provides for penalty mitigation if a disclosure is timely, complete, and candid. The VSD regime was materially amended effective September 16, 2024 (see 89 Fed. Reg. 75477), introducing procedural updates and expanded avenues for engagement.

2024 Material Amendments — Dual Track and Third-Party Engagement The September 2024 amendments to § 764.5 include:

• Dual track for minor/technical violations: The new paragraph (c) establishes an expedited process for disclosures solely involving minor or technical violations (i.e., recordkeeping, typographical, or inadvertent administrative errors not involving aggravating factors). These VSDs may be eligible for streamlined review and disposition.
• Expansion of who may request post-export engagement: Amended paragraph (g) clarifies that not only the original discloser, but any party, may request BIS engagement on compliance remediation or corrective actions following a disclosed violation.
• Reorganization and clarifications: Paragraphs are reordered; portions regarding required content, timelines, and mitigating factors are clarified or restated. The agency reiterates that incomplete or misleading submissions are aggravating factors; full disclosure and timely supplementation are required if additional facts are uncovered.

Standard VSD process (per § 764.5 as of 2026):

1. Initial written notification: Upon discovery, parties must provide a written notice to BIS identifying the generic nature of the suspected violation, discovery date, and all known involved parties. This must be made "immediately" upon identification.
2. Narrative account: Within 180 days (extensions may be requested), a detailed narrative and supporting documentation must be submitted. This report must describe the violation in full, detail all parties, specify the applicable regulations, set out commodity and ECCN data, analyze root causes, and describe remedial measures undertaken or planned.
3. Supplementation: Any additional facts learned after initial submission must be reported in supplemental filings as soon as practicable.

Mitigation effect and procedural points:

• Timely and complete VSDs remain a major mitigating factor in BIS penalty determinations (see Supplement No. 1 to Part 766). Resolution may include penalty reduction, warning letters, or case closure without action, though no outcome is guaranteed. Deliberate omissions or falsifications are considered aggravating.
• If the conduct may also violate other statutes (ITAR, OFAC), parallel disclosures to DDTC or OFAC are encouraged but not strictly required by the EAR.
• All records relating to a VSD must be kept for at least five years from the last date of the relevant activity, per Part 762.

Recent changes emphasized: The main substantive changes since September 2024 are the formalization of a VSD track for minor/technical violations and the explicit allowance for third-party requests for engagement post-disclosure. Practitioners must ensure VSD procedures are updated accordingly.

Source: 15 C.F.R. § 764.5 — Voluntary Self-Disclosure Source: 89 Fed. Reg. 75477 (Sep. 16, 2024)

The Export Administration Regulations (EAR) impose strict recordkeeping requirements on all parties subject to the EAR, including exporters, reexporters, freight forwarders, and agents. The controlling authority is 15 C.F.R. Part 762, which prescribes what records must be kept, how long they must be retained, and the operational risks of noncompliance.

Who must keep records? Any person who exports, reexports, or transfers items subject to the EAR, or who applies for a BIS license, or who participates in an EAR-controlled transaction (including technology releases and deemed exports/reexports), is required to comply. This includes not only U.S. exporters but also foreign parties and intermediaries, such as consignees, freight forwarders, brokers, and even financial institutions if they participate in the actual export transaction (15 C.F.R. § 762.2).

What records must be retained? Required records are broadly defined by § 762.2 as “all information made or obtained in the course of activities subject to the EAR and required to be kept by the EAR,” whether or not a license is issued or used. Core categories include:

• Export license applications (whether granted, denied, or returned without action);
• Export, reexport, and transfer documentation (e.g., Bills of Lading, Shipping Instructions, Commercial Invoices, Automated Export System (AES)/EEI filings);
• Records pertaining to use of License Exceptions or to NLR transactions (with ECCN/CCL classification justifications);
• Internal and external communications relating to EAR-controlled shipments (including email correspondence with customers, agents, or BIS);
• End-use and end-user certifications, screening records, and compliance screening documentation;
• Financial records related to the export/reexport transaction;
• Notices from BIS and any related compliance documentation;
• Any records required as a license or license exception condition (e.g., consignee statements under STA, Part 740).

Records created and retained under other Federal regulations (e.g., by CBP, Census, or the ITAR) are deemed sufficient if they contain all the EAR-mandated elements (§ 762.2(b)).

How long must records be kept? The default period is five years from the latest of:

• The transaction date for exports, reexports, and in-country transfers;
• The expiration date of the license or License Exception relied upon; or
• The date of any other agency action related to the transaction (§ 762.6).

