The Department of State and the Department of Commerce have issued final rules detailing changes to the classification of certain aircraft and gas turbine engines under Categories VIII and XIX, respectively, of the United States Munitions List (USML). The rules go into effect on October 15, 2013.
The changes will modify the export requirements of certain aircraft, aircraft-related articles and gas turbine engines by transferring them from the USML to the Commerce Control List (CCL).
These final rules are only a small component of a broader Export Control Reform Initiative (ECR) undertaken by the Obama Administration to improve national security and facilitate “transparency and coherence to a field of regulation which has long been lacking both.” To this end, the Departments of State and Commerce have attempted to make the USML and CCL control lists more positive. Since these final rules will take effect in less than four months, and will greatly affect the export requirements of aircraft, aircraft-related components, and gas turbine engines currently restricted under the USML, companies are well advised to survey their export compliance programs now.
Amendments to USML categories VIII and XIX
The final rules amend USML Category VIII by narrowing the list of aircraft and aircraft-related articles included in the USML. The revised Category VIII will, with one notable exception, be a positive control list of specific components and accessories. While some of these aircraft engines and related articles will be moved to the newly-created Category XIX, others will be moved to the CCL.
These final rules also amend the International Traffic in Arms Regulations (ITAR) and establish a new category, Category XIX, under the USML. Category XIX includes gas turbine engines for aircraft, missiles, surface vessels, and vehicles and supersedes other USML categories that previously covered those items. The purpose of this amendment is to emphasize and clarify the items that fall under USML Category XIX.
The new CCL 600 series
The changes create a new Export Control Classification Number (ECCN) series under the CCL called the 600 series. Items listed under the 600 series previously fell under the USML and were governed by the ITAR because of their potential for military applications. These items will now be transferred to the CCL and fall under the jurisdiction of the Export Administration Regulations (EAR), generally a less restrictive regulatory regime than the ITAR.
Although moving these items from the USML to the CCL has loosened some export restrictions, items falling under the 600 series are presumptively for military end use and may still be subject to licensing requirements and other restrictions. For example, while the 600 series eliminates licensing requirements for exporting some former-USML items to Export License Exception STA eligible countries, exports to China are still subject to the ITAR status quo, which is a policy of denial.
The 600 series items will also be eligible for the following EAR License Exceptions:
- LVS: Low value shipments - US$1,500 for most 600 series ECCNs
- TMP: Temporary exports
- RPL: Repair/replacement of certain items
- GOV: Shipments to/for certain governments and international organizations
- TSU: Releases of certain technical data and source code
More changes to the USML are to come, affecting many categories of military equipment
These changes are only the beginning of the Obama Administration’s sweeping ECR updating effort. Currently, final rules affecting Categories VI (Naval Vessels), VII (Military Vehicles), XIII (Materials), and XX (Submersibles) of the USML are pending. Additionally, public comments are being reviewed for Categories IV (Missiles), V (Explosives), IX (Simulators), X (Protective Equipment), XI (Military Electronics), and XVI (Nuclear Weapons) and proposed rules for Category XV (Spacecraft Systems) have been published.
Companies subject to ITAR controls should engage in a review of these proposals and take part in the comment process. Assertive action by companies now may result in company- or industry-favorable changes to the final rules, all of which the Administration intends to publish by the end of 2013.