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President's Export Control Reform Initiative

October 4, 2013


Note: The following article is pulled from the export.gov website .  To see if any other developments have occured since the posting of this article, follow this link: http://export.gov/ecr/


“While there is still more work to be done, taken together, these reforms will focus our resources on the threats that matter most, and help us work more effectively with our allies in the field. They’ll bring transparency and coherence to a field of regulation which has long been lacking both. And by enhancing the competitiveness of our manufacturing and technology sectors, they’ll help us not just increase exports and create jobs, but strengthen our national security as well.” - President Obama, Department of Commerce Annual Export Controls Update Conference, August 30, 2010

From the ECR Blog

October 4, 2013 - Commerce Publishes Final Rule to Make the Commerce Control List Clearer
On October 4, 2013, the Bureau of Industry and Security published a final rule to clarify the Commerce Control List (CCL) to make conforming changes and minor clarifications in support of the two final rules initiating the implementation of Export Control Reform.  This rule took effect on October 15 in conjunction with those two rules.

October 3, 2013 - Commerce and State Publish Creative Rule
On October 3, 2013, the State and Commerce Departments published rules providing technical corrections to the previously published final rules implementing Export Control Reform, which took effect on October 15.

August 28, 2013- State Publishes new Brokering Rules
On August 28, 2013, the Department of State published a new final rule regarding the activities of brokers in transactions involving defense articles and defense services for exports and imports.  This rule revision implements the President's direction regarding consolidated brokering activities per E.O. 13637 of March 8, 2013, and is the result of a comprehensive review that included significant input from industry, and it can now be found online.

August 20, 2013 - USML/CCL Rule Revisions Can Be Followed on ECR Website
You can keep abreast of the ECR list re-writes by accessing the ECR control list tracking sheet on the ECR website's "Export Control List" page.  This document will provide you with an archive of the published proposed rules, public comments, and final rules for each re-written category.  Check back often to follow the progress being made in reforming the control lists and regulatory framework.

July 29, 2013 - Annual BIS Update Conference held in Washington, DC
On July 23-25, the Bureau of Industry and Security hosted the "Update 2013 Conference on Export Controls and Policy", which is an annual event for industry leaders and other stakeholders interested in recent and forthcoming changes to export control policy.  This year's theme was "Export Control Reform: Fulfilling the Promise", and a number of senior officials provided their thoughts on the subject to the participants in attendance.  Transcripts of remarks from the following speakers can now be accessed online:

State and Commerce Published Second-Round Proposed Rules for Category XI
On July 25, the State and Commerce Departments published a second round of proposed rules for USML Category XI- Military Electronics.  This is the second set of proposed rules for this category, and there will be a 30-day public comment period that will close on September 9, 2013.  The State and Commerce rules are now available online.

July 8, 2013- ECR Reaches Another Key Milestone as Second Set of Final Rules Publish

On July 8, 2013, the second set of rules implementing Export Control Reform were published.  These rules include revisions to USML Categories VI (vessels of War and Special Naval Equipment), VII (Tanks and Military Vehicles), XIII (Auxiliary Military Equipment), and XX (submersibles).  With this publication, eight of the 19 USML categories have now been rebuilt under ECR.  The State and Commerce versions of these rules are now avaialble online, and they will take effect in 180 days on January 6, 2014.

July 3, 2013- BIS Offers ECR Webinars and Teleconferences

For more information on ECR and other export control-related topics, BIS hosts regular webinars and teleconferences for the public that are available though the BIS website.  This page can also be accessed from the ECR website by clicking on the "Weekly Teleconference" hyperlink located on the website sidebar.

