FDP Rule Scope Expanded for Iran, Russia, Belarus

BIS is imposing additional controls to further restrict Iran’s access to low-level technologies, such as basic commercial grade microelectronics. Friday's  action will cut off a wider range of items from reaching Iran’s arsenal – including items manufactured outside the U.S. that are produced using U.S. technology. 

Effective April 18th,  the new rule from BIS amends the EAR to impose new controls restricting Iran’s access to additional low-level technology, including items manufactured outside the United States that are produced using U.S. technology.   The rule also expands the scope of the Russia/Belarus/Temporarily occupied Crimea region of Ukraine Foreign Direct Product (FDP) rule.

Certain foreign-made items located outside of the United States are subject to the EAR because they meet criteria specified under one of the FDP rules under the EAR.

This final rule expands the product scope of two of the FDP rules to make additional items subject to the EAR and imposes a license requirement when they are reexported or exported from abroad to Iran, Russia, Belarus, or the Temporarily occupied Crimea region of Ukraine.

Prior to this rule, BIS had not controlled all foreign transactions involving items covered by this rule.   This rule is effective on April 18, 2024.

Consistent with the U.S. Government’s commitment to restrict Iran from obtaining any item that might contribute to its manufacture of missiles, including those used against Israel and Ukraine, this rule amends the EAR to impose new controls restricting Iran’s access to additional low-level technology, including items manufactured outside the United States that are produced using U.S. technology, i.e., through the Iran FDP Rule in § 734.9(j) of the EAR.

Overview of New Controls 

This rule further expands the list of items included in supplement no. 7 to part 746 to include additional items that are critical to Iran and Russia’s weapons programs. 

While BIS’s controls cover a vast array of items necessary to the defense industries of Iran and Russia, certain items are more significant to their weaponry than others. The items in supplement no. 7 to part 746 will now include the entirety of the ‘Common High Priority List’ (CHPL).

BIS, in coordination with its partners in the European Union, Japan, and the United Kingdom, developed the CHPL to jointly identify items used in Russian weapons development by HTS-6 Codes.

The 50 CHPL HTS-6 Codes include electronic components such as integrated circuits and radio frequency (RF) transceiver modules, items essential for the manufacturing and testing of electronic components, and computer numerically controlled (CNC) machine tools.

Iran’s drone program is also dependent on foreign sources for these items. In adding 39 additional items to supplement no. 7 to part 746, the supplement will now include all 50 Common High Priority items. 

Amendments to the EAR

All items subject to the EAR that are classified under these HTS-6 entries already require a license for export, reexport, or transfer (in-country) to Russia and Belarus under § 746.5 of the EAR.

In addition, CCL and U.S.-origin EAR99 items classified under these HTS-6 entries are prohibited for export or reexport to Iran under § 746.7(e) of the EAR.

By adding these items to supplement no. 7 to part 746, BIS jurisdiction over foreign produced items in these categories will be expanded, which will in turn expand license requirements for Russia and Belarus under 746.8(a)(2).

The addition of these codes to supplement no. 7 to part 746 will also expand EAR restrictions over foreign transactions with Iran under § 746.7(a). 

En Route Items

Shipments of items removed from eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on April 18, 2024, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR), provided the export, reexport, or transfer (in-country) is completed no later than on May 20, 2024. 

[FR Notice]