State and BIS Propose Rules to Revise USML Cat VI & CCL, "Tiering" on Hold, Etc.

Written comments on both proposed rules are due by February 6, 2012.

State Dept Proposed Rule

Proposed Rules Do Not Reflect Tiering

In December 2010 advanced notices of proposed rulemaking, the State Department and the Bureau of Industry and Security described the Administration’s plan to make the U.S. Munitions List and the Commodity Control List positive, tiered, and aligned so that eventually they can be combined into a single control list. While these remain the Administration’s ultimate Export Control Reform (ECR) objectives, their concurrent implementation would be problematic in the near term. As a result, the Administration has decided, as an interim step, to propose and implement revisions to both the USML and the CCL that are more positive, but not yet tiered.

(See ITT's Online Archives 10121021 and 10120921 for summary of State and BIS ANPRs, respectively, on the Administration's plan to make the USML and CCL positive, tiered, and aligned, and to establish a "bright line" between the two.)

Proposed Revision of USML Category VI

The State Department's proposed rule would revise USML Category VI, covering surface vessels of war and special naval equipment, to establish a clear bright line between the USML and the CCL for the control of these articles. The proposed revision would narrow the types of surface vessels of war and special naval equipment controlled on the USML to only those that warrant control under the stringent requirements of the Arms Export Control Act (AECA).

Proposed changes include:

Harbor devices and submarines. Removing harbor entrance detection devices (controlled under USML Category VI(d)) from the USML, and including submarines in USML Category XX (instead of Category VI).

Definition of war vessels, naval equipment. This proposed rule would also revise 22 CFR 121.15 to more clearly define ‘‘surface vessels of war and special naval equipment’’ for purposes of the revised USML Category VI.

Positive list of generic parts. The most significant aspect of this more positive, but not yet tiered, proposed revision to this USML category is that it does not contain controls on all generic parts, components, accessories, and attachments that are "specifically designed" or modified for a defense article, regardless of their significance to maintaining a military advantage for the U.S. Rather, it contains a positive list of specific types of parts, components, accessories, and attachments that continue to warrant control on the USML. All other parts, components, accessories, and attachments will become subject to the new 600 series controls in Category 8 of the CCL as described in the BIS companion proposed rule.

Revisions to jurisdictional status. Revising the jurisdictional status of certain militarily less significant end items that do not warrant USML control (but the primary impact of this proposed rule would be with respect to current USML controls on parts, components, accessories, and attachments that no longer warrant USML control).

Proposed Definition for "Specially Designed"

For the purposes of this proposed rule, the draft definition for “specially designed” in the State Department's December 2010 ANPR should be used. The draft definition provided at that time is as follows: “For the purposes of this Subchapter, the term “specially designed” means that the end-item, equipment, accessory, attachment, system, component, or part (see ITAR 121.8) has properties that (i) distinguish it for certain predetermined purposes, (ii) are directly related to the functioning of a defense article, and (iii) are used exclusively or predominantly in or with a defense article identified on the USML.”

(BIS subsequently published on July 15, 2011, for public comment, the Administration’s proposed definition of “specially designed” that would be common to the CCL and the USML. The public provided more than 40 comments on that proposed definition on or before the September 13 deadline for comments. The Departments of State, Commerce, and Defense are now reviewing those comments and related issues, and the Departments of State and Commerce plan to publish for public comment another proposed rule on a definition of “specially designed” that would be common to the USML and the CCL. See ITT's Online Archives 11071519 for summary of the July 2011 BIS proposed rule for new definitions for "specially designed" end items, parts, etc.; the proposed rule also covers an EAR control structure to transfer less significant items from the USML to the CCL, the transfer of an initial traunche of items from USML Category VII to the CCL, etc.)

BIS Proposed Rule

Five New 600 Series ECCNs Are Proposed

The BIS proposed rule would create five new "600 series" Export Control Classification Numbers (8A609, 8B609, 8C609, 8D609, and 8E609) in the CCL for surface vessels of war and related articles that the President determines no longer warrant control under USML Category VI.

(BIS also plans to publish a proposed rule describing how the new controls described in this and similar notices would be implemented, such as through the use of ‘‘grandfather’’ clauses and additional exceptions. The goal of such amendments would be to give exporters sufficient time to implement the final versions of such changes and to avoid, to the extent possible, situations where transactions would require licenses from both the State Department and the Commerce Department.)

State proposed rule (Public Notice 7736, FR Pub 12/23/11) available here. BIS proposed rule (D/N 111020643--1642--01, FR Pub 12/23/11) available here.