US and Australian Export Controls Experts
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Background on U.S. Export Control Reform

The impetus behind U.S. export reform is three fold:

1. To protect the crown jewels of U.S. military technology by building a higher wall around fewer technologies. The goal is to make dual-use and military items more easily available to allies, while preventing the growth of military capability of 'countries of concern'. This involves transferring control of some items from the USML to the CCL;

2. To support U.S. coalition forces by making it easier for allies to obtain certain technologies, thereby increasing interoperability with U.S. forces. The goal is to have allies take on a greater security burden in join operations. License exceptions, including STA will play a critical role in this;

3. To keep the U.S. defense industry competitive by maintaining industry capability and incentive for innovation in the U.S. The goal is to maintain the U.S.' strength in technological innovation for defense articles. A large part of this reform is reducing foreign companies' drive to reduce 'ITAR taint'. It is also a goal to make it easier for allies, like Australia, to participate in joint research and development projects and share the cost of developing defense technology.

The U.S. is undertaking export reform through four initiatives:

1. The creation of a single IT system to allow for greater inter-agency communication of intelligence, which will aid in faster turn-around time for export license applications (in progress);

2. The creation of a single enforcement agency (completed and named the Export Enforcement Coordination Center- E2C2);

3. The creation of a single, positive control list (in progress- while this is still the ultimate plan, the interim plan is to move items from the USML to the CCL);

4. The creation of a single licensing form and license review agency (in progress).

These initiatives are commonly referred to as 'the four singles'.

Each of these initiatives requires extensive inter-agency cooperation between the U.S. Departments of State, Commerce, Energy, Defense, Treasury, Homeland Security, and others.

Will the reform efforts make exporting easier or more difficult?

A big part of US export control reform is the movement of goods regulated under the ITAR's US Munitions List (USML) to the Export Administration Regulations' Commerce Control List (CCL). The aim is to reduce regulation on items that no longer warrant stringent controls under the ITAR, which will allow the US State Department to focus resources on the crown jewels of US military hardware and technology.

The reform efforts offer significant advantages to most exporters as licensing requirements are lessened for items transitioned from the USML to the CCL and in many cases the EAR's license exceptions can be used to ship many transitioned items that previously required a DDTC license.

Moving controlled items from the ITAR’s USML to the EAR’s CCL

The process of deciding which items need to stay on the US Munitions List (USML), and which should move to the Commerce Control List (CCL) is quite involved for those persons involved in creating export control reform. There are 19 working groups involved in reviewing the USML and making recommendations for items that can be moved to the CCL.

For an item to remain on the USML it must meet the criteia of being inherently military in nature and function or otherwise warrant control on the USML. Alternatively, it must posses certain characteristics that provide both a critical military or intelligence advantage to the U.S. and be almost exclusively available from the U.S. If these criteria are not met, the item will move to the CCL.

Most (but not all) items moving from the USML to the CCL will become '600 series' items. Be aware that there are also changes to the ITAR moving articles from one ITAR category to another, either temporarily or permanently. Any export, re-export or re-transfer of items that have moved to the CCL must comply with the requirements of the U.S. Export Administration Regulations. Exporters will need to be able to prove they acted correctly and exercised due diligence in re-classifying their items on the CCL.

It is important to determine which ITAR controlled items in your company's control or possession will be transitioning from the USML to the CCL, and whether those items will be included in the CCL's more tightly monitored '600 series'. Contact us for assistance in helping your staff to make this determination, configure your ERP systems, conduct trainings, or answer any compliance questions you may have.

What about existing licenses and Agreements?

Below is a 'quick guide' to the grandfathering of DDTC Approvals:

Approvals containing only items transitioning to the CCL:
DSP-5 May be used for up to two years after the effective date of transition unless license expires or returned.
DSP-61 and DSP-73 Valid until expiration. May be amended after the effective date on a case by case basis.
TAA/MLA/WDA May be used for up to two years after effective date of transition unless agreement expires. May be amended after effective date on a case by case basis.

Approvals containing transitioning and non-transitioning items:
DSP-5 Valid for all items until expiration. May be amended after effective date on a case by case basis.
DSP-61 and DSP-73 Valid until expiration. May be amended after effective date on a case by case basis.
TAA/MLA/WDA May be used for up to two years after effective date of transition unless agreement expires. Agreement may be kept valid beyond the two year period by submitting amendment to authorise transitioning items under 120.5(b)

Contact Us

119 Willoughby Rd
Crows Nest, NSW 2065
ABN: 85 149 496 631
Eva Galfi Phone: 0421 506 095
eva@internationaltradeadvisors.com.au

Industries Served

  • Defence
  • Aerospace
  • Mining
  • Consumer Goods
  • High Technology
  • Universities

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