Update on recent U.S. export control reform activity


Steve Chambers,
U.S. Export Compliance Specialist

There have been quite a few proposals published by Commerce Department’s Bureau of Industry and Security (BIS) and its State Department counterpart, the Defense Directorate of Trade Controls (DDTC), in recent weeks. The proposals are related to the ongoing Export Control Reform initiative that the US government announced a few years back with the intent to simplify and align the export control regulations between the two agencies listed above.

The following is a brief summary of the proposals.

Move of Category XIV and XVIII items from the USML to the CCL
DDTC and BIS published parallel proposals in the Federal Register related to moving U.S. Munitions List (USML) items from Category XIV (Toxicological Agents) and Category XVIII (Directed Energy Weapons) to the Commerce Control List (CCL) where they would be controlled under Export Control Classification Numbers (ECCNs) 1A607, 1B607, 1C607, 1D607 and 1E607 (for Cat. XIV items), and 6B619, 6D619 and 6E619 (for Cat. XVIII items).

Public comments on these proposals will be accepted until August 17, 2015.

EAR and ITAR revisions to certain definitions
Another parallel proposal issued by the State and Commerce Departments focuses on clarifying and harmonizing certain definitions including defense article, technical data, public domain, fundamental research as well as export, re-export and retransfer.

Some of the proposed changes will significantly reduce the burden on cloud computing providers as long as the conditions detailed in the proposed changes are met. Companies involved in cloud computing should read these proposed changes carefully.

Public comments on these proposals will be accepted until August 3, 2015.

Proposed revisions to Destination Control Statements
DDTC and BIS both issued proposed changes to the Destination Control Statements (DCS) in the International Traffic in Arms Controls Regulations (ITAR) and the Export Administration Regulations (EAR) to ensure that both statements are harmonized. The new DCS would read as follows:

“These items are controlled and authorized by the U.S. Government for export only to the specified country of ultimate destination for use by the end-user herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized end-user or consignee(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.”

Public comments on these proposals will be accepted until July 6, 2015.

Harmonization of export clearance provisions
BIS is seeking public comment on how the export clearance process can be improved as well as harmonized with the ITAR. Some of the proposed changes include:

  • ECCNs to be identified on export control documents for all items on the Commerce control list, not just for 9×515 and 600 series.
  • The country of ultimate destination to be identified on export control documents, mirroring the ITAR requirement.
  • License number, license exception code or no license required or export authorization symbol on export control documents.
  • AES filing for exports to Canada for items controlled for National Security, Missile Technology, Non-proliferation, and Chemical Biological Weapons reasons regardless of license requirements.

Public comments will be accepted until July 6, 2015.

Proposed cybersecurity rule
Lastly, BIS recently published a proposed rule that would impact the exports of intrusion software, surveillance and related systems equipment and software and components. This rule would add new ECCNs 4A002 and 4D0004 to the CCL as well as amend existing 4D001 and 4E001 ECCNs. Companies involved with cybersecurity software and technologies should take note of these proposed changes.

Public comments will be accepted until July 20, 2015.

Information in this article was extracted from Braumiller Law Group’s “Trade Alert”.