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Category XV ITAR Changes Published and Kevin Wolf of BIS visits Australia

On 13 May, the United States published the long-awaited amendments to ITAR Category XV, Spacecraft and Related Articles, which covers satellites. In brief, certain satellites and related items that have been deemed not critical to U.S. national security and that do not contain technologies unique to the U.S. have been moved to the jurisdiction of the Export Administration Regulations (EAR). For example, certain communication satellites (those that do not contain classified components) and remote sensing satellites (with performance parameters below certain thresholds) have been moved to the EAR. This change in jurisdiction now allows the satellites now controlled by the EAR to be exported/re-exported/retransferred to certain destinations under an EAR license exception (e.g. no license is required in certain circumstances).

The amendments made significant changes to Category XV and also included a change to Category IV (i) regarding spacecraft-launch vehicle integration and launch failure analysis services. It is important for companies in this industry to note that there is a 45 day implementation period (not the normal 6 month as with other changes to the ITAR) for some articles including radiation hardened microelectronic circuits formerly described in paragraph (d) of USML Category XV. As of 27 June 2014 they will be controlled under the EAR's ECCN 9A5151.d. Also, microelectronic circuits formerly described in paragraph (e) will be controlled by the EAR's ECCN 9A515.e as of 27 June 2014. Software and technical data directly related to these commodities will be transitioned to the jurisdiction of the EAR effective 1 July 2014. Satellites and spacecraft that provide only a differential correction broadcast for the purposes of positioning, navigation, or timing are now controlled under ECCN 9A515.

For a complete list of amendments to ITAR Category XV and associated sections, as well as the corresponding changes to the EAR, read the State Final Rule here and the Commerce Final Rule here.

These important changes to the ITAR will affect Australian companies in the following ways:

1. It may be that "ITAR" articles in your inventory (or care) are no longer in the ITAR. A careful review of each of the amended categories is required to determine whether your article is still ITAR controlled. If it is not listed in the newly revised category, then it has likely moved to the EAR, though in some cases it may have moved to another part of the ITAR.

2. Once the ITAR changes become effective (for this set of final rules the effective date will be 10 November 2014 for most articles in Category XV), any articles that have transitioned from the ITAR to the EAR will require a license from the U.S. Commerce Department's Bureau of Industry and Security for any subsequent re-exports and retransfers. Although grandfathering provisions do apply to allow for the re-export or retransfer of transitioned items for up to two years (provided certain conditions are met) under exiting DSP-5s, MLAs, TAAs, and other approvals, the U.S government will require that as of 10 November 2014, these items be managed in accordance with the requirements of the EAR (except for a few aforementioned articles with a 45 day transition period). All EAR record keeping provisions will need to be adhered to, for example, which are quite different from the ITAR's requirements.

3. Articles transitioned from the ITAR to the EAR will be listed on the EAR's Commerce Control List (CCL). The CCL contains over 500 Export Control Classification Numbers (ECCN) and the new ECCN for transitioned items will need to be identified. Although U.S. supplies will in many cases provide the ECCN to Australian companies, they may not always be prepared to do so. In addition, for items that have been in Australia for some time, it will be up to Australian industry to identify the correct ECCN and develop processes and procedures to ensure the re-export, retransfer of items subject to the EAR is in compliance with the EAR.

4. The EAR's licensing requirements are more relaxed than the ITAR's. In many instances, an items on the EAR does not require a license for re-export or retransfer to a NATO country, New Zealand, the US or Japan. The EAR also contains many license exceptions that may be utilised by Australian industry for re-exports and re-transfers both within Australia and abroad. Australian industry needs to be aware however that certain items that have moved to the CCL from the USML will be very tightly controlled. This includes all "600 Series" ECCNs.

5. In some instances, while the physical item has moved to the jurisdiction of the EAR, the technical data will remain ITAR controlled. It will be important for Australian industry to manage the policies and procedures for re-export/retransfer of the technology separately to the hardware in these instances.

For assistance with determining whether a certain article(s) in your inventory/under your management remain ITAR controlled or have transitioned to the EAR, and to learn more about what your company will be required to do to ensure compliance with the revised U.S. legislation, please contact us on 0421 506 095.

kevin wolf photoIn addition to these recent changes to the ITAR, Australia was recently honoured with a visit from the Bureau of Industry and Security's Assistant Secretary of Commerce for Export Administration, Kevin Wolf. Mr. Wolf is one of the key architects of U.S. export control reform and explained many of the changes to U.S. export controls at the Defence Trade Controls Conference held in Sydney on the 26 and 27th of May. www.dtcconference.com

Mr. Wolf's office holds a weekly telephone conference on U.S. export control reform during which industry questions are answered. Australian companies are welcome to dial in and participate. To access the teleconference from outside of the United States, use the international call in number (this is a toll call at your international call rate): 1-212-547-0330 and then dial the participant code: 6514196. You can submit a question about any aspect of the Export Control Reform Initiative including any BIS proposed rule that is open for comment. The address is ECRweekly@bis.doc.gov .

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