De minimis Calculations –Two of these too!

The new controls necessarily change de minimis analysis as well. If a foreign-produced item contains more than the allowable de minimis threshold of US-origin controlled content, then that foreign-produced item is subject to the EAR. Critically, only content that is controlled for export to the country of destination is counted towards the de minimis threshold. However, now that items in CCL Categories 3-9 require a license for export, reexport, and in-country transfer to Russia, such items all count towards the US-controlled content for determining if the de minimis threshold has been tripped for foreign-produced items destined for Russia. For example, a US-origin ECCN 3A991 chip in a Chinese-produced widget is now US controlled content if the widget is going to Russia. If the total US-origin controlled content exceeds 25% of the value of the widget, then the widget is subject to the EAR and may, depending on its classification, require a BIS license to export from China to Russia.

Interestingly, if the widget is produced in Finland, the same is not true due to the special rule for the Supplement 3 Countries. If the foreign-produced item will be exported or reexported from one of those countries, the de minimis analysis does not consider US-origin content in ECCNs controlled for AT reasons only (e.g., ECCNs 3A991) plus ECCN 9A991. The ECCN must also not otherwise be excluded in the “Scope” column in Supplement No. 3 (which currently reads “Full” for all the favored countries but allows the United States to exclude ECCNs from the scope of the coverage in case US allies do not actually impose equivalent export controls as the United States expects).