Demographic change + Export controls + Global Gateway (2023)

Demographic change + Export controls + Global Gateway (1)

picture alliance / | Sheldon Cooper


Xi faces challenges as Chinese population keeps aging


Japan-Netherlands-US plan to align China export controls may become a blueprint

China edges one step closer to weaponizing tech supply chains it controls

EU’s Global Gateway connectivity initiative takes shape as BRI turns ten

Review: Chip War, by Chris Miller

MERICS China Digest

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Xi faces challenges as Chinese population keeps aging

At the onset of the new year, China’s government announced measures to, among other things, loosen China’s household registration system. The measures are urgently needed in view of the announcement that China’s population had started to decline less than two weeks ago. They are meant to improve the integration of rural citizens and laborers into urban China and could contribute to more flexibility on the labor market, supporting Beijing’s goal of shifting the economy to what it calls “high-quality growth”. The strict so-called hukou rules have long prevented rural citizens from permanently relocating to cities to live and work. Simultaneously, authorities in Sichuan announced that children born out of wedlock will for the first time enjoy the same legal rights as others.

The (now abandoned) one-child policy, changing attitudes to family and the high cost of living in cities have made China’s population one of the fastest aging in the world. Economists estimate that a shrinking labor force could slow growth of China’s gross domestic product (GDP) by one percentage point a year – a “demographic tax” of something like 180 billion US dollars from 2022 into 2023 alone. Such scenarios have spurred some Western commentators to talk of the country’s inevitable decline. But labor-market reforms and raising the retirement age could still do much to avert it.

Beijing’s challenge will be to successfully implement measures that will alter the entire fabric of society. Apart from the hukou system, China’s generously low retirement age (50 or 55 years for women, 60 for men) will need to rise by up to ten years and the pension systems overhauled. Improvements to women’s rights are long overdue, elderly care has to end its reliance on informal care. Many reforms have been talked about for over a decade, but tangible progress has been modest to date.

While China’s economy was growing at a double-digit rate, such social and fiscal policy impositions could be avoided. Beijing could allocate consistently increasing government revenues to ensure people live better and become wealthier. With today’s lower growth economy, the country needs reform to control the cost of public expenditure. This could see Beijing calling into question structures citizens and officials nationwide take for granted. Aside from the retirement age, this could target local and provincial governments’ taste for risky real estate and infrastructure deals to raise money (by Beijing’s count, real estate accounts for 50 percent of local government resources).

To guide China’s transition from the world’s most populous country to the nation with the largest over-65s population, Xi Jinping will have to overcome immense vested interests and deal with adverse public opinion. China’s most powerful leader in decades will not find the task any easier given local public coffers have been depleted by three years of zero-Covid measures. Plans to raise the retirement age have existed at least since Xi’s accession in 2013, and the time in which to trigger them is getting shorter.

MERICS analysis: “Reforms to manage an ‘aging China’ are Xi’s litmus test,” says MERICS Analyst Vincent Brussee. “Xi appears to hold all the power he needs to force through these difficult decisions. But the longer he waits, the more painful these reforms will become. A botched policy response will risk the central government’s legitimacy, not just in the eyes of the people but also in the view of the party cadres it relies on.”

More on the topic:China’s demography is not destiny, by MERICS Senior Associate Fellow Bert Hofman

Media coverage and sources:

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Only half as many people traveled during the Chunyun (春运) Spring Festival travel rush as they did during the last “normal” one in 2019. Authorities said traveler numbers were 56 percent higher than in 2022, but 46.9 percent lower than in the year before Covid-19 struck. The figures show China is not back to business as usual as people avoided taking the train for fear of getting the virus and infecting relatives. The number of trips by private car was 14.6 percent higher than in 2019.


Japan-Netherlands-US plan to align China export controls may become a blueprint

The facts: Three months after the Biden Administration imposed export controls on key US semiconductor technology exports to China, two of Washington’s top allies have agreed to a plan to align their own rulesets. On January 27, Japan and the Netherlands, home to essential semiconductor manufacturing equipment suppliers like lithography machinery from Dutch ASML and Japanese Tokyo Electron and Nikon, agreed to begin legislative processes to craft new export controls. While the details have yet to emerge, the deal is a milestone in the technology war, as the US has chiefly relied on its own unilateral measures and long-arm jurisdiction to limit technology flows to China.