June 3, 2013 - BIS-Produced Tools for Understanding New "Specially Designed" Definition, the CCL Order of Review, and License Exception STA now Abailable

In order to help exporters understand the way export control compliance will change as a result of ECR, the Bureau of Industry and Security (BIS) has produced a series of decision tree tools to help make the new "Specially Designed" defniition and Commerce Control list classification easier to understand.  These tools can be found on the BIS website, along with a third decision tree tool that will guide exporters in the use of the new license exception STA. In addtion, BIS has also produced a free webinar to explain this new term that is available both as an online video and in transcript form on the BIS website. 

To keep informed about future online trainings, please make sure to visit BIS' ECR teleconference and Webinar page, which can be accessed by clicking on the "Weekly Teleconference" link under the "For Exporters" heading on the sidebar of this page.

May 29, 2013 - State and Commerce Publish Proposed Rules for Category XV

On May 24, 2013, the State and Commerce Departments published a pair of Proposed Rules to transfer certain satellites from the USML to the CCL.  This move was made possible by an ECR milestone reached this past January 30: the passage of an amendment to the 2013 National Defense Authorization Act that returned flexible authority to the President to tailor controls on satellites and related items according to the risk of diversion.  These Proposed Rules are the product of that restored authority, and comments will be accepted on these rules for a 45-day window, which will close on July 8, 2013.

May 3, 2013 - Reports Submitted to Congress on Satellites and Related Items

On May 1, 2013, the Department of Commerce submitted two reports to Congress per Sections 1263(a) and 1264(b) of the National Defense Authorization Act for FY 2013. The “1263 Report” is on country exemptions for licensing of exports of certain satellites and related items prepared in consultation with the Departments of Justice and Homeland Security, and other appropriate departments. The “1264 Report” is on end-use monitoring of exports of certain satellites and related items prepared in consultation with the Departments of State and Defense. These reports represent key steps in the Administration’s implementation of rebuilding USML Category XV – Spacecraft Systems and Associated Equipment – that includes controls on satellites and related items.

April 25, 2013 - State, Commerce, and Defense Testify at House Foreign Affairs Committee Hearing

On April 24, Acting Assistant Secretary of State Tom Kelly, Assistant Secretary of Commerce Kevin Wolf, and Defense Technology Security Administration Director James Hursch testified before the House Foreign Affairs Committee during a hearing entitled, “Export Control Reform: The Agenda Ahead”. During the hearing, the officials discussed the goals and status of the President’s Export Control Reform Initiative, and they also answered questions from committee members on a variety of related topics. The full video of the hearing is now available on the committee website, and copies of the opening remarks can be found below:

April 23, 2013 – Justice Publishes Final USMIL-USML Delinking Rule

On April 22, 2013, the Department of Justice published a final rule to distinguish the list of import-related defense articles and defense services controlled by the Attorney General from those controlled by the Secretary of State. The State Department is charged with regulating the export and temporary import of defense articles and defense services, while the Justice Department regulates permanent imports of such items. Consequently, this rule provides clarity that items controlled on the Department of Justice’s U.S. Munitions Import List (USMIL) are not affected by the transfer of items from the Department of State’s U.S. Munitions List (USML) to the Commerce Control List.

April 18, 2013 - Major Milestone Reached as First Pair of Final Rules Publish

On April 16, 2013, the first pair of rules implementing Export Control Reform were published. These rules include final versions of the “Specially Designed” and “Transition” rules, as well as revisions to USML Categories VIII (Aircraft) and XIX (Gas Turbine Engines). These rules were subjected to an extensive review by Congress and are the first category rewrites to be published in final form; as such, they are the first completed step toward the creation of a Single Control List. The State and Commerce versions of these rules are now available online, and more information can be obtained on the State Department website.

