The Bureau of Industry and Security (BIS) recently published a proposed new rule that would make significant changes in the export controls of certain items. This is one of the bigger steps we’ve seen in recent months, and marks a move towards implementing President Obama’s overall export control reform initiative.
Essentially, this rule would allow for the movement of ITAR-controlled items from the United States Munitions List (USML) to the Commerce Control List (CCL). Some of the items proposed for movement to the CCL include an initial “tranche” of Category VII (Tanks and Military Vehicles) items. From there, these items would ostensibly be eligible for export using some of the EAR license exceptions, including the new STA exception.
Perhaps more importantly, this new rule would create a regulatory construct whereby the President can transfer future USML items to the CCL if he determines those items no longer warrant ITAR controls.
If this new rule is implemented, future USML items would be transferred into a new “600 series” of ECCNs on the CCL. (These would be ECCNs where the third number is “6” – such as 9A601, for example.) Once items are placed in this new series, exporters could request the STA License Exception for these items, which would allow for shipments without a license to a variety of destinations (assuming all of the provisions of STA are followed, of course.) It’s important to realize that the new “600 series” would be generally controlled for NS Column 1 Reason of Control. This means a license would be required to all countries except Canada. However, the ability to utilize a license exception (such as STA) would effectively decrease the need for export licenses on some items.
The rule also proposes the creation of a new ECCN (0Y521), which would be similar in construct to USML Category XXI. This ECCN would be used to temporarily hold new items (such as emerging technologies), which warrant export controls, but which do not currently have a place on the CCL. These items would fall under one of the five product groups of the CCL (thereby creating five ECCNS: 0A521, 0B521, 0C521, 0D521 and 0E521).
Items placed in the 0Y521 categories would likely require a license to every country except Canada.
There are a lot more details and proposed changes covered in this rule. (You can read all 132 pages of the proposal here.) The public has 60 days to comment, and there are other steps which must be taken (such as Congressional notification) before the rule can be implemented.
We’ll be analyzing this in more detail with future blog posts. Stay tuned and look for more discussion at: www.ExportSolutionsInc.com/resources/blog
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.