What to watch: The details, which should emerge throughout the year, will determine just how closely the Dutch and Japanese restrictions will resemble those of the US. This may take some time. ASML already indicated it anticipates a lengthy legislative process, stating it doesn’t expect 2023 revenues to be affected. Rather than traditional policy alignment through multilateral platforms like the Wassenaar Arrangement, this coordination only involves the three markets with the most cutting-edge machinery in this specific technology. Even if the countries do not fully align their policies, the agreement will likely become a blueprint for further restrictions moving forward.

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MERICS analysis: “In a market with multiple suppliers of a given technology, nobody wants to restrict their own companies from selling to China if other countries continue to supply the tech to Beijing. Alignment like this is key to preventing a ‘race-to-the-bottom’ dynamic that emerges when unilateral measures are taken,” said Jacob Gunter, Senior Analyst. “This sort of coordination is in many ways the nightmare scenario for Beijing, which will view this as an effort for joint containment.”

Media coverage and sources:

China edges one step closer to weaponizing tech supply chains it controls

The facts: Bloomberg reported that Beijing is mulling an export ban of technologies used to manufacture advanced solar wafers, part of the solar PV supply chain China dominates. China’s share in all manufacturing stages of solar PV exceeds 80%, with a striking 97% for wafers. In a new report, the European Commission’s Joint Research Center issued a stark reminder that the EU is too reliant on China for strategic materials and products critical for the digital and green transitions.

What to watch: The technologies are marked as “restricted” in a catalog circulated for comment by China’s ministries of commerce and science and technology between December 30 and January 28. The proposed restrictions would imply a new export licensing requirement, not a ban as some media has suggested. Other additions are in the areas of automotive LiDAR, synthetic biology, crop heterosis utilization, and bulk loading and transportation. Authorities are also considering an export ban of certain cell cloning and gene editing technologies, such as CRISPR. Adding items to its controls list allows China to protect – and, if push comes to shove, weaponize – its technological advantages by disrupting supply chains important to Europe and the US. The catalog has only been updated twice – in 2008 and 2020.

MERICS analysis: “As the US, the EU, and India are making efforts to diversify solar tech supply chains away from China, Beijing is looking to defend the country’s dominance. China has developed its export controls regime considerably over the past few years to be able to protect its security, economic and industrial interests, at a time when the US is flexing its muscles in global tech trade. And Beijing does not want other countries to use its tech to strengthen their own industries,” says MERICS Analyst Rebecca Arcesati.

More on the topic:Diversification isn’t enough to cure Europe’s economic dependence on China, short analysis by Francesca Ghiretti and Hanns W. Maull.

Media coverage and sources:

EU’s Global Gateway connectivity initiative takes shape as BRI turns ten

The facts: The European Commission appears to have selected 70 projects to flesh out the EU’s Global Gateway (GG) connectivity initiative. Like China’s Belt and Road Initiative (BRI), its older rival, GG‘s initial focus is mostly on the Global South, with Politico Europe reporting 36 projects earmarked for sub-Saharan Africa, 14 for Latin America and the Caribbean, 13 for Asia-Pacific and seven closer to home. They range from traditional infrastructure projects of different sizes to fostering digital capabilities and green transitions in receiving countries and the EU. While the BRI will celebrate its tenth anniversary in 2023, questions still surround the initiative – including whether Beijing will mark its first decade in existence, possibly as part of a third BRI Summit.

What to watch: The EU’s projects strike a balance between ambition and feasibility – but only concerted step-by-step implementation and a good deal of public diplomacy will make Global Gateway a success. Xi Jinping in 2021 signaled a change of emphasis for BRI from large investments in big infrastructure projects to “small and beautiful” projects, something the EU also appears to find sensible. Given the difficulties GG and BRI face, it will be interesting to see whether 2023 brings any project collaboration between the EU and China into view. But competition will remain the baseline, a situation that could once again push China and the EU to promise too much to potential partner countries.

