by the State Department's Directorate of Defense Trade Controls (DDTC), strictly control items listed on the USML. The USML generally includes military and space items; certain related parts, components, accessories, attachments and technical data, as well as defense services. All U.S. manufacturers (even those that do not export) as well as exporters and brokers of items listed on the USML must register with the State Department. Virtually all exports of items appearing on the USML require export licenses. The EAR regulations are administered by the Department of Commerce's Bureau of Industry and Security (BIS) and provide for controls on the items listed on the CCL. Before the recent reforms, the CCL generally covered "dual-use" products (i.e., products and related materials, technology, and software that have both commercial and potential military applications). A basket category under the CCL EAR99 covers everything not specified or controlled by another agency, including purely commercial items. Items listed on the CCL are subject to differing export licensing controls depending upon their classification, destination countries, end-users and end-uses. The EAR also provides license exceptions, which are not available under the ITAR. The new reforms are intended to limit the items on the USML to those that are inherently military or those that provide a "critical military or intelligence advantage" to the United States and are almost exclusively available from the U.S. Other items that are "specially designed" for military applications but do not continue to warrant the strict ITAR controls imposed on the USML are being moved to the CCL and subject to the less stringent, but nonetheless complicated, controls of the EAR. The items moved from the USML to the CCL will appear in a new "600 series" of the CCL, where many of them will now be eligible for exceptions to the export license requirements. In many instances, license requirements will be relaxed under the Reform Initiative, which may present opportunities for manufacturers and exporters. However, codes, requirements and exceptions. For example, anyone seeking to export an item under the new "600 series" of the CCL will have to determine the proper classification of the item, the applicable controls and any applicable license exceptions based on value, use or end users. A thorough fact-specific analysis will be required for every relevant product, and BIS has cautioned that reliance on prior determinations may be improper. The first wave of reforms took effect on October 15, 2013 and involved: equipment and designed," which will be used in classifying items under the USML and CCL. "brokering" took effect, which should be of particular interest to lawyers and others facilitating export transactions. reforms will take effect involving: expected in 2014 in areas such as: and materials. encountering problems in complying with the revised regulations include: components, accessories, attachments and software for the items involved in the reforms; implemented robust export compliance programs; and agency determinations regarding which controls are applicable to similar products. Violations violation can result in civil penalties of up to $500,000 and criminal fines of up to $1 million and/or imprisonment for up to 20 years, and an EAR violation can result in civil penalties of up to $250,000 or twice the value of the transaction, and criminal fines of up to $1 million and/or imprisonment for up to 20 years. Even unintentional violations can result in denial of export privileges, exclusion from practice and/or seizure and forfeiture of goods. companies and individuals responsible for exporting understand and comply with the changing export control rules. This requires a close examination of the new rules and a thorough analysis of the revised control lists for the proper classification of each and every product produced and/or exported. By carefully ensuring that everything is right before exporting, businesses and individuals can avoid major penalties. tions (Jan. 17, 2013). ergy and the Nuclear Regulatory Commission administer nuclear export controls, and the ATF administers controls regarding permanent imports of items listed on the U.S. Munitions Import List. Reg. 22,660 (Dep't Commerce Apr. 16, 2013) (final rule); Amendment to the International Traffic in Arms Regula- tions: Initial Implementation of Export Control Reform, 73 Fed. Reg. 22,740 (Dep't State Apr. 16, 2013) (final rule). Activities, and Related Provisions, 73 Fed. Reg. 52,680, 52,690 (Dep't State Aug. 26, 2013) (interim final rule). Oceanographic Equipment; Related Items; and Auxiliary and Miscellaneous Items That the President Determines No Longer Warrant Control Under the United States Munitions List, 73 Fed. Reg. 40,892 (Dep't Commerce July 8, 2013) (final rule); Amendment to the International Traffic in Arms Regulations: Continued Implementation of Export Control Reform, 73 Fed. Reg. 40,992 (Dep't State July 8, 2013) (final rule). |