Kevin Wolf, Undersecretary of BIS, stressed the following:
Export Control Reform – we are at the end of the beginning. It will be completed in 3 phases. Last, Phase III, when it is completed (Export Control Nirvana) will look like:
· Single licensing agency
· Single IT system
· Single enforcement agency
· Single set of regulations.
Phase II – List review
All agencies are screening against a set of criteria to have a 3-tiered system:
· Tier 1: items only available from US and have a military advantage. These would have world-wide licensing requirements.
· Tier 2: items that have substantial military or intelligence advantage will require a license outside of NATO and close allies.
· Tier 3: items that are more widely available. They will eventually drop off when availability is high enough.
Phase I - US Munitions List will become a positive list. Now “specially designed” catches too many components. Components should not be controlled at the same level as the end item. The Munitions List will be pared down.
Please review Federal Register Dec 10th notice (below) and provide comments by Feb 8th.
There will be a new license-free zone under license exception Strategic Trade Authorization (STA) that will permit export to NATO and members of at least 3 of the license regimes. This exception is also permitted for deemed exports. This will eliminate approximately 24,000 licenses where there have been only 11 denials, 5 for being on the Denied Parties List, so they should have been caught anyway under other prohibitions.
The agencies are also working on a single license form. The electronic submission will be outsourced. Definitions will be harmonized from all the regulations: fundamental research, publicly available, technology and specially designed.
Read the following for more detail/background on the President’s Export Control Reform Initiative:
In August 2009, the President directed a broad-based interagency review of the U.S. export control system, with the goal of strengthening national security and the competitiveness of key U.S. manufacturing and technology sectors by focusing on current threats, as well as adapting to the changing economic and technological landscape. This review determined that the current export control system is overly complicated, contains too many redundancies, and, in trying to protect too much, diminishes our ability to focus our efforts on the most critical national security priorities. (Read the White House Press Release)
As a result, the Administration has initiated an Export Control Reform Initiative (ECR Initiative), which will fundamentally reform the U.S. export control system. The ECR Initiative, which is not related to the President’s National Export Initiative, is designed to enhance U.S. national security and strengthen the United States’ ability to counter threats such as the proliferation of weapons of mass destruction.
The Administration is implementing the reform in three phases. The first two phases build toward the third phase of a single control list, licensing agency, information technology system, and enforcement coordination agency. Under this approach, new “criteria” for determining what items need to be controlled based on a three-tier construct and a coordinated set of policies for determining when an export license is required will be implemented. The control list criteria will be based on transparent rules, which will reduce the uncertainty faced by our allies, U.S. industry, and its foreign partners, and will allow the government to erect higher walls around the most sensitive items in order to enhance national security.
Progress Report
Control Lists. On December 9, 2010, the U.S. Departments of State and Commerce issued proposed regulations to reform their control lists, the U.S. Munitions List (USML) and Commerce Control List (CCL), respectively, in accordance with the ECR Initiative. Both Departments also solicited public comments on how to make their control lists more “positive” (see footnote below) and how to tier the lists taking into consideration the military or intelligence significance of an item and foreign availability information. The Federal Register notices issued are as follows:
Department of Commerce Advanced Notice of Proposed Rulemaking soliciting comments on how the CCL can be more positive and tiered. Department of Commerce Proposed Rule establishing License Exception Strategic Trade Authorization that implements revised dual-use licensing policies to certain destinations.In addition, Departments have consolidated the export screening lists administered by the Departments of State, Commerce and the Treasury into a common electronic format to facilitate the screening of parties to export transactions to ensure compliance with U.S. export control and sanctions regulations.
Next Steps
The Administration will continue to issue additional ECR-related actions beginning in early 2011 with proposed rewrites of other USML categories, publication of proposed harmonized definitions and a proposed common form that exporters can use to apply for export licenses from the Departments of State, Commerce and the Treasury.
Footnote: Describing items using objective criteria, such as qualities to be measured (e.g., accuracy, speed, and wavelength), units of measure (e.g., hertz, horsepower, and microns), or other precise descriptions, rather than broad, open-ended, subjective, catch-all, or design intent-based criteria.
