On August 17, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 150107020-6464-02] that implements changes that were proposed on May 22, 2015, in a proposed rule entitled Revisions to the Export Administration Regulations (EAR): Harmonization of the Destination Control Statements. This final rule revises the destination control statement in § 758.6 of the Export Administration Regulations (EAR) to harmonize the statement required for the export of items subject to the EAR with the destination control statement in § 123.9(b)(1) of the International Traffic in Arms Regulations (ITAR).
Prior to the effective date of the BIS final rule, the EAR required exporters to include a destination control statement (DCS), specified in § 758.6 (Destination control statement and other information furnished to consignees) of the EAR, on certain export control documents that accompanied a shipment for most exports. The purpose of the DCS was to alert parties outside the United States that receive the item that the item was subject to the EAR, the item was exported in accordance with the EAR, and that diversion contrary to U.S. law was prohibited.
The BIS final rule is also part of Commerce’s retrospective regulatory review plan under Executive Order (E.O.) 13563.
The BIS final rule is published in conjunction with the publication in the August 17, Federal Register of a Department of State (Directorate of Defense Trade Controls) final rule revising § 123.9(b)(1) and other sections of the ITAR. Both final rules are part of the President’s Export Control Reform Initiative. In addition to revising the DCS in ITAR §123.9 to harmonize the language with the EAR, the State final rule also makes conforming changes to ITAR §§124.9 and 124.14, and makes several minor edits for clarity. ITAR §§124.7, 124.12, 125.2, and 125.7, among others are also revised.
Prior to the effective date of the State final rule, the ITAR, under § 123.9(b)(1), included the same type of DCS requirement as BIS, but with slightly different text than that which was required by the EAR. The purpose of the DCS requirements was the same under both sets of export control regulations. As a general principle of the Export Control Reform (ECR) effort, wherever the ITAR and EAR have provisions that are intended to achieve the same purpose, the U.S. Government will harmonize the corresponding provisions. The State rule removes the requirement that the DCS be placed on shipping documents and requires the DCS on the commercial invoice.
The State final rule also adds clarifying language to various provisions of the ITAR pertaining to the use of exemptions to the license requirements and the export of items subject to the EAR, when the EAR items are shipped with items subject to the ITAR. These revisions include guidance on the use of license exemptions for the export of such items, as well as clarification that items subject to the EAR are not defense articles, even when exported under a license or other approval, such as an exemption, issued by the Department of State. The rule also adds a paragraph (c) to ITAR §126.9, which permits any person to make a written request for an interpretation of the requirements in the form of an advisory opinion.
Both rules are effective November 15, 2016.