Co-Authored by Sharath Patil

Background on Export Administration Regulations

 Over 95% of the world’s consumers are outside of the United States. Opportunities abound for U.S. companies that export. However, exporting is a privilege and not a right. U.S. exporters have an important responsibility to adhere to U.S. export control laws, including the Export Administration Regulations (“EAR”).

Administered by the U.S. Commerce Department, the EAR is a set of regulations which governs whether U.S. persons may export or transfer goods, software, and technology outside of the United States or to non-U.S. citizens. U.S. exporters have an important responsibility to adhere to the EAR. Violations of the EAR carry hefty civil and criminal penalties. Exporters can pay hundreds of thousands of dollars in penalties, lose export privileges, and even be imprisoned.

Computers (APP) License Exception

Although an EAR export license may ordinarily be required for a proposed transaction, the EAR provides numerous license exceptions found in 15 CFR 740.

This article focuses on the the license exception Adjusted Peak Performance (“APP”) authorizes exports of certain high-performance computer products and related technology. The license exception is broad, and applies to all “Computer Tier” countries. Computer Tier countries are destinations for which the APP license exceptions apply. There are two broad categories of Computer Tier countries: Computer Tier 1 and Computer Tier 3. Both are discussed below, in turn.

The scope of the APP license exception comprises:

  • Exports, reexports, and in-country transfers of computers controlled by ECCN 4A003, including electronic assemblies and specially designed components separately or as part of a system for consumption in “Computer Tier” countries; and
  • Exports of technology and software controlled by ECCNs 4D001 and 4E001 specially designed or modified for the development, production, or use of computers, including electronic assemblies and specially designed components to “Computer Tier” countries.


Computer Tier 1 countries are countries to which exporters can use the license exception to export items specifically defined by 15 CFR 740.7(c)(2)-(3). Tier 1 countries are ally countries or countries that do not pose a national security, nuclear or missile threat to the United States. APP license exceptions apply to Tier 1 countries for all computers within the scope of the APP license exception and certain technology and software.

As of this writing, Computer Tier 1 countries include:

  • Albania, Antigua and Barbuda, Argentina, Aruba, Australia, Austria, Bahamas (The), Bangladesh, Barbados, Belgium, Belize, Benin, Bhutan, Bolivia, Botswana, Brazil, Brunei, Bulgaria, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Chile, Colombia, Congo (Democratic Republic of the), Congo (Republic of the), Costa Rica, Cote d’Ivoire, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, El Salvador, Equatorial Guinea, Eritrea, Estonia, Ethiopia, Fiji, Finland, France, Gabon, Gambia (The), Germany, Ghana, Greece, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hungary, Iceland, Indonesia, Ireland, Italy, Jamaica, Japan, Kenya, Kiribati, Korea (Republic of), Latvia, Lesotho, Liberia, Lithuania, Luxembourg, Madagascar, Malawi, Malaysia, Maldives, Mali, Malta, Marshall Islands, Mauritius, Mexico, Micronesia (Federated States of), Monaco, Mozambique, Namibia, Nauru, Nepal, Netherlands, New Zealand, Nicaragua, Niger, Nigeria, Norway, Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Rwanda, St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines, Sao Tome & Principe, Samoa, San Marino, Senegal, Seychelles, Sierra Leone, Singapore, Sint Maarten (the Dutch two-fifths of the island of Saint Martin), Slovakia, Slovenia, Solomon Islands, Somalia, South Africa, Spain, Sri Lanka, Surinam, Swaziland, Sweden, Switzerland, Taiwan, Tanzania, Togo, Tonga, Thailand, Timor-Leste, Trinidad and Tobago, Turkey, Tuvalu, Uganda, United Kingdom, Uruguay, Vatican City, Venezuela, Western Sahara, Zambia, and Zimbabwe.


Meanwhile, Computer Tier 3 destinations are all other countries with the exception of the terrorist supporting countries listed in Country Group E:1 of Supplement No. 1 to part 740. Computer Tier 3 destinations are countries to which exporters can use license exception APP to export items specifically defined under 15 CFR 740.7(d)(2)-(3). While they do not include any computer commodities, they do include certain technology and source code.

