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Definitions, Other Changes Proposed for Defense, Dual-Use Export Regulations

Wednesday, June 03, 2015
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security and the State Department’s Directorate of Defense Trade Controls have issued separate proposed rules that would revise various definitions in the Export Administration Regulations and the International Traffic in Arms Regulations to make them more consistent with one another. The rules would make other changes to the EAR and ITAR as well. These proposals are part of the Export Control Reform Initiative and are designed to enhance U.S. national and economic security, facilitate compliance with export controls, update those controls and reduce unnecessary regulatory burdens on U.S. exporters. Comments are due no later than Aug. 3.

Definitions. The BIS notes that the EAR and the ITAR each control the export, reexport and in-country transfer of commodities, products or articles, technology, technical data, software and services to various destinations, end users and end uses for similar national security and foreign policy reasons. However, the two sets of regulations have been issued pursuant to different statutes, have been administered by different agencies with missions that are distinct from one another in certain respects, and have covered different items (or articles). For those reasons, and because each set of regulations has evolved separately over decades without much coordination between the two agencies regarding their structure and content, they often use different words, or the same words differently, to accomplish similar regulatory objectives.

BIS and DDTC have identified a series of similar terms in the EAR and the ITAR that are defined differently and that warrant either harmonization or the creation of similar structures that would identify more clearly the differences in how similar concepts are treated under the EAR and the ITAR. Consequently, the BIS rule would revise the definitions of the terms technology, required, peculiarly responsible, proscribed person, published, results of fundamental research, export, reexport, release, transfer and transfer (in-country), and the DDTC rule would amend the definitions of the terms technical data, required, peculiarly responsible, public domain, results of fundamental research, export, reexport, release and retransfer. DDTC is also proposing to create definitions for the terms required; technical data that arises during, or results from, fundamental research; release; retransfer; and activities that are not exports, reexports or retransfers.

The rulemakings propose that, to the extent possible, similar definitions be harmonized both substantively and structurally. Substantive harmonization will mean using the same words for the same concepts across the two sets of regulations. Structural harmonization will mean setting forth similar definitions in a paragraph order that renders their similarities and differences clearly visible. This structural harmonization may require reserving certain paragraphs in an EAR definition if the corresponding paragraph does not exist in the ITAR definition, or vice versa.

BIS notes that the proposed revisions are generally not intended to materially increase or decrease the existing scope of these terms. In particular, BIS and DDTC will continue to maintain their long-standing positions that published (or public domain) information and the results of fundamental research are excluded from the scope of technology subject to the EAR and the ITAR’s technical data. Rather, the proposed changes are designed to clarify and update BIS policies and practices with respect to the application of the terms and to allow for their structural harmonization with their counterparts in the ITAR.

Other Changes. The BIS proposal would also amend the “Scope” part of the EAR to update and clarify the application of controls to electronically transmitted and stored technology and software.

The DDTC proposal would:

- create new sections in the ITAR detailing the scope of licenses, unauthorized releases of information, and the release of secured information;

- revise the sections on exports of technical data to U.S. persons abroad;

- establish that the electronic transmission of unclassified technical data abroad is not an export provided that the data is sufficiently secured to prevent access by foreign persons; and

- allow for the electronic storage of unclassified technical data abroad provided that the data is secured to prevent access by parties unauthorized to access it.

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