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New ITAR rules published for Military Vehicles, Vessels of War and Submersibles- What Australians need to know

On Monday the United States published amendments to the ITAR (and EAR) that affect Australian companies exporting, importing, retransfering, storing, managing and servicing the following USML categories of articles:

Category VI- Surface Vessels of War and Special Naval Equipment
Category VII- Ground Vehicles
Category XIII- Materials and Miscellaneous Articles
Category XX- Submersible Vessels and Related Articles

In addition to major amendment to the contents and structure of these Categories, the definition of "surface vessels of war" in 121.15 was revised, a definition for "ground vehicles" was created in ITAR section 121.4 and a definition of "submersible vessels" was also created in 121.14. The amendments to the ITAR also resulted in the creation of definitions for "Organizational-Level Maintenance", "Intermediate-Level Maintenance" and "Depot-Level Maintenance".

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 6 January 2014), 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 6 January 2014, these items be managed in accordance with the requirements of the EAR. 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.

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