The de minimis Rule In Practice

#ExportCanada
ACI’s4th IndustryForumonU.S.Exportand
ReexportComplianceForCanadianOperations
Matthew J. Lancaster
Business Attorney
Esri
The de minimis Rule In Practice -
January 27 – 28, 2015
Tweeting about this conference?
How to Conduct and Submit de minimis Calculations
for 500 and 600 Series, and Other CCL Items

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Acronomycon
• ACI – American Conference Institute
• ADOD – Australia Department of Defence
• APP – Adjusted Peak Performance
• AT – roughly, ‘Anti-Terrorism’ – See EAR Parts 742.8-742.10, 742.19, and Supplement No. 2 to Part 742
• BIS – Department of Commerce, Bureau of Industry and Security
• CA – California
• CCL – Commerce Control List
• CFR – Code of Federal Regulations
• CIV – License Exception CIV (roughly, ‘CIVil end-user’) – See EAR Part 740.5
• D.C. – District of Columbia
• DDTC – Department of State, Directorate of Defense Trade Controls
• DOD – Department of Defense
• EAR – Export Administration Regulations
• ECCN – Export Control Classification Number
• ENC – License Exception ENC (roughly, ‘ENCryption’) – See EAR Part 740.17
• Esri – Environmental Systems Research Institute
• ext. – extension
• FR – Federal Register
• GBS – License Exception GBS (roughly, ‘Group B Shipments’) – See EAR Part 740.4
• IEEPA – International Emergency Economic Powers Act
• ITAR – International Traffic in Arms Regulations
• J. – John
• LVS – License Exception LVS (roughly, “Limited Value Shipments’) – See EAR Part 740.3
• NLR – No License Required
• No. – Number
• NS – roughly ‘National Security’ – See EAR Part 742.4
• N.W. – Northwest
• OEM – Original Equipment Manufacturer
• OFAC – Department of Treasury, Office of Foreign Assets Control
• PRC – People’s Republic of China
• QRS – Quartz Rate Sensor
• Supp. No. – Supplement Number
• TSU – License Exception TSU (roughly, ‘Technology and Software Unrestricted’) – See EAR Part 740.13
• U.S. – United States of America
• US – United States of America
• USC – United States Code
• USA – United States of America
• USML – United States Munitions List
• WT – Weighted TeraFLOPS

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The de minimis Rule In Practice
• Background
• When an Item is Considered to be a Non-
US-Manufactured ITAR Item
• Conducting Calculations for Regular CCL,
500 and 600 Series
• Filing de minimis Calculations with BIS and
the Response
• Resolving de minimis Issues for Hardware
and Technology Calculations
• How to Handle Aggregate Data

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Background
• “de minimis” is New Latin (first known use ~1948) roughly
translating to ‘concerning trifles.’
• “de minimis” is defined as ‘lacking significance or
importance’ or ‘so minor as to merit disregard.’
• The EAR describes de minimis at Part 734, especially 734.4.
• The EAR is the US Export Administration Regulations (15
CFR §§730-774), which has been extended by successive
Presidential Notices under the International Emergency
Economic Powers Act (50 USC §§1701-1706), or IEEPA,
since the Export Administration Act of 1979 expired on
August 20, 2001.
• I don’t use “foreign”; I use “non-US”.
• I use “item” to mean hardware, software and/or
technology.

#ExportCanada
Background
• In general, US de minimis rules, in the context of
export, stand for the proposition that if an item made
outside the US contains less than a certain percentage
of US-origin controlled content, then the US-origin
content is released from jurisdiction of the EAR.
• When US-origin content is released from the
jurisdiction of the EAR, it is no longer subject to the
cradle-to-grave track-and-trace requirements of the
EAR.
• WARNING – If the US-origin content is extracted from
the non-US-made item, it no longer subject to de
minimis and again becomes subject to jurisdiction
under the EAR.

