Export Control Reform

Revision Resolution: Export Control Reforms on Track

This is the time of year that many of us fall off the New Year’s Resolution bandwagon.

Maybe donuts have stealthily crept back into your diet, you’re still buying too many gadgets or your gym membership card is starting to gather a little dust. It happens to the best of us. Fortunately, so far the government seems to be sticking to its own 2014 goal:  to finish rewriting the U.S. Munitions List (USML).

To date, regulations for 13 of 21 categories on the list have already been modified.  The most recently published Directorate of Defense Trade Controls (DDTC) final rule addresses Categories IV, V, IX, X, and XVI and adds controls on military training equipment, energetic materials, personal protective equipment, shelters, articles related to launch vehicles, missiles, rockets, military explosives, and related items.  While some items will remain on the USML, the Bureau of Industry and Security’s (BIS) final rule adds controls for items that no longer warrant control on the USML and will transition to the Commerce Control List (CCL). These include certain helmets, smoke hand grenades and stun grenades, and particular thermal batteries.

This latest round of export control reforms will take effect on July 1st, 2014, with another round to follow later in the year.  Advice to companies is the same as it was in advance of the first wave of reforms in October 2013: be prepared.  Among the tasks you should consider sooner rather than later:

  • Update export compliance manuals and train personnel on the new changes
  • Re-classify items and technology as needed
  • If all of your items and/or services have transitioned to the CCL, provide written notification  to the State Department that you’re no longer subject to the ITAR registration requirements

Keep in mind that while you may submit an export license application to the BIS for items moving from the USML to the CCL before July 1st, you will not be granted your license before that date.

Still on the agenda for this year is the creation of a single export licensing database – a common portal (shared by the Defense, State and Commerce departments) for requesting permission to export items. Caroline Atkinson, deputy national security advisor for international economics, states that once revisions to the U.S. Munitions List are finished, she expects the White House to propose legislation to “consolidate our licensing and enforcement agencies.”  While a specific date for this event is unknown, given the steady pace of USML revisions, it seems reasonable to be optimistic about a timely amalgamation. The potential reduction of bureaucracy resulting from such a move is encouraging. Sluggish processing of export licenses costs businesses billions of dollars in lost sales (readily snapped up by foreign suppliers).  The aim of ECR to simplify doing business with allied countries – particularly for the technological and defense industries – appears to be on track.

And that should inspire us all to revisit our own goals for the year.  Right after one last donut.