Licensing Policy – Overall, a Policy of Denial

BIS adjusted its licensing policy in several control categories to either a policy of denial or the licensing policy for the newly controlled ECCNs in CCL Categories 3-9 and the FDPR. That policy is (surprise!) generally a policy of denial. What is important to know is when the BIS licensing policy shifts from one of denial to a case-by-case review to determine whether the transaction in question would benefit the Russian Government or defense sector. These situations include applications related to:

• Flight safety,
• Maritime safety,
• Humanitarian needs, and
• Supporting government space cooperation.

Perhaps of most interest for companies headquartered in the United States and in certain US-allied countries is that BIS will apply a case-by-case review policy for license applications for items:

• Destined to wholly-owned U.S. subsidiaries, foreign subsidiaries of U.S. companies that are joint ventures with other U.S. and companies, joint ventures of U.S. companies with companies headquartered in countries from Country Groups A:5 and A:6, and joint ventures of wholly-owned subsidiaries of companies headquartered in those countries, and
• Destined for companies headquartered in Country Groups A:5 and A:6 to support civil telecommunications infrastructure or government-togovernment activities.

We expect a wave of export license applications for US corporations and corporations headquartered in A:5 and A:6 countries and active in CCL Categories 3-9 who need to support their subsidiaries and joint ventures in Russia. Indeed, BIS estimated an additional 2,445 license applications annually as a result of the February 24th rule.