Third Set of USML-CCL Transfers Approach, BIS Official Says at RPTAC Meeting

More than half of the existing U.S. Munitions List (USML) categories will have undergone some stage of revision following the forthcoming publication in the Federal Register of a proposed rule to revise the third set of USML categories, said Bureau of Industry and Security (BIS) Deputy Assistant Secretary of Export Administration Matt Borman during a BIS Regulations and Procedures Technical Advisory Committee meeting Sept. 10. The USML categories IV (Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines), V (Explosives, Propellants, Incendiary Agents, and their Constituents), IX (Military Training Equipment), and X (Protective Personnel Equipment) will publish in a matter of weeks, Borman predicted.

“We’ve got a third implementation rule that is in the OMB final stages … the OMB review process … so I expect that that will be published in the next few weeks, which then of course will have another 180 days implementation period,” said Borman, referring to the Office of Management and Budget (OMB). The deputy assistant secretary said the Commerce and State departments are prepared procedurally and materially, in terms of resources, to handle the “tens of thousands” of expected export components that will arrive on the Commerce Control List (CCL) on Oct. 15, as the first batch of USML transfers. The transfers are part of the administration’s Export Control Reform (ECR) that targets a comprehensive overhaul of the U.S. Munitions List (USML). The first set of revisions is due for implementation after an April final rule issuance and a 180-day interim period designed to allow the business community to adjust (see 13041616).

The second set of USML-CCL transfers will be implemented Jan. 6, following final rule issuance in July (see 13070524). Borman said the commenting period has already closed for USML category XV (Spacecraft Systems and Associated Equipment) and corresponding 515 ECCNs and a final rule is expected in a few weeks, saying the comment period for a second proposed rule for category XI (Military Electronics) has expired. A final version for that category, Borman said, is expected by the end of the year. As the interagency effort prepares to send the third set of categories to Capitol Hill for scrutiny, Borman said lawmaker concerns are steadily decreasing.

“We had an extensive amount of comments in that informal consultation period for the first implementation rule. My recollection is that roughly we had 50 questions, and a lot of subparts, in our 600 series,” said Borman. “And State had roughly the same on theirs for that first. And we’ve had far fewer questions on the succeeding implementation rules … the sense is we’ll have fewer on the third as well.”

Commodity Jurisdiction and Residual Ambiguity

There has been a decrease in commodity jurisdiction (CJ) requests at the State Department for export items subject to the USML category transfers already published, indicating increased ECR awareness in the business community, Borman said. Borman advised exporters who deal with items that will clearly undergo transfer, as early as Oct. 15, to wait until that date to file a CJ, if that is still desired. All the qualifications and jurisdictions are not clear cut, however, Borman said. The most prevalent issue that remains is when modifications can potentially alter jurisdiction.

“I’d say it would fall into two categories … where someone says I have a Gulf Stream and it has 'x' on it. Then they have to work through, or have us help them work through: where does it fall? That’s one category” of remaining ambiguity, said Borman, referring to the Gulf Stream jet. “And then the other category is actual circumstances that had not been identified yet, like particular types of products that wouldn’t be on the new USML, that when we did the proposed rule and even the final, there were no comments that said ‘oh, wait, a minute, this thing that you’re describing as a USML item actually has commercial applications.’ Those are relatively rare.” But through consultation with Commerce and State departments, there will be a “concrete, objective” resolution in all scenarios, Borman said.

Implications for Wassenaar Agreement and Other Treaties

Responding to questions of why certain export licenses will still be required for items that are subject to transfer on Oct. 15 and future transfer implementation dates, Borman said many U.S. treaties are consistent with the International Traffic in Arms Regulations (ITAR) and that participation takes precedent. International treaties have very specific exclusions and technology scopes, noting that the majority of 600 series items are eligible for Strategic Trade Authorization license exceptions with countries such as the U.K. and Australia.

For those items not eligible for exception, there needs to be alterations within the law in order to change license status, Borman said, adding that companies are free to contact European governments directly to apply pressure. “You first have to have a legal analysis of the law because you have a treaty that deals with ITAR,” said Borman. “The fix is simple. There is a fundamental legal issue though.”