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, is one of the most widely used License Exceptions for exports, reexports, and transfers (in-country) of controlled items under the Export Administration Regulations. STA permits exporters to ship many items that would otherwise require an individual license to a defined list of trusted allied and partner destinations, in lieu of filing a license application with the Bureau of Industry and Security (BIS). Use of STA is voluntary; exporters retain the option to file a license application even when a transaction qualifies for STA.

Purpose and policy foundation

BIS created STA in 2011 to facilitate strategic-trade flows with countries that are members of multilateral export-control regimes (Wassenaar Arrangement, Nuclear Suppliers Group, Australia Group, Missile Technology Control Regime) and that maintain robust national export-control systems. The Exception reflects a policy judgment that the risk of diversion to improper uses is sufficiently low when transactions occur among like-minded regime partners, and that the administrative burden of individual licensing can be reduced for these flows without compromising U.S. national-security or foreign-policy objectives.

Eligible destinations: Country Groups A:5 and A:6

STA is geographically selective. Most items eligible for STA may be exported, reexported, or transferred (in-country) to destinations in Country Group A:5, enumerated in Supplement No. 1 to 15 C.F.R. Part 740. Country Group A:5 comprises 36 allied and partner countries that are members of all four multilateral export-control regimes and that the U.S. Government has determined maintain effective export controls. A smaller subset of items — typically those controlled solely for national security (NS) reasons and not on the Wassenaar Arrangement Sensitive List — may be exported to the eight destinations in Country Group A:6 (Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, and Taiwan).

STA is not available for exports to embargoed countries (Part 746), denied or sanctioned parties (Part 744, including Entity List, Denied Persons List, and Military End User List), or for transactions triggering end-use controls (e.g., nuclear, missile, chemical/biological-weapons end uses under Part 744). Section 740.20(b)(1)(i) explicitly bars use of STA in lieu of any license requirement imposed by Part 744 or Part 746.

Reasons for control: transaction-based eligibility

STA eligibility is determined on a transaction basis under § 740.20(c)(1). An exporter must examine which Reason(s) for Control apply to the specific transaction — the intersection of the item's ECCN, the destination, and the Commerce Country Chart (15 C.F.R. Part 738, Supplement No. 1). If the only applicable reason(s) for control for that transaction is (are) National Security (NS), Chemical or Biological Weapons (CB), Nuclear Nonproliferation (NP), Regional Stability (RS), Crime Control (CC), Firearms Convention (FC), or Anti-Terrorism (AT), then STA may be available (subject to the conditions and limitations below). This transactional focus means that the same item exported to two different Country Group A:5 destinations may be STA-eligible for one and license-required for the other, depending on which columns of the Country Chart have an "X" for each destination.

Limitations on eligible items

15 C.F.R. § 740.20(b) enumerates categories of items that are excluded from STA even when the destination and reason-for-control tests are met:

• Items requiring a license under Part 744 (end-user/end-use controls) or Part 746 (embargoes);
• Specified crime-control items in Category 0 (e.g., shotguns under 0A501.a through .e, certain less-lethal agents) (§ 740.20(b)(1)(ii));
• All human and zoonotic pathogens and certain toxins in Category 1 (§ 740.20(b)(1)(iii));
• Items controlled for Encryption Items (EI), Short Supply (SS), Surreptitious Listening (SL), or Chemical Weapons (CW) reasons (§ 740.20(b)(2)(i) and (iii));
• Items controlled for Missile Technology (MT) reasons (§ 740.20(b)(2)(ii)), except for a narrow set of UAVs and airships enumerated in § 740.20(c)(1)(ii) that may be exported to Country Group A:5 under STA;
• Certain high-performance integrated circuits under ECCN 3A001.b.2 or .b.3 (unless exported for civil telecommunications applications) (§ 740.20(b)(2)(xi));
• Items subject to exclusive jurisdiction of another U.S. Government agency (e.g., defense articles on the ITAR U.S. Munitions List) (§ 740.20(b)(2)(iv));
• 9x515 and "600 series" items identified in the relevant ECCN as not eligible for STA (§ 740.20(b)(3)(i)). Many ECCNs in the 600 series and 9x515 spacecraft categories include explicit "License Exception STA: No" entries or list specific exclusions in a "Special Conditions for STA" paragraph. Exporters must read the full ECCN entry to confirm STA eligibility for these items.

