[Code of Federal Regulations]
[Title 15, Volume 2]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 15CFR732.2]

[Page 204-206]
 
                  TITLE 15--COMMERCE AND FOREIGN TRADE
 
  CHAPTER VII--BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE
 
PART 732_STEPS FOR USING THE EAR--Table of Contents
 
Sec.  732.2  Steps regarding scope of the EAR.

    Steps 1 though 6 are designed to aid you in determining the scope of 
the EAR. A flow chart describing these steps is contained in Supplement 
No. 2 to part 732.
    (a) Step 1: Items subject to the exclusive jurisdiction of another 
Federal agency. This step is relevant for both exports and reexports. 
Determine whether your item is subject to the exclusive jurisdiction of 
another Federal Agency as provided in Sec.  734.3 of the EAR.
    (1) If your item is subject to the exclusive jurisdiction of another 
Federal agency, comply with the regulations of that agency. You need not 
comply with the EAR and may skip the remaining steps.
    (2) If your item is not subject to the exclusive jurisdiction of 
another federal agency, then proceed to Step 2 in paragraph (b) of this 
section.
    (b) Step 2: Publicly available technology and software. This step is 
relevant for both exports and reexports. Determine if your technology or 
software is publicly available as defined and explained at part 734 of 
the EAR. Supplement No. 1 to part 734 of the EAR contains several 
practical examples describing publicly available technology and software 
that is outside the scope of the EAR. The examples are illustrative, not 
comprehensive. Note that encryption software controlled for EI reasons 
under ECCN 5D002 on the Commerce Control List (refer to Supplement No.1 
to part 774 of the EAR) shall be subject to the EAR even if publicly 
available. Accordingly, the provisions of the EAR concerning the public 
availability of items are not applicable to encryption items controlled 
for ``EI'' reasons under ECCN 5D002.
    (1) If your technology or software is publicly available, and 
therefore outside the scope of the EAR, you may proceed with the export 
or reexport if you are not a U.S. person subject to General Prohibition 
Seven. If you are a U.S. person, go to Step 15 at Sec.  732.3(j) of this 
part. If you are a U.S. person and General Prohibition Seven concerning 
proliferation activity of U.S. persons does not apply, then you may 
proceed with the export or reexport of your publicly available 
technology or software. Note that all U.S. persons are subject to the 
provisions of General Prohibition Seven.

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    (2) If your technology or software is not publicly available and you 
are exporting from the United States, skip to Step 7 in Sec.  732.3(b) 
of this part concerning the general prohibitions.
    (3) If you are exporting items from a foreign country, you should 
then proceed to Step 3 in paragraph (c) of this section and the other 
steps concerning the scope of the EAR.
    (c) Step 3: Reexport of U.S.-origin items. This step is appropriate 
only for reexporters. For an item in a foreign country, you should 
determine whether the item is of U.S. origin. If it is of U.S.-origin, 
skip to Step 7 in Sec.  732.3(b) of this part. If it is not of U.S. 
origin, then proceed to Step 4 in paragraph (d) of this section.
    (d) Step 4: Foreign-made items incorporating less than the de 
minimis level of U.S. parts, components, and materials. This step is 
appropriate only for items that are made outside the United States and 
not currently in the United States. Note that the following encryption 
items are subject to the EAR even if they incorporate less than the de 
minimis level of U.S. content: encryption items controlled for ``EI'' 
reasons under ECCN 5A002, 5D002 or 5E002 on the Commerce Control List 
(Supplement No. 1 to Part 774 of the EAR) and mass market encryption 
commodities and software, described in the Cryptography Note (Note 3) in 
Category 5--Part 2 (``Information Security'') of the Commerce Control 
List, that have not been reviewed by BIS and released from the ``EI'' 
and ``NS'' controls of ECCN 5A002 or 5D002 in accordance with the 
requirements described in Sec.  742.15(b)(2) of the EAR. Exporters may, 
as part of a review request, ask that certain 5A002 and 5D002 parts, 
components and software also be made eligible for de minimis treatment 
(see Sec.  734.4(b) of the EAR). The review of de minimis eligibility 
will take into account U.S. national security interests.
    (1) For an item made in a foreign country, you should determine 
whether controlled U.S.-origin parts, components, or materials are 
incorporated as provided in Sec.  734.4 of the EAR. Also, determine the 
value of the U.S.-origin controlled content as provided in Supplement 
No. 2 to part 734 of the EAR.
    (2) To determine the value of the U.S.-origin controlled content, 
you should classify the U.S.-origin content on the CCL, determine those 
items that would require a license from BIS for reexport to the ultimate 
destination of the foreign-made product if such parts, components, or 
materials were reexported to that destination in the form received, and 
divide the total value of the controlled U.S. parts, components, and 
materials incorporated into the foreign-made item by the sale price of 
the foreign-made item.
    (3) If no U.S. parts, components, or materials are incorporated or 
if the incorporated U.S. parts, components, and materials are below the 
de minimis level described in Sec.  734.4 of the EAR, then the foreign-
made item is not subject to the EAR by reason of the parts and 
components rule, the classification of a foreign-made item is irrelevant 
in determining the scope of the EAR, and you should skip Step 4 and go 
on to consider Step 6 regarding the foreign-produced direct product 
rule.
    (4) If controlled parts, components, or materials are incorporated 
and are above the de minimis level, then you should go on to Step 5.
    (e) Step 5: Foreign-made items incorporating more than the de 
minimis level of U.S. parts, components, or materials. This step is 
appropriate only for foreign-made items incorporating certain U.S. 
parts. If the incorporated U.S. parts exceed the relevant de minimis 
level, then your export from abroad is subject to the EAR. You then 
should skip to Step 7 at Sec.  732.3 of this part and consider the steps 
regarding all other general prohibitions, License Exceptions, and other 
requirements.
    (f) Step 6: Foreign-made items produced with certain U.S. technology 
for export to specified destinations. This step is appropriate for 
foreign-made items in foreign countries.
    (1) If your foreign-produced item is described in an entry on the 
CCL and the Country Chart requires a license to your export or reexport 
destination for national security reasons, you should determine whether 
your item is subject to General Prohibition Three (Foreign-Produced 
Direct Product Reexports) (Sec.  736.2(b)(3) of the EAR). Your item is 
subject to the EAR if it is captured by

