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First Export Control Reform Rules Take Effect Oct. 15

Friday, October 11, 2013
Sandler, Travis & Rosenberg Trade Report

The ongoing federal government shutdown could complicate the expected Oct. 15 implementation of the first regulatory revisions being made under the Export Control Reform Initiative. The two final rules issued last spring by the Bureau of Industry and Security and the Directorate of Defense Trade Controls are intended to improve national security, improve interoperability with foreign partners and bolster the U.S. defense industrial base.

Melissa Miller Proctor, head of Sandler, Travis & Rosenberg’s Export Practice, notes that the Census Bureau will have to make programming changes to the Automated Export System (e.g., inserting the new 600-series export control classification numbers and license codes) to enable exporters to make exports under the new rules. Census officials have previously said these changes would be completed in time for exporters to file their electronic export information on Oct. 14 for shipments departing on Oct. 15. However, the Commerce Department has said that Census Bureau activities will be suspended during the shutdown, and it remains unclear if there is any sort of exception for the programmers needed to make the AES changes.

The DDTC final rule amends the International Traffic in Arms Regulations with respect to U.S. Munitions List categories VIII (aircraft and related articles), XVII (classified articles, technical data and defense services not otherwise enumerated), and XXI (articles, technical data and defense services not otherwise enumerated). It also creates a new Category XIX covering gas turbine engines and associated equipment. The BIS final rule creates ten new 600-series ECCNs to accommodate the items being transferred from the USML, which include aircraft, gas turbine engines, related parts, components, accessories, attachments, software and technology. Policies for handling licensing and other issues both before and after the 180-day transition period are provided.

Both rules also provide definitions for the term “specially designed” under the ITAR and the Export Administration Regulations. In addition, the BIS rule establishes a new process whereby exporters and reexporters may request formal BIS confirmation that a part, component, accessory, attachment or software is not specially designed.

For more information on these new regulations or any other aspect of the Export Control Reform Initiative, please contact Melissa Miller Proctor, Donna L. Bade or Anu Gavini.

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