RGCI-What-is-a-Deemed-Export_

Both the EAR and the ITAR regulate Deemed Exports. But what exactly is a Deemed Export and how is it different from a traditional export?

Exports Defined

Most people assume exporting means shipping a tangible item outside of the United States. But it is possible to export technology and non-tangible items. And it is also possible to export even within the United States. A Deemed Export is defined as releasing or otherwise transferring controlled technical data to a foreign person in the United States. Both the EAR and the ITAR regulate these Deemed Exports, but to different extents.

EAR and Deemed Exports

Under the EAR, releases of controlled technology to foreign persons in the U.S. are "deemed" to be an export to the person’s most recent country or countries of nationality.

Typical organizations using EAR “deemed” export licenses include universities, high technology research and development institutions, bio-chemical firms, as well as the medical and computer sectors.

With Deemed Exports, there is usually an obligation to obtain an export license from BIS or DDTC before “releasing” controlled technology to a foreign person.

ITAR and Deemed Exports

Under the ITAR, releasing or otherwise transferring technical data to a foreign person in the United States is considered a “deemed” export. Any release in the United States of technical data to a foreign person is deemed to be an export to all countries in which the foreign person has held or holds citizenship or holds permanent residency.

As an example, if you have a deemed export of ITAR technology to a foreign national from Canada, that was born in China, then ITAR views that as a deemed export to Canada AND China. EAR would view that only as an export to Canada.

Exemptions from Deemed Exports

It should be noted that those organizations having technology exchanges with persons with permanent residence status, U.S. citizenship, and persons granted status as "protected individuals" are exempt from the “deemed” export rule.

EAR “Deemed” exports are described in 734.13(b) of the EAR. The EAR defines a "release" of "technology" or source code in section 734.15 of the EAR, and defines activities that are not "deemed" exports in section 734.20 of the EAR. EAR Deemed Exports: https://www.bis.doc.gov/index.php/policy-guidance/deemed-exports

ITAR Deemed Exports are described in §120.17 Export: https://www.ecfr.gov/cgi-bin/text-idx?SID=70e390c181ea17f847fa696c47e3140a&mc=true&node=pt22.1.120&rgn=div5#se22.1.120_117

For further information about deemed exports and the specifics surrounding EAR and ITAR designations, contact Redstone Government Consulting. We offer a variety of consulting packages, training, and a host of educational articles on our website.

Written by Carolyn Turner

Carolyn Turner Carolyn Turner is an Export/Import Compliance Consultant at Redstone Government Consulting, Inc., specializing in international trade regulations, includingInternational Traffic in Arms Regulations(ITAR) andExport Administration Regulations(EAR) on the export side. She provides guidance on import compliance matters such as customs clearance, classification, free trade agreements, country of origin requirements, duty drawback, and supply chain analysis. Carolyn advises contractors on regulatory compliance and develops policies and procedures to support effective international trade operations.Since 2002, Carolyn has held roles including International Research Analyst, International Trade Specialist, and Assistant Director or Research and Training at the Alabama International Trade Center, where she conducted market analyses, and provided training and consulting to small and medium-sized businesses across all industry sectors. She also has experience in freight forwarding working as the NVO coordinator for both imports and exports. And she has also served as an Adjunct Professor at the University of Alabama, developing and teaching online International Business courses.Carolyn is a Licensed U.S. Customs Broker and a NASBITE Certified Global Business Professional. She is proficient in Spanish. Her skills include Incoterms, import and export documentation, ITAR/EAR, free trade agreements, compliance program development, and international finance.She holds a B.S. in Commerce and Business Administration and a Master’s in Management with a Global Business Concentration from the University of Alabama. Carolyn serves on the boards of the Japan America Society of Alabama, Destination Hoover International, and BIO Alabama, and is a member of the Export Alabama Alliance.

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Government Regulations, Export & Import