March 29, 2013 - Public Comments for Categories IV, XI, and XVI Published

Public Comments for the following proposed rule changes are now published and available online:

  • The State and Commerce proposed revisions to Category IV-Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines
  • The State and Commerce proposed revision to Category XI-Military Electronics
  • The State proposed revisions to Category XVI-Nuclear Weapons, Design and Testing-Related Items

March 8, 2013 - Executive Order 13637 Signed, First Formal 38(f) Notification of Reform Process Submitted On March 8, 2013, President Obama signed Executive Order 13637 to update delegated presidential authorities over the administration of certain export and import controls that have not been comprehensively updated in 36 years. This action makes changes needed to implement our new export control system. The Administration also notified Congress of the first in a series of changes to the U.S. Munitions List (USML), as required by Section 38(f) of the Arms Export Control Act, that advances the process of putting our new export control lists in place. Once the Congressional notification period concludes, these changes to the current Department of State-administered controls on aircraft and gas turbine engines will be published, with an effective date of 180 days after publication. The revised USML will enable the United States to better focus its resources on items that deserve the highest levels of protection and on destinations of concern, while providing American companies with a streamlined export authorization process for thousands of parts and components. The remaining USML changes will be published on a rolling basis throughout 2013. These actions are key steps in modernizing the nation’s export control system that will improve our national security and competitiveness. For further information, please see the White House Fact Sheet on these actions.

February 28, 2013 - Is the implementation of Export Control Reform, particularly the rebuilding of the Department of State’s U.S. Munitions List (USML), dependent upon the departments all transitioning to the Department of Defense secure licensing database, USXPORTS, or implementing the planned single license application form? Implementation of the rebuilt USML categories and the corresponding new “600 series” in the Commerce Control List (CCL) is not dependent upon the transition of all licensing and license reviewing agencies transition to USXPORTS or implementing a single license application form. All license-related activities can be implemented based on existing information technology systems and using existing procedures and forms.

February 15, 2013 - How will the United States be “maintaining and expanding robust controls” as part of Export Control Reform? In what cases will the current licensing policy be made more stringent for items transferred to the Commerce Control List (CCL) than when those same items were under the Department of State’s U.S. Munitions List (USML) control?

The U.S. Government will be maintaining and expanding robust controls in three ways. First, by enumerating controlled items to the greatest extent possible, and by defining the term “specially designed” for items that are not specifically enumerated, we will make clearer to exporters what items are subject to control. This will help avoid the ambiguity that has resulted in confusion for exporters and prosecutors in the past under both the State and Commerce regulations.

Second, all current military items on the CCL (as identified in Export Control Classification Numbers (ECCNs) ending in “018”) will be consolidated with the USML items being moved to the CCL. The Commerce regulations will be changed so that such items on the CCL will become subject to the same licensing policies as articulated in the State regulations in Part 126.1 for proscribed destinations. For example, those items will also no longer be eligible under the Commerce “de minimis” rule. These changes will expand controls on items for proscribed countries. Also, controls are being maintained in the sense that all exports, except in some cases to the countries eligible for License Exception STA (see factsheet #4 in the ECR library), will continue to require individual validated licenses. All applications to export these items to the countries subject to U.S. embargoes will be presumptively denied, which is the case now under the State regulations. Third, items moving to the CCL will result in more enforcement assets focused on compliance. In addition to the Department of Homeland Security and FBI enforcement assets, the availability of Department of Commerce enforcement authorities, Special Agents, and analysts will further enhance the U.S. Government’s ability to effectively control former USML items.

February 4, 2013 - What are the “Higher Fences Around Fewer Items”? Administration officials frequently state that the purpose of ECR is to put “higher fences around fewer items.” How will current defense articles or dual-use controlled items have more stringent licensing policies than at present and what is meant by “fewer items”?

A key element of the control-list reform effort is to clarify the items subject to control, particularly on the Department of State’s U.S. Munitions List (USML), based on objective technical parameters. The Department of Defense led a technical review that determined the most sensitive items which warrant control on the USML and those lesser sensitive items that may be moved to the Commerce Control List (CCL), thus allowing them to be exported under Commerce’s more flexible legal authorities to Allies and many multilateral export control regime partners. In this regard, this prioritization of controls is part of the “fewer items.”

