New Encryption Export Rules Relax Regulatory Burden For Many End-Products But Also Raise Many New Questions

On June 25, 2010, the Administration issued the long-awaited regulations implementing the changes from the last Wassenaar Plenary Session and seeking to reduce the regulatory burden on exporters of encryption products under the ENC license exception. See Encryption Export Controls: Revision of License Exception ENC and Mass Market Eligibility, Submission Procedures, Reporting Requirements, License Application Requirements, and Addition of Note 4 to Category 5, Part 2; Interim Final Rule, 75 Fed. Reg. 36482 (June 25, 2010).

The new rule does not make material changes in the encryption items qualifying for mass market treatment, export for internal use by U.S. subsidiaries or contractors developing new products or the category of “restricted” encryption products described in 15 C.F.R. § 740.17(b)(2), although it does add specified types of encryption technology to paragraph (b)(2) of the ENC license exception. The rule also separates the earlier “unrestricted” category in 740.17(b)(3) into two categories. One of these new categories remains subject to essentially the same treatment as existed under earlier 740.17(b)(3). The other new category no longer requires a 30-day waiting period for review prior to export outside of the Supplement 3 list of countries.

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