[Code of Federal Regulations]
[Title 15, Volume 2, Parts 300 to 799]
[Revised as of January 1, 1997]
From the U.S. Government Printing Office via GPO Access
[CITE: 15CFR732.2]

[Page 136-138]
 
                TITLE 15--COMMERCE AND FOREIGN TRADE
 
CHAPTER VII--BUREAU OF EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE
 
PART 732--STEPS FOR USING THE EAR--Table of Contents
 
Sec. 732.2  Steps regarding scope of the EAR.

    Steps 1 through 6 aid you in determining the scope of the EAR.
    (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. You have no obligations under the EAR and need not comply 
with the EAR. You may skip the remaining steps.
    (2) If your technology or software is not publicly available and you 
are exporting from the United States, skip to

[[Page 137]]

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. Note 
that encryption items controlled for EI reasons under ECCN 5A002 or 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 they incorporate less 
than the de minimis level of U.S. content. Accordingly, the provisions 
of the EAR concerning de minimis levels are not applicable to encryption 
items controlled for ``EI'' reasons under ECCN 5A002, ECCN 5D002, or 
ECCN 5E002.
    (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 BXA 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 5 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 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, North Korea, 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

[[Page 138]]

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 unless publicly available.)

[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 
FR 68577, Dec. 30, 1996]