Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Intercompany Transfer Exception

In the October 3, 2008, Federal Register, BIS published rules which are intended to ease the intercompany transfer of technology and technical data. For more details see http://edocket.access.gpo.gov/2008/E8-23506.htm

Under this BIS proposal, parties will be required to have a technology control plan and submit to annual audits by BIS. There is a need for screening, training, and self-evaluation elements to the control plan. The process starts with an application to BIS that includes the ICT control plan, supporting documents, and a list of wholly owned entities and controlled-in-fact entities that will be eligible users. Any individual or group that has at least a 10% ownership interest must be disclosed, as well as a list of the ECCNs of the items to be exported, reexported, or transferred, a narrative description of the purpose for which the requested ECCNs will be used, and the anticipated resulting commodities, along with acknowledgment from an officer of the applicant that all entities will agree to a BIS audit. If the application is accepted, individual export licenses are no longer required. This can be particularly helpful if a goodly number of non-Americans (subject to the deemed export rule) are involved with a company's production, whether located in the U.S. or elsewhere.

Two major open questions remain. First, are companies limited to reporting only those who will actually receive controlled information or goods, or can anyone who might receive be listed? Second, with the required annual report, must the report list who received which controlled item/data?

The other significant open question is if these ICT applications are subject to inter agency approval. How large a sample of shipments must be audited to determine a company's compliance level? BIS expects to have this last issue worked out once the proposal is implemented.

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