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General Prohibition No. 3: Direct Product Rule

§ 736.2(b)(3) of the EAR

(A) Non-U.S.-made items produced from U.S. non-“600 series” and non-9x515 technology or software, OR from a non-U.S.-made manufacturing plant or major plant component (made from U.S. non-“600 series” and non-9x515 technology or software) are subject to the EAR and may require a license or license exception for export from abroad if all of the following apply:

(1)      The U.S. technology or software requires a written assurance as a supporting document for a license as defined in paragraph (o)(3)(i) of Supplement No. 2 to part 748, or as a precondition for use of License Exception TSR in § 740.6 or the EAR (Generally, this means the US technology/software is controlled for NS reasons);

(2)      The non-U.S.-made item is subject to national security (NS) controls as designated in the ECCN on the CCL (Supp. No. 1 to part 774 of the EAR); and

(3)     The non-U.S.-made item is destined to a destination listed in Country Group D:1, E:1 or E:2 (Supp. No. 1 to part 740 of the EAR).

(B) Non-U.S.-made items produced from U.S. “600 series” or 9x515 technology or software, OR from a non-U.S.-made manufacturing plant or major plant component (made from U.S. “600 series” or 9x515 technology or software) are subject to the EAR and may require a license or license exception to export from abroad if all of the following apply:

(1) The non-U.S.-made item is produced from “600 series” or 9x515 U.S. technology or software;

(2) The non-U.S.-made item is specified under a “600 series” ECCN or 9x515 of the CCL (Supp. No. 1 to part 774 of the EAR); and

(3) Either or both of the following are true:

(a) For “600 series” non-U.S.-made items, the destination is listed in Country Group D:1, D:3, D:4, D:5, E:1 or E:2 (Supp. No. 1 to part 740 of the EAR); or

(b) For 9x515 non-U.S.-made items, the destination is listed in Country Group D:5, E:1 or E:2 (Supp. No. 1 to part 740 of the EAR).

NOTE: “600 series” or 9x515 non-U.S.-made direct products of U.S technology or software subject to GP3 do not require a license for export from abroad to the new destination unless the new destination would have been prohibited or made subject to a license requirement or prohibition by part 742, 744, 746, or 764 of the EAR.

NOTE: This guidance does not address items classified as ECCN 0A919. Please see that ECCN entry in the Commerce Control List for guidance.

(C) Entity List Direct Product Rule (see footnote 1 to Supp. No. 4 to part 744 and § 736.2(b)(3)(vi) of the EAR)

(a) Direct product of “technology” or “software” specified in certain Category 3, 4 or 5 ECCNs

If the answer is YES to ALL 4 of the following questions, then the foreign-produced item is subject to the EAR and a license is required for export, reexport or transfer (in-country) of the item to any entity with a footnote 1 designation in the license requirement column of the Entity List.

1.     Do you have “knowledge” that the foreign-produced item, including a semiconductor design, is destined to an entity with a footnote 1 designation in the license requirement column of the Entity List (Supplement No. 4 to part 744)?

2.     Is the foreign-produced item being produced or developed outside the U.S. by a footnote 1 listed Entity?

3.     Is the foreign-produced item a direct product of “technology” or “software” subject to the EAR, i.e., U.S.-origin, or foreign-origin but subject to the EAR pursuant to de minimis or direct product rules?

4.     Is the “technology” or “software” specified by one of the following ECCNs: 3D001, 3D991, 3E991, 3E001, 3E002, 3E003, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991?

(b) Direct product of a plant or major component of a plant

If the answer is YES to ALL 4 of the following questions, then the foreign-produced item is subject to the EAR and a license is required for export, reexport or transfer (in-country) of the item to any entity with a footnote 1 designation in the license requirement column of the Entity List.

1.     Do you have “knowledge” that the foreign-produced item, including a semiconductor, is destined to an entity with a footnote 1 designation in the license requirement column of the Entity List (Supplement No. 4 to part 744)?

 

2.   Is the plant or major component of a plant located outside the United States?

3.    Is the plant or ‘major component of a plant’ a direct product of U.S.-origin “technology” or “software” specified in ECCN 3D001, 3D991, 3E991, 3E001, 3E002, 3E003, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991, whether made in the U.S. or a foreign country?

Note: A ‘major component of a plant’ located outside the United States means equipment that is essential to the “production” of an item, including testing equipment, to meet the specifications of a design produced or developed by an entity with a footnote 1 designation in the license requirement column of the Entity List.

4.       Is the foreign-produced item a direct product of “software” or “technology,” whether or not subject to the EAR, produced or developed by an entity with a footnote 1 designation in the license requirement column of the Entity List (Supplement No. 4 to part 744)?     


This information is for general guidance purposes only and should not be regarded as a substitute for legal advice concerning the applicability of this rule to particular facts and circumstances.