As of this writing, Computer Tier 3 destinations include:

  • Afghanistan, Algeria, Andorra, Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia & Herzegovina, Burma, Cambodia, China (People’s Republic of), Comoros, Djibouti, Egypt, Georgia, India, Iraq, Israel, Jordan, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Laos, Lebanon, Libya, Macau, Macedonia (The Former Yugoslav Republic of), Mauritania, Moldova, Mongolia, Montenegro, Morocco, Oman, Pakistan, Qatar, Russia, Saudi Arabia, Serbia, Sudan, Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, Uzbekistan, Vanuatu, Vietnam, and Yemen.

What Should You Do

Exporters have significant responsibilities to ensure compliance, to avoid penalties and/or jail time (i.e., your compliance manager deserves a raise!). Proper adherence to EAR requirements ensures that your business contributes to safeguarding U.S. national security and avoiding costly penalties. Many U.S. businesses have paid hefty civil penalties for violating U.S. export control laws. L3Harris Technologies, for example, was fined $13 million for illicitly exporting defense technology and software. For more examples of costly civil and criminal penalties, check out BIS’ latest Don’t Let This Happen to You! Publication.

If you are exporting goods subject to EAR, we propose you should:

  • Develop an effective export compliance plan.

A key foundation of proactive and effective export compliance requires the development of an export compliance plan. An export compliance plan establishes a set of procedures for your organization to ensure that everyone is on the same page about how standard processes work, who is responsible for what, how to identify violations, what to do when violations occur, etc. An export compliance plan helps build consciousness in your organization that compliance is critical – both to avoid costly penalties and also to protect national security. Diaz Trade Law helps exporters create export compliance manuals that help prove you have a process in place to classify your merchandise correctly, vet your customers and ensure you can prove you can take compliance seriously and implement all of the important great weight mitigating factors. Diaz Trade Law has significant experience in developing and enhancing export compliance plans for organizations. Additionally, Diaz Trade Law can assist your business in auditing and improving your current plan so that it is in its best shape.

  • Engage in regular export compliance training.

A foundation of a strong export compliance program is export compliance training. Training is important because it (1) ensures that all employees understand the export regulations and reinforces internal policies and procedures, (2) demonstrates to federal government agencies that your business is proactive about export compliance, and (3) avoids your business from being subject to costly penalties and even criminal liability. Fortunately, export compliance training can be highly tailored to meet your company’s needs. All of your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training.

  • Thoroughly vet your proposed export transactions

Unsure whether a proposed export transaction violates the EAR? Diaz Trade Law has significant experience vetting your potential transaction against U.S. export control laws. Through research and due diligence, Diaz Trade Law ensures that your transaction won’t get you in trouble later down the road.

  • Request authorization when necessary

BIS export authorization is required for many export transactions of controlled goods. Diaz Trade Law has significant experience in vetting proposed transactions to determine whether BIS authorization is required. Furthermore, Diaz Trade Law assists clients by filing BIS export license applications on their behalf on BIS’ SNAP-R portal.

  • Engage in mitigation and corrective actions.

If your business has violated U.S. export control laws, there is a lot you can do to mitigate penalties and prevent future violations. Diaz Trade Law has significant experience representing businesses in dealing with the U.S. Commerce Department’s Bureau of Industry & Security and the Census Bureau. Specifically, Diaz Trade Law has successfully assisted clients in (1) submitting voluntary self-disclosures to mitigate penalties, (2) negotiated agreements with BIS and Census, and (3) built corrective action systems to help ensure that your business does not make the same violation again.

Diaz Trade Law’s Upcoming Webinar: Building & Maintaining an Effective Export Compliance Plan

On September 22, 2021 at 12:00 PM ET, Diaz Trade Law is hosting a webinar on Building & Maintaining an Effective Export Compliance Plan. This one-hour webinar will discuss the elements of an effective export compliance plan, best practices, how to train your employees, and an overview of both how to build and effectively maintain a robust export compliance plan.

In the webinar, you will learn:

  • Why you Should Have an Export Compliance Plan in Place
  • Elements of an Effective Export Compliance Plan
  • How to Build and Effective Export Compliance Plan
  • Common Risks Associated with the Export Process that Should be Addressed in Your Plan
  • What Do You When BIS/OFAC/Census/DDTC Come Knocking on Your Door
  • How to Maintain an Effective Export Compliance Plan Through Training
  • What to Do When All Goes Wrong
  • What NOT to Do – Examples from “Don’t Let This Happen to You”

Contact Us

Diaz Trade Law has significant experience in a broad range of export compliance matters. To learn more about the services we offer, contact us at or call us at 305-456-3830.