MERICS analysis: “Europe would do well to see the BRI’s first decade as a cautionary tale about the risks of overpromising,” says Francesca Ghiretti, Analyst at MERICS. “The EU has been criticized for a lack of ambition and relabeling existing schemes, but Global Gateway’s initial projects are a good foundation – even if putting it in place took a while. Ranging from easily achievable to ambitious goals, they should allow for a solid start.”

Media coverage and sources:


Chip War: The Fight for the World's Most Critical Technology by Chris Miller (Simon & Schuster 2022)

Chris Miller’s “Chip War” is essential reading for anyone wondering why semiconductors have become a huge issue in geopolitics. The author explains the importance of chips beyond everyday life – that is, their importance for the military and the industrial power base of any nation that can make or use them. He initially focuses on the US and Soviet Russia and then brings Asia into view, reflecting the development of the industry over the decades. Sadly, he neglects Europe’s integral place in this decades-long story.

This omission aside, Miller’s historical overview of the development of microchips is the strongest part of the book. Invented as a replacement for vacuum tubes in weapons, semiconductors were ideal for all sorts of other things. Today only a small part of US manufacturers’ revenues comes from government contracts, but in the early days they relied on demand from the US government, usually in the form of NASA or the Pentagon.

Describing the different industrial policies pursued by the US, Japan, Taiwan and China, Miller shows how hard it is to make chip making commercially viable. All leading chip-making countries relied on government support, directly through subsidies and market controls or indirectly through public procurement. Although armed forces generally don’t use top-of-the line chips, the author explains why innovation still remains a military priority.

Miller’s description of the current conflict between China and the US is less developed. The author sees a second Cold War emerging, but does not do enough to justify why the first one between Soviet Russia and the US is a useful comparison. This part of the book is full of interesting examples, but they lack a red thread. But in highlighting the geopolitics behind successive chip wars, he counters the idea that the division of work in modern chip-making was shaped purely by market forces.

Reviewed by Antonia Hmaidi

MERICS China Digest

Pfizer’s Covid-19 pill vies to be part of China’s medical bulk-buy scheme (Yicai Global)

US pharma company Pfizer’s antiviral drug Paxlovid will be part of China’s Covid bulk-buy scheme according to Yicai Global reports. (23/01/06)

Project Texas: The details of TikTok’s plan to remain operational in the United States (

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For several years now, TikTok has been negotiating with the US government to address potential national security risks posed by the platform. Lawfare blog reports from a recent briefing by TikTok officials on the topic. (23/01/26)

China's Baidu to launch ChatGPT-style bot in March - source (Reuters)

The technology firm plans to launch the service as a standalone application and gradually merge it into its search engine, according to the source. (23/01/31)

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Xi faces challenges as Chinese population keeps aging


Japan-Netherlands-US plan to align China export controls may become a blueprint

China edges one step closer to weaponizing tech supply chains it controls

EU’s Global Gateway connectivity initiative takes shape as BRI turns ten

Review: Chip War, by Chris Miller

MERICS China Digest

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Who is required to be a US person for export control compliance? ›

Under the export control regulations, a “U.S. person”[2] is someone who is: 1) a U.S. citizen (whether born or naturalized); 2) a lawful permanent resident of the United States (e.g., “green card” holders); or 3) a protected individual as defined by 8 U.S.C.

What is the difference between ECCN and EAR99? ›

EAR99 is a classification for an item. It indicates that a particular item is subject to the Export Administration Regulations (EAR), but not specifically described by an Export Control Classification Number (ECCN) on the Commerce Control List (CCL).

What are EAR99 requirements? ›

EAR99 items generally consist of less sensitive consumer goods and do not require a license in most situations. However, if you plan to export an EAR99 item to an embargoed country, to an end user of concern or in support of a prohibited end use, you may be required to obtain a license. Where are you exporting?