Second, the increased clarity of the regulations will impose a “higher wall” by reducing ambiguity that can be exploited. Items subject to controls will be specifically enumerated to the greatest extent possible or for those controlled items not enumerated on any control list, the Administration’s definition of the term “specially designed,” to be used in both the USML and CCL, will provide clear guidance by defining the term for the first time. Application of strict USML licensing requirements on enumerated and “specially designed” items in the rebuilt USML categories imposes a “higher wall” on these most sensitive items.

Additionally, working collaboratively with Congress, the Administration has standardized the criminal and civil penalties for violations of either the State or Commerce regulations to the same maximum. Criminal penalties include a fine of either $1 million or five times the value of the transaction (whichever is greater) and up to 20 years imprisonment, per violation. Likewise, the maximum civil fines are the same for violating either State or Commerce regulations: the greater of $1 million per violation or twice the amount of the transaction that is the basis of the violation. This parity both maintains robust controls and provides greater clarity of penalties to the public.

Further, the Administration’s addition of a new control in the CCL, in Export Control Classification Number (ECCN) 0Y521, provides the U.S. Government with the ability to quickly control any item (e.g., an emerging technology) for foreign policy reasons to address any current control gaps, similar to how USML Category XXI (Miscellaneous Articles) works. This too is a feature of the “higher walls.” Finally, military items currently on the CCL will be consolidated with those items moved from the USML to the CCL and become subject to the more stringent licensing policies for ITAR §126.1 destinations. All “specially designed” items that move from the USML to the CCL will also be precluded from export to embargoed destinations.

These changes – the tightening of the embargoes, the increased clarity in both export control lists, the parity of penalties, the definition of “specially designed” and the prioritization of controls to allow less sensitive items to be exported to certain trusted destinations without requiring a specific license -- are all aspects of the “higher walls” in both lists around the “fewer items” that remain on the USML and those on the CCL that require a specific license. These actions will enhance U.S. exporter compliance with U.S. export control regulations, help focus U.S. Government licensing resources, and of particular importance, provide for the legal basis for the U.S. Government to prosecute violators using objective regulatory standards.

February 1, 2013 - State Publishes a Proposed Rule for Category XVI The State Department published a proposed rule change for USML Category XVI-Nuclear Weapons, Design and Test Equipment on January 30, 2013. This rule is now available online and is distinct from the forthcoming Department of Energy proposed rule change to 10 CFR Part 810, which governs technologies and assistance for the design, production and use of facilities that make peaceful nuclear materials. The Department of State will accept comments to the Category XVI rule for a 45-day window, which will close on March 18, 2013.

February 1, 2013 - State and Commerce Publish Proposed Rules for Category IV On January 31, the State and Commerce Departments published a pair of proposed rules for the transition of certain items currently subject to the USML’s Category IV-Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombes and Mines. These rules are now available for viewing online, and there will be a 45-day public comment period that will close on March 18, 2013.

January 30, 2013 - NDAA Includes Authorization for Satellite Export Control Reform On January 2, 2013, President Obama signed into law the National Defense Authorization Act (NDAA) for FY 2013, which restores flexible authority to the President to tailor controls on the export of satellites and related items appropriately to the risk of diversion to unauthorized end-users or end-uses. This action marks a significant milestone in the President’s Export Control Reform Initiative and in the continued collaboration with Congress to modernize the nation’s export control system. Exports and reexports of all satellites, regardless of sensitivity or availability, will continue to be prohibited if destined to China, North Korea, Iran, and other countries subject to comprehensive arms or other embargoes. The new authorities are consistent with the recommendations of the Departments of Defense and State in the NDAA for FY 2010 Section 1248 report.

