BIS Discusses Future Plans for Export Control Reform at Update 2011

At the Bureau of Industry and Security’s Update 2011 conference, Under Secretary for Industry and Security Eric Hirschorn gave an overview of the Administration’s Export Control Reform plans, which for 2012 include having all U.S. Munitions List categories, and corresponding revised ECCNs, in final form and for the State, Commerce, and Defense Departments to link to a single information technology system.

(In Spring 2010, the Administration launched its Export Control Reform (ECR) initiative in order to address shortcomings in the current export control system and increase U.S. security and competitiveness. According to the Administration, the ultimate result of ECR will be a single control list, administered by a single licensing agency, operating on a single information technology platform, with enforcement coordinated by a single agency.)

Highlights of Hirshorn's overview of the Administration's ECR efforts include the following:

USML Cats VI and VIII Next, Want All Cats Finalized Well Before End of 2012

Simplification and streamlining of the USML and the Commerce Control List (CCL) is a critical element of the ECR, an activity that is well under way. In December 2010, the State Department issued a proposed rule on revising USML Category VII into a “positive” category.

The Administration anticipates that later in 2011, State will issue a final version of USML Category VII, which will be followed by proposed rules for USML Categories VI (Naval Vessels) and VIII (Aircraft). The plan is to have all 20 USML categories, and the corresponding revised Export Control Classification Numbers (ECCNs) in the CCL, written and in final form well before the end of 2012. (See ITT’s Online Archives or 12/10/10 news, 10121013, for BP summary.)

Changes to Dual-Use Licensing Policies, then Changes for Defense Articles

As part of the ECR effort, the Administration has developed a three-tiered set of control list criteria to screen all items on the two primary lists of controlled items. Following completion of the list review effort, the Administration anticipates additional changes to licensing policies for dual-use items and then changes for defense articles.

License Exception STA Rule is First Step in Implementing New Licensing Policy

On June 16, BIS published a significant change to the dual-use regulations, a change that is part of ECR. The new License Exception STA final rule is the first step in implementing the Administration’s vision of eliminating easy cases so the U.S. Government can focus its limited resources on items and end users that require more attention.

According to the Administration, STA departs from the traditional licensing paradigm, wherein a license often has been required for the initial export but not the reexport. It establishes, in effect, a license free zone to cover the first transaction while creating new safeguards to ensure that items are not diverted outside the designated country group. BIS has been reaching out to companies that are likely beneficiaries of the license exception and plans to enhance its outreach and compliance effort to guard against misuse and facilitate optimal usage of STA by exporters. STA potentially will eliminate 3,000 of the 22,000 licenses BIS issued in 2010.

Iran, North Korea, Syria, Etc. Sanctions to Continue, No Change in China Policy

Notwithstanding the reform of the U.S. export control system, the federal government will continue its comprehensive sanctions against Cuba, Iran, North Korea, Syria, and Northern Sudan. The government also has no plans to alter its prohibitions on exporting Munitions List items to China or dual-use items for military end use in China.

Deemed Exports/I-129 Form Educational Efforts

BIS also has engaged in a public education effort to explain the relationship between the deemed export rule and the Department of Homeland Security’s (DHS) I-129 form, required for certain non-immigrant visas, that now contains an export control certification. Since the requirement took effect in February 2011, BIS has conducted a dozen outreach activities that attracted nearly 1,100 new participants and plans to continue its efforts.

U.N. Requirement for Effective Export Control Systems

In the context of implementing United Nations Security Council Resolution 1540, which requires member nations to establish effective export control systems, BIS works with many other governments to share best practices and help strengthen the international non-proliferation network. During fiscal year 2011, BIS has participated in about two dozen international outreach events sponsored by the Department of State’s Export Control and Related Border Security program. These dialogues help promote security cooperation and enable strong partnerships to address collaboratively the global threats of proliferation and terrorism.

Additional Resources for Export Management and Compliance Tool Kit

BIS will soon add more items to its export management and compliance tool kit, including best practices for exporting through transshipment hubs as well as new electronic tools to help exporters make accurate and timely input into the Automated Export System.

State, Commerce to Link to Defense USXPORTS System by Spring 2012

As another part of the Administration’s efforts, it is going to upgrade the internal information technology system to leverage the resources and information of agencies across the government. The plan is to link State licensing officials to the Department of Defense’s USXPORTS system later in 2010, with their Commerce counterparts to follow by the spring of 2012. This will provide a more efficient process for reviewing transactions and responding to the public in a timely manner.

(See ITT’s Online Archives or 06/14/11 news, 11061416, for BP summary on single IT system in which BIS had stated that State was expected to link to USXPORTS in August/September 2011 and Commerce by the end of 2011 at the earliest.)

Single Electronic License Application Not Expected Until Late 2012 at Earliest

Establishing a single system for the license review process will enable the next step -- moving to a single license application form on a single electronic portal. While this will not occur any sooner than late 2012, the Administration plans to work with exporters of all sizes regarding the composition of this portal.

BIS Plans Improvements to its Web Site, Including EAR in “Old” Format

BIS is in the process of revising not only the look of its Web site, but also how one finds data on export control issues, regulations, and enforcement questions. In response to the trade’s comments regarding the need for a more user friendly Export Administration Regulations, BIS is in the process of adding a PDF of the old format of the EAR to its Web site.

Enforcement Continues to be a High Priority

Enforcement will continue to have a high priority in the Administration. In November 2010, the President signed an executive order to increase coordination among export control enforcement agencies. The order mandates the participation of BIS, the Federal Bureau of Investigation, military security agencies, Immigration and Customs Enforcement, and the Intelligence Community in an Export Enforcement Coordination Center to share information and leverage resources.

(See ITT’s Online Archives or 06/16/11 news, 11061613, for BP summary of the Administration’s plans for the Export Enforcement Coordination Center.)

BIS Will Publish Proposed Rule to Implement Defense Production Act Changes

BIS’ defense industrial base responsibilities consist of four core activities: priorities and allocations, foreign acquisition reviews, industrial capability studies, and advocacy in support of U.S. exporters. In 2011, BIS will be issuing a proposed rule that implements recent amendments to the Defense Production Act.

BIS Hosts International Inspectors of U.S. Chemical Facilities

BIS collects annual data declarations from the U.S. chemical industry for transmission to the Organization for the Prohibition of Chemical Weapons. The more than 800 declarations cover the activities of U.S. chemical facilities. In recent years, BIS has hosted an annual average of twenty inspections, by international inspectors, of U.S. facilities; since June 2000, BIS has supported 155 inspections.