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Tuesday, July 30, 2013

Export Control Reform Overview

In 21st century the U.S  is the part of the new world order where multipolarity is the foreign policy of geopolitical players in international arena, so the United States requires new proactive approaches and strategies to deal with constantly arising security threats. The reality is that current national security structure is not appropriate and qualified in solving contemporary national security problems and might be in fact harmful if reorganizations of national security apparatus would be ignored or delayed. According to the United States Commission on National Security/ 21st Century “…most troublesome is the lack of an overarching strategic framework… clear goals and priorities are rarely set and  budgets are prepared and appropriated as they were during the Cold War..”
Along with the process of reorganization of national security structure to meet the emerging threats of the new century, the President directed in depth review and reformation of the U.S. export control system in order to address the challenges of contemporary economic and technological environment. Indeed the confusion exist due to difficulty in identification which list  the U.S. Munitions List (USML) or Commerce Control List (CCL), administered by the Department of State and Commerce respectively holds  jurisdiction over the certain item controlled. The ECR initiative is a long process which started in year 2009 by the presidential decision to review all seven agencies directly involved in export control process.  By implementing all three Phases of reformation the administrations tries to create a single control list,  licensing agency as well as unified information technology system, and enforcement coordination center. As of now in October 15, 2013 certain proposed rules will take an effect and the changes to ITAR controls are scheduled to be implemented by categories  starting with Category VIII – Aircraft and Associated Equipment and Category XIX – Gas Turbine Engines and Associated Equipment. Furthermore, one of the most significant changes is the addition in CCL of the new “600 series” which will be controlling former USML items. The establishment of a new series ought to bring simplification of export control system through eliminating restrictions on exporting items by transferring them from laws and regulations that govern military products and services under the International Trafficking in Arms Regulations (ITAR) to the laws of dual use items controlled by the Export Administration Regulations (EAR).

About the Author:
Marina Truhan

International trade compliance expert with a focus on export compliance, denied party screening, export classification, EAR, ITAR, deemed export and encryption items.
For additional details on changes to EAR and ITAR and how this important change may affect your organization you can consult Intredex Export Compliance services. Intredex assists companies with services such as restricted and denied party screening, product export classification, and with achieving the EAR (Export Administration Regulations) and ITAR compliance with developing procedures for export transactions in alignment with the U.S. Government laws and regulations.

EAR and ITAR Amendment Regarding Aircrafts, Gas Turbine Engines and Related Items

On April 16, 2013, the Bureau of Industry and Security of the Department of Commerce and the Directorate of Defense Trade Controls (DDTC), Department of State, have published several affirmed amendments to the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). The regulation described the steps of implementation of Export Control Reform initiative with the emphasis on necessity in including a structure and certain provisions control munitions items such as aircraft, gas turbine engines, and related items which are no longer regarded as under the jurisdiction of the USML of the Department of State and transferred to CCL – the Department of Commerce. Final rule will take an effect on October 15, 2013, so there is plenty of time to identify, be familiar with and get used to all changes associated with implementation of the rule in particular and ECR initiative in general. According to the Federal Register/ Vol. 78, No. 73 / Tuesday, April 16, 2013 / Rules and Regulations revisions were made in Supplement No. 1 to part 774, Category 9. For the conveniences of interested parties, changes regarding some of the created ECCNs are highlighted below, note that they are mostly in summarized format:
• Particular aircrafts and related articles as well as gas turbine engines and related articles were moved under the jurisdiction of BIS and listed under the new series 600 ECCNs:
1. Addition of new ECCNs 9A610 and 9A619 between ECCNs 9A120 and 9A980:
- 9A610 – Military aircraft and related commodities.
- 9A619 – Military gas turbine engines and related commodities.
2. Addition of new ECCNs 9B610 and 9B619 between ECCNs 9B117 and 9B990:
- 9B610 – Test, inspection, and production ‘‘equipment’’ and related commodities ‘‘specially designed’’ for the ‘‘development’’ or ‘‘production’’ of commodities enumerated in ECCN 9A610 or USML Category VIII.
- 9B619 – Test, inspection, and production ‘‘equipment’’ and related commodities ‘‘specially designed’’ for the ‘‘development’’ or ‘‘production’’ of commodities enumerated in ECCN 9A619 or USML Category XIX.
3. Addition of new ECCNs 9C610 and 9C619 between ECCNs 9C110 and the product group header that reads ‘‘D. Software’’:
- 9C610 – Materials ‘‘specially designed’’ for commodities controlled by 9A610 not elsewhere specified in the CCL or the USML.
- 9C619 – Materials ‘‘specially designed’’ for commodities controlled by 9A619 not elsewhere specified in the CCL or on the USML.
4. Addition of new ECCNs 9D610 and 9D619 between ECCNs 9D105 and 9D990:
- 9D610 – Software ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ operation, or maintenance of military aircraft and related commodities controlled by 9A610, equipment controlled by 9B610, or materials controlled by 9C610.
- 9D619 – Software ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ operation or maintenance of military gas turbine engines and related commodities controlled by 9A619, equipment controlled by 9B619, or materials controlled by 9C619.
5. Addition of new ECCNs 9E610 and 9E619 between ECCNs 9E102 and 9E990:
- 9E610 – Technology ‘‘required’’ for the ‘‘development,’’ ‘‘production,’’ operation, installation, maintenance, repair, overhaul, or refurbishing of military aircraft and related
commodities controlled by 9A610, equipment controlled by 9B610, materials controlled by 9C610, or software controlled by 9D610.
- 9E619 – ‘‘Technology’’ ‘‘required’’ for the ‘‘development,’’ ‘‘production,’’ operation, installation, maintenance, repair, overhaul, or refurbishment of military gas turbine engines and related commodities controlled by 9A619, equipment controlled by 9B619, materials controlled by 9C619, or software controlled by 9D619.

