Tuesday, July 24, 2007

BIS China Rule Compliance: Document and Information List on VEU Application

Along with the implementation of the BIS China Rule, the VEU application becomes a new practice area for attorneys in the cross border transactions, especially related to China. This article, with reference to BIS official publication, intends to address some basic filing document and information issues related to the VEU application.

I: Where to File?
An Advisory Opinion Request for Authorization Validated End-User (VEU) should be filed to apply for the Validated End User (VEU) status. The request for authorization should be filed to the Office of Exporter Services at BIS Department of Commerce with attention to the End-User Review Committee.

II: Who Can File?
As currently the VEU program applies only to Chinese companies, the Chinese companies can apply directly for the VEU authorization. US companies can also file the VEU applications on behalf of Chinese companies to whom they have export business relations. Generally, in determining the eligibility of the VEU status, the following criteria apply:
• Any end user in the PRC may apply to use Validated End-User authorization. All applications will be considered on the merits.

• Subsidiaries of U.S. or foreign companies in the PRC, as well as Chinese companies, may apply to receive products that might otherwise need an individual license.

• End users must demonstrate a record of using sensitive, U.S.-origin commodities, software or technology responsibly and must only be involved in civilian activities.

III: Document and Information List on VEU Application

According to the Supplement No. 8 to part 748 of the EAR and the template published in the BIS website, the following documents and information shall be provided with the filing of the VEU application:

1: General Information
The proposed VEU candidates’ name (including business operating name if applicable); company physical address (P.O. box address only not sufficient); contact persons and telephone, fax numbers; email address and company website if applicable; filing company information other than the candidate company if applicable, candidate multiple location list in the eligible destination if applicable.

2: Structure, Ownership and Business Activities of the Candidate Company
An overview description of the structure, ownership and business activities of the candidate company should be provided in the request of the VEU status. These shall include the operating and organizing structure of the company (closely held or publicly held companies, partnership etc.), the ownership (state owned, foreign owned, joint-venture, privately owned etc.), business activities and nature of the business (including any activity or relations with either government or military organizations.)

3: Item(s) Description Proposed for VEU Authorization
The items proposed for VEU application and their intended end-uses should be listed, including the description of the items and the relevant Export Control Classification Number (ECCN) and the Commodity Classification Automated Tracking System (CCATS) number, if BIS has previously classified the item. The application should also describe how the validated end-user will use the item(s) received under VEU authorization. If the items received under VEU authorization will be used at a location different from the location(s) listed in the General Information section of this submission, identify such location(s). Also identify any items that will be reexported or transferred after they are received under VEU authorization, and the destination(s) in which they will ultimately reside.

4: Information on Record Keeping and Compliance
The system in place to ensure compliance with VEU authorization requirements related to the items received under VEU authorization should be described. As recommended by BIS, the Validated End-Users should maintain records relating to: the specific location to which the items were exported or reexported; the end-use of such items; and the ECCN(s) of such items. The record keeping requirements are set forth in §748.15(e) of the EAR.

5: Certification
The application for VEU authorization must also include an original statement, which can be provided as a letter attached to the advisory opinion request, on letterhead of the prospective validated end-user, signed and dated by a person who has authority to legally bind the prospective validated end-user, certifying that the end-user will comply with all VEU requirements. According to the Template, this statement must include acknowledgement by the prospective end-user that it:

1) Has been informed of and understands that the item(s) it may receive as a validated end-user will be exported in accordance with the EAR and that use or diversion of such items contrary to the EAR is prohibited;
2) Understands and will abide by all authorization VEU end-use restrictions, including the requirement that items received under authorization VEU will only be used for civil end-uses and may not be used for any activities described in part 744 of the EAR;
3) Will comply with VEU recordkeeping requirements; and
4) Agrees to allow on-site reviews by U.S. Government officials to verify its compliance with the conditions of the VEU authorization.

6: Additional Information
Any helpful and supporting information has been encouraged to be included in the application package for VEU authorization. This kind of information may include, but not limited to, background information other than general information of the candidate company, China law and policy information about the company ownership, structure and operations (expert affidavit can be used whenever necessary), technical or marketing literature about the related items and product or promotional information about line of business, the business relation history of the import and export companies etc.

No comments: