Revisions to U.S. Export Control Rules

Beginning in July of 2013 the Commerce and State Departments, as well as the Bureau of Industry and Security (“BIS”), began publishing proposed revisions to the export control laws on products and technology.  In October final rules were implemented by executive order and administrative regulations. Further revisions and reclassification of products were made in January 2014. These changes are intended to simplify the classification and review process for determining licenses required and outright bans on specific products exported to specific nations.

There are three primary areas of reform under the President’s Export Control Reform Initiative. The first is the gradual consolidation of separate lists under multiple enforcement regimes into a single list of controlled items, beginning with shifting many products previously listed on the U.S. Munitions List (“USML”), regulated under the International Traffic in Arms Regulations (“ITAR”), to the Commodity Control List (“CCL”). A second area of reform is the redefinition of specially designed items, a reform which has major significance to the automotive industry. The third area is a simplification of the export licensing and approval process.

The consolidation to a single list of controlled items is intended to ease the licensing burdens on many items and will eliminate the prior prohibitions on the export of certain items. These specified products will still be subject to controls but the system for approval and licensing is revised to attempt a more predictable and less burdensome process than under ITAR. Items shifted from the USML list to the CCL list include certain aircraft, ground vehicles used for military purposes, turbine engines and test equipment and components.

Item descriptions were clarified to remove some of the inherently vague descriptions under the prior lists, allowing  more definite identification. Products may now be identified with specific criteria such as speed, weight, dimensions, accuracy and other more objective measurements. Automotive components, for example are more easily categorized. A single consolidated screening list is available at the export.gov website.

Specifically exempted from ITAR restrictions on “specially designed” products are those allowed prior export, nuts, bolts and screws, and certain items developed for commercial (not military) use. Many automotive components, parts and systems built for commercial vehicles are subject to less restrictions and many may be exported without a license.

Companies that export products or technology should conduct a review to determine how the new rules and regulations apply to them.  Certain items may be grandfathered under existing licenses, but to the extent the new rules apply, companies will need to invest time and effort to be ready when their existing licenses expire.

For assistance with import and export or other government regulatory matters, please contact James Y. Rayis at (248) 457-7173; jrayis@gmhlaw.com.