When the Export
Control Reform (ECR) initiative was first announced in 2009, the initial
reaction was, “That’s never going to happen and we won’t have to learn about
it”. Well, flash forward four years and
it has really happened and we do have to learn about it. If you
are in the business of exporting your product or technology, you should learn
about it too. In an effort to eliminate
redundancy, streamline processes and update outdated Cold-War regulations for
both Department of State and Commerce there are four goals of ECR which are known
commonly as the “four singulars”: single
License Authority (SLA), single list of controlled technologies, single export control IT system, and a
single enforcement authority. The singulars are being tackled in a three-Phased
approach. Phases I and II are aligning
the regulations, definitions and policies before moving into Phase III which
will finalize the singulars. Each
singular is at its own stage of implementation but all are in motion. Status can be tracked at http://export.gov/ecr
New rules: The latest and by far the biggest change to date are the Final Rules
that were published in a Federal Register notice on 16 April 2013 with an
effective date of 15 October 2013. These
rules introduce policies and procedures for the licensing of items moving from
the International Traffic in Arms Regulations (ITAR) U.S. Munitions List (USML)
to the Export Administration Regulations (EAR) Commerce Control List (CCL) and
provide much-needed beefed-up definitions for things such as “aircraft” and
“specially designed”. Specifically, the
new rule re-writes USML Category VIII (Aircraft and Related Articles) and added
a Category XIX (Gas Turbine Engines and Associated Equipment). For those who have spent their careers
studying and enforcing the ITAR; this is a game-changer. The new regulations require a very detailed
understanding of the new ITAR regulations as well as the EAR and the CCL and how
to apply it to your product. Of course
there are seminars, webinars, publications and trade groups who have focused on
providing training and transition assistance.
Buyer
beware: The key in applying the new
regulations is to have a strong understanding of your product, its intended
uses and a list of potential or confirmed foreign partners. The biggest misconception is that if a
product is moved to the CCL that it no longer will require a license. The EAR has its own complex licensing
requirements. An item must be properly
classified with an Export Control Classification Number (ECCN) and there are
many License Exceptions to navigate before making the determination of a
license requirement. The most commonly-used
Exception for the new CCL items will be the Strategic Trade Authorization (STA)
exception which will allow a “no license required (NLR)” to 36 countries with
other stipulations.
The new rules do not get us to Phase III of
the four singulars, there are still two licensing authorities and two lists of controlled
technologies. This means that for now
there are still two Departments with two separate systems for submitting a
license request. Fortunately Department
of Commerce does not require a registration fee to submit a license unlike the
Department of State. If assistance is
needed in making a classification determination a Commodity Jurisdiction
request can still also be filed.
The biggest take-away is that going forward
exporters must have a strong knowledge of both ITAR and EAR and how they apply
to their products and in-house compliance programs in order to avoid
unnecessary violations. If you are a
small exporter you know how hard it was just to keep up with the ITAR. If a violation is discovered, exporters are
strongly encouraged to file a voluntary disclosure either to Department of
State or Commerce as appropriate.
If you have any questions or need assistance navigating
export compliance, contact us – TSA, Inc. can help!
Heidi France
is a Lead International Trade Specialist with Technology Security Associates,
Inc. Email Heidi at heidi_france@theTSAteam.com
