Category Archives: Export Control Reform

A Cornucopia of Export Compliance Updates

USML Category XI Revised – Radars, XI(b), and Integrated Circuits

On August 30, 2019, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (84 FR 45652) revising United States Munitions List (USML) Category XI – Military Electronics.  This action follows a February 2018 comment request.

Most notably, USML Category XI(a)(3)(ix) is removed and reserved.  XI(a)(3)(ix) previously controlled “Air surveillance radar with multiple elevation beams, phase or amplitude monopulse estimation, or 3D height-finding.”  Public comments had “identified current and imminent commercial uses” for these radars, including use in “driver-assisted and self-driving ground vehicles and in detect and avoid systems for autonomous aerial systems.”

The notice also adds a comment to Category XI regarding transmit/receive modules and transmit/receive monolithic microwave integrated circuits (MMICs).

Items previously controlled on the USML are now subject to the Export Administration Regulations (EAR).

Finally, the notice also amends USML Category XI(b) to continue the current text which was scheduled to be replaced on August 30, 2019.  XI(b) currently controls:

*(b) Electronic systems, equipment or software, not elsewhere enumerated in this subchapter, specially designed for intelligence purposes that collect, survey, monitor, or exploit, or analyze and produce information from, the electromagnetic spectrum (regardless of transmission medium), or for counteracting such activities.

This text was scheduled to be replaced on August 30, 2019, but with the amendment the replacement will be delayed until August 30, 2021.  At that time, unless otherwise amended, Category XI(b) will read:

*(b) Electronic systems or equipment, not elsewhere enumerated in this subchapter, specially designed for intelligence purposes that collect, survey, monitor, or exploit the electromagnetic spectrum (regardless of transmission medium), or for counteracting such activities.

The change now scheduled for 2021 removes “software” as well as the capability to analyze and produce information from the electromagnetic spectrum.

The current language is meant to maintain control of “certain intelligence-analytics software” until a long-term solution is developed.  The rule gives the government time to include the revision of XI(b) within an overall revision of Category XI.

DDTC published a similar amendment last year.

DDTC separately published a FAQ on integrated circuits controlled by USML Category XI(c)(1).

Brazil a Major Non-NATO Ally

On July 31, 2019 (84 FR 43035 published August 19th), Brazil was designated a Major Non-NATO Ally (MNNA).  DDTC published an announcement on their website that Brazil “effective immediately is included within the definition of major non-NATO ally at ITAR section 120.32.”  DDTC has not yet officially amended §120.32.

For ITAR purposes, the MNNA designation relates directly to §124.15 “Special Export Controls for Defense Articles and Defense Services Controlled under Category XV: Space Systems and Space Launches.”

DTAG to Meet September 26

The Defense Trade Advisory Group (DTAG) will meet on September 26, 2019 to discuss the following topics:

  1. Consent agreements, including remedial measures and areas for improvement to compliance programs;
  2. Authorizations involving third party technical data; and
  3. Licensing challenges for participation in international cooperative programs.

The DTAG meeting is open to the public, with seating limited to 125 persons.  For meeting and registration information, click here for the meeting notice.

Click here for more information about DTAG.

DRL Published Guidance on Surveillance Exports

On September 4, 2019, the Department of State, Bureau of Democracy, Human Rights, and Labor (DRL) published draft guidance on the export of surveillance hardware, software, and technology.  DRL is accepting comments on the draft guidance through October 4, 2019 and stated that the draft will be removed from the website at that time.  DRL is a frequent staffing point (reviewing office) for many export license applications.  This guidance is of particular interest to exporters of with “intended or unintended surveillance capabilities.”

Commerce Publishes Pakistan Due Diligence Guidance

The Department of Commerce, Bureau of Industry & Security (BIS) published due diligence guidance regarding Pakistan.  The guidance highlights red flag guidance and the EAR’s end-use and end-user based restrictions.  It also includes specific examples of problematic entities and transactions in Pakistan.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Export Compliance Updates: Time to Launch Your Concerns About Exemptions–Let’s Raise the Amount for Spare Parts to $1500 under 123.16 (b)(2)!

