President Details First Steps Towards Implementation of Export Control Reform
The White House has posted remarks that the President will deliver via videotape to the Bureau of Industry and Security’s Annual Export Controls Update Conference that began on August 31, 2010. In addition, the White House has posted a press release regarding the Administration’s export control reform efforts. Both the remarks and press release provide additional details of the Administration’s first steps toward implementation of export control reform.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
(See ITT’s Online Archives or 04/21/10 news, 10042125, for BP summary of Defense Secretary Gate’s announcement of the Administration’s three-phased plan to reform U.S. export controls.
See ITT’s Online Archives or 07/02/10 news, 10070215, for BP summary of National Security Advisor General Jones’ remarks containing additional details of the Administration's export control reform plans.)
Single, Tiered, Positive Export Control List
Going forward, the U.S. will have a tiered, positive export control list -- one which will allow the U.S. to build higher walls around the export of its most sensitive items while allowing the export of less critical ones under less restrictive conditions. In addition, there will be a single set of licensing policies that will apply to each tier of control.
USML and CCL tiers. The U.S. Munitions List and Commerce Control List will be split into three tiers to distinguish the types of items that should be subject to stricter or more permissive levels of control for different destinations, end-uses, and end-users as follows:
High. Items in the highest tier will be those that provide a critical military or intelligence advantage to the U.S. and are available almost exclusively from the U.S., or items that are a weapon of mass destruction;
Middle. Items in the middle tier will be those that provide a substantial military or intelligence advantage to the U.S. and are available almost exclusively from U.S. multilateral partners and Allies; and
Low. Items in the lowest tier will be those that provide a significant military or intelligence advantage but are available more broadly.
According to the White House, the above structure will permit the government to adjust controls in a timely manner over a product’s life cycle in order to keep lists targeted and up-to-date based on the maturity and sensitivity of an item.
Corresponding licensing policies. Once a controlled item is placed into a tier, a corresponding licensing policy will be assigned to it to focus agency reviews on the most sensitive items:
A license will generally be required for items in the highest tier to all destinations. Many of the items in the second tier will be authorized for export to multilateral partners and Allies under license exemptions or general authorizations. For less sensitive items, a license will not be required more broadly.
For items authorized to be exported without licenses, there will be new controls imposed on the re-export of those items to prevent their diversion to unauthorized destinations.
At the same time, the U.S. Government will continue its sanctions programs directed toward specific countries, such as Iran and Cuba.
Overhaul of Category VII completed. Technical experts across the government have completed the overhaul of USML Category VII (Tanks and Military Vehicles) and restructured it into a positive, tiered list. The corresponding entries on the Commerce Control List have also been overhauled.
The Administration’s preliminary analysis is that about 74% of the 12,000 items the U.S. licensed last year in USML Category VII will either be moved to the CCL or will be decontrolled altogether. The preliminary estimate is that about 32% of the total may be decontrolled altogether. Of the 26% of items that remain on the USML, none were found to be in the highest tier of control, about 18% are in the middle tier, and the remaining 8% in the lowest tier.
(See ITT”s Online Archives or 08/13/10 and 08/26/10 news, 10081320, and 10082611, for previous BP summaries discussing efforts to restructure the USML and CCL.)
Enforcement to Include More End-Use Assurance, On-Site Visits
According to the White House, agencies will focus and strengthen U.S. enforcement efforts and there will be additional end-use assurances against diversion from foreign consignees, increased outreach and on-site visits domestically and abroad, and enhanced compliance and enforcement.
Coordination Center for Enforcement
The President also plans to sign an Executive Order that creates an Export Enforcement Coordination Center to coordinate and strengthen U.S. enforcement efforts -- and eliminate gaps and duplication -- across all relevant departments and agencies.
2010 Proposals Expected on Control Lists, Licensing Policies
The Administration’s goal is to begin issuing proposed revisions to the control lists and licensing policies later in 2010.
Administration to Continue to Work with Congress and Trade
As these steps are implemented, the Administration says it will continue to work with Congress and the export control community, including on the necessary authorities to consolidate these activities under a single licensing agency and single export enforcement coordination agency.
(The Administration has previously announced that the completion of the transition to the new U.S. export control system by implement a single licensing agency, consolidate certain enforcement activities into a primary enforcement coordination agency, and implement a single IT system, will require legislation to implement.)
President’s remarks to BIS conference available here. White House press release on export control reform available here.