Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canadian Companies May Benefit From U.S. Changes to De Minimis Rules for Export Controls

The U.S. Bureau of Industry and Security (BIS) has revised its regulations on export controls for foreign-made items that incorporate controlled U.S.-origin goods (the de minimis rules).  The changes are effective on an interim basis stating October 1, 2008.  Comments on it are due by December 1, 2008 and may result in further changes and / or clarifications.

Highlights of the changes to the U.S. export control rules for foreign-made goods include the following.

• (1) foreign-produced goods that incorporate controlled U.S.-origin goods / inputs, (2) foreign-produced goods / inputs that are “bundled” with controlled U.S.-origin software, (3) foreign-produced software that is commingled with controlled U.S.-origin software, and (4) foreign-produced technology that is commingled with controlled U.S.-origin technology are subject to the U.S. Export Administration Regulations (EAR) if the incorporated controlled U.S.-origin content exceeds the specified de minimis levels.

• The one-time reporting requirement for foreign-made software that incorporates a de minimis level of controlled U.S.-origin software is removed. [This requirement is being retained for foreign-made technology.]

• New recordkeeping requirements regarding the method used to determine the percentage of U.S. content in foreign software or technology are imposed.

• The guidelines for controlled U.S.-origin content and for determining content values for purposes of the de minimis rules are clarified.

• The definition of the term “incorporated” is clarified.

For more information, please contact Cyndee Todgham Cherniak (416) 307-4168.

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