Records must be accessible and producible to BIS within a reasonable period, even if held offsite or in electronic storage. There is no exception for cloud storage or overseas servers—the record must be available for U.S. government inspection. Destruction or alteration of required records before the required retention period is a direct EAR violation, subject to both administrative and criminal penalties (§ 764.2(i)).

Inspections and enforcement BIS and other agencies (including CBP and, for certain records, the FBI or Department of Justice) have authority to inspect and copy records required to be kept under the EAR. Failure to provide requested records is itself a separate, chargeable violation for each required record.

Practical pitfalls

• “We don't have it—our broker has those records” is not a defense; every party is independently liable for its own recordkeeping.
• For cloud/email and EDI systems, retention means maintaining accessible historical records and being able to reconstruct the transaction trail for an audit.
• The five-year period restarts if the transaction is the subject of an enforcement action.

Source: 15 C.F.R. Part 762 — Recordkeeping

The foundational step in U.S. export controls is determining whether an item or activity is under the International Traffic in Arms Regulations (ITAR) or the Export Administration Regulations (EAR). ITAR (22 C.F.R. Parts 120–130), administered by the State Department’s Directorate of Defense Trade Controls (DDTC), controls the export, reexport, temporary import, and brokering of “defense articles” and “defense services” enumerated on the U.S. Munitions List (USML; 22 C.F.R. § 121.1). EAR (15 C.F.R. Parts 730–774), administered by the Bureau of Industry and Security (BIS), governs commercial dual-use items and software not exclusively listed on the USML.

What triggers ITAR jurisdiction

• A “defense article” means any item or technical data specifically designed, developed, configured, adapted, or modified for a military application and enumerated or otherwise described on the USML (§ 120.6).
• “Defense service” includes furnishing assistance or technical data related to a defense article to foreign persons, whether abroad or in the U.S. (§ 120.9).
• The USML structure is broad, capturing not just weapons but also military parts, components, technical data, and services.

EAR’s carve-out for ITAR items

• EAR explicitly excludes items "subject to the exclusive jurisdiction of another U.S. federal department or agency" (15 C.F.R. § 734.3(b)(1)); if an item or service is covered by the USML, it is not “subject to the EAR.”
• Certain military and spacecraft-related items once controlled under the USML may be transferred to Commerce and appear in EAR as the “600 series” ECCNs; exporters must review both regulations and the relevant notes in the USML and CCL.

Commodity Jurisdiction (CJ) determinations

• When classification is unclear, a Commodity Jurisdiction (CJ) request may be (and if directed, must be) filed with DDTC under 22 C.F.R. § 120.4.
• The CJ process, made through the DECCS system, is fact-specific. A CJ result is binding only as to the described item or service and does not create regulatory precedent (§ 120.4(e)).
• BIS and DoD are consulted as needed; DDTC issues a formal written determination.

“Specially Designed” and “Catch-and-Release” carve-outs

• The phrase “specially designed” is defined in ITAR at § 120.41 and triggers many catch-all USML controls. USML notes and § 120.41 also contain exclusion tests (“release” provisions) that remove items from ITAR if they meet specific criteria or are transferred to the EAR (“see ECCN xY616” etc.).

Registration and penalties

• Any manufacturer or exporter of defense articles—even if no export occurs—must register annually with DDTC (§ 122.1).
• Civil and criminal penalties for ITAR violations are substantial; penalty figures are set by statute (22 U.S.C. § 2778; regularly adjusted in DDTC rules), and registration is the legal prerequisite for ITAR activities.

Operational workflow

• Step 1: Identify whether your item or service appears on the USML (22 C.F.R. § 121.1); scrutinize all relevant definitions and notes.
• Step 2: If uncertain, file a CJ with DDTC before exporting or disclosing technical data.
• Step 3: Retain all classification, CJ, and export records for at least five years—required by ITAR for registrants (§ 122.5) and by EAR (15 C.F.R. Part 762) for EAR-controlled items.

Source: 22 C.F.R. § 120.4 — Commodity Jurisdiction Source: 22 C.F.R. § 121.1 — U.S. Munitions List Source: 15 C.F.R. § 734.3(b)(1) — EAR exclusions for ITAR items

Encryption controls under the Export Administration Regulations (EAR) are structured in a dedicated track: Category 5, Part 2 of the Commerce Control List covers information security hardware, software, and technology (ECCNs 5A002, 5D002, 5E002). These categories control products or technology for data confidentiality—typically cryptographic items—because of their sensitivity for national security (NS), anti-terrorism (AT), and encryption (EI) reasons. The legal foundation lies in 15 C.F.R. Part 742 (Supplement No. 1 to Part 774 identifies controlled encryption ECCNs).