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Background
• De minimis levels vary…

#ExportCanada
Background
0% - Depending
734.4(a)(1) - Non-US-made computer with an Adjusted Peak
Performance (APP) exceeding 8.0 Weighted TeraFLOPS (WT)
containing US-origin controlled semiconductors (other than
memory circuits) classified under ECCN 3A001 to Afghanistan,
Algeria, Andorra, Angola, Armenia, Azerbaijan, Bahrain, Belarus,
Bosnia & Herzegovina, Burma, Cambodia, China (People's
Republic of), Comoros, Djibouti, Egypt, Georgia, India, Iraq,
Israel, Jordan, Kazakhstan Kosovo, Kuwait, Kyrgyzstan, Laos,
Lebanon, Libya, Macau, Macedonia (The Former Yugoslav
Republic of), Mauritania, Moldova, Mongolia, Montenegro,
Morocco, Oman, Pakistan, Qatar, Russia, Saudi Arabia, Serbia,
Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab Emirates,
Uzbekistan, Vanuatu, Vietnam, or Yemen.
Performance (APP) of 0.002 WT containing US-origin controlled
semiconductors (other than memory circuits) classified under
ECCN 3A001 or high speed interconnect devices (ECCN 4A994.j)
to Cuba, Iran, North Korea, Sudan, or Syria.
734.4(a)(2) - Non-US-produced encryption technology that
incorporates US-origin encryption technology controlled by
ECCN 5E002 is subject to the EAR regardless of the amount of
US-origin content.
734.4(a)(3)(i) - Commercial primary or standby instrument
systems of the type described in ECCN 7A994 on the Commerce
Control List (Supplement No. 1 to part 774 the EAR) when the
systems integrate QRS11-00100-100/101 Micromachined
Angular Rate Sensors.
734.4(a)(3)(ii) - Commercial automatic flight control systems
when the systems integrate QRS11-00050-443/569
Micromachined Angular Rate Sensors.
734.4(a)(3)(iii) - Aircraft of the type described in ECCN 9A991
when such aircraft incorporate a primary or standby instrument
system integrating a QRS11-00100-100/101 sensor or an
automatic flight control system integrating a QRS11-00050-
443/569 sensor.
734.4(a)(4) - US-origin technology controlled by ECCN 9E003.a.1
through a.8, .h, .i, and .j. when redrawn, used, consulted, or
otherwise commingled abroad.
734.4(a)(5) - Non-US-made military commodities that
incorporate cameras classified under ECCN 6A003.b.4.b if such
cameras would be subject to the EAR as separate items and if
the non-US-made military commodity is not subject to the
International Traffic in Arms Regulations (22 CFR 120-130).
734.4(a)(6)(i) - Non-US-made items that incorporate US-origin
9x515 or “600 series” items enumerated or otherwise described
in paragraphs .a through .x of a 9x515 or “600 series” ECCN
when destined for Afghanistan, Belarus, Burma, Central African
Republic, China (PRC), Cote d’Ivoire, Cuba, Cyprus, Democratic
Republic of Congo, Eritrea, Fiji, Haiti, Iran, Iraq, Lebanon, Liberia,
Libya, Noth Korea, Somalia, Sri Lanka, Sudan, Syria, Venezuela,
Vietnam, or Zimbabwe.
734.4(a)(6)(ii) - Non-US-made items that incorporate US-origin
9x515 or “600 series” .y items when destined for China (PRC),
Cuba, Iran, North Korea, Sudan, or Syria.
734.4(a)(7) - Under certain rules issued by the Office of Foreign
Assets Control (OFAC), certain exports from abroad by US-
owned or controlled entities may be prohibited notwithstanding
the de minimis provisions of the EAR.
734.4(a)(7) - De minimis rules do not relieve US persons of the
obligation to refrain from supporting the proliferation of
weapons of mass-destruction and missiles.
734.4(b)(1) - US-origin commodities or software, if controlled
under ECCNs 5A002.a.1, .a.2, .a.5, .a.6, .a.9, .b, or 5D002, not
authorized for License Exception TSU, or License Excpetion ENC
pursuant to § 740.17(b)(1)-(4).
734.4(b)(1)(iii) - US-origin commodities or software, if controlled
under ECCNs 5A002.a.1, .a.2, .a.5, .a.6, .a.9, .b, or 5D002,
authorized for License Exception ENC by BIS after classification
pursuant to § 740.17(b)(2) to Cuba, Iran, North Korea, Sudan, or
Syria.

