This week, the Departments of Commerce and State revised export controls on most commercial, scientific and civil satellites, as well as their parts and components. This move is another key step forward in the Export Control Reform Initiative. For those of you who have been in trade compliance long enough, you will remember that this change reverses a decision in 1999, which moved commercial satellite systems from Commerce jurisdiction (under the EAR) to State jurisdiction (under the ITAR). In some ways, after more than 15 years, we have finally come full circle on the issue.
The recent revisions will move items from USML Category XV to the Commerce Control List (various ECCNs in Category 9). The changes will occur over two separate timeframes – (1) within 45 days of the published rule (or by June 27, 2014) for certain radiation-hardened microelectronic circuits, and (2) within 180 days of the published rule (or by November 10, 2014) for all of the other affected items by this rule.
From the BIS press release announcing this change:
“The items moving to Commerce jurisdiction include communications satellites that do not contain classified components, certain remote sensing satellites, spacecraft parts, components, accessories, attachments, equipment, or systems that are not specifically identified in the revised category, and all radiation-hardened microelectronic microcircuits.
In many instances, the updated regulations also allow the commercial, scientific and civil satellites transferred to Commerce jurisdiction to incorporate parts and components listed on the USML and remain under Commerce licensing authority.”
One thing that is important to note regarding this change: The controls on satellites and related systems are still determined primarily by the performance capabilities of those items, and not by their end use. This means it is still possible to have a satellite that is intended for commercial/civilian end-use, but which is controlled by the ITAR, due to its performance capabilities. Stated another way (from the Federal Register notice):
“The Department intends to control on the USML, and specifically provides for this in paragraph (a) introductory text, some spacecraft that have commercial end-use.”
Nevertheless, the move should help increase the competitiveness of U.S. manufacturers against foreign companies. It is also designed to boost jobs in the U.S. manufacturing and technology sectors by better aligning the U.S. export controls with its national security policies.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in ITAR and EAR compliance.