Additional restrictions for "600 series" items

Former ITAR-controlled military items that were transferred to the Commerce Control List under the Export Control Reform initiative — the so-called "600 series" — are subject to heightened STA conditions beyond those for other Commerce-controlled items.

15 C.F.R. § 740.20(b)(3)(ii) provides that:

• 600 series items may be exported under STA only to Country Group A:5 destinations (not A:6);
• The ultimate end user for the 600 series item must be either:
• the armed forces, police, paramilitary, law enforcement, customs, correctional, fire, or search and rescue agency of a government of a Country Group A:5 country or the United States; or
• a non-governmental or governmental person in a Country Group A:5 country for the development, production, operation, installation, maintenance, repair, overhaul, or refurbishing of an item that will ultimately be used by one of the foregoing government agencies or incorporated into certain allied military platforms;
• Prior BIS or DDTC approval of the parties (on a BIS license or DDTC TAA, MLA, WDA, or GC) is required under § 740.20(c)(1)(i) unless the transaction is for a Country Group A:5 government end user;
• The "600 series" item must "complete the chain" to an eligible ultimate end user (regulatory language in Note 1 to § 740.20(b)(2) and (b)(3)). This means that regardless of how many times the item is transferred (in-country) or incorporated into higher-level assemblies — even if the downstream item is no longer subject to the EAR — the original 600 series item must ultimately reach an eligible government end user or be otherwise authorized under the EAR. This "completing the chain" requirement does not apply to 9x515 or other non-600 series ECCNs.

Conditions for use of STA

An exporter, reexporter, or transferor must satisfy four administrative conditions before using STA (§ 740.20(d)):

1. Furnish the ECCN to the consignee (§ 740.20(d)(1)). The exporter must inform the consignee of the correct ECCN for each item. The consignee must know the ECCN in order to determine its own STA eligibility on a subsequent reexport or transfer (in-country). One ECCN communication is valid for multiple shipments of the same item, provided it remains accurate.

1. Obtain a prior consignee statement (§ 740.20(d)(2)). Before the first STA shipment to a specific consignee, the exporter must obtain a written statement from the consignee certifying that the consignee:

• understands the EAR restrictions on the item;
• will comply with the EAR;
• will not reexport or transfer the item to a destination for which a license would be required without first obtaining that license or another authorization;
• for 600 series items, understands and will comply with the ultimate-end-user restrictions described above (§ 740.20(d)(2)(vii) and (viii));
• will not use the item in or for a military end use or military end user in China, Russia, or Venezuela (or Burma, Cambodia, or Nicaragua for certain items), or in connection with weapons of mass destruction;
• maintains a record-retention system consistent with Part 762 of the EAR.

One consignee statement may cover multiple transactions if the parties, item descriptions, and ECCNs remain accurate. BIS does not prescribe a specific form; the statement may be in a letter, email, or incorporated into a contract, and must be retained in the exporter's files.

1. File an EEI (Electronic Export Information) with the correct License Exception code "STA" and the correct ECCN (15 C.F.R. Part 740 and 15 C.F.R. Part 30).

1. Maintain records of STA transactions for five years in accordance with 15 C.F.R. Part 762 (§ 740.20(d)(3)). For tangible (non-intangible) exports, exporters must maintain a log or other record identifying each STA consignee and confirming that a consignee statement was obtained. For intangible STA transactions (software source code or technology releases), a log is not required, but the exporter must ensure that a consignee statement has been obtained before the release.

Special rule for software source code and technology releases within a single country

When releasing software source code or technology to a foreign national within a single country (a deemed export or deemed reexport) under STA, the party making the release does not need to obtain a prior consignee statement or furnish the ECCN. Instead, the releasing party must notify the recipient — in writing — of the EAR restrictions on further release of the software source code or technology, either by expressly informing the recipient that the EAR impose limits on further disclosure or by obtaining an agreement from the recipient to limits equivalent to or more restrictive than those imposed by the EAR (§ 740.20(d)(4)). This simplified procedure applies only when releasing to nationals of Country Group A:5 or A:6.

Reporting obligations

Exporters using STA for specified items must comply with semi-annual reporting requirements under 15 C.F.R. § 743.1. Exporters using STA for 600 series items must file additional reports on conventional-arms exports under 15 C.F.R. § 743.4. These reports do not require BIS approval; they are informational filings that BIS uses for policy analysis and international arms-control reporting.

