Final Rules Published for Initial Export Control Reform
Article Summary
ECR is a U.S. government initiative to modernize export controls by transferring less sensitive items from the USML to the CCL.
The final rules include reclassification of items, the adoption of the "Specially Designed" definition, and updated licensing procedures.
It provides a clear framework for determining whether parts, components, or software are subject to export controls.
Exporters benefit from streamlined licensing, reduced regulatory burdens, and clearer compliance guidelines.
Exporters have a 180-day transition period to adjust to new rules, with existing licenses remaining valid for two years.
To simplify export controls, enhance compliance, and strengthen U.S. national security.
The time has come. As promised, the Departments of Commerce and State have just published the final rules that will guide the initial implementation of the Obama Administration’s Export Control Reform. Since there is a six month waiting period, these rules will be effective on October 15th, 2013. See full text of DOC/BIS announcement below. DOS/DDTC made a very similar announcement a few minutes later.
Full Text of DOC/BIS Release: “As part of the Export Control Reform (ECR) Initiative, the Bureau of Industry and Security (BIS), and the Directorate of Defense Trade Controls (DDTC), Department of State, have published multiple proposed amendments to the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), respectively, to strengthen national security by fundamentally reforming the export control system. This final rule implements the initial ECR changes by adding a structure and related provisions to control munitions items that the President has determined no longer warrant export control on the U.S. Munitions List (USML) on the Commerce Control List (CCL), specifically aircraft, gas turbine engines, and related items. “Today’s publication of implementation rules is the result of extraordinary interagency cooperation to realize the President’s vision of export control reforms that enhances national security by focusing our resources on the threats that matter most,” said Under Secretary of Commerce Eric L. Hirschhorn. This rule is being published in conjunction with a Department of State rule that revises the USML so that upon the effective date of both rules, the USML and CCL and corresponding regulatory structures will be complementary. Both rules become effective October 15, 2013.
Find links to both DDTC and BIS Final Rules using this link: http://beta-www.bis.doc.gov/index.php/about-bis/newsroom/export-control-reform-news
Key Points
What is the Export Control Reform (ECR) initiative?
- The Export Control Reform (ECR) initiative is a U.S. government effort to modernize and streamline export control regulations.
- It focuses on transferring less sensitive military items from the United States Munitions List (USML) to the Commerce Control List (CCL) under the Export Administration Regulations (EAR).
- The initiative aims to reduce regulatory burdens while maintaining strict controls on items critical to national security.
What are the final rules under ECR?
The final rules under ECR include:
- Reclassification of items: Less sensitive military items are moved from the USML to the CCL, forming the "600 series" classification.
- Adoption of the "Specially Designed" definition: A unified definition to determine whether parts, components, or software are subject to export controls.
- Updated licensing procedures: Streamlined processes for items transferred to the CCL, including license exceptions.
- Transition rules: Guidelines for exporters to adjust to the new regulatory framework.
What is the purpose of the "Specially Designed" definition?
- The "Specially Designed" definition provides a clear framework for determining whether an item is subject to export controls.
- It consists of two parts:
- Catch provision: Identifies items that are controlled based on their design and intended use.
- Release provision: Excludes items that are general-purpose or not specifically designed for controlled applications.
- This definition reduces ambiguity and ensures consistent application of export controls.
How do the final rules impact exporters?
Exporters benefit from the final rules in several ways:
- Streamlined licensing: Items moved to the CCL are subject to more flexible licensing options under the EAR.
- Reduced regulatory burdens: Simplified compliance processes save time and resources.
- Clearer compliance guidelines: The "Specially Designed" definition and reclassification provide greater clarity for exporters.
- Improved competitiveness: By reducing unnecessary restrictions, U.S. businesses can compete more effectively in global markets.
What are the transition procedures for exporters?
The transition procedures include:
- 180-day transition period: Exporters have six months to adjust to the new rules after a USML category is revised.
- Validity of existing licenses: Licenses issued before the effective date remain valid for two years or until expiration.
- Guidance for compliance: Exporters are encouraged to review the new rules and update their compliance processes accordingly.
What is the ultimate goal of ECR?
The ultimate goal of ECR is to:
- Simplify export controls: Create a less complex regulatory framework for exporters.
- Enhance compliance: Provide clear guidelines to ensure adherence to export control regulations.
- Strengthen national security: Focus resources on controlling items with the greatest potential to harm U.S. interests.
- Promote economic growth: Reduce barriers for U.S. businesses, fostering innovation and job creation.