Comment on Redundant or Ambiguous ITAR Exemptions

On July 26, 2019, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (84 FR 36040) requesting comments on how to consolidate and clarify exemptions found throughout the International Traffic in Arms Regulations (ITAR).

Specifically, DDTC is seeking comments on the following questions for exemptions:

  1. Which exemptions, if any, are redundant or could be consolidated?
  2. Which exemptions, if any, contain language that introduces significant ambiguity or hinders the exemption’s intended use? 123.16 (b)(2) for components or spare parts under $500 is no longer feasible–$1500 makes much more sense.

This is an important opportunity to contribute to streamlined and more usable ITAR exemptions.  Comments may be submitted through August 26, 2019 at www.regulations.gov (Docket No. DOS–2019–0022), by email to DDTCPublicComments@state.gov, or by mail.  Refer to the Federal Register Notice for additional information.

ACES Certificate Decommission

On July 17, 2019, DDTC announced the phase-out of ACES Certificates used to access the DTrade export licensing system:

ACES Certificates are required to access the DTrade defense export licensing system.  Per GSA instruction, all ACES Certificates must expire before August 1st, 2020.  The ACES provider, IdenTrust, will continue to issue certificates, but they must be posted with an expiration date of July 31st, 2020 or earlier.  If you purchase an ACES certificate after July 31st, 2019, the validity period will be truncated to less than a full year.

DTrade’s replacement by the Defense Export Control and Compliance System (DECCS) application has been under development, with a current status of “Will Launch in 2019.”

DDTC Registration Becomes Registration Compliance & Analysis (RCA) 

DDTC also posted the following announcement renaming the Registration division of Defense Trade Controls Compliance:

Effective July 15, 2019, the DTCC Registration division’s name will change to the Registration Compliance & Analysis (RCA) division.  There is no change to Registration organization structure.  All registration letters issued on and after July 15, 2019 will reflect the RCA division.  All active registration letters issued prior to July 15, 2019, will remain valid and no changes are required.  Updates to the DDTC Website will also occur on July 15, 2019, to be consistent with DTCC Registration name change.

While the DDTC street addresses remains the same, any correspondence with the former Registration Division should be updated to reflect the new name.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Comment Now on Future Space and Missile Export Controls

DDTC Requests Comments on USML Categories IV and XV

As a part of the ongoing review of the United States Munitions List (USML), the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice on March 8, 2019 (84 FR 8486) requesting comments on USML Categories IV (Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines) & XV (Spacecraft and Related Articles).  The Department of Commerce published a companion notice (84 FR 8485) requesting comments on Commerce Control List (CCL) Export Control Classification Numbers (ECCNs) 0A604, 0B604, 0D604, 0E604, 9A604, 9B604, 9D604, and 9E604.

The review seeks to ensure a bright line between the USML and CCL, where the USML:

  • Does not inadvertently control items in normal commercial use
  • Accounts for technological developments, and
  • Properly implements the national security and foreign policy objectives of the United States.

In particular, DDTC requests comments on the following topics:

  • New or emerging technologies that warrant control
  • Articles that have entered into normal commercial use
  • Articles that may enter commercial use in the next five years
  • How to distinguish between space-based optical telescopes for astrophysics missions and those used for Earth observation without specifically listing missions (e.g., the James Webb Space Telescope (ECCN 9A004.u)
  • Definitions regarding space optics in XV(a)(7) & XV(e)(2)
  • Clarification of spacecraft “servicing” under XV(a)(12)
  • Potential control status of the future Lunar Gateway
  • Cost savings for industry from shifting control of items from the USML to CCL

In addition to overlapping topics described above, BIS requests comments on the following:

  • licensing requirements for 9A515 technologies, such as habitats, planetary rovers, and planetary systems such as communications and power
  • space-related technologies which may warrant further review

Comments under both notices may be submitted until April 22, 2019.  Please see the Federal Register Notices (State and Commerce) for additional details.