Tailoring satellite export controls will facilitate cooperation with Allies and many multilateral export control regime partners while maintaining robust export controls as necessary to protect national security. The Administration is preparing proposed rules to request public input on the rebuilt USML Category XV that currently includes satellites and related items. Updating satellite export controls will provide the U.S. satellite industry with an opportunity to seek to restore its leadership by allowing it to compete on a more level playing field with its international competitors. This will be particularly beneficial to small- and medium-sized U.S. companies that manufacture parts and components for satellites and will bolster the industrial base to ensure it can meet current and future U.S. requirements.

November 29, 2012 - Commerce Publishes Proposed Rule to Make the Commerce Control List Clearer On November 29, the U.S. Department of Commerce published a proposed rule to clarify certain sections of the Commerce Control List to remedy any unnecessary compliance burdens caused by rules that are overly complex, outmoded, inconsistent, or overlapping as a result of accretion. There will be a 60-day window for submitting comments that will close on January 29.

November 29, 2012 - The Defense Trade Advisory Group Holds Meeting to Discuss Export Control-Related Issues The Defense Trade Advisory Group (DTAG) held a meeting in Washington to present and discuss the findings from three of its recent studies regarding trade in defense industrial goods. The first discussion laid out a list of industry priorities for export control reform, the second included a proposal for a new ITAR exemption, and a third was an examination of proposed changes to ITAR brokering rules. Assistant Secretary of State Andrew Shapiro presented keynote remarks and provided a status update for the Export Control Reform effort.

November 28, 2012 - State and Commerce Publish Proposed Rules for Category XI On November 28, the U.S. Departments of State and Commerce published proposed rules for the transition of certain items from Category XI of the U.S. Munitions List to the Commerce Control List. Category XI pertains to controls for a variety of “Military Electronics”, and there will be a 60-day window for submitting comments that will close on January 28.

November 28, 2012 - Assistant Secretary of Commerce for Export Administration to Host Weekly Conference Calls on Export Control Reform BIS Assistant Secretary Kevin Wolf will resume his series of weekly conference calls on December 12 at 2:30 pm. These calls are open to the public and will provide interested parties with a unique opportunity to develop their understanding of the improvements now being made through the Export Control Reform Initiative. For more information about participating, please refer to the notice on the BIS website.

November 5, 2012 - Export Control Reform Levels the Playing Field for Small American Exporters In addition to reducing the compliance burden for exporters, the Export Control Reform improvements will make it easier for smaller American firms to participate in foreign markets and provide after-market support to Allies who purchase U.S. systems. The Defense Department considers many parts and components of these systems to be less sensitive, so these items will be moved to the more flexible Commerce statutory authorities. This will make it easier to export to Allies, thereby enhancing interoperability. The items will remain controlled, but by prioritizing U.S. controls, the second- and third-tier suppliers who make many of these items for U.S. primes will no longer lose the after-market to foreign end-users who design-out U.S. content to avoid the reach of U.S. controls. Some items might even be eligible for a license exception. This will enhance the reliability of U.S. suppliers and will be beneficial to the health and competitiveness of the U.S. industrial base, including maintaining and expanding jobs. Most critically, these changes will ensure the vitality of the U.S. industrial base to meet future U.S. national security requirements.

For more information, please visit the ECR Library.

October 25, 2012 - Export Control Reform Reduces the Compliance Burden on Small Businesses Small businesses are a key part of the defense industrial base, yet they are confronted by unique challenges in trying to export into foreign markets. According to the Small Business Administration, small firms account for 99.7 percent of all employers, comprise 97.5 percent of all identified exporters, and account for 31 percent of export value, yet they spend 36 percent more per employee than larger firms to comply with federal regulations. Given this disparity, a key objective of the President’s Export Control Initiative is to reduce the regulatory compliance burden on small firms to maintain the health of the industrial base. Some specific steps toward this objective include:

