US Export Jurisdiction Over Aircraft Parts that Have Never Been to America

The normal reach of US export law extends to aircraft parts that were made in America. But that is not the sole reach of US export law. The foreign direct products rule extends the reach of US export law to apply to certain aircraft parts that have never “touched” the United States, including ones that were produced outside the United States.

The foreign direct products rule can yield surprising results, because it can apply US export laws to articles that were never exported from the United States based on other “connections.” In the aviation realm, this can include things that were produced outside the United States like Airbus parts from Europe and Embraer parts from Brazil, when they meet other requirements.

Under the foreign direct products rule, certain articles that are made outside the United States are subject to the export jurisdiction of the United States’ regulations. The rule is a complicated one, so we will only hit the highlights in this discussion. If you think that your article may be subject to the foreign direct products rule, then you should perform a complete legal analysis to assess the compliance path for that article.

The foreign direct products rule typically applies when two different qualifications are met — a product scope, and a country scope (sometimes based on the country groups specified in Part 740 Supplement No. 1 of the regulations). The actual rule has many different elements and each applies a different standard. These are summarized in the table below. The purpose of the table is to highlight when the rule may apply – if you think the rule might apply to your transaction then please read the full text of the rule as there are nuances that are not captured in the table.

Rule	Product Scope (for the foreign produced article — typically includes articles made in plants that are such “direct products”)	Country Scope
National Security	An article controlled for “NS” reasons that is a “direct product” of certain U.S.-origin “technology” or “software”	Country Group D:1, E:1, or E:2
9×515	A 9×515 article that is the “direct product” of U.S.-origin “technology” or “software” that is specified in ECCN 9D515 or 9E515	Country Group D:5, E:1, or E:2
“600 series”	A “9×515″600 series” article that is the “direct product” of U.S.-origin “technology” or “software” that is specified in a “600-series” ECCN	Country Group D:1, D:3, D:4, D:5, E:1, or E:2
Entity List	An article specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 that is a “direct product” of “technology” or “software” subject to the EAR	Entities on the BIS entity list and indicated as being subject to footnote 1 or footnote 4
Russia/Belarus	All article subject to an ECCN that are the “direct product” of U.S.-origin “technology” or “software” that is specified in any technology or software ECCN.	Russia or Belarus
Russia/Belarus-Military End User	All articles that are the “direct product” of U.S.-origin “technology” or “software” that is specified in any technology or software ECCN.	Entities on the BIS entity list and indicated as being subject to footnote 3
Advanced computing	An article specified in ECCN 3A090, 3E001 (for 3A090), 4A090, or 4E001, or an integrated circuit, computer, “electronic assembly,” or “component” that meets the performance parameters of ECCN 3A090 or 4A090; in each case, that is a “direct product” of “technology” or “software” specified in 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D090, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E991, or 5E002	People’s Republic of China or Macau
“Direct product” of “technology” or “software.”	An article that is a “direct product” of “technology” or “software” specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, 5E991, 5D002, or 5E002	People’s Republic of China or Macau
Iran	An article that is a “direct product” of “technology” or “software” specified in categories 3-5 or 7 of the CCL (this may include avionics, among other articles)	Iran

Typically, if the plant in which a foreign produced article was produced would be covered under the foreign direct products rule, then the articles made in that plant are subject to the rule.

One important application of the foreign direct products rule is the application to Russia and Belarus. This extends US jurisdiction to many foreign produced articles if they were derived from U.S.-origin “technology” or “software” controlled under the US export regulations. This would include products like the CFM56 engines, which are derived from the controlled technology of the F101 engine (and which famously needed to be licensed by the US government in order to permit fabrication in France). Thus, such foreign direct products articles are prohibited from export to Russia or Belarus without a US export license even though they were produced outside of the United States.