What are some of the key issues to take into consideration when exporting? ›

Key factors one needs to look after before engaging export.
  • Importance of Place. ...
  • Description of Product. ...
  • Customer Satisfaction. ...
  • Feasible Transport Modes. ...
  • Product Demand. ...
  • Importance of Marketing. ...
  • Product's Cost. ...
  • Insurance of business.
Jun 17, 2020

What are the two main export control regulations of the US? ›

Federal Regulations on Export Control
  • Bureau of Industry and Security. Export Administration Regulations (EAR)
  • Census Bureau. Foreign Trade Regulations (FTR)

Who is subject to export controls? ›

Basically, any research activity may be subject to export controls if it involves the actual export or “deemed” export of any goods, technology, or related technical data that is either 1) “dual use” (commercial in nature with possible military application) or 2) inherently military in nature.

How do I know if my product is EAR99? ›

If your item falls under the jurisdiction of the BIS and is not listed on the CCL, it is designated as EAR99. The majority of commercial products are designated EAR99 and generally will not require a license to be exported or reexported.

What products fall under EAR99? ›

Under the export control regulations, every item can classified as being subject to ITAR, the CCL, another agency's regulations, or else is designated as EAR99.
These regulations cover:
  • defense articles;
  • significant military equipment;
  • major defense equipment;
  • defense services; and.
  • technical data and software.

How do I find my ECCN code? ›

Contact the manufacturer, producer, or developer of the item you are exporting to see if they have classified their product and can provide you with the ECCN. If they have exported the item in the past, it is likely they have the ECCN.

What does EAR99 mean in shipping? ›

EAR99 is a classification designation for an item that is subject to the EAR but not specifically described by an ECCN on the CCL. NLR, which stands for “No License Required,” is a shipment designation.

What are the three 3 main documents required for import customs clearance? ›

• Customs for the clearance of imports consists of:
  • Import Declaration.
  • Bill of Lading (B/L) or Air Waybill.
  • Invoice.
  • Packing List.
  • Import License (if applicable)
  • Certificates of Origin (if applicable)
  • Other relevant documents such as catalogue, product ingredients, etc.

Is ECCN same as HS Code? ›

An ECCN (Export Control Classification Number) is a five alpha-numeric designation for dual-use items that are listed on the Commerce Control List (CCL) to ensure these items are not for military use. An HS (Harmonized System) code is used for standardized international trade.

What are the 5 essential elements of the export process? ›

5 Essential Elements of Export Compliance
  • Summary:
  • Product Classification.
  • Export Country Requirements.
  • Screen Your Customers.
  • How Your Product Will Be Used.
  • Exporting Dangerous or Hazardous Goods.
  • Plan Ahead for Export Compliance.
Jun 1, 2021

What is the greatest barrier to exporting? ›

The most common barrier to trade is a tariff–a tax on imports. Tariffs raise the price of imported goods relative to domestic goods (good produced at home). Another common barrier to trade is a government subsidy to a particular domestic industry. Subsidies make those goods cheaper to produce than in foreign markets.

What should be one of the most important considerations in exports? ›

Arguably the most important part of being an exporter is getting paid for your goods. To make sure you get paid, you need to find an international banking partner and understand all of your payment options.

What are three types of export control? ›

The three major lists of export-controlled items are the Commerce Control List (CCL), the United States Munitions List (USML), and the Nuclear Regulatory Commission Controls (NRCC).

Who enforces export controls? ›

The Treasury Department's Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions that have been imposed against specific countries based on reasons of foreign policy, national security, or international agreements.

What are examples of export controls? ›

Examples of situations that may be subject to Export Controls include, but are not limited to:
  • Shipping controlled materials, supplies, or samples to other countries.
  • Sharing information disclosed under confidentiality agreements with foreign persons, including students, staff, and faculty.

What is red flag in export control? ›

Red Flag Indicators

The Recipient or purchasing agent is reluctant to offer information about the end-use of the requested material. The requested material or product's capabilities do not fit the Recipient 's line of business or expertise.

What is the importance of export control? ›

Export controls regulate technologies, technical data and information that are taken to other countries by U.S. travelers or imparted to foreign nationals working in the U.S. These controls are intended to protect U.S. economic interests and foreign policy goals, as well as to prevent the acquisition of technologies, ...

Why do we need export controls? ›

Why do we have export controls? An effective export control system consists of a comprehensive legislative and regulatory framework that controls defence and strategic goods and technologies in both tangible (i.e. blueprints) and intangible (i.e. emails) forms.

