This week marked the first major shift in the U.S. export control system under the Export Control Reform Initiative, launched by President Obama more than four years ago. Manufacturers have long demanded a new approach to export controls, aimed at today’s threats rather than yesterday’s Cold War, and the NAM is pleased to see this important first step toward a modernized U.S. export control system. The changes now underway will help strengthen the industrial base, enhance national security and improve economic competitiveness.
The changes to the U.S. Munitions List (USML) and the Commerce Control List (CCL) that went into effect on Tuesday pertain primarily to controls on aircraft and gas turbine engines. According to the White House, these two control categories together account for the largest volume of U.S. export licenses and represent the highest percentage of licensed exports from 43 states, with licensed shipments of almost $21 billion a year. These two categories also account for the largest amount (75 percent) of USML export licenses approved solely for parts and components.
In addition to stringent licensing requirements, manufacturers and exporters of items controlled on the USML are subject to annual registration requirements and fees. For the less sensitive items that have moved to the CCL, such requirements are eliminated. Additionally, many of the items moved to the CCL are now eligible for export without specific licenses if intended for the ultimate end-use by the governments of 36 U.S. allies and partners (these exports, though, carry additional compliance and reporting requirements).
In 2009, President Obama announced an Export Control Reform Initiative that was intended to fundamentally reform the U.S. export control system and rationalize U.S. export laws. As part of this process, the State Department is transferring some less sensitive items from the USML to a new section of the CCL maintained by the Commerce Department, and the agencies are adopting a number of additional regulatory changes. The final State and Commerce rules for a new definition of “Specially Designed,” as well as revisions to USML Categories VIII (Aircraft), XIX (Gas Turbine Engines), XVII (Classified Articles and Technical Data), and XXI (Miscellaneous Articles) were published in April. These went into effect on October 15. The Commerce Department has also produced a series of tools to help exporters, as well as new tool that will guide exporters in the use of the license exceptions. The NAM provided extensive input on the proposals and on the framework of the transition period, and we will continue to work with the Administration to ensure a smooth transition over the next few months.
Additional USML and CCL changes will be implemented throughout the next year, as the United States adopts a new export control system designed to address the national security and economic competitiveness challenges of the 21st century. You can learn more about the full scope of the President’s Export Control Reform Initiative, and other export-related issues, at www.export.gov/ecr/.