01.04.2012 Export Control Reform: State and Commerce Officials Propose Revisions to Export Control Lists

Manufacturers and exporters have a unique opportunity to help shape the controls on their exports by commenting on proposed revisions to U.S. export control regulations.  Company comments can help ensure that products are not included inadvertently on the export control lists and subject to licensing requirements that either drive up costs or prohibit sales to certain markets, and express support for proposed changes that would eliminate licensing requirements on the company’s products. 


In support of the President’s National Export Initiative goal of doubling U.S. exports over five years, the U.S. State and Commerce Departments, as well as other relevant federal agencies, are working to streamline U.S. export controls by building "higher walls around the export of our most sensitive items while allowing the export of less critical ones under less restrictive conditions."  The State Department is proposing to move many military end-items and their systems, subsystems, parts, components and technologies from the U.S. Munitions List (USML) to the Commerce Control List (CCL). 


Most of the items that are moved to the CCL will be controlled for national security reasons and will still require a license for export to all destinations except Canada.  However, they will be eligible for the broader license exceptions available for CCL items and for de minimis treatment when incorporated into a foreign article.  Some of the less significant parts and components will be controlled less strictly.  In addition, manufacture and export of those items would no longer trigger a requirement to register with the State Department.  


The USML and CCL revisions are intended to continue to impose very strict controls on military items of particular concern, while loosening controls on other items.  State and Commerce Department officials have stated that their three objectives are to improve interoperability with allies, reduce the incentives for foreign companies to “design out” U.S. origin parts, components or other content, and reduce the amount of time that U.S. government officials spend examining license requests for items that will always be approved for export. 


Several proposed revisions were published in December.  Comments on proposed revisions to the categories for military vehicles and gas turbine engines are being accepted until January 20, 2012.   Comments on proposed revisions to the categories for submersible vessels and oceanographic equipment and vessels of war and other special naval equipment are being accepted until February 6, 2012.


Numerous categories are currently under internal review.  Proposed changes to USML Categories I (Firearms, Close Assault Weapons and Combat Shotguns), II (Guns and Armament), III (Ammunition/Ordnance), V (Explosives and Energetic Materials, Propellants, Incendiary Agents, and their Constituents), and XIV (Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment) are expected to be published in the near future. 


Congressional notification is required before the changes can be finalized, and State is planning to propose revisions to all USML Categories before making any notification to Congress.  Company comments in support of proposed changes may be particularly helpful when the changes are presented to Congress.  Officials have noted that they expect to send Congress the proposed revisions for military vehicles in Spring or Summer 2012, and expect that all of the changes should be finalized by the end of 2012. 


If you have any questions concerning this topic, please feel free to contact Jahna M. Hartwig, 202.293.8145 or , or any member of Williams Mullen’s International Section.

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