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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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The U.S. Department of Commerce’s Bureau of Industry &amp; Security (BIS) issued a <a href="https://www.federalregister.gov/documents/2021/03/29/2021-05481/export-administration-regulations-implementation-of-wassenaar-arrangement-2019-plenary-decisions" target="_blank" rel="noopener">final rule</a> amending the Export Administration Regulations (EAR) to eliminate most reporting requirements related to open source encryption software and certain “mass market” encryption items and to revise the Commerce Control List (CCL). These amendments reflect decisions made at the December 2019 plenary meeting of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.

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Previously, software source code published online that involved encryption functionality frequently remained subject to the EAR (and its licensing requirements) until the author of the code submitted an email notification report to the U.S. government. Additionally, exporters were required to submit an annual report to BIS for most “mass market” encryption items (e.g., software and other items generally available for sale to the public).

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This final rule eliminates these reporting requirements, specifically:

Further, the rule allows self-classification reporting for ECCN 5A992.c or 5D992.c components of mass market products (and their “executable software”) and moves mass market “components,” executable software, toolsets and toolkits out of § 740.17(b)(3)(i) and into (b)(1). This means that such items are now subject to self-classification and the filing of a Commodity Classification (CCAT) request with BIS is no longer required.

Notably, the rule does not change the License Exception ENC requirements for any non-mass-market encryption item or any encryption item (mass market or not) that implements non-standard cryptography. For more information on this exception and annual reporting requirements, see our <a href="https://www.thompsonhine.com/publications/encryption-exports-annual-self-classification-reports-due-february-1-2021" target="_blank" rel="noopener">January 5, 2021</a> International Trade Update.

The final rule also provides technical updates and revisions to the following ECCNs on the CCL: 0A502, 0A503, 0A606, 1A002, 1A005, 1A006, 1A613, 1B002, 1C001, 1C002, 1C006, 1C010, 2A001, 3B001, 3E002, 5A002, 6A004, 6A005, 6A008, 9A011, 9D515, and 9E003.

The final rule was effective on March 29, and BIS stated that these changes “are designed to reduce the regulatory burden for exporters while still fulfilling U.S. national security and foreign policy objectives.” BIS has noted that shipments of items impacted by this final rule that were on dock for loading, laden aboard an exporting carrier or en route aboard a carrier to a port of export on March 29, pursuant to actual orders for export, reexport or transfer (in-country) to a foreign destination, may proceed to that destination under the previous license exception eligibility or without a license so long as they have shipped before May 28, 2021.

Francesca M.S. Guerrero Partner, International Trade 202.973.2774 <a href="mailto:Francesca.Guerrero@ThompsonHine.com">Francesca.Guerrero@ThompsonHine.com</a>

Samir D. Varma Partner, International Trade 202.263.4136 <a href="mailto:Samir.Varma@ThompsonHine.com">Samir.Varma@ThompsonHine.com</a>

Joyce Rodriguez Associate, International Trade 202.973.2724 <a href="mailto:Joyce.Rodriguez@ThompsonHine.com">Joyce.Rodriguez@ThompsonHine.com</a>

Scott E. Diamond* Senior Legislative &amp; Regulatory Policy Advisor, International Trade 202.263.4197 <a href="mailto:Scott.Diamond@ThompsonHine.com">Scott.Diamond@ThompsonHine.com</a>

*Not licensed to practice law

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/International_Trade_Update_-_BIS_Eliminates_Most_Mass_Market_Encryption_Reporting_Obligations.pdf

BIS Eliminates Most Mass Market Encryption Reporting Obligations

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