Which countries require export license? ›

The Office of Foreign Asset Control (OFAC) limits certain activities in the Balkans, Burma, Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria, and Zimbabwe. View the active sanctions. Some of the sanctions are monetary in nature, and other sanctions may either prohibit shipping or require a license to ship.

Can EAR99 be dual-use? ›

Dual use items that are subject to regulation but are not identified on the CCL are termed "EAR99." Dual use items may require an export license depending on the item, the recipient, the recipient's citizenship or country of destination, and the item's application.

What does an ECCN number look like? ›

What is an ECCN? An Export Control Classification Number (ECCN) is an alphanumeric designation (e.g., 1A984 or 4A001) used in the Commerce Control List (CCL) to identify items for export control purposes.

Do I need a license to export from USA? ›

Get an Export License or Permit

Most items exported to a foreign buyer will not require an export license. However, all items are subject to export control laws and regulations. This list of federal departments and agencies is the best way to find out whether you need an export license for your product.

What are 3 ways to get an ECCN? ›

How to find ECCN number
  1. Talk to the manufacturer, who may already have an assigned ECCN.
  2. Look at the Commerce Control List, and work through the categories to find the ECCN which most closely fits your product.
  3. Get an ECCN online through the Electronic Request for Item Classification (ERIC) process.

Do I need an export Licence? ›

If you are exporting (transferring or disclosing) any controlled items, you must apply for an export licence. Even if the items you are exporting are not controlled, you might still need a licence depending on who the recipient is, where they are located and the intended end-use of the items.

What is the ECCN number for shipping? ›

ECCNs are five character alpha-numeric designations used on the Commerce Control List (CCL) to identify dual-use items for export control purposes. An ECCN categorizes items based on the nature of the product, i.e. type of commodity, software, or technology and its respective technical parameters.

How do I get an export code? ›

To submit an IEC application, you need to log in after creating an account. Click the Submit and Generate IEC Certificate button to obtain the IEC code after the application form (ANF 2A format) has been completed, the necessary documents have been uploaded and payment has been made.

What is US ECCN code? ›

An Export Control Classification Number (ECCN) is a five-character alphanumeric key used in the Commerce Control List (CCL) to classify U.S. exports and determine whether an export license is needed from the Department of Commerce. An ECCN categorizes a product based on its commodity, software, or technology.

What is ECCN EAR99 classification? ›

They fall under U.S. Department of Commerce jurisdiction and are not listed on the Commerce Control List (CCL). EAR99 items generally consist of low-technology consumer goods and do not require a license in most situations.

What is export classification code? ›

What is an Export Control Classification Number (ECCN)? An ECCN is a five-digit identifier used by the U.S. Department of Commerce to categorize items subject to export control restrictions, as per the Commerce Control List. Example: The ECCN of gas turbine technology is 9E003.

What is ECCN code 3A991A2? ›

3A991A2 applies because the microprocessor has a clock that exceeds 25MHz as per US regulations highlighted below. The EU export regulations do not recognize 3A991A2 but instead classifies this device as EAR99.

How do I pass customs clearance? ›

Customs Clearance Process: 4 Easy Steps to Follow
  1. Key Points:
  2. A customs officer examines your customs paperwork. ...
  3. Import duties and taxes are assessed using the customs paperwork. ...
  4. Customs requests payment for taxes and duties, if applicable. ...
  5. Your shipment clears customs once all duties are paid.
May 9, 2018

How do I clear customs clearance? ›

The customs clearance involves several steps, and we list them below:
  1. Step 1: Document inspection. This is the point where all the documents listed above come into relevance. ...
  2. Step 2: Tax and duty calculation. ...
  3. Step 3: Incoterm choice and payment of taxes and duties. ...
  4. Step 4: Release of shipment.
Sep 14, 2021

What documents do I need for customs clearance? ›

There are four basic import documents you need in order to clear customs quickly and easily.
  • Commercial Invoice. This document is used for foreign trade. ...
  • Packing List. Provided by the shipper or freight forwarder, the packing list may be used by customs to check the cargo. ...
  • Bill of Lading (BOL) ...
  • Arrival Notice.