Section 740.20(g) STA eligibility determinations for specific items

Certain high-value items — aircraft (ECCN 0A606.a), military vessels (ECCNs 8A609.a, 8A620.a, and .b), spacecraft (ECCN 9A515 subparagraphs .a.1 through .a.4 and .g, and 9A610.a), and specified technology (ECCNs 9E515.b, .d, .e, .f) — are presumptively not eligible for STA unless BIS has made an affirmative item-specific determination. An exporter seeking STA eligibility for one of these items may file a license application and simultaneously request that BIS determine the item to be eligible for STA for future shipments of the same type of item. BIS publishes approved determinations in the License Exceptions paragraph of the relevant ECCN and on the BIS website.

Interaction with other License Exceptions

STA may not be layered with License Exceptions available under Parts 744 or 746. However, if a transaction does not qualify for STA (e.g., because the consignee is unwilling to provide a consignee statement or the item is STA-ineligible), the exporter may evaluate whether another License Exception — such as RPL (one-for-one replacement parts, § 740.10), TMP (temporary exports, § 740.9), GOV (government end users, § 740.11), or TSR (technology and software restricted to Country Group B, § 740.6) — applies. STA is one tool in the License Exception toolkit; it is neither exclusive nor mandatory.

Consequences of noncompliance

Exports, reexports, or transfers (in-country) made under STA without meeting the conditions of § 740.20 are violations of the EAR and may result in civil penalties (up to the greater of $368,136 per violation or twice the value of the transaction, adjusted annually for inflation), denial of export privileges, and criminal prosecution. Exporter compliance programs should include procedures to verify STA eligibility (item, destination, reason for control, consignee statement) before each shipment, periodic audits of consignee-statement files, and training on the "600 series" ultimate-end-user restrictions.

Source: 15 C.F.R. § 740.20 — License Exception Strategic Trade Authorization (STA) Source: 15 C.F.R. Part 740, Supplement No. 1 — Country Groups

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 or software, or are produced by a plant or major component of a plant that is itself the direct product of U.S. technology or software. 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 or software was used to design it, or what equipment was used to manufacture it.

The FDP rules represent the most aggressive assertion of extraterritorial jurisdiction under the EAR, and they have been the principal tool used by the Bureau of Industry and Security (BIS) since 2020 to restrict Chinese access to advanced semiconductors and telecommunications equipment produced abroad using U.S. chip-design software or semiconductor-manufacturing equipment.

Structural overview — four distinct FDP rules plus entity-specific regimes

BIS consolidated the FDP provisions into § 734.9 effective February 2022 (previously scattered across §§ 736.2(b)(3) and Entity List footnotes). Section 734.9 now enumerates multiple distinct FDP rules, each with its own product scope and destination or end-user scope. The major categories are:

1. National Security FDP rule (§ 734.9(b)) — applies to foreign-produced items that are the direct product of specified U.S.-origin technology requiring a written assurance for licensing, when destined to Country Group D:1, E:1, or E:2.

1. 9x515 FDP rule (§ 734.9(c)) — applies to foreign-produced items that are the direct product of specified U.S.-origin spacecraft technology or software (ECCNs in the 9x515 series) when destined to Country Group D:5, E:1, or E:2.

1. "600 series" FDP rule (§ 734.9(d)) — applies to foreign-produced items that are the direct product of specified U.S.-origin military technology or software (ECCNs in the "600 series" transferred from the ITAR) when destined to Country Group D:5, E:1, or E:2.

1. Entity List FDP rules (§ 734.9(e)) — a set of entity-specific provisions that apply when a foreign-produced item is the direct product of specified U.S. technology or software and is destined to (or involves as a party) an entity on the Entity List with a designated footnote (e.g., Footnote 1 for Huawei and specified affiliates).

In addition, BIS has promulgated specialized FDP rules for Russia, Belarus, and China targeting advanced computing and semiconductor manufacturing (§ 734.9(f)–(l)), each with unique product and destination/end-user triggers.

A foreign-produced item subject to the EAR under one or more of these FDP rules becomes "subject to the EAR" for all purposes, meaning the exporter must classify the item, consult the Commerce Country Chart or Entity List restrictions, and determine whether a license is required or a License Exception applies.

Definition of "direct product" — the two-pathway test

The term "direct product" is defined in 15 C.F.R. § 772.1. A foreign-produced item is a "direct product" of U.S.-origin technology or software if:

1. The foreign-produced item is produced by applying the U.S.-origin technology or software; or

1. The foreign-produced item is designed using the U.S.-origin technology or software.

The definition does not require that the U.S. technology or software be the only technology used, nor does it require majority U.S. input. If U.S.-origin controlled technology or software played a role in the design or production of the item — for example, electronic design automation (EDA) software used to design integrated circuits, or semiconductor-manufacturing-equipment control software used to fabricate wafers — the item may be a "direct product."

BIS guidance emphasizes that "produced" encompasses all production stages: product engineering, manufacture, integration, assembly (mounting), inspection, testing, and quality assurance. Testing equipment essential to production counts as part of the production plant under the FDP rules.

"Major component of a plant" — the equipment-based FDP trigger

Section 734.9(a)(1)(i) defines 'major component' (in single quotation marks to indicate it is specific to § 734.9) as "equipment" that is essential to the "production" of an item, including testing "equipment." When a foreign factory uses U.S.-origin (or foreign-made but itself a direct product of U.S.-origin) semiconductor-manufacturing equipment, wafer-test systems, or integrated-circuit assembly tools that are essential to production, and that equipment is classified under specified ECCNs, the items produced by that plant can become subject to the EAR under one of the FDP rules even if the items themselves contain zero U.S. components and were designed using non-U.S. software.

This plant-based FDP pathway is the mechanism by which BIS has extended EAR jurisdiction to foreign-made semiconductors fabricated in non-U.S. foundries (e.g., Taiwan Semiconductor Manufacturing Company or Samsung Foundry) when those foundries use U.S.-origin lithography steppers, etch systems, or deposition equipment classified in Categories 3, 4, or 5 of the Commerce Control List.

The National Security FDP rule — § 734.9(b)

The original and broadest general FDP rule applies to foreign-produced items when:

Product scope (§ 734.9(b)(1)): The item meets one of two conditions:

• (i) Direct product of technology or software: The item is a "direct product" of U.S.-origin technology or software that requires a written assurance as a supporting document for a license (see Supplement No. 2 to Part 748, paragraph (o)(3)(i)) or as a precondition for using License Exception TSR (Technology and Software — Restricted), and the item is subject to national security (NS) controls as designated in its ECCN; or

• (ii) Direct product of a plant or major component: The item is produced by a complete plant or 'major component' of a plant located outside the United States, when that plant or major component is itself a "direct product" of U.S.-origin technology requiring a written assurance (same criteria), and the foreign-produced item is subject to NS controls.

Country scope (§ 734.9(b)(2)): The item is destined to Country Group D:1 (China, among others), E:1 (Cuba, Iran, North Korea, Syria), or E:2 (Crimea region of Ukraine and specified regions of Donetsk and Luhansk).

The written-assurance requirement is significant: it limits the National Security FDP rule to a subset of the most sensitive dual-use technologies — primarily those at the highest control tiers under multilateral regimes. Items classified under many NS-controlled ECCNs do not require written assurances and therefore do not trigger this FDP rule.

The Entity List FDP rule (Footnote 1 — Huawei) — § 734.9(e)(1)

The most operationally disruptive FDP rule is the Huawei-specific provision in § 734.9(e)(1), which applies when a foreign-produced item meets both a product scope and an end-user scope.

Product scope (§ 734.9(e)(1)(i)): The item is either:

• (A) a "direct product" of technology or software subject to the EAR and specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 (semiconductor, computer, and telecommunications design and production technology); or

• (B) produced by any plant or 'major component' of a plant located outside the United States, when the plant or major component is itself a "direct product" of U.S.-origin technology or software specified in those same 16 ECCNs.

End-user scope (§ 734.9(e)(1)(ii)): There is "knowledge" (as defined in § 772.1) that:

• (A) the foreign-produced item will be incorporated into, or used in the production or development of, any part, component, or equipment produced, purchased, or ordered by an entity with a Footnote 1 designation on the Entity List (Huawei Technologies Co., Ltd. and its designated non-U.S. affiliates); or

• (B) any entity with a Footnote 1 designation is a party to any transaction involving the foreign-produced item — as purchaser, intermediate consignee, ultimate consignee, or end user.

This two-prong structure means that a non-U.S. semiconductor manufacturer using U.S.-origin EDA software or fab equipment covered by the 16 ECCNs is prohibited from shipping chips to Huawei or its listed affiliates, or to any customer when the manufacturer has knowledge that Huawei is involved downstream, without first obtaining a BIS license. License review policy for items subject to § 734.9(e)(1) is set forth in § 744.11(a)(2)(i): presumption of denial for 5G-capable items, case-by-case for items capable of supporting only sub-5G telecom.