Comment on the Voluntary Disclosure Process

On March 8, 2019, DDTC also published a notice (84 FR 8558) requesting comments on the Voluntary Disclosure information collection.  This request is part of the Office of Management and Budget (OMB) approval process which evaluates the necessity and reporting burden of the information collection.  The elements of a Voluntary Disclosure are detailed in ITAR §127.12.  Voluntary Disclosures are currently submitted to DDTC in hard copy, but the DS-7787 electronic form is in development.

Comments may be submitted until May 7, 2019.  Please see the Federal Register Notice for additional details.

Test the Next Commodity Jurisdiction Application

On March 15, 2019, DDTC announced testing for the updated Commodity Jurisdiction (CJ) application on the DECCS system.  Visit the DDTC website on March 20th for instructions.  Testing will be open through March 26th.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Be on the Lookout, Stricter License Requirements Expected for Chinese Military; Review the New Emerging Technologies and Send Your Comments to BIS!

Chinese Military End Users Targeted in Commerce Regulatory Agenda

On November 16, 2018, the Department of Commerce published its Fall 2018 Semiannual Agenda of Regulations (83 FR 57998).  In addition to various entries for other parts of the department, it includes an announcement that the Bureau of Industry and Security (BIS) plans to expand license requirements for export, reexports, and transfers (in country) to military end users in the People’s Republic of China.  Currently, Section 744.21 of the Export Administration Regulations (EAR) imposes license requirements on such transactions when the item is intended for a “military end use” in China or a “military end user” in Russia or Venezuela.  The change would likely expand licensing requirements for China to match current requirements for Russia and Venezuela and make other changes, including to EAR “Reasons for Control” and Automated Export System (AES) filing requirements.  A Notice of Proposed Rulemaking is anticipated in February 2019.

Comments Requested on Emerging Technologies

This summer’s Export Control Reform Act (ECRA) directed the Department of Commerce, along with Defense, Energy, and State, to identify “emerging and foundational technologies” that may warrant export controls to include CFIUS review and export licensing.

Proceeding with this review, the Department of Commerce published a notice (83 FR 58201) on November 19, 2018 requesting comments on emerging technologies that are essential to national security due to “potential conventional weapons, intelligence collection, weapons of mass destruction, or terrorist applications” or that may provide the U.S. “qualitative military or intelligence advantage.”

The notice includes the following representative list of technologies currently controlled by the EAR, but with limited licensing requirements:

(1) Biotechnology, such as:

(i) Nanobiology;
(ii) Synthetic biology;
*
(iv) Genomic and genetic engineering; or
(v) Neurotech.

(2) Artificial intelligence (AI) and machine learning technology, such as:

(i) Neural networks and deep learning (e.g., brain modelling, time series prediction, classification);
(ii) Evolution and genetic computation (e.g., genetic algorithms, genetic programming);
(iii) Reinforcement learning;
(iv) Computer vision (e.g., object recognition, image understanding);
(v) Expert systems (e.g., decision support systems, teaching systems);
(vi) Speech and audio processing (e.g., speech recognition and production);
(vii) Natural language processing (e.g., machine translation);
(viii) Planning (e.g., scheduling, game playing);
(ix) Audio and video manipulation technologies (e.g., voice cloning, deepfakes);
(x) AI cloud technologies; or
(xi) AI chipsets.

(3) Position, Navigation, and Timing (PNT) technology.

(4) Microprocessor technology, such as:

(i) Systems-on-Chip (SoC); or
(ii) Stacked Memory on Chip.

(5) Advanced computing technology, such as:

(i) Memory-centric logic.

(6) Data analytics technology, such as:

(i) Visualization;
(ii) Automated analysis algorithms; or
(iii) Context-aware computing.