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General Prohibition Three (Foreign-Produced Direct Product Reexports), 
and that prohibition applies if your transaction meets each of the 
following conditions:
    (i) Country scope of prohibition. Your export or reexport 
destination for the direct product is Cuba, Libya, or a destination in 
Country Group D:1 (see Supplement No. 1 to part 740 of the EAR) 
(reexports of foreign-produced direct products exported to other 
destinations are not subject to General Prohibition Three);
    (ii) Scope of technology or software used to create direct products 
subject to the prohibition. Technology or software that was used to 
create the foreign-produced direct product, and such technology or 
software that was subject to the EAR and required a written assurance as 
a supporting document for a license or as a precondition for the use of 
License Exception TSR in Sec.  740.6 of the EAR (reexports of foreign-
produced direct products created with other technology and software are 
not subject to General Prohibition Three); and
    (iii) Scope of direct products subject to the prohibition. The 
foreign-produced direct products are subject to national security 
controls as designated on the proper ECCN of the Commerce Control List 
in part 774 of the EAR (reexports of foreign-produced direct products 
not subject to national security controls are not subject to General 
Prohibition Three).
    (2) License Exceptions. Each License Exception described in part 740 
of the EAR overcomes this General Prohibition Three if all terms and 
conditions of a given License Exception are met by the exporter or 
reexporter.
    (3) Subject to the EAR. If your item is captured by the foreign-
produced direct product control at General Prohibition Three, then your 
export from abroad is subject to the EAR. You should next consider the 
steps regarding all other general prohibitions, License Exceptions, and 
other requirements. If your item is not captured by General Prohibition 
Three, then your export from abroad is not subject to the EAR. You have 
completed the steps necessary to determine whether your transaction is 
subject to the EAR, and you may skip the remaining steps. Note that in 
summary, items in foreign countries are subject to the EAR when they 
are:
    (i) U.S.-origin commodities, software and technology unless 
controlled for export exclusively by another Federal agency or unless 
publicly available;
    (ii) Foreign-origin commodities, software, and technology that are 
within the scope of General Prohibition Two (Parts and Components 
Reexports), or General Prohibition Three (Foreign-Produced Direct 
Product Reexports). (However, such foreign-made items are also outside 
the scope of the EAR if they are controlled for export exclusively by 
another Federal agency or publicly available.)

[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 
FR 68577, Dec. 30, 1996; 62 FR 25453, May 9, 1997; 63 FR 50520, Sept. 
22, 1998; 65 FR 38150, June 19, 2000; 65 FR 62604, Oct. 19, 2000; 67 FR 
38860, June 6, 2002]