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Background
10% - Worldwide
734.4(c)(1) - Reexports of a non-US-made commodity
incorporating controlled US-origin commodities or ‘bundled’
with US-origin software valued at 10% or less of the total value
of the non-US-made commodity, only if the bundled US-origin
software is listed on the Commerce Control List (CCL) and has a
reason for control of anti-terrorism (AT) only or bundled US-
origin software that is designated as EAR99. For all other
software, an independent assessment of whether the software
by itself is subject to the EAR must be performed. (See Note 3 to
§ 734.4(c)(1))
734.4(c)(2) - Reexports of non-US-made software incorporating
controlled US-origin software valued at 10% or less of the total
value of the non-US-made software
734.4(c)(3) - Reexports of non-US technology commingled with
or drawn from controlled US-origin technology valued at 10% or
less of the total value of the non-US technology. Before you
may rely upon the de minimis exclusion for non-US-made
technology commingled with controlled US-origin technology,
you must file a one-time report. (See Supplement No. 2 to Part
734 for submission requirements)
25% - Worldwide,
Excluding Cuba, Iran, North Korea,
Sudan, and Syria
734.4(d)(1) - Reexports of a non-US-made commodity
incorporating controlled US-origin commodities or ‘bundled’
with US-origin software valued at 25% or less of the total value
of the non-US-made commodity, only if the bundled US-origin
software is listed on the CCL and has a reason for control of AT
only or bundled US-origin software that is designated as EAR99.
For all other software, an independent assessment of whether
the software by itself is subject to the EAR must be performed.
(See Note 3 to § 734.4(d)(1))
734.4(d)(2) - Reexports of non-US-made software incorporating
controlled US-origin software valued at 25% or less of the total
value of the non-US-made software
734.4(d)(3) - Reexports of non-US technology commingled with
or drawn from controlled US-origin technology valued at 25% or
less of the total value of the non-US technology. Before you
may rely upon the de minimis exclusion for non-US-made
technology commingled with controlled US-origin technology,
you must file a one-time report. (See Supplement No. 2 to Part
734 for submission requirements)

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When an Item is Considered to be a
Non-US-Manufactured ITAR Item
0% - Depending

#ExportCanada
When an Item is Considered to be a
Non-US-Manufactured ITAR Item
• If a US-origin ITAR-controlled item is incorporated or installed into,
or commingled or bundled with a non-US-manufactured item, the
presence of the US-origin ITAR-controlled item taints the non-US-
manufactured item with ITAR.
• If a non-US-manufactured item is derived from US-origin ITAR-
controlled technology, the resulting non-US-manufactured item is
also tainted with ITAR and should be treated under the original
licensing jurisdiction of DDTC and the ITAR for reexport or retransfer.
• BEWARE of the US person employee outside the US.
• There is no de minimis for US-origin ITAR-controlled items.
• Also, if a non-US-manufactured item is described on the USML, and
enters the US, the non-US-manufactured item becomes subject to
the licensing jurisdiction of DDTC and the ITAR for export from the
US, but, usually, is not treated as a US-origin ITAR-controlled item
after exiting the US.

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Conducting Calculations for
Regular CCL, 500 and 600 Series
• The official guidance for conducting de minimis
calculations is in Supplement No. 2 to EAR Part 734.
• Some steps for all de minimis calculations are the
same:
• Identify incorporated US-origin controlled content:
• What is the ECCN of each US-origin item incorporated into the non-US-made item?
• Which, if any, US-origin items would require a license from BIS if they were exported or
reexported (in the form in which received) to the non-US-made item’s country of destination?
• Consider EAR Part 746 – Embargoes and Other Special Controls.
• Ignore EAR Part 744 – Control Policy: End-user and End-use Based.
• Exclude from de minimis calculations US-origin items that could be exported or reexported to
the country of destination:
• without a license (designated as “NLR”), or;
• Under License Exception GBS.
• US-origin technology and source code used to design or produce non-US-made hardware or
software are not considered to be incorporated into the non-US-made hardware or software.
• De minimis, by itself, cannot justify diversion to a previously stated end-user or end-use.