(7) Quantum information and sensing technology, such as

(i) Quantum computing;
(ii) Quantum encryption; or
(iii) Quantum sensing.

(8) Logistics technology, such as:

(i) Mobile electric power;
(ii) Modeling and simulation;
(iii) Total asset visibility; or
(iv) Distribution-based Logistics Systems (DBLS).

(9) Additive manufacturing (e.g., 3D printing);

(10) Robotics such as:

(i) Micro-drone and micro-robotic systems;
(ii) Swarming technology;
(iii) Self-assembling robots;
(iv) Molecular robotics;
(v) Robot compliers; or
(vi) Smart Dust.

(11) Brain-computer interfaces, such as

(i) Neural-controlled interfaces;
(ii) Mind-machine interfaces;
(iii) Direct neural interfaces; or
(iv) Brain-machine interfaces.

(12) Hypersonics, such as:

(i) Flight control algorithms;
(ii) Propulsion technologies;
(iii) Thermal protection systems; or
(iv) Specialized materials (for structures, sensors, etc.).

(13) Advanced Materials, such as:

(i) Adaptive camouflage;
(ii) Functional textiles (e.g., advanced fiber and fabric technology); or
(iii) Biomaterials.

(14) Advanced surveillance technologies, such as:

Faceprint and voiceprint technologies.

*(1)(iii) was omitted in the published notice.

Comments are requested on how to define emerging technology, control criteria, and other relevant information.  Comments may be submitted until December 19, 2018.  Please see the Federal Register Notice for more information.  A separate notice is planned for “foundational technologies.”

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Export Compliance Updates: DECCS, Electronic Waste, and Wassenaar

Be the First to Test On-Line Advisory Opinion & Registration Applications!

DDTC is requesting industry testing of future Advisory Opinion and Registration applications in the Defense Export Control and Compliance System (DECCS).  See the DDTC News & Events page (10/15/2018 & 10/30/2018) for more information.  Testing is expected to continue through mid-November.

Comment on Prior Approval Requests for Brokering

On October 16, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (83 FR 52298) requesting comments on Brokering Prior Approval requests.

As described in the notice:

Currently submissions are made via hardcopy documentation. Applicants are referred to ITAR part 129 for guidance on information to submit regarding proposed brokering activity. Upon implementation of DDTC’s new case management system, the Defense Export Control and Compliance System (DECCS), a DS-4294 may be submitted electronically.

Comments may be submitted until December 17, 2018.  Please see the Federal Register Notice for additional details.

And the New Year Will Bring:

  • Movement on USML Categories I-III – see our previous blog posts on the proposed changes to firearms, guns, and ammunition;
  • Revisions to ITAR Exemption 126.4(a) – Shipments by or for U.S. Government agencies;
  • DECCS testing of the DSP-85 – classified hardware & technical data; and
  • Reorganization of the sections of the ITAR.

Commerce Requests Comments on Electronic Waste

On October 23, 2018, the Department of Commerce published a notice (83 FR 53411) requesting public comments on potential export controls on electronic waste.  This request is based on concerns that “counterfeit goods that may enter the United States’ military and civilian electronics supply chain” resulting from unregulated overseas recycling of discarded electronic equipment.  See the Federal Register Notice for additional background, potential definitions, and potential regulatory requirements and exemptions.  Comments may be submitted through December 24, 2018.

Commerce Revises CCL to Reflect Wassenaar Plenary

On October 24, 2018, the Department of Commerce published rule (83 FR 53742) which amends the Commerce Control List (CCL) to reflect changes made to the Wassenaar Arrangement List of Dual-Use Goods and Technologies at the December 2017 Plenary meeting.

