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Sat, Aug 4, 2007 1:03 PM
June 7, 2007, Proposed Rule on Entity List RIN 0694-AD83

William A. Root
Export Control Consultant
419 Russell Avenue #214
Gaithersburg MD 29877
August 4, 2007
[email protected]_ (mailto:[email protected])
0694-AD82

RIN

Comments on June 5, 2007, Proposed Rule on Entity List
I suggest adding 744.20 to the proposed 744.11(b) list of 744.12, .13, .14,
or .18 sections to which 744.11 may not be used and requiring State Department
concurrence in the listing of any entity under 744.11 for foreign policy
reasons. Otherwise, the result might be inclusion in the EAR of differences
of
opinion between Commerce and State as to which entities were 744.20 or
otherwise of foreign policy concern.
The first paragraph of the Background states that the reasons for which BIS
may place an entity on the 744 Supp.4 Entity List are stated in 744.2, .3, .4,
.6, .10, and .20. However, only 744.10 and 744.20 now refer to Supp 4 and
Supp. 4 makes no reference to any of the 744 sections. It is therefore
suggested that 744.2(b), 744.3(b), 744.4(b). 744.6(b), and proposed 744.11
refer to
744 Supp. 4 and that a column be added to Supp.4 to identify which 744
section is applicable to each listed entity.

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August 6, 2007
U.S. Department of Commerce
Bureau of Industry and Security
Regulatory Policy Division
Room H2705
14th Street and Pennsylvania Avenue, NW
Washington, DC 20230
Attention: RIN 0694-AD82
RE: Comments on Proposed Rule – Authorization to Impose License Requirements for Exports
or Reexports to Entities Acting Contrary to the National Security or Foreign Policy Interests of
the United States
Dear Sir or Madam,
The Wisconsin Project on Nuclear Arms Control submits the following comments in response to
the Bureau of Industry and Security’s June 5, 2007, Proposed Rule (72 Fed. Reg. 31005), which
proposes to expand the scope of reasons for which BIS may add parties to the Entity List.
The Project is a non-profit organization that conducts outreach and public education to inhibit the
proliferation of mass destruction weapons and their means of delivery. For more than twenty
years, the Project has pursued its mission by advocating strong and effective export and transit
controls worldwide. The Project commends the Commerce Department for considering
measures to strengthen the Entity List, and supports the proposed change in principle. However,
additional actions are necessary to ensure that the List serves its original, intended function as a
key nonproliferation tool in the U.S. dual-use export control system.
In the Proposed Rule, BIS seeks authorization to add to the Entity List entities that BIS has
reasonable cause to believe, based on specific and articulable facts, have been, are or pose a risk
of being involved in activities that are contrary to the national security or foreign policy interests
of the United States, or those acting on behalf of such entities. This would be a broad and
beneficial control, allowing BIS to conduct more prior reviews of exports to risky end-users. In
particular, BIS should use the proposed new Section 744.11 to impose export license
requirements on entities that have been targeted for nonproliferation-related reasons by other
agencies of the U.S. government, and by foreign governments, in cases where other sections in
Part 744 do not already allow inclusion of such entities on the Entity List. This approach would
become another tool allowing BIS to work with its counterparts within and outside the U.S.
government to ensure that entities of proliferation concern worldwide are denied access to
controlled goods and technologies.

In publishing the proposal, BIS seeks to aid the exporting public by simplifying the EAR and
providing more information about entities of concern. But in pursuit of stronger, more effective
and efficient export controls, BIS should go beyond this proposal, and implement additional
measures, most under authorities already in effect.
BIS should institutionalize the practice of supplying as much information as possible in entries
on the Entity List – including all known aliases and contact information. This would provide the
public with effective notice regarding entities of concern, and make it more difficult for such
entities to evade export controls. Existing entries should be systematically reviewed, revised and
enriched to be maximally useful to exporters. Some of these existing entries are now outdated, as
the entities in question have changed their names and/or affiliations. And since many entries on
the List have only a name to identify the entity, the public no longer has notice of the risky enduser once its name is changed.
BIS has stated that it cannot supply the Chinese names of entities on the List, because the Federal
Register cannot accommodate their publication. To bypass this technical limitation, BIS should
publish on its website, as guidance for exporters, an augmented version of the List including also
the names of listed entities in their original alphabets. This vital information would allow
industry to investigate properly potential customers for controlled goods.
BIS should also provide clear guidance to exporters on how to deal with entities related to those
on the List. Some language regarding subordinates was included in the "Frequently Asked
Questions Regarding the Entity List" on the BIS website, but the relevant section was recently
removed. Many entities on the List have numerous subsidiaries and other related companies that
constitute a diversion risk. BIS should explicitly state the extent to which license restrictions on
listed entities extend to their relatives. All related entities so affected should be listed, as well.
In the interest of informing exporters more fully about diversion risk, BIS should include
additional information about why entities are added to the list, and do so more clearly. BIS now
describes, in Federal Register notices and accompanying press releases, the risk posed by each
entity when it is added to the List. But the List itself only indirectly suggests the nature of the
risk presented by each entity, by pointing to a section in Part 744 for license review policy. This
indirect explanation would be further diluted in the case of the proposed Section 744.11, which
contains a very broad basis for designation. The Japanese Ministry of Economy, Trade and
Industry provides a useful model in this regard, by indicating WMD programs of concern
directly on its warning list, for each entity. Such one-stop public education would allow industry
to make efficient and informed decisions about prospective end-users, commodities and
transactions.
BIS should also consider more systematic use of Section 744.20, which allows imposition of
license requirements on entities sanctioned by the State Department. These sanctions are applied
under various legal authorities against foreign individuals, private entities, and governments that
engage in proliferation activities. All of these inherently risky end-users should be added to the
Entity List after they are sanctioned, and should remain on the List even if the statutory term of
the sanction has expired, unless the End-User Review Committee (ERC) determines that the
entity is no longer a risk.

The Proposed Rule would establish a process by which a listed entity could request that it be
removed from the List or that its listing be modified. It is not clear why BIS is seeking to
formalize the procedure. But this change underscores the need for the ERC to conduct systematic
reviews of entries on the List, to ensure that the entries are current and complete. These reviews
should always be undertaken in conjunction with the intelligence community. Therefore, the
proposed Section 744.16 should be changed to reflect the inclusion of the intelligence
community in the review process. Also, private companies are often the recipients of information
(such as suspicious purchase requests) suggesting that a particular entity is a risky end-user. BIS
should afford the public an opportunity to supply such information to the ERC, which would aid
the Committee's deliberations. It would therefore be prudent for BIS to allow a public comment
period before the removal or modification of an Entity List entry at the request of the entity
itself.
BIS has recently announced that it is planning a draft proposal that would introduce a standard
format for all U.S. Government screening lists, with the objective of having a "more complete
continuum of information … available for exporters to use in screening potential customers."
Indeed, such a standard format could be a great help for industry. It could also benefit national
security, by allowing smaller businesses to screen their transactions more efficiently and
effectively. But this standard format would need to present complete information in a clear
fashion. We look forward to working with BIS and other interagency partners on that
forthcoming proposal, and hope that the suggestions herein will be helpful then, as well.
We are grateful for the opportunity to present our views.
Respectfully submitted,
Arthur Shulman
General Counsel
Wisconsin Project on Nuclear Arms Control