#ExportCanada
• Incorporated, for purposes of calculating
de minimis, means that the US-origin
controlled item is:
• essential to the functioning of the non-US-made item;
• customarily included in sales of the non-US-made item, and;
• reexported with the non-US-produced item.
• Additionally, US-origin software that is
listed on the CCL and has a reason for
control of AT only or that is designated as
EAR99, may be ‘bundled’ with non-US-
produced items, and, in such cases, is
considered incorporated.

#ExportCanada
• To obtain the ECCN for each US-origin item:
• Contact the OEM.
• Insert terms into agreements making the failure of the OEM to provide
complete US export classification information (to the subparagraph) grounds
for termination for default (maybe with liquidated damages?).
• Find a way to make the OEM responsible for providing the information.
• If the US OEM does not have the US export classification information, has the
US OEM already violated US law?
• If all else fails with the OEM, contact BIS or outside counsel.
• It is highly risky to self-classify someone else’s item on your own.
• Once the ECCN is obtained, determine the
reason(s) for control, for example:
• If the US-origin content classifies for export
from the US under ECCN 3B001.a.1:

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• And, once the ECCN is obtained,
ensure the US-origin item is not
precluded from inclusion in the de
minimis calculation altogether:

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0% - Depending
Performance (APP) exceeding 8.0 Weighted TeraFLOPS (WT)
containing US-origin controlled semiconductors (other than
memory circuits) classified under ECCN 3A001 to Afghanistan,
Algeria, Andorra, Angola, Armenia, Azerbaijan, Bahrain, Belarus,
Bosnia & Herzegovina, Burma, Cambodia, China (People's
Republic of), Comoros, Djibouti, Egypt, Georgia, India, Iraq,
Israel, Jordan, Kazakhstan Kosovo, Kuwait, Kyrgyzstan, Laos,
Lebanon, Libya, Macau, Macedonia (The Former Yugoslav
Republic of), Mauritania, Moldova, Mongolia, Montenegro,
Morocco, Oman, Pakistan, Qatar, Russia, Saudi Arabia, Serbia,
Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab Emirates,
Uzbekistan, Vanuatu, Vietnam, or Yemen.
Performance (APP) of 0.002 WT containing US-origin controlled
semiconductors (other than memory circuits) classified under
ECCN 3A001 or high speed interconnect devices (ECCN 4A994.j)
to Cuba, Iran, North Korea, Sudan, or Syria.
734.4(a)(2) - Non-US-produced encryption technology that
incorporates US-origin encryption technology controlled by
ECCN 5E002 is subject to the EAR regardless of the amount of
US-origin content.
734.4(a)(3)(i) - Commercial primary or standby instrument
systems of the type described in ECCN 7A994 on the Commerce
Control List (Supplement No. 1 to part 774 the EAR) when the
systems integrate QRS11-00100-100/101 Micromachined
Angular Rate Sensors.
734.4(a)(3)(ii) - Commercial automatic flight control systems
when the systems integrate QRS11-00050-443/569
Micromachined Angular Rate Sensors.
734.4(a)(3)(iii) - Aircraft of the type described in ECCN 9A991
when such aircraft incorporate a primary or standby instrument
system integrating a QRS11-00100-100/101 sensor or an
automatic flight control system integrating a QRS11-00050-
443/569 sensor.
734.4(a)(4) - US-origin technology controlled by ECCN 9E003.a.1
through a.8, .h, .i, and .j. when redrawn, used, consulted, or
otherwise commingled abroad.
734.4(a)(6)(i) - Non-US-made items that incorporate US-origin
9x515 or “600 series” items enumerated or otherwise described
in paragraphs .a through .x of a 9x515 or “600 series” ECCN
when destined for Afghanistan, Belarus, Burma, Central African
Republic, China (PRC), Cote d’Ivoire, Cuba, Cyprus, Democratic
Republic of Congo, Eritrea, Fiji, Haiti, Iran, Iraq, Lebanon, Liberia,
Libya, Noth Korea, Somalia, Sri Lanka, Sudan, Syria, Venezuela,
Vietnam, or Zimbabwe.
734.4(a)(6)(ii) - Non-US-made items that incorporate US-origin
9x515 or “600 series” .y items when destined for China (PRC),
Cuba, Iran, North Korea, Sudan, or Syria.
734.4(a)(7) - Under certain rules issued by the Office of Foreign
Assets Control (OFAC), certain exports from abroad by US-
owned or controlled entities may be prohibited notwithstanding
the de minimis provisions of the EAR.
734.4(a)(7) - De minimis rules do not relieve US persons of the
obligation to refrain from supporting the proliferation of
weapons of mass-destruction and missiles.
734.4(b)(1) - US-origin commodities or software, if controlled
under ECCNs 5A002.a.1, .a.2, .a.5, .a.6, .a.9, .b, or 5D002, not
authorized for License Exception TSU, or License Excpetion ENC
pursuant to § 740.17(b)(1)-(4).
734.4(b)(1)(iii) - US-origin commodities or software, if controlled
under ECCNs 5A002.a.1, .a.2, .a.5, .a.6, .a.9, .b, or 5D002,
authorized for License Exception ENC by BIS after classification
pursuant to § 740.17(b)(2) to Cuba, Iran, North Korea, Sudan, or
Syria.