The rule revises 50 Export Control Classification Numbers (ECCNs): 0A617, 0A919, 1A002, 1C001, 1C002, 1C007, 1C010, 1C608, 2A001, 2B001, 2B006, 2B007, 2B008, 2E003, 3A001, 3A002, 3B001, 3B002, 3C002, 3C005, 3C006, 3C992, 3E001, 4A003, 4A004, 4D001, 4E001, 5A001, 5A002, 5D002, 5E002, 6A002, 6A003, 6A004, 6A005, 6A008, 6A203, 6D003, 6D991, 6E001, 6E002, 6E201, 7A006, 7E004, 9A002, 9A004, 9D001, 9D002, 9D004, and 9E003.  It also removes ECCNs 6A990 and 6E990, corrects 3A991, and makes other changes to ECCNs 2B206 and 3A001.i.  Furthermore, the rule moves 37 definitions from Part 772 to the relevant ECCNs and makes changes throughout the Export Administration Regulations (EAR) to reference the revised ECCNs.

A follow-up notice was published on November 2, 2018 (83 FR 55099) to correct an omitted reference to the Civil end-users (CIV) exception for some 3A001 items.

Export compliance is always changing.  Subscribe to Our “EAR”… to the ITAR to keep up!

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

State Department Tweaks ITAR, Requests Comments

On October 4, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (83 FR 50003) that made several immediate, but minor, changes to the International Traffic in Arms Regulations (ITAR) and United States Munitions List (USML).  The revisions are in response to a July 2017 request for comments implementing the President’s Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs” and other industry feedback.

Other than USML revisions and notes, the only ITAR change was the removal of the requirement to return expired or exhausted licenses for technical data under 123.22(b)(3)(i) and (c)(2).

The USML revisions are as follows:

  • A note to USML Category IV(d) clarifies that it does not control satellite and spacecraft thrusters (instead, refer to XV(e)(12) and ECCN 9A515).
  • A note to USML Category V clarifies that, except for materials in V(c)(6), (h) or (i), the Department of Commerce licenses materials when incorporated into an item classified under ECCN 1C608 (“Energetic materials and related commodities”).
  • VIII(h)(12) – The description of UAV flight control systems is revised so that collision avoidance alone does not lead to ITAR controls:

(12) Unmanned aerial vehicle (UAV) flight control systems and vehicle management systems with swarming capability (i.e. UAVs that operate autonomously (without human input) to interact with each other to avoid collisions and stay together, fly in formations, and are capable of adapting in real-time to changes in operational/threat environment, or, if weaponized, coordinate targeting) (MT if for an aircraft, excluding manned aircraft, or missile that has a ‘‘range’’ equal to or greater than 300 km);

  • Notes to XI(a)(3)(i) and (xii) add additional technical specifications and a reference to Commodity Jurisdiction determinations to avoid control of airborne radars used by commercial drones.
  • Revisions to XI(c)(4) implement power thresholds to exclude components necessary for 5G wireless technology, including four required criteria and eight explanatory notes.
  • XV(f) is revised to include “to a foreign person” in its definition of satellite and spacecraft defense services.

DDTC also noted that it is working on a possible temporary export exemption for repair/replacement by foreign Original Equipment Manufacturer (OEM) as well as revised definitions proposed in 2015 (80 FR 31525) that were not included in the 2016 interim final rule (81 FR 35611) or final rule (81 FR 62004).

The Federal Register Notice includes additional background and responses to comments that may be of interest.  While these changes are effective immediately, comments may be submitted until November 19, 2018.

In separate notices, DDTC has also requested comments on three existing information collections for Office of Management and Budget (OMB) approval.  Click on the Federal Register Notices for more information and docket and control numbers needed for comments:

  • §123.9 Request to Change End-User, End-Use and/or Destination of Hardware (83 FR 47235).  The notice acknowledges that DDTC is working on a DS-6004 form to be submitted through the Defense Export Control and Compliance System (DECCS).  Comments will be accepted up to November 19, 2018.
  • Part 129 Annual Brokering Reports (83 FR 47390). Comments will be accepted up to November 19, 2018.
  • DS-2032 Statement of Registration (83 FR 48496).  Comments will be accepted up to November 26, 2018.

