Since the release of the recent Export Control Reform changes to USML Category VIII (Aircraft and Related Articles) under the ITAR, a lot of companies are wondering how the changes affect them. Even if you are not in the aerospace industry, but are still involved in the manufacture of defense articles or providing defense services, there will be significant changes that affect your company in the near future. While it may seem that mid-October is a long time away, there are a lot of tasks companies should be considering now … before the rules become final.
Below are a few things you must consider before the changes take effect:
- Update your classification database. Any part currently classified as USML Category VIII(h) should be reviewed to determine if it will be subject to EAR controls with a corresponding Export Control Classification Number (ECCN) and subparagraph. Remember: Depending on the subparagraph in Category 9 of the Commerce Control List (CCL), the licensing conditions will change.
- Gas Turbine engines have a new Category under the ITAR. The new category is XIX to cover gas turbine engines and associated equipment previously covered in USML Categories IV, VI, VII, and VIII.
- If you have an automated export screening system or it is integrated with your Enterprise Resource System (ERP), these systems will need to be updated with the new ECCNs and USML categories.
- Review current ITAR licenses and determine if a new license will be required under the EAR, or if license exception STA will be applicable. In addition, you will need to consider any license/agreement amendments that will be required due to USML category changes.
- Update the automated export screening or ERP systems with license exception STA. This would also include changes to any internal tools used to create the Automated Export System (AES) / Electronic Export Information (EEI) records for your company.
- Reach out to your business partners (internal and external) and notify them of the changes coming. This will help with any requirements to get new licenses and/or cancel existing ones.
- Your partners will also want to know for forecasting, delivery and project planning changes.
As you can see, there’s a lot of work that your company has to do to prepare for the new export control reforms. For example, if your company manufactures thousands of aerospace parts and components, it may take you months to complete the classification review. The earlier you start preparing for these reforms, the less likely there will be complications when shipping goods in mid-October.
And for those of you in other industries who just think you’ve dodged a bullet … keep in mind that your turn is coming! Last week, State and Commerce released proposed revisions to USML Category XV (Spacecraft and Related Items), as well as a new definition of “defense service.” You can read those proposals here and here. There’s also already talk of the next set of reform regulations going into effect sometime in the first quarter of 2014.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in ITAR and EAR compliance.