#ExportCanada
• Then compare the reasons for control
to the Commerce Country Chart at
EAR Supplement No. 1 to Part 738
against the country of destination, for
example:
• If the non-US-made product
incorporating the US-origin 3B001.a.1
item is destined for Aruba:

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• It appears that the US-origin 3B001.a.1 item
is US-origin controlled content for the
purposes of the de minimis calculation with
respect to an Aruba destination.
• Note that the same would not be the case
with respect to an Australia destination
(unless the US exporter failed to refrain
from supporting the proliferation of
weapons of mass-destruction or missiles at
the time of export from the US):

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• Note that the same would not be the case with respect
to an Australia destination (unless the US exporter
failed to refrain from supporting the proliferation of
weapons of mass-destruction or missiles at the time of
export from the US):
• And unless an EAR Part 746 Embargo or Other Special
Control comes into play. The EAR Part 746 Embargoes
and Other Special Controls pertain, generally, to Cuba,
Iran, Syria, and Russia, and Central African Republic,
Cote d'Ivoire (Ivory Coast), Democratic Republic of the
Congo, Eritrea, Iraq, Lebanon, Liberia, Libya, North
Korea, Somalia, and Sudan.
• In the case of Australia, it seems unlikely an EAR Part
746 Embargo or Other Special Control will apply.

#ExportCanada
• It appears that the US-origin 3B001.a.1 item
is US-origin controlled content for the
purposes of the de minimis calculation with
respect to an Aruba destination.
• NLR does not apply.
• It also seems, in the case of Aruba, unlikely
that an EAR Part 746 Embargo or Other
Special Control will apply.
• But we must also examine whether License
Exception GBS is available and applies to an
Aruba destination:

#ExportCanada
• According to the CCL listing for ECCN 3B001,
License Exception GBS is available for US-origin
3B001.a.1 items.
• The scope of License Exception GBS is described
at EAR Part 740.4 – Shipments to Country Group
B Countries. It tells us:
License Exception GBS authorizes exports and reexports to Country Group B (see
Supplement No. 1 to part 740) of those commodities where the Commerce Country
Chart (Supplement No. 1 to part 738 of the EAR) indicates a license requirement to
the ultimate destination for national security reasons only and identified by “GBS -
Yes” on the CCL. See §743.1 of the EAR for reporting requirements for exports of
certain commodities under License Exception GBS.
• Turning to EAR Supplement No. 1 to Part 740, we
see that Aruba is a Country Group B country:

#ExportCanada
• Also review EAR Part 743.1 for potential reporting
requirements, which, in turn, directs you to EAR
Supplement No. 6 to Part 774 – The Sensitive List.
• The Sensitive List is a list of items controlled under the
Wassenaar Arrangement.
• BIS collects the reports in order to honor US reporting
obligations to other Wassenaar Arrangement member
countries.
• A BIS reexport license could take the place of a report.
• For the US-origin 3B001.a.1 item, there are no
additional reporting requirements:

#ExportCanada
• It appears that the US-origin 3B001.a.1
item, as incorporated into the non-US-
made item, is eligible for inclusion in the
de minimis calculation.
• Let’s change the hypothetical to a US-
origin item classified for export from the
US under ECCN 3B001.a.3 (which is
excluded from qualification for use of
License Exception GBS) so that we can
proceed through the de minimis
calculation.