As always, these are important opportunities to comment on how your business views and is affected by export regulations.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Submit Your Comments for Categories I-III to State & Commerce Today

Updating on our previous post on the proposed revisions to USML Categories I, II, and III, the proposed rules to transfer articles from the firearms, artillery, and ammunition categories from State Department to Commerce Department jurisdiction have been published.

The proposed rules were officially published in the Federal Register on May 24, 2018 at 83 FR 24166 (Commerce Department) and 83 FR 24198 (State Department).  Comments will be accepted under both notices until July 9, 2018.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

USML Categories I, II, and III Proposed for Reform!

Nearly two years after Export Control Reform stalled without reaching the remaining three categories, the Departments of State and Commerce have simultaneously published proposals to revise United States Munitions List (USML) Categories I, II, and III (firearms, artillery, and ammunition).  Click here for the Department of State proposal and click here for the Department of Commerce proposal.

The rationale for the review is that:

The Department of State is engaged in an effort to revise the U.S. Munitions List so that its scope is limited to those defense articles that provide the United States with a critical military or intelligence advantage or, in the case of weapons, are inherently for military end use. The articles now controlled by USML Categories I, II, and III that would be removed from the USML under this proposed rule do not meet this standard, including many items which are widely available in retail outlets in the United States and abroad.

Currently written broadly, USML Categories I, II, and III cover most firearms, artillery systems, and ammunition.  They also include catch-all parts and components categories (e.g., I(h) “Components, parts, accessories and attachments for the articles in paragraphs (a) through (g) of this category.”).  Items no longer controlled under the USML would be controlled by the Department of Commerce’s Export Administration Regulations (EAR) and listed on the Commerce Control List (CCL).

The eagerly-awaited USML Category I revision would include the following, notably excluding most “non-automatic or semi-automatic firearms”:

  1. Firearms using caseless ammunition.
  2. Fully automatic firearms to .50 caliber (12.7 mm) inclusive.
  3. Firearms specially designed to integrate fire control, automatic tracking, or automatic firing (e.g., Precision Guided Firearms (PGFs)), and specially designed parts and components therefor.
    Note to paragraph (c): Integration does not include only attaching to the firearm or rail.
  4. Fully automatic shotguns regardless of gauge.
  5. Silencers, mufflers, and sound suppressors, and specially designed parts and components therefor
  6. [Reserved]
  7. Barrels, receivers (frames), bolts, bolt carriers, slides, or sears specially designed for the articles in paragraphs (a), (b), and (d) of this category.
  8. Parts, components, accessories, and attachments, as follows:
    1. Drum and other magazines for firearms to .50 caliber (12.7 mm) inclusive with a capacity greater than 50 rounds, regardless of jurisdiction of the firearm, and specially designed parts and components therefor;
    2. Parts and components specially designed for conversion of a semiautomatic firearm to a fully automatic firearm.
    3. Accessories or attachments specially designed to automatically stabilize aim (other than gun rests) or for automatic targeting, and specially designed parts and components therefor.
  9. Technical data (see §120.10 of this subchapter) and defense services (see §120.9 of this subchapter) directly related to the defense articles described in paragraphs (a), (b), (d), (e), (g), and (h) of this category and classified technical data directly related to items controlled in ECCNs 0A501, 0B501,0D501, and 0E501 and defense services using the classified technical data. (See §125.4 of this subchapter for exemptions.)

x.  Commodities, software, and technology subject to the EAR (see §120.42 of this subchapter) used in or with defense articles. Note to paragraph (x): Use of this paragraph is limited to license applications for defense articles where the purchase documentation includes commodities, software, or technology subject to the EAR (see §123.1(b) of this subchapter)

