When the first of three (3) final rules to change the International
Traffic in Arms Regulations (ITAR) U.S. Munitions List (USML) categories and
establish the new “600 series” on the Export Administration Regulations (EAR)
Commerce Control List (CCL) was published on April of 2013, it seemed like
everyone was scrambling to meet the 180-day transition period. October 15, 2013
is now in the rear-view mirror and (from where I sit) there has yet to be a
significant spike in the number of export licenses we are reviewing, let alone
getting ANY licenses with a new “600 series” commodity staffed from Department
of Commerce (DoC).
So I am wondering - Why all this hype, excitement, and
preparation? I have a few theories.
Maybe exporters have just decided to take the “mea culpa”
route. The three (3) final rules are quite detailed and admittedly a perplexing
read. For larger exporters / big industry, determination of new
classifications, for the over 30K parts, is a daunting task and for smaller
exporters / small businesses, the specially-trained staff and time to analyze
the new rules does not exist (to determine what license might be required). The
difficulty with this approach is the risk of the exporter receiving an ITAR
violation.
Another reason could be that exporters are filing Commodity Jurisdiction
requests (with either Department of State (DoS) or DoC (or both) to obtain an authoritative
ruling on the appropriate placement of their commodity before moving forward
with any license request. Please refer to my previous post regarding Commodity
Jurisdictions at: http://www.thetsateam.com/export-control-blog/
Or, perhaps exporters who HAVE read
/ understood the new rules have decided to actually use them and have chosen to
execute ITAR 120.5(b) and EAR 734.3(e) which “authorizes the export, reexport,
or in-country transfer of items subject to the EAR when the items subject to
the EAR will be used in or with items subject to the ITAR and are included on
the same DDTC license, agreement, or other approval.” This provision removes the
requirement to obtain licenses from both agencies in certain circumstances and even
allows for both USML and CCL items to be included on a DSP-5 (permanent export
license) or Technical Assistance Agreement / Manufacturing License Agreement
(TAA / MLA). Of course exceptions exist; therefore I recommend a thorough
analysis of the rules for a comprehensive understanding.
Another possibility for the delay in DoC licenses is the
‘transition plan’ presented by both DoC and DoS allowing for some additional delays
in obtaining new licenses. Part of the transition plan allows for existing
licenses or agreements to stay in effect for up to two (2) years, from the
effective date of the revised USML category (only if ALL of the items within
the license or authorization have transitioned from the USML to the CCL). Another
part allows for licenses or agreements to remain valid until its expiration (only
if SOME of the items on the license or authorization have transitioned from the
USML to the CCL). Simply stated, some cases will enable exporters to wait and
apply for a new license, specifically exporters can obtain authorization two
years after the effective date of the revised USML category or when their
existing license / authorization expires (in the case of USML Category VIII,
exporters potentially have until October 14, 2015 to obtain a new license). The
transition is clearly going to take time and perhaps five months is premature
to expect the changes to come into effect given that export control reform has
taken more than five (5) years to implement.
I am curious to see how export control reform is going to
change…and am anxiously awaiting!
More information on the transition plan can be found
at: https://www.pmddtc.state.gov/FR/2013/78FR22740.pdf
Link to the ITAR 120.5(b):http://www.ecfr.gov/cgi-bin/text-idx?SID=86008bdffd1fb2e79cc5df41a180750a&node=22:1.0.1.13.57&rgn=div5#22:1.0.1.13.57.0.31.5
Link to the EAR 734.3(e): http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=a8460dee9a3ce9050bf04fa7591c1a2a&ty=HTML&h=L&n=15y2.1.3.4.22&r=PART#15:2.1.3.4.22.0.1.3
Need help with export controls? TSA Inc. can help!
Heidi France is a Lead
International Trade Specialist, Technology Security Associates, Inc.
Email:
heidi_france@theTSAteam.com
Contributor: Jackie
Sudore-Flood, Director of International Programs, Technology Security
Associates, Inc., Email: jackie_sudore-flood@theTSAteam.com