#ExportCanada
• The de minimis calculation is described in EAR
Supplement No. 2 to Part 734:
• Value of US-origin controlled content = the fair market price of the US-origin item
in the market where the non-US product is being made
• In most cases, this value will be the same as the actual cost of the US-origin item to the
non-US manufacturer, except:
• when the non-US manufacturer and the US supplier are affiliated and have special arrangements
that result in below-market pricing, the value of the US-origin item should reflect fair market prices
that would normally be charged to unaffiliated customers in the same non-US market. If fair
market value cannot be determined based upon actual arms-length transaction data for the US-
origin item, then you must determine another reliable valuation method to calculate or derive the
fair market value, which may include either:
• the use of comparable market prices, or;
• costs of production and distribution.
• The EAR does not require calculations based on any one accounting system or US
accounting standards, so you may calculate fair market price using another formula.
• However, the method you use must be consistent with your business practices, meaning
that it must be supported by both records and consistent practices, and you may not
depreciate reported fair market values or otherwise reduce fair market values through
related accounting conventions.
• Values may be historic or projected, but projected values may only be relied upon to the
extent that such values remain consistent with your documentation.

#ExportCanada
• Value of non-US-made product = the fair market price of the non-US item in the
market where the non-US item is sold
• In most cases, this value will be the same as the actual cost of the non-US item to a
buyer, except:
• when the non-US manufacturer and the buyer of the non-US item are affiliated and have special
arrangements that result in below-market pricing, the value of the non-US item should reflect fair
market prices that would normally be charged to unaffiliated customers in the same non-US
market. If fair market value cannot be determined based upon actual arms-length transaction data
for the non-US item, then you must determine another reliable valuation method to calculate or
derive the fair market value, which may include either:
• the use of comparable market prices, or;
• costs of production and distribution.
• The EAR does not require calculations based on any one accounting system or US
accounting standards, so you may calculate fair market price using another formula.
• However, the method you use must be consistent with your business practices, meaning
that it must be supported by both records and consistent practices, and you may not
depreciate reported fair market values or otherwise reduce fair market values through
related accounting conventions.
• Values may be historic or projected, but projected values may only be relied upon to the
extent that such values remain consistent with your documentation.

#ExportCanada
• After determining:
• the value of all of the US-origin controlled items, and;
• the value of the non-US-made product
• Add up the total value of all US-origin controlled items, divide that number by the
value of the non-US made product, and multiply the result by 100.
• If the number is 10 or less, the non-US-made product is released from US cradle-to-grave
track-and-trace requirements for all destinations, worldwide, insofar as the US-origin
content is not later separately extracted from the non-US-made product.
• If the number is 25 or less, the non-US-made product is released from US cradle-to-grave
track-and-trace requirements for all destinations, worldwide, except Cuba, Iran, North
Korea, Sudan, and Syria, insofar as the US-origin content is not later separately extracted
from the non-US-made product.
• Except for non-US technology incorporating US-origin controlled content
technology, which, if it appears qualifies for de minimis treatment, additionally
requires:
• filing one-time report with BIS, and;
• a minimum 30-day waiting period prior to any reexport or retransfer.
• See EAR Supplement No. 2 to Part 734 at paragraph (b).

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• What do you do if the number is 26?

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• What do you do if the number is 14
and the destination is Iran?

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• What do you do if the number is 14,
the destination is Australia for ADOD,
but you have a copy of an end-use
statement from your Panama supplier
telling the US OEM that the end-user
was the US DOD in the US?
• (See EAR Part 764.1(g)(2))

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includes 9 parts Regular CCL and 3
parts 600.a Series and the destination
is Vietnam?

#ExportCanada
includes 9 parts Regular CCL and 3
parts 600.x Series and the destination
is China (PRC)?

#ExportCanada
includes almost 2 parts Regular CCL
and the eensiest smidgeon (.0001) of
ITAR and the destination is
Tim Hortons in Oakville, Ontario?

