Export Regulations Are Changing! Is Your Export License Still Valid?

We have previously written on this blog about the upcoming changes to the State Department’s International Traffic in Arms Regulations (ITAR) and Bureau of Industry and Security’s Export Administration Regulations (EAR).  The transition of many United States Munitions List (USML) items (controlled by the State Department’s DDTC) to the Commerce Control List (CCL) 600 Series ECCNs (controlled by the Commerce Department’s BIS) is intended to ease export compliance and allow the State Department to better focus its resources on those items with the greatest national security implications.

The amendments to the regulations concerning the export of these certain defense-related articles articles go into effect on October 15, as a significant number of articles formerly found on the USML transition to the CCL, and the USML itself transitions to a positive list of controlled articles.

With the pending transition of articles formerly exported under a DDTC permanent export license (DSP-5) to BIS control, we have had a number of members ask about the status of DDTC-issued export licenses after the new rules become final on October 15.  Export licenses issued by the DDTC are typically valid for four years, so it will be important for distributors with DDTC-issued export licenses to know for how long, and under what circumstances, those licenses authorizing export of new 600 Series ECCNs remain valid.  (Previously issued BIS export licenses will not be affected by the change.)

Because the ITAR is generally more restrictive than the EAR, the BIS has largely deferred to the transition plan established by the DDTC in its final rule.  The DDTC transition plan contemplates the two possible scenarios in which articles covered by a DDTC export license transition to the 600 Series ECCNs such that they be regulated by the EAR in the future.

The first scenario considers an export license in which ALL articles that are included on the issued export license transition to the CCL. Such a license will remain valid for two years from the effective date of the final rule (October 15, 2013), which means October 15, 2015, or until the license expires, whichever occurs first.  Until that time, there is no need to apply for a new export license and the distributor may rely on the export license as usual.

The second scenario considers an export license in which only some of the articles included on the license transition to the CCL, but others remain on the USML and subject to the ITAR.  In this case, the export license will remain valid until it expires, whether the expiration date is prior to October 15, 2015 or not.  This means that those distributors who find a DSP-5 now lists a mix of USML and CCL items may continue exporting pursuant to that license beyond the October 15, 2015 cutoff date, assuming the license has not previously expired.

Of course, in both cases a license may still be voluntarily returned to the DDTC or otherwise suspended, revoked, or terminated.

Ultimately, in the short term, those distributors exporting pursuant to a DDTC export license issued prior to October 15, 2013 may continue to export under the terms of their validly issued export licenses.  The key factor is that if it is determined that all articles authorized on the license have transitioned to the CCL, then the distributor may only continue to export under the license until October 15, 2015 at the latest.  After October 15, 2015, distributors wishing to continue to export those articles must apply to BIS for the appropriate export licenses, or ship under a valid exception.  Export licenses that continue to authorize at least one article still on the USML will be valid until expiration, at which point application must be made to BIS for future export licenses.

Export issues can often be confusing, even without the challenges of new amendments to the governing regulations.  We have significant experience in handling export compliance matters, so if you have any questions regarding the October 15 transition, or regarding export compliance in general, feel free to call our office with your export concerns.

3 Responses to Export Regulations Are Changing! Is Your Export License Still Valid?

  1. Pingback: The New “600 Series” ECCNs Effective Today! | ASA Web Log

  2. Pingback: Are You Supporting Defense Aviation Projects? Your Parts May No Longer Be ITAR-Controlled! | MARPA

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