For additional details on changes to EAR and ITAR and how this important change may affect your organization you can consult Intredex Export Compliance services. Intredex assists companies with services such as denied party screening, product export classification, achieving the EAR (Export Administration Regulations) and ITAR compliance with developing procedures for export transactions in alignment with the U.S. Government laws and regulations.

Moving Control of Certain Military Ground Vehicles from USML to CCL

On July 8, BIS published revisions to the Export Administration Regulations. Changes were regarding various categories of vehicles including Military Vehicles; Vessels of War; Submersible Vessels, Oceanographic Equipment as well as Relate, Auxiliary and Miscellaneous Items that are no longer considered to be under the jurisdiction of the USML of the Department of State and moved to CCL – the Department of Commerce. Furthermore, the revision identifies new ECCN’s of “600 series” created by movement of certain items within the Commerce Control List. The final rule will take an effect on January 6, 2014, so there is plenty of time to identify, comprehend and get used to all changes associated with implementation of the rule in particular and ECR initiative in general.
According to the Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Rules and Regulations, following revisions were made in Category 0—Nuclear Materials, Facilities, and Equipment [and Miscellaneous Items], Category 8—Marine and Category 9 —Aerospace and Propulsion of the  Supplement No. 1 to part 774 of the CCL. For the convenience of interested parties, changes related to some of the modified and created ECCNs are listed below, note that they are mostly in summarized format:
1.ECCN  0A018 -  Items on the Wassenaar Munitions List is amended by adding a sentence to the end of the Related Controls paragraph in the List of Items Controlled section and removing and reserving paragraph .a in the Items paragraph of the List of Items Controlled section.
2. Addition of  ECCNs 0A606 and 0A617 between ECCNs 0A521 and 0A918:
0A606-  Ground vehicles and related commodities, as follows (see List of Items Controlled): License Requirements;
- 0A617 – Miscellaneous ‘‘equipment,’’ materials, and related commodities (see List of Items Controlled).
3. (ECCN) 0A918 – Miscellaneous Military Equipment Not on the Wassenaar Munitions List (see List of Items Controlled)  is amended by:
- changing the License Exceptions section;
- changing the List of Items Controlled section
4. Addition of  ECCNs  0B606 and 0B617 between ECCNs 0B521 and 0B986:
0B606 – Test, inspection, and production ‘‘equipment’’ and related commodities, not enumerated on the USML, ‘‘specially designed’’  for  the ‘‘development,’’ ‘‘production’’ repair, overhaul, or refurbishing of commodities enumerated in ECCN 0A606 or USML Category VII (see List of Items Controlled).
0B617-  Test, inspection, and production ‘‘equipment’’ and related commodities ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ repair, overhaul, or refurbishing of commodities enumerated in ECCN 0A617 or USML Category XIII, and ‘‘parts,’’ ‘‘components,’’ ‘‘accessories,’’ and ‘‘attachments’’ ‘‘specially designed’’ therefor (see List of Items Controlled).
5. Addition of  ECCNs 0C606 and 0C617 after ECCN 0C521:
0C606 -  Materials ‘‘specially designed’’ for  commodities controlled by ECCN 0A606 not elsewhere specified in the USML (see List of Items Controlled).
0C617 -  Miscellaneous Materials ‘‘Specially Designed’’ for Military Use (see List of Items Controlled).
6. Addition of new ECCNs 0D606 and 0D617 after 0D521:
0D606 ‘‘Software’’ ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ operation, or maintenance of ground vehicles and related commodities controlled by 0A606, 0B606, or 0C606 (see List of Items Controlled).
- 0D617 ‘‘Software’’ ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ operation, or maintenance of commodities controlled by 0A617, ‘‘equipment’’ controlled by 0B617, or materials controlled by 0C617 (see List of Items Controlled).
7.  ECCN 0E018 – ‘‘Technology’’ for the ‘‘development,’’ ‘‘production,’’ or ‘‘use’’ of items controlled by 0A018  is amended by adding a note at the end of the entry
8.  Addition of new ECCNs 0E606 and 0E617 between ECCNs 0E521 and 0E918:
0E606 -  ‘‘Technology’’ ‘‘required’’ for the ‘‘development,’’ ‘‘production,’’ operation, installation, maintenance, repair, overhaul, or refurbishing of ground vehicles and related commodities in 0A606, 0B606, 0C606, or software in 0D606 (see List of Items Controlled).
0E617  – ‘‘Technology’’ ‘‘required’’ for the ‘‘development,’’ ‘‘production,’’ operation, installation, maintenance, repair, overhaul, or refurbishing of commodities controlled by ECCN 0A617, ‘‘equipment controlled by 0B617, or materials controlled by 0C617, or ‘‘software’’ controlled by ECCN 0D617 (see List of Items Controlled).