Note 1 to Category I: Paragraphs (a), (b), (d), (e), (g), (h), and (i) of this category exclude: any non-automatic or semi-automatic firearms to .50 caliber (12.7 mm) inclusive; non-automatic shotguns; BB, pellet, and muzzle loading (e.g., black powder) firearms; and parts, components, accessories, and attachments of firearms and shotguns in paragraphs (a), (b), (d), and (g) of this category that are common to non-automatic firearms and shotguns. The Department of Commerce regulates the export of such items…

The proposed Category II revision includes expanded technical notes and specifications for control and enumerate the parts and components that will remain on the USML.  The proposed Category III is rewritten to control ammunition based on technical attributes rather than merely being “for the articles in Categories I and II.”  Both Category I and Category II will include paragraphs controlling developmental products funded by the Department of Defense.

Other sections of the International Traffic in Arms Regulations (ITAR) would be amended due to existing references to “firearms” that would be overbroad with a revised Category I.  These include the firearms exemptions in §123.17, which would no longer be subject to the ITAR.

Concurrently, the Department of Commerce would create new Export Control Classification Numbers (ECCNs) for the items leaving the USML.  Items currently controlled in Category II would be controlled under new “600 series” ECCNs “to control items of a military nature” and Category I and III items would be controlled under new “500 series” ECCNs “because, for the most part, they have civil, recreational, law enforcement, or other nonmilitary applications.”  Conforming to the new ECCNs, seven existing ECCNs would be revised and nine removed.  Various other changes would be made throughout the EAR.

Notably, from the Department of Commerce proposal:

This proposed rule does not deregulate the transferred items. BIS would require licenses to export, or reexport to any country a firearm or other weapon currently on the USML that would be added to the CCL by this proposed rule. BIS would also require licenses for the export or reexport of guns and armament that would be controlled under new ECCN 0A602, such as guns and armaments manufactured between 1890 and 1919 to all destinations except Canada. As compared to decontrolling firearms and other items, in publishing this proposed rule, BIS, working with the Departments of Defense and State, is trying to reduce the procedural burdens and costs of export compliance on the U.S. firearms industry while allowing the U.S. Government to enforce export controls for firearms appropriately and to make better use of its export control resources.

Comments on the proposed revisions may be submitted to the Department of State until 45 days after the publication of the Federal Register Notice—likely June 30, 2018 or later.  Comments are specifically requested regarding any possible gaps in control between the revised USML and CCL, items whose jurisdiction is unclear under the revision, the time needed for industry to implement any final rule, and any other regulatory burden.  Comments may be submitted via the Federal eRulemaking Portal at http://www.regulations.gov under Docket DOS-2017-0046 or by email to DDTCPublicComments@state.gov with the subject line, “ITAR Amendment – Categories I, II, and III.”

Comments may be submitted to the Department of Commerce on the same timeline via the Federal eRulemaking Portal at http://www.regulations.gov under Docket BIS-2017-0004 or by mail, referencing RIN 0694-AF47 to:

Regulatory Policy Division
Bureau of Industry and Security
U.S. Department of Commerce
Room 2099B
14th Street and Pennsylvania Avenue, NW
Washington, DC 20230

 

Update, May 25, 2018

The proposed rules were officially published in the Federal Register on May 24, 2018 at 83 FR 24166 (Commerce Department) and 83 FR 24198 (State Department).  Comments will be accepted until July 9, 2018.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Leveling the Playing Field—We Now Have a New Conventional Arms Transfer (CAT) Policy

On April 19, 2018, the White House released a new Conventional Arms Transfer Policy (CAT).  This is a high level policy which directs the Departments of State, Defense, Commerce, and Energy to coordinate on the policy considerations for arms transfers.  Replacing the 2014 Conventional Arms Transfer Policy, it adds “Economic Security” to the list of factors used in evaluating proposed armed transfers, retaining the factors of national security, relationships with allies and partners, and nonproliferation.  “Economic Security” includes the effect of a proposed transfer on the defense industrial base and the availability of comparable foreign systems.

