India/Pakistan Inquiries

Bureau of Export Administration
December 4, 1998

1.  A U.S. company is a service provider to a listed entity (example: provides engineering services). Is a license required?

If the services involve the export or reexport of technology,including technical assistance, subject to the Export Administration Regulations (EAR), a license is required. Section 772 of the EAR provides a definition of technology. Also, see the response to question 5 concerning activities of U.S. persons.

2.  Can representatives of a U.S. company talk (e.g., communications by phone, in writing, or in person) to a listed entity about future financial transactions?

Yes, as long as the communications do not involve the export or reexport of technology subject to the EAR. See the response to question 1 for further guidance.

3.  Does an exporter need to get a license in order to provide a listed entity technical specifications so that the listed entity can manufacture an item which the U.S. exporter will purchase?

If the technical specifications constitute technology subject to the EAR, then a license is required. For example, if the technology qualifies for TSR or TSU to that country but it is going to a listed entity, a license is required.

4.  Do Office of Foreign Asset Control(OFAC)regulations parallel BXA regulations?

No, they do not. Certain financial-related sanctions, including sanctions on India and Pakistan that would have been implemented by OFAC, have been waived by the President. Please contact OFAC for further information on the status of any OFAC regulations.

5.  Can a U.S. person invest money in a listed entity?

Yes, however, Section 744.6 of the EAR imposes licensing requirements on exporters and other U.S. persons when they have knowledge that their activities will directly assist in prohibited proliferation activities. Exporters and other U.S. persons have obligations under the "Know Your Customer" guidance and "Red Flag" indicators, contained in Supplement No. 3 to Part 732 of the EAR.

6.  Are exports permitted if a listed entity is the purchaser or order party but the export is drop-shipped to a benign, unlisted entity in India or in another country?

If the listed entity is party to the transaction but is not the Ultimate Consignee or End-User, a license would be required if the entity takes possession of the goods. A license is always required if the listed entity is either the Ultimate Consignee or End-User.

7.  How does a bank determine if an exporter qualifies under the saving clause before it pays out on a letter of credit?

There is no regulatory requirement in the EAR specifying what documents a bank must obtain prior to paying a letter of credit. A bank should request such information from the exporter (e.g., invoice, bills of lading, air way bills, etc.) which would satisfy the bank that the export is authorized under the savings clause. Please note that exporters and other persons have obligations under the "Know Your Customer" guidance and Red Flag indicators, contained in Supplement No. 3 to Part 732 of the EAR. In addition, exporters and other persons should be mindful of Prohibition 10 set out in section 736.2 of the EAR regarding proceeding with transactions with knowledge that a violation has occurred or is about to occur.

8.  Can a U.S. person provide information in an open forum in India about how to use a commodity that is classified as EAR99?

Yes, as long as the open forum satisfies the terms and conditions of section 734.3(b)(3) of the EAR concerning publicly available technology and software. Supplement No. 1 to Part 734 contains explanatory questions and answers on publicly available technology and software, including release in an open conference.

9.  Can a Special Comprehensive License be used to ship items to a listed entity?

No. Part 752(a)(1) states "The existence of an Special Comprehensive License does not supersede an exporter's obligation to request a separate license as many be required by part 744."

10.  Is it a Red Flag when BXA lists an entity on the Entity List?

Yes.

11.  Can I now send a service person to service or install equipment which had been sent to an entity on the Entity List prior to the publication of the India/Pakistan regulations?

If the service or installation involves the export or reexport of goods, technology, or software subject to the EAR, a license is required. No License Exceptions are available.

12.  Since Bharat Electronics was on the Entity List prior to November 19 with the requirement for a license for all items subject to the Export Administration Regulations, not having a classification of EAR99, is it a mistake in the current listing that Bharat Electronics now requires a license for all items subject to the Export Administration Regulations?

No, the current regulation is correct.

13.  Can products manufactured in-country (i.e., domestically manufactured in India or Pakistan) be sold to a listed entity?

Domestically manufactured products may be sold to a listed entity. Please note that there are licensing requirements if you export or reexport to a listed entity U.S.-origin manufacturing technology or U.S.-origin parts for incorporation in a foreign- manufactured product. Please note that Section 744.6 of the EAR imposes licensing requirements on U.S. persons when they have knowledge that their activities will directly assist in prohibited proliferation activities. See the response to question 5.

14.  What is the licensing policy for computers with a CTP of under 2,000 to a listed entity?

Computers subject to the Export Administration Regulations to a listed entity have a presumption of denial. If the listed entity is a parastatal or private entity and BXA confirms that there is a pre-existing business arrangement, the licensing policy is presumption of approval. Computers that have a classification of EAR99 do not require a license to listed military entities.

15.  Can warranty services be provided for a previously exported commodity to a listed entity?

If the services involve the export or reexport of technology or software subject to the EAR, a license is required.

16.  Are the India/Pakistan regulations intended to prohibit the export of food and other agricultural commodities, which are exempt under the provisions of Section 102(b)(2) of the Arms Export Control Act (the Glenn Amendment sanctions), as amended?

No. Consistent with the provisions of section 102(b)(2) of the Arms Export Control Act and the provisions of the Agriculture Export Relief Act of 1998 (P.L. 105-194), BXA intends to publish in the near future a regulatory revision to clarify the exemption to cover food and agricultural commodities (which includes fertilizers).

17.  Does the saving clause language relating to "on dock" refer to the exporter's loading dock or the dock of the exporting carrier?

Shipments for actual orders received on or prior to November 19 must have left the exporter premises by November 19. The items must have been either aboard an exporting carrier or en route to a port of export (ex. freight forwarder, airline, any place other than the exporter loading dock) by midnight November 19.

Items that are "exported" electronically (such as by fax or Internet; or software and technology) had to be out of the control of the exporter by midnight November 19. If such items were in the control of the exporter after November 19, you must apply for a license.

All shipments under the "savings clause", must leave the United States by midnight December 17. Items cannot be stored or send to a bonded warehouse/foreign-trade zone for later shipment, since for the purpose of export controls a bonded warehouse/foreign-trade zone is considered within the territory of the United States.

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