For additional details on changes to EAR and ITAR and how this important change may affect your organization you can consult Intredex Export Compliance services. Intredex assists companies with services such as denied party screening, product export classification, achieving the EAR (Export Administration Regulations) and ITAR compliance with developing procedures for export transactions in alignment with the U.S. Government laws and regulations.

Transfer of Control for Certain War Vessels to CCL

Resulting from the recent export control reform perhaps one of the most extensive update was moving several USML controlled Surface vessels of war, Submersible vessels, Oceanographic Equipment as well as Related items, Auxiliary vessels and Miscellaneous items and associated accessories, parts, and commodities to EAR Commerce Control List. Even though the BIS and DDTC agencies are going to do and actually start to share more detailed analysis of the final rule, at first glance I noticed the below listed changes in Cat 8 and Cat 9 of the EAR CCL. Note that the final rule will go into an effect on January 6, 2014, and it is crucial for the companies and organizations to be prepared for the changes by perhaps revisiting and revising their both EAR and ITAR compliance programs: - 8A018 - Items on the Wassenaar Arrangement Munitions List is changed. - Inclusion of new ECCNs 8A609 and 8A620 between ECCNs 8A018 and 8A918: - 8A609 - Surface vessels of war and related commodities. - 8A620 - Submersible vessels, oceanographic and associated commodities. - New ECCNs 8B609 and 8B620 are added immediately after ECCN 8B001: - 8B609 - Inspection, testing and production Equipment and related commodities for the commodities enumerated in ECCN 8A609 or USML Category VI (except for Cat VI(f)(7)). - 8B620 - Inspection, testing and production Equipment and related commodities of commodities enumerated in ECCN 8A620. - Inclusion of a new ECCN 8C609 - Materials for the items controlled by 8A609 not elsewhere specified in the USML, directly following ECCN 8C001. - Addition of new ECCNs 8D609 and 8D620 between ECCN 8D002 and 8D992: - 8D609 - Software for items commodities controlled by 8A609, 8B609, or 8C609. - 8D620 - 'Software for commodities controlled by 8A620 or 8B620. - Inclusion of new ECCNs 8E609 and 8E620 between ECCN 8E002 and 8E992: - 8E609 - Technology for the items controlled by 8A609, 8B609, or 8C609, or software controlled by 8D609. - 8E620 - Technology related to commodities controlled by 8A620 or 8B620, or software controlled by 8D620. - 9A018 - Equipment on the Wassenaar Arrangement Munitions List is modified. - 9A619 - Military gas turbine engines and related commodities, the Note at the end of paragraph.a in the Items paragraph of the List of Items Controlled section is changed. - 9D018 - Software for the use of equipment controlled by 9A018 is changed. - 9E018 - Technology for the equipment controlled by 9A018 is modified.


About the Author:

Marina TRUHAN

International trade compliance expert with a focus on export compliance, denied party screening, export classification, EAR, ITAR, deemed export and encryption items.
For additional details on changes to EAR and ITAR and how this important change may affect your organization you can consult Intredex Export Compliance services. Intredex assists companies with services such as restricted and denied party screening, export classification, eccn, and with achieving the EAR (Export Administration Regulations) and ITAR compliance with developing procedures for export transactions in alignment with the U.S. Government laws and regulations.