  • The creation of the Consolidated Screening List, which combines the screening lists maintained by the Departments of State, Treasury, and Commerce to help exporters evaluate parties to transactions themselves without having to hire a screening service or read the Federal Register each day;
  • The standardization of terminology to make the regulations easier to understand and enforce;
  • The elimination of the annual registration requirement and the related annual registration fee for an estimated 60 percent of current State Department registrants;
  • The elimination of requirements for a multitude of authorizations – whether individual export licenses, Technological Assistance Agreements to tell customers how to incorporate the exported item, or Manufactured Licensing Agreements to produce near the customer;
  • The elimination of the “see-through” rule for non-embargoed destinations that requires the manufacturer of a defense article to inform all domestic and foreign customers that their product will never lose its identity, regardless of what it is incorporated into, thus transforming those customers’ products into U.S. munitions items as well; and
  • The eventual move toward a single U.S. Government IT platform and licensing application to reduce confusion for exporters.

Ultimately, these and other important changes will allow small firms to prosper, making it easier for them to comply to the benefit of U.S. national security, while also bolstering the health and competitiveness of the U.S. industrial base and helping maintain and create American jobs. For more information, please visit the ECR Library.

October 11, 2012 – Public Comments for USML Categories IX, X, and XIII Published Online Public comments to the following proposed rule changes are now published and available online:

  • The State and Commerce proposed revisions to Category IX-Military Training Equipment and Training
  • The State and Commerce proposed revisions to Category X-Protective Personnel Equipment and Shelters
  • The State and Commerce proposed revisions to Category XIII-Auxiliary Military Equipment.

The departments are now reviewing and considering these comments in preparation for the publication of the final versions of these rules.

August 15, 2012 - Public Comments on the BIS and DDTC Proposed Transition Rules Are Now Available Online The State and Commerce Departments have published the public comments they received in response to the proposed rules for the orderly transition of items from the U.S. Munitions List (USML) to the Commerce Control List (CCL) as part of the reform effort. These comments are now being studied by the departments in preparation for publication in final and are available for public review on the State and Commerce websites, respectively.

August 14, 2012 - Public Comments on the Proposed Specially Designed Rules Are Now Available Online The State and Commerce Departments have published the public comments they received in response to the proposed change in the definition of the term “specially designed” within the context of the reform effort. These comments are now being studied by the departments for preparation for publication in final and are available for public review on the State and Commerce websites, respectively.

August 3, 2012 - BIS Update 2012 Export Control Conference Held in Washington, DC On July 17-19, the Bureau of Industry and Security hosted the “Update 2012 Conference on Export Controls and Policy”, which is an annual event for industry leaders and other interested stakeholders to learn about the current and future direction of export controls. The Export Control Reform Initiative was a key topic during the event, and several key participants in the process were present to discuss different aspects of the process. Speeches from the event by the following participants can be accessed online:

July 26, 2012 - The Defense Trade Advisory Group Holds Semi-Annual Meeting to Discuss Export Control-Related Issues On July 26, the Defense Trade Advisory Group (DTAG) held a meeting in Washington to present and discuss the findings from two of its recent studies regarding trade in defense industrial goods. The first discussion focused on two competing legislative proposals to restore the authority of the President to determine the proper regulatory jurisdiction of commercial satellites, and the second was a presentation about how the ITAR might be improved to bring its guidance on transshipment requirements more into line with the challenges of current global logistics networks. Assistant Secretary of State Andrew Shapiro presented keynote remarks and discussed the importance of the Export Control Reform effort.

The speech listing for inclusion on the ECR Library page is as follows (the link goes to the same location as the one in the blog article):

Remarks by Andrew J. Shapiro, Assistant Secretary of Political-Military Affairs during the Defense Trade Advisory Group Plenary

July 2, 2012 – Public Comments on the Proposed Rule Changes to Category V-Explosives and Energetic Materials Are Now Available Online The State and Commerce Departments have published the public comments they received in response to the proposed changes to the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) regarding ITAR Category V-Explosives and Energetic Materials. These comments are now being studied by the departments and are available for public review on the State and Commerce websites, respectively.

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