Limited functionality available
The United States Bureau of Industry and Security (“BIS”) has published regulations to implement changes agreed at the annual Wassenaar Arrangement (WA) Plenary to control “emerging technology” items under the Commerce Control List (“CCL”).
Changes have been made to Category 3, Category 5 Part II, Category 6, and Category 9. Specifically, the rule adds to the Export Administration Regulation’s (“EAR”) CCL five recently developed or developing technologies deemed “essential to the national security of the United States”. These are: discrete microwave transistors (a major component of wideband semiconductors), continuity of operation software, post-quantum cryptography, underwater transducers designed to operate as hydrophones, and air-launch platforms.
There are four Export Control Classification Numbers (ECCNs) that have been revised: 3A001, 5A002, 6A001, and 9A004.
There is one new ECCN added to the CCL: 3D005. ECCN 3D005 has been added to the CCL in order to control software that ensures continuity of operation when electronics are exposed to Electromagnetic Pulse (EMP) or Electrostatic Discharge (ESD). The software is controlled for national security and anti-terrorism reasons and a US license is required worldwide, except for Canada.
ECCN 5A002 is amended in order to add a control on certain types of postquantum cryptographic (“PQC”) algorithms. Significantly for those operating in the field of trading items and software with cryptographic capabilities, the control replaces the term “in excess of 56 bits of symmetric key length, or equivalent” with “described security algorithm”, which is defined later in the text. The Federal Register Notice states, “Currently, the WA includes controls over the most commonly-used forms of cryptography in the contemporary world: symmetric algorithms based on key length; and asymmetric algorithms based on factorization of integers or on the computation of discrete logarithms (over various groups)… However, if and when large scale quantum computers are built, they will likely undermine the security of current cryptographic systems.” The concern is that postquantum cryptography, which is becoming increasingly common, is currently in use in commercial products, but those algorithms are not covered by any WA controls.
ECCN 6A001 has been amended and has revised paragraph a.2.a.6 adding the parameter “and having a ‘hydrophone sensitivity’ better than – 230 dB below 4kHz” this revision is to remove any transducers or hydrophones that aren’t of strategic concern. Having sensitivity below 4kHz must be controlled because of its use in Anti-Submarine Warfare (ASW). This new control structure amends the previous control gap that treated acoustic transducers and receivers separately. Therefore, this amendment takes into consideration the multifunction aspects of newer underwater acoustic devices to be evaluated as they can more readily operate in both transmit and receive mode. This rule also corrects a license exception LVS paragraph for a.1.b.1 by reversing the frequency band range for the equipment from “30kHz to 2kHz” to now read “2kHz to 30kHZ”.
ECCN 9A004 has been amended with revisions to the heading adding “air-launch platforms”. This rule adds new item paragraph controlling “aircraft” “specially designed” or modified to be air-launch platforms for space launch vehicles. There have also been revisions to the license requirement table to add 9A004.g to the NS and AT license requirement paragraphs. This new amendment comes in light of a number of commercial entities that are expanding into building space-bound crafts utilising air-launch rather than a traditional ground launch.
The BIS routinely publishes annual updates to the CCL to reflect changes agreed at the Wassenaar Arrangement plenary. On this occasion, however, the BIS has selected changes referring to new controls on “emerging technologies”, leaving the remaining changes until later. This presumably reflects a desire to demonstrate progress on the identification and control of “emerging technologies” called for in the 2018 Export Control Reform Act (ECRA).
Following the ECRA, the BIS published an Advanced Notice of Proposed Rulemaking (ANPRM) in November 2018, seeking public comments on criteria for identifying emerging technologies essential for US security. We have yet to see how the BIS intends to proceed based on industry response.
Julia leads Deloitte’s Global Export Controls & Sanctions team in London. She has led compliance-enhancing projects for a number of years in a variety of industries, including financial services, consumer products, oil and gas, aerospace & defence, manufacturing and the technology, media and telecommunications industries. She is a specialist in US, EU, UK, French, German and other EU Member State military, dual-use and sanctions regulations. Julia has a thorough understanding of the export control challenges faced by companies involved in international trade activities. More broadly, Julia supports her clients in developing integrated compliance programmes to manage their regulatory compliance requirements (including export controls, ABAC and data privacy), with a focus on lean business requirements to manage regulatory obligations. Julia has also been involved in the development of a number of different technology solutions to manage export compliance requirements, and has supported clients to develop and implement their digital strategies for effective compliance management.