BIS Official Says House Bill Could "Cripple" Export Control Reform
Certain provisions of the House version of the National Defense Authorization Act for Fiscal Year 2013, passed on May 18, “could cripple and certainly would delay substantially the overall Export Control Reform initiative,” said Under Secretary of the Bureau of Industry and Security Eric Hirschhorn at a meeting of the President’s Export Council Subcommittee on Export Administration on June 4. Hirschhorn also said he hopes the first ECR rules will be finalized this summer or fall, and a member of the benchmarking subcommittee contemplated merging BIS’ license application system into a unified DTrade system for both BIS and State license applications.
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House Version of NDAA for 2013 Could “Cripple” Export Control Reform
The Department of Defense’s section 1248 report on satellite export controls led to a "good deal” of briefings to Congress on satellites that “went very well,” said Hirschhorn, evidenced by the inclusion of an amendment that would restore the President’s authority to determine appropriate export controls for satellites in the NDAA for FY 2013.
However, although Hirschhorn lauded the House’s adoption of the amendment restoring the President’s satellite export control authority, he said BIS is working with the Hill to try to ensure that the final version of that bill includes the satellite provision but not certain other provisions that could cripple or delay Export Control Reform. “The last thing we want to see,” said Hirschhorn, “is a situation where Congress gives with one hand and then immediately takes it away with the other by imposing conditions on transfer of satellite parts and satellite technology that are very difficult if impossible to meet.”
The most egregious provision is enumeration of all parts, Hirschhorn said, saying if one were to try to list all of the thousands of parts in a satellite it could take lifetimes.
A Senate bill introduced by Sen. Michael Bennet (D-CO), the Safeguarding U.S. Satellite Leadership and Security Act of 2012, is very close to what BIS wants for the final product, Hirschhorn said, but a bill that may be introduced by Sen. Richard Lugar (R-IN) is very much like or is “perhaps even worse” than what passed the House.
Two USML-CCL Proposals Imminent; "Specially Designed" & Transition Proposals, Wassenaar Rule Soon
In an update on the progress of Export Control Reform, Hirschhorn said the BIS-proposed rule to move military equipment currently in U.S. Munitions List Category X was sent to the Federal Register Friday, and a military training equipment proposed rule should be sent to the Register this week. The final rule implementing the December 2011 Wassenaar changes is still under Office of Management and Budget review, having been delayed by the volume of ECR-proposed rules that BIS has been sending to OMB, but has almost completed review, said Hirschhorn.
Over the next couple of weeks, two important new rules will be proposed, said Hirschhorn: the second proposed rule on the definition of specially designed, and the proposed transition rule. Hirschhorn said the transition rule is for companies who have items moving from USML to the Commerce Control List (CCL), and would, among other things, extend the license period from the current 2 years to 4 years, as is the case with State licenses (in response to comments that there were exceptions in the ITAR that were more generous than those under the EAR); prescribe what exporters should do with existing State licenses; and create grandfathering periods for current licenses and agreements.
BIS Hopes to Finalize First USML to CCL this Summer; Increased Resources due to Burden
Hirschhorn said BIS continues to move towards the first 38(f) congressional notifications to finalize the movement of categories from the USML to the CCL, and hopes to give the first notifications this summer or fall.
In response to concerns of BIS’ ability to handle the increased burden that will result from ECR, Hirschhorn said BIS has been assigned 24 new positions in export enforcement by the Department of Commerce, worth about $6 million per year.
Hirschhorn Says BIS and DoD are “Close” on Firearms USML to CCL Proposal
Finally, in response to concerns generated by press reports that BIS and the Department of Defense disagreed on how to move firearms from the USML to the CCL, Hirschhorn said that BIS and DoD are close. According to Hirschhorn, part of the problem is that firearms are subject to so many other domestic controls, but he is confident that BIS and DoD will resolve it in a way that works for both agencies.
BIS Contemplates Unified DTrade System for State & BIS Licenses
A member of the Benchmarking subcommittee contemplated a move from SNAP-R to a unified DTrade system for BIS and State licenses in an update on rationalization of licensing information technology systems. BIS said the IT system could be implemented by Executive Order, and BIS could use a two-part solution that begins with a short-term fix but is eventually replaced by a long-term, comprehensive solution. BIS said any integration would be implemented in such a way that BIS license applications would not be subject to State’s $250 license fee.
In response to concerns that DTrade is often difficult to use for small companies, BIS floated the idea that SNAP-R could be used simultaneously, with larger companies using DTrade for both State and BIS licenses, while smaller and medium-sized companies that do not require State licenses and therefore do not use DTrade are able to continue using SNAP-R.