License Exception ENC (15 C.F.R. § 740.17) is the principal mechanism for exporting encryption items. Exporters must:

• Classify the product under the relevant ECCN (5A002, 5D002, 5E002), referencing definitions in 15 C.F.R. § 772.1 and Supplement No. 1 to Part 774. Devices/software that meet Note 3 to Category 5, Part 2 may be treated as "mass market" items (classified as ECCNs 5A992.c or 5D992.c) and are subject only to AT controls—significantly reducing license requirements.
• Determine if self-classification, self-classification with encryption registration, or BIS review is required. Products covered by § 740.17(b)(1) are self-classified and reported; those under § 740.17(b)(2) and (b)(3) require an encryption registration and a classification submission for BIS review (see Supplement No. 5 to Part 742 for required information).
• Registration is made via SNAP-R (Encryption Registration Number/ERN)—there is no guaranteed issuance time in regulation, but registration is a legal precondition for relying on the License Exception (§ 740.17(e)(1)).
• In most cases under § 740.17(b)(2) and (b)(3), export is permitted to most destinations (excluding Country Group E:1) 30 days after BIS accepts a complete encryption review, unless otherwise notified (§ 740.17(b)(2); § 742.15(b)).
• Annual self-classification reports are required for certain ENC exports (see 15 C.F.R. § 740.17(e)), in line with the technical requirements specified in Supplement No. 8 to Part 742. Failing to file reports or keep classification/registration documents triggers possible enforcement under EAR § 764.

Some encryption items may qualify as publicly available and be excluded from encryption controls (see 15 C.F.R. § 742.15(b)), but this requires a separate analysis and often notification to BIS. ITAR-controlled encryption remains outside EAR scope.

Source: 15 C.F.R. Part 742 — Control Policy: CCL-Based Controls Source: 15 C.F.R. § 740.17 — License Exception ENC Source: BIS — Encryption guidance

The Export Administration Regulations (EAR) include antiboycott regulations at 15 C.F.R. Part 760, barring U.S. persons from supporting or cooperating with unsanctioned foreign boycotts—most often, but not exclusively, the Arab League boycott of Israel. The rules implement the antiboycott provisions of the Export Administration Act (continued under IEEPA) and are enforced by BIS’s Office of Antiboycott Compliance (OAC).

Who is covered and scope of application Per § 760.1(b) and § 760.1(c), the regulations apply to “U.S. persons,” defined to include individuals who are citizens or residents of the United States, domestic entities, and their foreign affiliates owned or controlled by U.S. persons. The reach is broad: any activity in the course of “U.S. commerce,” broadly interpreted to include goods, services, or information, may trigger the rules if linked to a boycott-related request or compliance step.

Core prohibitions — conduct you cannot engage in Section 760.2 lists five principal prohibited acts:

1. Agreements to refuse to do business with a boycotted country or blacklisted person at the request of a boycotting country (§ 760.2(a));
2. Actual refusal to do business for a boycott reason (§ 760.2(b));
3. Furnishing information about business relationships with boycotted countries or blacklisted persons (§ 760.2(c));
4. Furnishing information about race, religion, gender, or national origin, in support of a boycott quest (§ 760.2(d));
5. Implementing letters of credit containing prohibited conditions (§ 760.2(f)).

Statutory exceptions and how they are construed Subpart § 760.3 enumerates exceptions, such as compliance with domestic U.S. law, routine commercial inquiries, and import requirements of boycotting countries unrelated to discrimination. The text specifies each exception and, at § 760.3(a), clarifies they are “strictly limited”—compliance beyond what is explicitly allowed remains a violation.

Mandatory reporting requirements Every U.S. person who receives a boycott-related request—regardless of whether they act on it—must report it to OAC. Per § 760.5 and § 760.6, single incidents are reported on BIS Form 621-P; multiple requests within a calendar quarter may be reported using BIS Form 6051P within thirty days after the end of the quarter or after receipt. Failure to submit a required report is itself a separate violation. The regulation does not provide exceptions for inadvertent or refused requests—reporting is mandatory for all covered requests.

Penalties for violations Civil penalties for each violation can reach the greater of $368,136 per violation or twice the value of the transaction, per § 764.3(a)(1). Willful violations may be prosecuted under IEEPA (see § 764.3(b)), with criminal penalties possible. The regulations cross-reference applicable penalty structures, and OAC publishes compliance resources and summaries of enforcement actions.

Compliance notes Enforcement emphasizes attention to subtle language in commercial documents, contracts, and letters of credit. Most regulatory violations stem from missing or mishandling “soft” boycott requests. The regulatory text does not mandate a compliance program but places the risk squarely on the party’s ability to recognize and report prohibited requests promptly.

Source: 15 C.F.R. Part 760 — Restrictive Trade Practices or Boycotts