The Export Administration Regulations ("EAR" or "Export Regulations"), 15 C.F.R. §§ 730 et seq., are administered by the Bureau of Export Administration ("BXA") in the Department of Commerce. They were completely reorganized in March 1996, with a major encryption-related revision in December 1996.

Readers should consult the actual Export Regulations themselves, including possible late-breaking changes announced in the Federal Register, in determining what if any kind of export license is required for a specific export or whether instead a License Exception is applicable.

What "Exports" Must be Licensed?
A: Some surprising transactions.

Under the Export Regulations, "export" means an actual shipment or transmission of items subject to the Regulations out of the United States. See Important EAR terms and principles, 15 C.F.R. § 734.2(b)(1).

Unless a "License Exception" applies, the export of high technology products, including sophisticated computer software and other technical data, is very likely to require a license.

An export license may be needed even if the export is being made from a U.S. company to its branch office or wholly owned subsidiary located abroad.

Some actions that might not be regarded as an "export" in other contexts do constitute an export subject to the Export Regulations. For example:

• carrying a notebook computer with encryption-capable software on a business trip outside the United States (possibly subject to a "tools of the trade" License Exception);

• the release of technology to a foreign national in the United States through such means as demonstration or oral briefing;

• the return of foreign equipment to its country of origin after repair in the United States,

• shipments from a U.S. foreign trade zone;

• the electronic transmission of non-public data that will be received abroad, e.g., posting to an Internet newsgroup or to a Web site;

• visual inspection by foreign nationals of U.S.-origin equipment and facilities;

• oral exchanges of information in the United States or abroad;

• the application to situations abroad of personal knowledge or technical experience acquired in the United States;

• technical assistance by U.S. persons with respect to encryption commodities or software. [15 CFR 730.5, 734.2(b)(2)

Are There Any "License Exceptions" for Software Exports?
A: Yes

Several License Exceptions (which are just what they sound like -- exceptions to the requirement for an export license) are available for software. Some of these are discussed below.

What is the "Mass Market" Software License Exception?
Perhaps the principal software-related License Exception is TSU, which authorizes exports and reexports of "mass market" software subject to the General Software Note in Supplement No. 2 to part 774 of the Export Regulations.

That exception does not apply, however, to encryption software. Such software may become eligible after a one-time BXA review according to the provision of § 742.15(b)(1) of the Export Regulations.

License Exception TSU is available to all destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. To be eligible for that exception, software must be generally available to the public by being:

a. Sold from stock at retail selling points, without restriction, by means of:

1. Over the counter transactions;

2. Mail order transactions; or

3. Telephone call transactions; and

b. Designed for installation by the user without further substantial support by the supplier.

What Software Exports Can Use the "Tools of the Trade" License Exception?
Another License Exception likely to be widely used for software is the one-year "tools of the trade" exception under section 740.9(a)(2)(i). This exception can make it possible for a business traveler to take software abroad on a notebook computer. This variation of the TMP License Exception can be used even for encryption software that would be otherwise subject to the new EI restrictions on encryption software.

The tools of the trade License Exception perimts export and reexport of "[u]sual and reasonable kinds and quantities of commodities and software for use by employees of the exporter in a lawful enterprise or undertaking of the exporter."

The software in question must remain under the effective control of the exporter or the exporter’s employee.

Shipment of the software may accompany the individual departing from the United States or may be shipped unaccompanied within one month before the individual’s departure from the United States, or at any time after departure.

No tools of the trade may be taken to Country Group E:2 (Cuba, North Korea, Libya), and only equipment necessary to commission or service goods may be taken as tools of trade to Country Group D:1 (basically, all present or former Communist countries except for certain central European countries).

Software shipped as a temporary export under the tools of the trade License Exception must be returned to the country from which they were exported as soon as practicable but (except in certain specific circumstances) no later than one year from the date of export.

Can Beta Software Be Exported Under a License Exception?
A: Quite possibly (except encryption software)

Still another License Exception is for beta-test software under section 740.9(c). This form of the TMP License Exception cannot be used for software subject to the EI encryption restrictions.

What Other U.S. laws or Agencies
Might Regulate Exports?

Other U.S. agencies also have their own export controls which may affect certain exports.

For example, exports of cryptographic devices or products designed to military specifications or pursuant to a military contract or specifically designed, modified, or configured for military applications are governed by the International Traffic in Arms Regulations ("ITAR"), administered by the Department of State. See 22 C.F.R. §§ 121-130

If the exporter is uncertain whether the Department of State or the BXA has jurisdiction over the export, a written determination from the Office of Defense Trade Controls can be requested.

Are There Penalties for Export-Law Violations?
A: Yes -- including fines and prison terms.

As complicated and time consuming as export control compliance is, exporters must achieve compliance.

If you violate the Export Regulations, you can be fined and/or imprisoned.

Even without demonstrating culpability on the part of the exporter, administrative officials may impose substantial fines for each violation, condition subsequent export licensing upon payment of penalties, and suspend or revoke the privilege to export.