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White House Trumpets Progress on Export Control Reform

Thursday, October 17, 2013
Sandler, Travis & Rosenberg Trade Report

A White House fact sheet states that with the first set of revised export control lists having gone into effect Oct. 15, the Obama administration “has successfully implemented the first parts of its new export control system in all four areas of the current export control system: what we control, how we control it, and how we enforce and manage our controls.”

Export Controls. The Oct. 15 changes include the transfer of numerous items from 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) to new 600-series export control classification numbers on the Commerce Control List. In addition, a new category XIX covering gas turbine engines and associated equipment was added to the USML. The fact sheet notes that aircraft and gas turbine engines together account for the largest volume of U.S. export licenses, the highest percentage of licensed exports from 43 states (nearly $21 billion a year), and the largest amount (75%) of USML export licenses approved solely for parts and components.

The fact sheet emphasizes that items remaining on the USML will continue to be subject to the most stringent controls. Manufacturers, exporters and brokers of USML-controlled items are subject to annual registration requirements and fees, export licenses are approved only with a valid purchase order provided by the exporter, and comparable requirements for all domestic and foreign-made items that incorporate USML-items remain in place.

Such requirements have been eliminated for less-sensitive items now on the CCL, the fact sheet states. In addition, many of the items moved to the CCL are now eligible for export without specific licenses if intended for ultimate end-use by the governments of 36 U.S. allies and partners (although such exports carry additional compliance requirements). However, all of the items moved from the USML to the CCL, even those now eligible for export without specific licenses, remain controlled, and all these items on either list remain subject to the same U.S. arms embargoes.

Enforcement. According to the fact sheet, the Department of Homeland Security and the Federal Bureau of Investigation will continue their “robust enforcement” of export controls for items on both the USML and CCL. While export licensing requirements for many items moved to the CCL have been eased, there will also be increased oversight from Department of Commerce export enforcement special agents and analysts dedicated exclusively to export enforcement for items on the CCL. Enhanced export enforcement includes the coordination of all efforts by the multi-departmental Export Enforcement Coordination Center, which formally began operation in March 2012 and is administered by DHS.

IT Infrastructure. The Department of State successfully transferred its export licensing database and software platform to the one used by the Department of Defense (USXports) this past July and the DOC is scheduled to begin using USXports in early 2014. At that point the three largest departments involved in export licensing will be on a single information technology system, enabling them to better administer the licensing process and ensure that decisions made by different agencies are fully informed.

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