Understanding Deemed Export

Both the EAR and ITAR cover the concepts of Deemed Exports. A Deemed Export is to transfer or release controlled articles, technical data, or performing controlled services to a Foreign Person within the United States. Deemed Exports are focused on the party that we do business with, not on the location where we release technical information or ship our products to. Many people outside the regime of export compliance do not understand the concepts of Deemed Export nor do they understand the severe consequences due to deemed export violations. To avoid inadvertent violations, we shall first understand the important definitions concerning Deemed Export.

Deemed Exports within the meaning of the EAR.
§734.13 (a) (2) of the EAR defines Deemed Export as releasing or otherwise transferring “technology” or source code (but not object code) to a foreign person in the United States. 15 CFR 746.7 (a) (4) states any Person who does not fall under the definition of a “United States Person” is a foreign person. Under the EAR, the term “United States Person” means any United States citizen, permanent resident alien, and lawfully protected political refugees or political asylum holder. The term also includes any organizations established to do business under the laws of the United States.

Deemed Exports in the ITAR Context
Within the definition of Export under Section 120.50, export includes several means which fall under the same concept of “Deemed Export”:
(1) releasing or otherwise transferring technical data to a foreign person in the United States.
(2) Releasing or otherwise transferring a defense article to an embassy or to any of its agencies or subdivisions, such as a diplomatic mission or consulate, in the United States;
(3) Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad.
22 CFR 120.50 also states that any release in the United States of technical data to a foreign person is deemed to be an export to all countries in which the foreign person has held or holds citizenship or holds permanent residency.
22 CFR 120.63 defines “foreign person” as any natural person who is not a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society, or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments, and any agency or subdivision of foreign governments (e.g., diplomatic missions).

Understanding of Various Types of Deemed Export
Similar to an export to a point outside the U.S., to determine whether we have a deemed export situation when we release, transfer, or ship a tangible article or document, or an intangible via email or other communication means, we shall answer four questions:
1. What is it?
2. Where is it going?
3. Who are they (the recipient)?
4. What will they do with it?
One type of deemed export is the transfer of controlled articles under the EAR or the ITAR within the U.S. to a foreign person.
Another type of deemed export is the release or transfer of controlled technology to a foreign person or a U.S. citizen on behalf of a foreign person. Technology is a very broad term, it not only includes Group E in each CCL Category, but also involves articles in other groups concerning operating parameters and manuals, assembly instructions and so forth. Technology can be released in the form of a tangible document, shared through verbal communication, display, or sent via electronic means. Technology can also be hidden in a physical article. The recipient of the article can obtain technology by taking apart the assembly, testing on the parts to obtain design or manufacturing know-how.
Controlled articles and technology are subject to deemed export compliance requirements and can only be transferred or released to a foreign person with proper export authorization, such as an export license or use of a license exception or exemption.
Learn More About Deemed Export and Export Compliance
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