Export Control Reform Update: 2014 and Beyond

October 15, 2014 - via Baker Donelson

It’s been just about a year since the President’s Export Control Reform Initiative kicked off with revisions to four categories of the United States Munitions List (USML). Since then, two more rounds of changes has brought the total number of revised categories to 13, more than half of the total 21 categories contained in the USML. As a result of rounds 1-3, the following categories have been revised:
    ▪    IV – Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines
    ▪    V – Explosives and Energetic Materials, Propellants, Incendiary Agents, and Their Constituents
    ▪    VI – Surface Vessels of War and Special Naval Equipment
    ▪    VII – Ground Vehicles
    ▪    VIII – Aircraft and Related Articles
    ▪    IX – Military Training Equipment
    ▪    X – Personal Protective Equipment
    ▪    XIII – Materials and Miscellaneous Articles
    ▪    XVI – Nuclear Weapons Related Articles
    ▪    XVII – Classified Articles, Technical Data, and Defense Services
    ▪    XIX – Gas Turbine Engines and Associated Equipment
    ▪    XX – Submersible Vessels and Related Articles
    ▪    XXI – Articles, Technical Data, and Defense Services Otherwise Not Enumerated

And in the last few months of 2014 certain items included in two more categories will be taken off of the USML and transferred to the 600 Series of the Commerce Control List (CCL). As was the case with items that were transferred to the 600 Series in previous rounds, the classification change will result in differing controls on those items and consequently, will require your company to reclassify items in the newly revised categories to determine whether they remain under the jurisdiction of the State Department’s International Traffic In Arms Regulations (ITAR, which apply to USML products) or have been moved to the CCL, which falls under the jurisdiction of the Commerce Department’s Export Administrations Regulations (EAR).

Practically speaking, the potential classification changes brought about by the category revisions matter to exporters because they may bring about changes in licensing requirements as each department has a distinct set of requirements and separate application process. If an item you export may be reclassified as a result of the upcoming changes, it is important to determine if your licensing responsibilities have also changed so you don’t get caught inadvertently exporting with outdated paperwork – something that could stall your delivery and create export violations and penalties.

Obviously, the whole point of Export Control Reform is to simplify the licensing process for exporters by relaxing controls on less sensitive items. But keep in mind that relaxed controls doesn’t mean that your licensing responsibilities will either remain the same or disappear altogether. They may require the implementation of a different procedure altogether. In light of this, it is important to keep in mind that the following two USML categories will be revised in the last few months of 2014:
    ▪    Revisions to XV – Spacecraft and Related Articles will take effect on November 10, 2014
    ▪    Revisions to XI – Military Electronics will take effect on December 30, 2014

By the end of the year, 15 USML categories out of 21 will have been revised. What’s unclear is when the following six categories will be revised as the State Department has still not announced effective dates for changes to these categories, which include I – Firearms; II – Artillery; III – Ammunition; XII – Fire Control, Sensors, and Night Vision; XIV – Toxicological Agents; and XVII – Directed Energy Weapons.

As a reminder, it is not only items on the USML that are actually being used for military purposes that require a license from the State Department’s DDTC to be exported lawfully, but rather any item that is specifically enumerated in a USML category or included in a category by virtue of the fact that it is deemed to have been specially designed for military use (“specially designed” is the new definition that is now applied to determine if an item that is not directly mentioned is nevertheless included in a revised category).

So if you know or suspect your item is included in a USML category make sure to consult the revisions to that category to ensure that your procedures satisfy the new regulatory framework.

External link: http://www.jdsupra.com/legalnews/export-control-reform-update-2014-and-b-61457/

Author:Doreen Edelman