What are the penalties for ECCN? ›

Civil: seizure and forfeiture of articles, revocation of exporting privileges, fines of up to $500,000/violation. violation; up to 10 years in prison.

Do you need HTS code for export? ›

In regards to whether an HTS Code is needed for exports, the answer can be clearly explained. HTS (Harmonized Tariff Schedule) codes are not used for exports. HTS codes are used to import products, while export codes, also known as Schedule B codes are used to export products.

How many types of HS codes are there? ›

How many Harmonized System (HS) shipping codes are there? There are approximately in circulation 5,300 HS codes that identify export goods that are broken down into headings along with subheadings. They are also arranged into 99 different chapters around with being grouped into 21 sections.

Do you have to be a U.S. citizen for ITAR? ›

U.S. Person (EAR Part 772 and ITAR 120.15)

With respect to both EAR and ITAR, a U.S. person includes: Any individual who is granted U.S. citizenship; or. Any individual who is granted U.S. permanent residence (Green Card holder); or. Any individual who is granted status as a “protected person” under 8 U.S.C.

Who is a U.S. person according to ITAR? ›

U.S. Person

Under the ITAR, a natural person who is a lawful permanent resident (green card holder) or a protected individual (citizen or national of the U.S., special agricultural worker, admitted refugee or person granted asylum); or any entity (corporation, business association, partnership, etc.)

What is defined as a U.S. person? ›

The term ''United States person'' means: A citizen or resident of the United States. A domestic partnership. A domestic corporation.

Are you a U.S. person per ITAR? ›

ITAR Definition

Under § 120.62 of the ITAR a U.S. person is defined as: A person who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3).

What happens if you break ITAR? ›

There are serious penalties imposed for any ITAR violations, including civil fines up to $500,000, criminal fines up to $1,000,000, and jail time of up to 10 years imprisonment per violation.

What are the most common ITAR violations? ›

6 Most Common Examples of ITAR Violations
  • Failing to Register. ...
  • Lack of Technical Data Licenses. ...
  • Incorrect Documentation. ...
  • Not Vetting Other Parties. ...
  • Uncontrolled Technical Data. ...
  • Willful Failure to Comply.
Oct 25, 2021

Do green card holders need export license? ›

As noted above, if the individual is a naturalized citizen or permanent resident of the United States, the deemed export regulations do not apply. In other words, he or she is not subject to the provisions of the deemed export regulation.

Can a U.S. citizen be a foreign national? ›

U.S. law does not mention dual nationality or require a person to choose one nationality or another. A U.S. citizen may naturalize in a foreign state without any risk to his or her U.S. citizenship.

Is ITAR federal law? ›

International Traffic in Arms Regulations (ITAR) is a United States regulatory regime to restrict and control the export of defense and military related technologies to safeguard U.S. national security and further U.S. foreign policy objectives.

Is a green card holder a foreign national? ›

Lawful permanent residents (LPRs) are foreign nationals who have been granted the right to reside permanently in the United States. LPRs are often referred to simply as "immigrants," but they are also known as "permanent resident aliens" and "green card holders."

What is the IRS green card test? ›

The Green Card Test (GCT) is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual qualifies as a "resident for tax purposes".

How does the IRS classify Cryptocurrency? ›

IRS Guidance

For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

Do freelancers get 1099? ›

As a freelancer, you're likely to get numerous 1099-NEC forms, (1099-MISC in prior years) one from each of your clients. If you receive payments through online payment services such as PayPal, you might receive a 1099-K. Payers will also send these forms to the IRS to report your income.

What is the difference between a U.S. person and U.S. citizen? ›

United States person means United States citizens (including minor children); United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under ...

Who needs a ITAR license? ›

Under ITAR § 122.1(a), registration is required only for persons who engage in the United States in the business of furnishing defense services or manufacturing, exporting, or temporarily importing defense articles.

Does ITAR apply to individuals? ›

It's important to note that the phrase “U.S. Persons,” as ITAR defines it, refers not only to people who are U.S. citizens or lawful permanent residents, but also any organization that is incorporated to do business in the U.S., as well as federal, state and local government entities.


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