Law Firm Seeing 'Mixed Results' From BIS for MEU-Related License Applications

Crowell & Moring has seen “mixed results” and some longer response times from the Bureau of Industry and Security for license applications captured by the agency’s military end-use and end-user rule, said Brian McGrath, a trade lawyer with the firm. But overall, McGrath said the agency has been helpful when responding to exporter questions about the rule, which imposed more due-diligence requirements on shipments that could be sent to military end users or used for military end uses in certain countries (see 2102190042).

McGrath, speaking during a Feb. 2 webinar hosted by Crowell & Moring, said BIS officials, “to their credit and to our pleasure,” have “thoroughly engaged” with exporters and law firms on MEU questions. He said the agency has encouraged exporters to submit license applications or advisory opinion requests when they are unsure if an end user may be captured by the rule.

But because BIS has so often encouraged exporters to submit applications and requests, the agency over the past year has faced “additional burdens on their end in terms of review and timing,” McGrath said. He also said BIS has shown “generally mixed results, as it would with any license application,” when responding to MEU-related applications. The firm has received some approvals, some denials and some returned without action.

A Commerce Department spokesperson said it recognizes the rules are "a fairly new set of requirements for companies, and BIS is eager to work with businesses to answer questions and support lawful, robust exports." The agency said it encourages exporters to make use of existing guidance and reach out with questions. "The [Export Administration Regulations] outlines strong 'Know Your Customer' guidelines," the spokesperson said in a Feb. 3 email, "and businesses should prioritize compliance and due diligence at all times, but particularly with respect to doing business in countries with MEU concerns."

McGrath said he expects BIS to “continue to utilize” the MEU list this year, especially for exports to China. “If there's one key takeaway for any exporter, both looking back to 2021 and continuing to look forward, it’s the importance of exporters continuing to do their homework” and due diligence, McGrath said. “We can expect through 2022 that BIS will continue to expend significant efforts and energy in its focus on China.”