As part of the Obama Administration’s Export Control Reform Initiative, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) has recently revised the Export Administration Regulations (EAR) by adding a new Export Classification Control Number (ECCN) series to the Commerce Control List (CCL). The newly created ECCN series 0Y521 is a temporary holding classification for items that are subject to the EAR but are not yet identified in an existing ECCN.
There are five ECCNs included in the 0Y521 series, as follows: 0A521 (systems, equipment, and components); 0B521 (test, inspection, and production equipment); 0C521 (materials); 0D521 (software); and 0E521 (technology). The individual ECCNs will not, however, contain the items listed in the 0Y521 series. Instead, a separate table in Supplement No. 5 to Part 774 will specifically enumerate the items classified as 0Y521, provide information on when such items were so classified, and a date by which they will be designated in a permanent ECCN. Supplement No. 5 is excluded from the part 756 appeals process, meaning a party may not appeal the decision to classify an item in the 0Y521 series.
An item will be added to the 0Y521 series only after Commerce, with the concurrence of the Defense and State departments, determines the item should be controlled either because (i) it provides a significant military or intelligence advantage to the United States or (ii) foreign policy reasons justify such control. It is expected that many items to be designated will be emerging technologies.
BIS does not anticipate a large number of items will move to the ECCN 0Y521 series. And exporters and reexporters are not obligated to seek a determination from the U.S. government as to whether any items currently classified under EAR99 should be moved to the new series.
0Y521 items initially will remain so classified for up to one year, although the U.S. government may obtain two one-year extensions. During this time, the U.S. government will determine how to control the item over the long term, including whether it should be classified under an alternate ECCN or should be designated EAR99.
A license is required to export ECCN 0Y521 items to anywhere but Canada. Currently, a license exception is available only for items for official use by personnel and agencies of the U.S. government. Commerce has indicated, however, that it will specify the availability of additional license exceptions at the time it classifies a given item under the ECCN 0Y521 series.
The government has suggested the primary purpose of the ECCN 0Y521 series is to transfer articles that no longer warrant control on the United States Munitions List (USML) to the CCL. The final rule describes the new temporary holding classification as essentially the same as USML Category XXI (Miscellaneous Articles). This is welcome news to exporters. More problematic, however, at least potentially, is that some items currently classified under EAR99 may be added to the CCL under ECCN 0Y521. Those engaged in the export or re-export of emerging technologies, therefore, need to keep close track of what is being added to Supplement No. 5.