#ExportCanada
• What do you do if the item is non-US-
made technology incorporating de
minimis-eligible US-origin controlled
technology?

#ExportCanada
Filing de minimis Calculations
with BIS and the Response
• EAR Supplement No. 2 to Part 734 also describes the
process for filing a de minimis calculation with BIS.
• The only time a one-time report is required for de minimis
is with respect to technology (although BIS does not state
such a report cannot be filed for hardware or software,
too).
• The report must contain:
• a description of the scope and nature of the non-US-made technology;
• a description of its fair market value, and;
• the rationale and basis for the valuation of the non-US-made technology.
• You must include, for the person in your company whom BIS may contact concerning your report, his
or her:
• Name;
• Title;
• Address;
• Telephone number;
• Email address, and;
• Facsimile (fax) number.
• Also, if the value of the US-origin controlled content exceeds 10%, the report must indicate the
country of destination for the non-US-made technology.

#ExportCanada
• Send the report, via:
• Email to rpd2@bis.doc.gov;
• Fax to (202) 482-3355, or;
• Mail or Hand-delivery/Courier to:
U.S. Department of Commerce
Bureau of Industry and Security
Regulatory Policy Division
14th and Pennsylvania Avenue, N.W.
Room 2099B
Washington, D.C. 20230

#ExportCanada
• If BIS does not contact your designated person
within thirty (30) days after filing the report with
BIS, you may rely upon the calculations
described in the report to support reexport and
retransfer activities unless and until BIS contacts
you and instructs you otherwise.
• If BIS contacts anyone in your company about
the report, you may not reexport or retransfer
the technology until authorized by BIS via:
• reexport/retransfer license, or;
• indication from BIS that the de minimis calculations were performed correctly.
• The best way to avoid long waits is to prepare
BIS for receipt of your report.

#ExportCanada
Resolving de minimis Issues for
Hardware and Technology Calculations
• The official guidance for conducting de minimis
calculations is in Supplement No. 2 to EAR Part 734.
• Some steps for all de minimis calculations are the
same:
• Identify incorporated US-origin controlled content:
• What is the ECCN of each US-origin item incorporated into the non-US-made item?
• Which, if any, US-origin items would require a license from BIS if they were exported or
reexported (in the form in which received) to the non-US-made item’s country of destination?
• Consider EAR Part 746 – Embargoes and Other Special Controls.
• Ignore EAR Part 744 – Control Policy: End-user and End-use Based.
• Exclude from de minimis calculations US-origin items that could be exported or reexported to
the country of destination:
• without a license (designated as “NLR”), or;
• Under License Exception GBS.
• US-origin technology and source code used to design or produce non-US-made hardware or
software are not considered to be incorporated into the non-US-made hardware or
software.
• De minimis, by itself, cannot justify diversion to a previously stated end-user or end-use.

#ExportCanada
Resolving de minimis Issues for
Hardware and Technology Calculations
• If the hardware and technology are
segregable:
• Submit a one-time report to BIS for the technology, and wait,
and;
• Run the hardware through your internal de minimis calculation
process.
• If the hardware and technology are
inextricably linked, submit the entire
de minimis calculation in a one-time
report to BIS and wait.

#ExportCanada
How to Handle Aggregate Data
• From 79 FR 0034:
“One commenting party observed that, with regard to technical data directly
related to a defense article controlled on the USML and unclassified technical data
directly related to parts and components of the defense article that are controlled
on the CCL, insofar as the parts and components are directly related to the defense
article, certain of the technical data directly related to the defense article by virtue
of being directly related to the parts and components of the defense article would
not be captured by the technical data control paragraph, depending on whether
the parts and components are part of the defense article at the point of export, or
are proposed for export apart from the defense article. The commenting party
discerns an export jurisdictional conflict. The Department clarifies that unclassified
technical data directly related to the parts and components that are controlled
under the CCL would not be controlled under the ITAR. The Department would,
however, have export jurisdiction over aggregated technical data that included
technical data directly related to a defense article. Unclassified technical data
directly related to parts and components that would be controlled under the CCL
would remain subject to the EAR if they were proposed for export apart from the
ITAR controlled technical data.”

The de minimis Rule In Practice

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