License Exceptions Opportunity Rise with ECR Rule Implementation

The opportunity for exporters to take advantage of license exceptions has increased since the Oct. 15 implementation of the first set of item transfers from the U.S. Munitions List (USML) to the Commerce Control List (CCL), as part of the administration’s Export Control Reform, according to industry officials. Exporters face limited license exception possibilities under USML, in accordance with the International Traffic in Arms Regulations.

“There are many different license exceptions under BIS as opposed to the USML under State Department. You can see that by the nature of the products,” said Julie Gibbs, a director at BPE Global. “Licenses for defense-originated products are required 95 percent of the time. BIS dual use items, because they’re everyday items, are the opposite, about five percent of shipments.” However, there are fewer opportunities to use license exceptions for the “600 series” items that were transferred from the USML to the CCL, relative to the rest of the Commerce Control List, said Gibbs.

The transferred items largely encompass aircraft and gas turbine engines, and related parts, components, software, and technology. Those items will now fall under a new “600 series” ECCN. The following license exceptions are immediately available for the “600 series” transferred items, according to Joiner Burton International Trade Law:

• LVS (shipments of limited value)

• TMP (temporary imports, exports, and re-exports)

• RPL (servicing and replacement of parts and equipment)

• TSU (technology and software unrestricted)

• GOV (governments, international organizations, international inspections under the Chemical Weapons Convention, and the international space station)

• STA (strategic trade authorization) is available for 600 series items.

These exceptions, however, are not available or 600 series items destined for arms embargoed countries, said the law firm.

The Bureau of Industry and Security (BIS) is now processing license applications at full capacity, said a BIS news release and a media official. Exporters of products that now qualify under “600 series” status are still able to use existing licenses, however, according to Jason Dickstein, President of the Washington Aviation Group, specializing in regulatory compliance. “If you had a USML license for something that switches over to the CCL, it’s actually grandfathered because of the chaos that would be caused by the requirement to get across-the-board new licenses,” said Dickstein. “The decision was made to allow those licenses to continue through their expiration.”

The aircraft and gas turbine engine products shifted from the U.S. Munitions List to the Commerce Control List (CCL) on Oct. 15 represent the largest volume of U.S. export licenses, the highest percentage of licensed exports from 43 states, and licensed shipments of almost $21 billion a year, the White House said in a statement. The products also constituted 75 percent of USML export licenses approved solely for parts and components, said the White House on Oct. 15 (see 13101618).