U.S.-India Dual-Use Export Policies and Procedures

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U.S.-India Dual-Use Export Policies and
Procedures November 2004
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Purpose of U.S. Export Controls

• Export controls are used to further U.S.
• National security,
• Foreign policy, and
• Economic interests

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U.S. Export Control Regime

• Controls on dual-use items commodities,
  software, and technology that have both
  commercial and military application are
  administered by the U.S. Department of Commerce.
  
• Controls on munitions items are administered by
  the Department of State.

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Dual-Use Export Controls

• The U.S. Export Administration Regulations (EAR)
  set forth a list of dual-use and commercial items
  that are subject to control called the Commerce
  Control List (CCL).
• Items that are listed in the CCL are controlled
  for various reasons, including national security
  (NS), nuclear proliferation (NP), missile
  technology (MT), chemical/biological (CB), and
  anti-terrorism (AT) reasons.
• Depending on the reason for control of the item
  and the country of destination, a license may be
  required for an export.
• A license exception may be available depending on
  the nature of the transaction.
• All dual-use items not specifically listed on the
  CCL are categorized as EAR99 items, which
  generally do not require a license to most
  destinations.

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General Licensing Requirements for India

• There are no sanctions currently in place against
  India. As with exports to other countries,
  certain exports to India may require licenses.
• Most dual-use items exported to India do not
  require licenses.
• Many commodities controlled on the CCL may be
  exported to India using a license exception.
• Computer technology and software are eligible for
  certain license exceptions.
• More than 75 percent of encryption products are
  eligible for export to India under a broad
  license exception.

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General Licensing Requirements for India (Cont.)

• EAR99 items (items not specified on the CCL) may
  be shipped to most end users in India without an
  export license. The vast majority of U.S.
  commercial exports fall into this category.
• Exports of EAR99 items to end users on the Entity
  List, except for Indian Space Research
  Organization subordinates, require a license.
• During Fiscal Year 2004, over one third of
  dual-use license applications processed for India
  were for EAR99 items. The United States approved
  approximately 83 percent of these applications
  that required a license.

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Nuclear Missile and Chemical Biological Items

• A license is required to export to India items
  controlled for nuclear (NP), missile (MT), or
  chemical/biological weapons (CB) proliferation
  reasons.
• Such licenses are reviewed on a case-by-case
  basis and are not subject to a policy of denial.
• Such licenses generally are approved unless the
  export would make a material contribution to
  nuclear, missile, or chemical/biological programs
  of concern, or pose an unacceptable risk of
  diversion to such programs.

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The Entity List

• Items intended for Indian companies on the Entity
  List still require an export license.
• There is 1 primary Indian organization and 14
  subordinate Indian organizations on the Entity
  List.
• There is a presumption of approval for
  applications to export EAR99 items to most listed
  entities. Recent regulatory changes have removed
  EAR99 license requirements for some Indian
  entities.
• Applications to export other items are subject to
  a case-by-case review.
• The complete list of Indian end users identified
  on the Entity List is located at
  http//www.bis.doc.gov/Entities/Default.htm

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Catch-All Controls for Missile Programs

• On November 8, 2004, a new missile catch-all
  rule that strengthens and expands the current
  missile end-use/end-user controls was published.
  The rule eliminates references to specific
  missile projects of concern.
• An exporter or reexporter must obtain a license
  for any item subject to the EAR if the exporter
  or reexporter knows or is informed that
• the item is going to a country in group D4 for
  use on a rocket or unmanned air vehicle (UAV)
  capable of achieving a minimum range of 300
  kilometers
• the item is going any where in the world for use
  on a rocket or UAV to delivery chemical,
  biological, or nuclear weapons or
• the item is going to a country in group D4 for
  use on a rocket or UAV for which the range and
  payload characteristics or the intended end use
  cannot be determined by the exporter.
• Exports to Indian missile programs of concern
  will be denied.

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Catch-All Controls for Nuclear Programs

• U.S. exporters must apply for a license if they
  know or have reason to know that their export
  will be used in certain nuclear activities in
  India.
• Items intended to ensure the safety of
  safeguarded civilian nuclear power facilities
  generally will be reviewed favorably.
• Exports of all EAR99 items including balance
  of plant commodities generally will be
  reviewed favorably for use in safeguarded
  facilities.
• Exports to specified unsafeguarded nuclear
  activities and to nuclear weapons programs will
  be denied.