The State Department’s Directorate of Defense Trade Controls (DDTC) has posted a statement on the new CAT policy which includes some useful examples:

Specifically, we will increase opportunities for pre-deployment training and simulations of complex operational environments to help partners avoid civilian casualties. We will also encourage acquisitions of U.S. technology and training to enable more accurate battlespace awareness and more accurate targeting. We will also continue training to assist security forces in carrying out operations in a manner that respects human rights.

DDTC welcomes submission of stakeholder comments to ArmsTransferProcess@state.gov.

It remains to be seen what effect these changes will have on particular license applications, but the consideration of foreign availability is one of the major factors driving the simultaneous reevaluation of unmanned aerial systems (UAS) policy.

The State Department released a fact sheet on the new UAS export policy which seeks to increase trade opportunities for U.S. companies, enhance partner security and counterterrorism capabilities, and strengthen bilateral relationships while preserving U.S. military advantage and preventing the weapons of mass destruction delivery system proliferation.  UAS transfers remain subject to the Missile Technology Control Regime (MTCR).

For additional background on the Conventional Arms Transfer and UAS policies from Peter Navarro, Assistant to the President and Director of the Office of Trade and Manufacturing Policy, click here.

Finally, DDTC has announced the launch of a redesigned website effective April 30, 2018, intending “a number of significant enhancements including improved navigation, searchability, and accessibility, with a consistent, full-featured experience across mobile devices.”  The redesign has changed many links, so bookmarks and other saved references may need to be updated.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

State and Commerce Departments Request Comments on USML Categories V, X, and XI and Related ECCNs

State Department Request for Comments

On February 2, the Department of State published a notice (83 FR 5970) seeking comments on the following topics as they relate to U.S. Munitions List (USML) Categories V (Explosives and Energetic Materials, Propellants, Incendiary Agents, and Their Constituents), X (Personal Protective Equipment), and XI (Military Electronics).  Specifically, the notice requests comments on the following issues:

  1. Emerging and new technologies that are appropriately controlled by one of the referenced categories, but which are not currently described in subject categories or not described with sufficient clarity.
  1. Defense articles that are described in subject categories, but which have entered into normal commercial use since the most recent revisions to the category at issue. For such comments, be sure to include documentation to support claims that defense articles have entered into normal commercial use.
  1. Defense articles for which commercial use is proposed, intended, or anticipated in the next 5 years.
  1. Drafting or other technical issues in the text of all of the referenced categories.
  1. Comments regarding USML Category XI paragraph (b) modification.
  1. Potential cost savings to private entities from shifting control of specific commercial items from USML to the Export Administration Regulations. To the extent possible, please quantify the cost of compliance with USML control of commercial items, to include the time saved, the reduction in paperwork, and any other cost savings for a particular change.

Comments may be submitted by internet at www.regulations.gov (Docket No. DOS–2017–0017) or by email to DDTCPublicComments@ state.gov through April 13, 2018.  Comments will be published and should not include proprietary or other sensitive information.

For the current USML categories, click here.

Commerce Department Request for Comments

In a related notice (83 FR 5968), the Department of Commerce requests comments on the following Commerce Control List (CCL) ECCNs (Export Control Classification Numbers): energetic materials (1B608, 1C608, 1D608 and 1E608); armored and protective equipment (1A613, 1B613, 1D613, 1E613); military electronics (3A611, 3B611, 3D611 and 3E611); and cryogenic and superconducting equipment (9A620, 9B620, 9D620 and 9E620).  Specifically, the notice requests comments on the efficacy of the previous revisions, how to improve the implementation of these 600 series items on the CCL, and the potential cost savings of shifting control of these specific items from the USML to the CCL.

Comments may be submitted by internet at www.regulations.gov (Docket No BIS–2018–0004) through April 13, 2018.  Comments will be published and should not include proprietary or other sensitive information.

For the current CCL categories click here.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)