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Exports – New Incentives, Old Rules

Some Export Rules on Hold Due to Regulatory Directives

Monday, April 10, 2017
Sandler, Travis & Rosenberg Trade Report

A revision of the Foreign Trade Regulations is among the Commerce Department rules on hold due to White House efforts to reduce government regulation. Bureau of Industry and Security officials told a recent meeting of the Regulations and Procedures Technical Advisory Committee that DOC agencies are continuing to discuss internally how to implement these efforts.

In March 2016 the Census Bureau issued a proposed rule that would amend the FTR to reflect new export reporting requirements related to the implementation of the International Trade Data System. It would also add two new data elements in the Automated Export System, the original internal transaction number field and the used electronics indicator. In addition, Census proposed to incorporate into the FTR the revised timeframes for split shipments that were addressed in FTR Letter #6.

However, on Jan. 20 the White House directed federal agencies to freeze new or pending regulations until a senior agency official appointed by President Trump has reviewed and approved them. An executive order issued Jan. 30 further required agencies to eliminate two existing regulations for each new regulation issued and to ensure the costs of the new regulation are offset by eliminating the costs associated with at least two prior regulations. This EO applies only to regulations deemed “significant” and exempts certain types of regulations, including those associated with national security.

BIS officials said a rule finalizing the FTR changes has been delayed in light of these developments. This rule appears to meet the definition of “significant” but officials said they are hopeful it may qualify for one of the exceptions.

In the meantime, BIS officials are continuing to discuss which other rules might be covered by the 2-for-1 and cost accounting requirements and how to comply. Rules to implement changes in the multilateral export control regimes to which the U.S. is a party appear to be significant but could qualify for a national security exemption. Other rules, such as those making changes to the Entity List or Unverified List, are not significant and have been making their way through BIS. Officials are also starting to evaluate which regulations they might be able to eliminate to comply with the 2-for-1 requirement.

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