BIS expanded this rule in August 2020 (85 FR 51596) in response to concerns that Huawei was evading earlier restrictions by sourcing chips designed and produced by third parties with no Huawei involvement until the final sale. The current rule eliminates the prior requirement that the item be "produced or developed by" Huawei — now, any foreign chip that is the direct product of the enumerated U.S. technology/software or production equipment is caught if Huawei is a party or downstream recipient.

Russia/Belarus and advanced-computing FDP rules — § 734.9(f)–(l)

BIS has layered additional FDP rules to restrict Russian and Chinese access to advanced semiconductors and supercomputing technology:

• Russia/Belarus FDP rule (§ 734.9(f)): Applies to foreign-produced items (not EAR99) that are the direct product of any U.S.-origin technology or software in product groups D or E, when destined to Russia or Belarus or for use in production in Russia or Belarus.

• Russia/Belarus Military End User FDP rule (§ 734.9(g)): Applies to items produced by plants using U.S.-origin D or E technology/software, when destined for Russian or Belarusian military end users or Footnote 3 entities on the Entity List.

• Advanced computing FDP rules (§ 734.9(h), (i)): Target foreign-produced integrated circuits meeting specified performance thresholds (transistor count, processing performance, bandwidth) when destined to China, Macau, or certain Entity List parties. These rules close the gap for cutting-edge AI and HPC chips fabricated abroad.

• Semiconductor manufacturing equipment (SME) FDP rules (§ 734.9(j), (k)): Extend EAR jurisdiction to foreign-made semiconductor-production equipment containing U.S.-origin ICs, when destined to Macau, Country Group D:5, or specified Entity List entries with a Footnote 5 designation (advanced-node fabs in China).

Each of these rules has detailed product-scope paragraphs specifying technical parameters (e.g., "any integrated circuit that has a total processing performance of 600 or more TOPS" in § 734.9(h)(1)(iii)) and destination or end-user scope triggers. Exporters in the semiconductor supply chain must evaluate each FDP rule sequentially to determine whether a foreign-made item is subject to the EAR.

The "is informed" authority — § 734.9(a)(3)

Section 734.9(a)(3) grants BIS authority to inform persons — individually by specific notice or through amendment to the EAR — that foreign-produced items are subject to the EAR under § 734.9 and of any license requirements that apply. Specific notice must be given by, or at the direction of, the Principal Deputy Assistant Secretary for Strategic Trade and Technology Security or the Deputy Assistant Secretary for Strategic Trade, and oral notice must be followed by written notice within two working days.

Critically, the regulation states: "The absence of BIS notification does not excuse the exporter from compliance with other requirements of this section." In other words, the FDP rules apply whether or not BIS has sent a notice. The is-informed authority is a supplement to self-assessment obligations, not a precondition.

Model certification — Supplement No. 1 to Part 734

BIS published a model certificate in Supplement No. 1 to Part 734 that suppliers may use to inform customers whether an item being provided would be subject to the EAR if future transactions meet the country/destination or end-user scope of one or more FDP rules. The model certificate is not required under the EAR, but BIS encourages its use as a red-flag resolution tool. A supplier certifies from its "knowledge" of the item that the item is (or is not) subject to specified FDP rules, and lists the applicable country or end-user scopes.

Use of the model certificate shifts due-diligence burden upstream: the component supplier or design-services provider attests to FDP status, and the downstream exporter or reexporter can rely on that certification (absent contrary knowledge or red flags).

Compliance workflow — how to apply the FDP rules

Trade-compliance teams address FDP determinations as part of the jurisdictional analysis under § 734.3:

1. Is the item U.S.-origin or located in the United States? If yes, it is subject to the EAR under § 734.3(a)(1) or (2); FDP analysis is not needed.

1. Does the item incorporate more than de minimis U.S. content? If yes, subject to the EAR under § 734.3(a)(3) and § 734.4; FDP analysis is not needed (though both can apply).

1. Is the item a foreign-produced direct product of U.S. technology, software, or a U.S.-origin plant/major component? Evaluate each FDP rule in § 734.9 in sequence:

• Does the item meet the product scope of any FDP rule (direct product of enumerated U.S. technology/software, or produced by a plant that is a direct product)?
• Does the transaction meet the country scope or end-user scope of that FDP rule?
• If both answers are yes, the item is subject to the EAR; classify it, consult the Country Chart or Entity List restrictions, and determine license requirements.

