Expect Proposed Rules Shifting USML Category I-III Goods to CCL in 2019, State Dept. Official Says
Proposed rules to shift goods to the Commerce Control List from the U.S. Munitions List categories that haven’t yet been covered by export control reform (ECR) likely won’t be issued until 2019 at the earliest, outgoing Deputy Assistant Secretary of State for Defense Trade Controls Brian Nilsson said Dec. 14, during a Practising Law Institute export controls conference. Part of the timing has to do with the Office of Management and Budget’s rejection of a State Department pitch to release an interim final rule instead of a proposed rule to cover USML categories I (Firearms, Close Assault Weapons and Combat Shotguns), II (Guns and Armament), and III (Ammunition/Ordnance), Nilsson said. State’s Defense Trade Advisory Group is working to get on a regular quarterly meeting schedule like the Commerce Department’s technical advisory committees, to help expedite the rule’s release, he said. Nilsson announced his retirement earlier this week, citing family matters as the reason for his departure.
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Existing policy is for proposed rules to take effect 180 days after publication in the Federal Register, but Nilsson expects State’s proposed rule to aim for quicker implementation, as it will ask commenters whether they will need the full 180-day period to comply with the charted changes, he said. The shift of USML Category I goods, especially, to the CCL is expected to substantially streamline State Directorate of Defense Trade Controls licensing, as those items make up about 32 percent of the agency’s export licenses, Nilsson said. Having too many goods on the USML hinders State from arriving at “tailored, simplified, understandable” definitions for defense goods, he said.
There are minimal safety concerns associated with shifting some military-designated goods into a civilian classification, in part, because that subset is less sensitive than other USML items, he said. “Those are things that I could buy at Walmart in Virginia,” Nilsson said. “They don’t provide the United States with any military intelligence advantage.”
Because ECR is a national security function, State is exempt from the mandates of a February executive order issued by President Donald Trump requiring the repeal of two regulations for every new one issued, but BIS is not exempt, and State is coordinating with that agency on a regulatory offset process for ECR rules, Nilsson said.
State and BIS intend another round of ECR-related shifts of goods in USML categories XI (Military Electronics) and XIII (Materials and Miscellaneous Articles), Nilsson said. The government’s lack of accounting for the rapid updates of 4G cellular networks into 5G is partly behind the planned USML Category XI transfers, he said. The government is also “getting close” to resolving outstanding issues, including “political,” associated with USML Category XIII, and State and BIS should put out proposed rules shifting goods of that category to the CCL, Nilsson said. Lockheed Martin International Trade Policy Director Mark Webber during the conference said ECR thus far has significantly reduced the amount of export paperwork the company has filed with the government, an “unforeseen” benefit.
In addition to the traditional ECR action of shifts of goods on the USML to the CCL, DDTC has drafted its first rule to start the second phase of ECR, which will entail a comprehensive relook at the International Traffic in Arms Regulations and a grouping of similar provisions together, Nilsson said. Nilsson initially announced the new phase in October (see 1710040037). That rule has moved beyond DDTC to State management for eventual submission to OMB for final approval, he said. After the initial rule, several proposed rules will ask for point-by-point public comments on how to streamline the ITAR, Nilsson said.