BIS drops proposed changes to “deemed export” rule

BIS drops proposed changes to “deemed export” rule

BIS drops proposed changes to “deemed export” rule

   The U.S. Commerce Department’s Bureau of Industry and Security has withdrawn a proposal to modify its licensing rules that allow foreign nationals to have access to certain U.S. technologies.
   The so-called “deemed export” rule requires BIS and the State Department’s Office of Defense Trade Controls to determine whether an export license is required to release technological know-how to a foreign national working in the United States.
   Since the Sept. 11, 2001 terrorist attacks, the Bush administration and some members of Congress have called for the Commerce Department to strengthen these controls. A 2004 Commerce Department Office of Inspector General’s report said current deemed export rules were weak.
   BIS responded with a proposed rule on March 28, 2004, which would make use of the individual’s birth country, rather than the country of most recent citizenship or permanent residence as criteria for deemed export licensing.
   The proposed rule received widespread criticism from numerous companies, trade groups and universities. Many of them argued that if this rule change was imposed, many organizations would be forced to move their research and development operations offshore to maintain access to overseas talent. Some even questioned the constitutionality of the deemed export rule.
   BIS said it recognizes that export controls must “take into account the integral and critical contribution of foreign nationals to U.S. fundamental research.”
   The agency added that “many individuals may have ethnic ties to a particular nation, but bear no loyalty towards states where they were born.” For example, under the proposed rule, an Iranian-born Canadian green card holder would be considered Iranian, leading to denial of an export license for that individual.