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Catch-All Controls forChemical/Biological
Weapons Activities

• U.S. exporters must apply for a license if they
  know or have reason to know that their export
  will be used in certain chemical/biological
  weapons activities.
• A license is required for any export or reexport
  if at the time of export or reexport you know
  that the item will be used in the design,
  development, production, stockpiling, or use of
  chemical/biological weapons.
• License applications will be reviewed to
  determine if the export or reexport would make a
  material contribution to a program of concern.

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Technology Exports To India

• As a Group B Country, India is eligible to
  receive advanced technology, software, and
  know-how without a license (e.g., under license
  exceptions TSR and CTP)
• Computer Technology and Software
• Semiconductor Design and Manufacturing Technology

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Deemed Exports

• A deemed export is the release in the United
  States of controlled technology or source code
  to a foreign national.
• Indian nationals can work the United States in
  high technology firms in many cases without
  Government approval (under license exception).
• Where deemed export licenses have been required
  for Indian nationals, BIS processed 65 cases
  without a denial during FY2004.
• The average processing time for new deemed export
  cases was approximately 46 days during FY2004.
  

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Dual-Use License Applications for Exports to India

• Fiscal Year 2003 (October 2002-September 2003)
• Approved 619 (57 million)
• Denied 72 (15 million)
• TOTAL 691 (72 million)
• Returned Without Action 229 (36 million)
• Total Fiscal Year 2003 U.S. trade with India
  approximately 4.8 billion

• Fiscal Year 2004 (October 2003-September 2004)
• Approved 912 (90 million)
• Denied 103 (13.6 million)
• TOTAL 1,015 (103.7 million)
• Returned Without Action 264 (28.3 million)
• Fiscal Year 2004 U.S. trade with India
  approximately 5.7 billion

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Analyzing the Statistics

• Most trade with India does not require a license.
• The United States requires a license for only a
  small percentage of overall trade with India.
  Approximately one percent of all U.S. trade with
  India requires an export license.
• The United States approves a vast majority of
  exports that require a license.
• In Fiscal Year 2004, the United States approved
  approximately 90 percent of the applications that
  required an export license.

• License application processing is timely and
  efficient.
• Despite the increasing number of applications,
  dual-use export license applications continue to
  be processed in approximately 40-45 days.

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Analyzing the Statistics (continued)

• Fewer export license applications are denied for
  India each year.
• Of the export applications that required a
  license in FY 2003 and 2004, only 10 percent were
  denied down from 15 percent in FY 2002.
• Many submitted applications do not require a
  license.
• Of the cases that are returned without action,
  most are returned to the applicant because the
  exports were eligible for shipment under a
  license exception or no license was required.

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U.S.-India Next Steps in Strategic Partnership
(NSSP)

• In September 2004, the United States published a
  regulation implementing the Phase One of the NSSP
  export licensing commitments. The regulatory
  changes include
• Removing the Indian Space Research Organization
  (ISRO) Headquarters from the Entity List
• Removing licensing requirements for low-level
  dual-use items exported to ISRO subordinate
  entities listed on the Entity List and
• Expanding the presumption of approval policy
  for all dual-use items not controlled by the
  Nuclear Suppliers Group (NSG), if intended for
  export to the balance of plant portion of an
  Indian nuclear facility subject to international
  safeguards.

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Effect of Phase One

• Phase One licensing changes are expected to
• Reduce the number of applications for ISRO
  subordinate entities by approximately 250
  applications per year, or approximately 75 to 85
  percent.
• Reduce the total number of applications for all
  dual-use exports to India by approximately 20 to
  25 percent.
• Since the implementation of this new licensing
  policy in September, the Department of Commerce
  has returned over 23 license applications for
  exports to these end users because a license was
  no longer required.

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Summary

• Export licensing requirements apply to only a
  very small percentage of overall U.S.-India
  trade.
• Many items subject to export controls can be
  exported to India without a license or under a
  license exception.
• Exports of controlled items to India will be
  approved provided that such items do not
  contribute to or pose a risk of diversion to
  Indian nuclear or missile programs.
• Applications for controlled items are reviewed on
  a case-by-case basis there is no longer any
  policy of denial.
• The United States and India are committed to
  working toward enhancing a qualitatively
  transformed relationship and continuing efforts
  to stimulate bilateral high-technology commerce.