OFAC Provides Guidance on Export/Reexport of Replacement Parts for Medical Devices
The Office of Foreign Assets Control has updated its frequently asked questions Web page to include new guidance on license policies for exporting or reexporting replacements parts for medical devices pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA).
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EAR99 Replacement Parts "Under License"' if Medical Device OFAC License Still Valid
OFAC's FAQ guidance poses the question: The U.S. exporter has a valid, one-year specific license issued by OFAC pursuant to the TSRA to enter into contracts during the one-year period of the license for the export/reexport of medical devices and to ship these medical devices within the 12-month validity period. Out of the box, the medical device has a defective component, or a component breaks within the validity period of the license. Can the U.S. exporter send a replacement part pursuant to its valid OFAC license as a transaction that is ordinarily incident and necessary to the sale of the medical device as a whole?
OFAC answers that the export or reexport of the replacement part would be considered ordinarily incident and necessary to the sale of the medical device and would be covered by the original valid OFAC license, provided that the replacement part has been classified separately as EAR991 by the Commerce Department under the Export Administration Regulations, and provided that the replacement part is shipped within the validity period of the original license.
Replacement Parts Could Also be "Under License" if Specifically Referenced by Commodity Classification
OFAC also states that a commodity classification issued for the medical device as a whole would not necessarily cover the replacement part; however, if the commodity classification issued by Commerce does specifically reference replacement parts, only those replacements parts that are covered by this classification would be eligible for export under this scenario. A one-for-one policy would be applied to the replacement of a defective or unusable component of a medical device.
(OFAC notes that in these cases, the U.S. exporter would remain subject to the recordkeeping and reporting requirements of the Reporting, Procedures and Penalties Regulations at 31 CFR 501.601 and 501.602, including the requirement that all records of transactions conducted pursuant to the license must be made available to OFAC upon request.)
1Items under BIS' jurisdiction (under the Export Administration Regulations) that are not listed on the Commerce Control List (CCL) are designated as EAR99.
OFAC replacement parts FAQ (updated 10/07/09) available at http://www.treas.gov/offices/enforcement/ofac/faq/answer.shtml119