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Officials Detail Export Control List Reforms, Offer No Timeframe on Additional Changes

Friday, April 26, 2013
Sandler, Travis & Rosenberg Trade Report

Obama administration officials updated Congress on the reorganization of export control lists this week but said it is unclear when other changes envisioned as part of the Export Control Reform Initiative will be made. The Bureau of Industry and Security will hold a two-day seminar next month to further discuss these reforms.

BIS chief Kevin Wolf and acting head of the State Department’s Bureau of Political-Military Affairs Thomas Kelly told the House Foreign Affairs Committee that they are focused on an ongoing effort to restructure the U.S. Munitions List and the Commerce Control List, which will eventually be merged into a single list of controlled items. Kelly said this revision “will draw a ‘bright line’ between the two lists using common terms and control parameters,” which Wolf said will provide the “clarity, reliability and predictability” exporters need. Kelly added that these changes will “ensure that those items of greatest concern to us from a national security and foreign policy perspective will remain on the USML, and thus be subject to the most stringent licensing requirements, while items of less sensitivity will be moved to the CCL.” However, he emphasized that items moving to the CCL are not being decontrolled; rather, in specific circumstances, they will be eligible for export under more flexible licensing mechanisms.

Wolf stressed the national security implications of the reform, which he said will facilitate military interoperability with foreign partners, strengthen the competitiveness of the U.S. defense industrial base and take advantage of interagency compliance and enforcement assets. While “tens of thousands of less-sensitive munitions items” will be able to be transferred to 36 allied and partner countries more quickly and easily, he said, all munitions and satellite-related exports destined for countries subject to a U.S. arms embargo (China, Cuba, Iran, North Korea, Sudan and Syria) will be subject to a licensing policy of denial and a zero percent de minimis rule. Other munitions and satellite-related exports will be subject to a 25 percent de minimis rule to avoid the “design-out” of U.S.-origin products.

Wolf also highlighted the new definitions of “specially designed” in the Export Administration Regulations and International Traffic in Arms Regulations. He said these complementary definitions provide objective criteria for exporters, licensing officers and enforcement officials to determine whether an item is subject to control. Such decisions will require exporters to document their findings, thereby creating a paper trail for subsequent compliance and enforcement actions, if necessary. For example, Wolf said, in the case of the development of an item, documentation about its intended end use must be contemporaneously created, thereby eliminating the opportunity to make retroactive classifications to avoid control.

In contrast to the progress that has been made on the export control lists, the two officials suggested that the creation of a single export licensing agency and a single export enforcement coordination agency is still way off in the future. Kelly said the administration “has not yet determined when to approach this effort,” which will require legislation, and Wolf said only that the administration is committed to working closely with Congress “when we approach this phase of the initiative.”

BIS is hosting a conference in Arlington, Va., May 9-10 to discuss the export control list reforms. Topics will include realigning the USML and CCL, the new 600 series of export control classification numbers, the definition of “specially designed,” license exception STA and other EAR exceptions, and transition issues in general. Senior BIS, State and Defense officials will be in attendance, and roundtable discussions will be held with policy, regulatory and technical specialists. Click here for more information.

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