1. Document the analysis. Maintain records showing which U.S.-origin technology, software, or equipment was evaluated, whether the item qualifies as a "direct product," the destination or end user, and the conclusion. Retain supplier certifications, bills of materials for production equipment, and software licenses for five years under Part 762.

Interaction with other EAR provisions

An item subject to the EAR solely by virtue of an FDP rule (i.e., it is foreign-made, has no U.S. content, and is not otherwise subject) must still be classified. BIS has clarified that such items are often classified as EAR99 if they do not meet the technical parameters of any ECCN. However, even EAR99 items require a license when:

• Destined to an embargoed country under Part 746 (Cuba, Iran, North Korea, Syria, Russia for specified items);
• Destined to or involving a party on the Entity List, Denied Persons List, or another Part 744 list;
• Supporting a prohibited end use (nuclear, missile, chemical/biological weapons) under § 744.6 or other end-use controls.

The FDP rules define jurisdiction; Part 744, Part 746, and the Commerce Country Chart define license requirements.

The semiconductor supply-chain impact — a case study

A Taiwan-based semiconductor foundry uses U.S.-origin ASML deep-ultraviolet (DUV) lithography steppers (ECCN 3B001) and Applied Materials chemical-vapor-deposition equipment (ECCN 3B001) — both are "major components" of the plant and are themselves direct products of U.S.-origin technology classified under ECCN 3E001. The foundry fabricates a custom system-on-chip (SoC) for a Chinese customer. The SoC design was created by the Chinese customer using Synopsys EDA software (ECCN 3D001, U.S.-origin).

Under § 734.9(e)(1), if the Chinese customer is Huawei or a Footnote 1 affiliate — or if the foundry has knowledge that Huawei will be a party to the transaction or will purchase equipment incorporating the SoC — the SoC is subject to the EAR (even though it is foreign-made, contains zero U.S. components, and was fabricated outside the United States), and the foundry's reexport or transfer of the finished wafer requires a BIS license. License review policy: presumption of denial if the SoC is capable of 5G, case-by-case if sub-5G.

This scenario — which played out thousands of times in 2020–2025 — is the operational core of the U.S. strategy to deny China access to leading-edge semiconductors for AI, 5G, and advanced computing.

Recent amendments and current status

The FDP rules have been amended more than twenty times since their consolidation in February 2022, reflecting the rapid pace of U.S.–China technology competition and the Russia/Ukraine conflict. The most significant recent changes (through late 2025) include:

• Expansion of the advanced-computing FDP rules in October 2022 and October 2023 to cover additional performance tiers and "supercomputer" end uses (§ 734.9(h), (i));
• Addition of the SME FDP rules targeting foreign-made semiconductor equipment containing U.S. ICs when destined to advanced-node Chinese fabs (§ 734.9(j), (k));
• Footnote amendments adding Chinese memory-chip manufacturers and AI-compute companies to entity-specific FDP triggers.

Exporters must monitor the Federal Register and BIS website for amendments; ECCNs and country-group definitions change frequently, and an FDP determination that was accurate six months ago may be stale.

Recordkeeping and enforcement

Violations of the FDP rules — exporting, reexporting, or transferring foreign-produced items subject to § 734.9 without the required license — carry the same penalties as any other EAR violation: civil penalties up to the greater of $368,136 per violation (adjusted annually for inflation) or twice the transaction value, denial of export privileges, and criminal prosecution under 50 U.S.C. § 4819 (knowing violations) or 50 U.S.C. § 4820 (willful violations, up to 20 years imprisonment).

BIS has brought high-profile enforcement actions against non-U.S. semiconductor manufacturers and distributors for unlicensed reexports to Huawei and other Chinese entities in violation of the Entity List FDP rules. Non-U.S. persons are subject to EAR enforcement through denial orders, Entity List additions, and cooperation with foreign authorities.

Source: 15 C.F.R. § 734.9 — Foreign-Direct Product (FDP) Rules Source: 87 Fed. Reg. 6024 (Feb. 3, 2022) — Foreign-Direct Product Rules: Organization, Clarification, and Correction Source: 15 C.F.R. § 772.1 — Definitions of terms as used in the EAR

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