BIS Proposes Amendments for License Exception STA

Oct. 26, 2021

The Bureau of Industry and Security (BIS) proposed amendments to the Export Administration Regulations (EAR) to clarify and expand restrictions for using License Exception Strategic Trade Authorization (License Exception STA or STA). BIS has concerns that the conditions for using License Exception STA may confuses exporters. Further, the agency wants to limit the use of the exception for some controlled coating technologies and technologies used to manufacture “hot section gas turbine parts” and “advanced military composite structures.”

License exception STA is available for export, re-export or transfer (in country) of eligible items to a number of countries considered to be "low-risk" for unauthorized use or diversion 15 CFR § 740.20). It facilitates exports between the United States and its allies by reducing the export license burden for many items subject to the EAR. Items eligible for STA do not pose a national security threat to the United States, even if misused or diverted. Using of License exception STA requires the transaction parties exchange notifications and statements designed to provide assurance against diversion to other destinations.

There are several prohibitions and limitations on the use of License Exception STA, including §740.20(b)(2)(viii), which prohibits use of STA for certain Category 9 export control classification numbers (ECCNs), regardless of destination. These ECCN include software and technology controlled under ECCNs 9D001, 9D002, 9D004, 9E001, 9E002, and 9E003. However, the final rule that established License exception STA, published on June 16, 2011 (76 FR 35276), included ‘‘Special Conditions for STA’’ paragraphs of these Category 9 ECCNs that were not as comprehensive as § 740.20(b)(2)(viii). In the proposed rule, BIS suggests text that clearly directs exporters to the Category 9 limitations on uses of the STA set forth in § 740.20(b)(2)(viii), when determining STA availability for the export, reexport and in-country transfer of certain items controlled under those ECCNs. The language proposed does not change license requirements or restrictions.

BIS also wants to exclude some items from eligibility under STA, including technologies controlled under ECCN 2E003.f used “for the application of inorganic overlay coatings or inorganic surface modification coatings to non-electronic substrates by certain coating processes” and technology in ECCN 1E001 that can be used to develop and manufacture hot section gas turbine parts and components and advanced military composite structures.

Comments on the proposed amendments are due by Dec. 6. If you would like provide comments or have questions about the STA license exception, please do not hesitate to contact an attorney at Barnes, Richardson & Colburn, LLP with any questions.