The US Department of State, Directorate of Defense Trade Controls (DDTC), has requested public comment on its proposed implementation plan for defense articles and services that will transition from the jurisdiction of the Department of State to the Department of Commerce. The Department of State will accept comments until August 6, 2012.
The proposed implementation plan is part of the Administration’s plan to eventually combine the United States Munitions List (USML) and the Commerce Control List (CCL) into a single control list. To avoid imposing an undue burden on the defense industry while ensuring that everything that should be licensed remains so, the DDTC has developed a phased implementation plan designed to mitigate the impact of the transition on US license holders.
Following are the highlights of DDTC’s proposed implementation plan for the transition.
Regulatory Responsibilities – Each item previously subject to the ITAR that is added to the CCL will be subject to the EAR on the effective date of the final rule. The Department of Commerce will exercise regulatory oversight for the purposes of licensing and enforcement of exports where no Department of State authorization is being used for items transitioning to the CCL, effective on the transition date.
The Department of State will exercise regulatory oversight where its previously issued licenses and agreements are still in use. License holders may apply for authorizations for export of the newly transitioned CCL items from the Department of Commerce rather than continuing to use previously issued Department of State authorizations. In order to obtain a new license from the Department of Commerce, previously issued Department of State licenses must be returned.
Existing DDTC Authorizations – DDTC licenses for items transitioning to the CCL issued prior to publication of the final rule will remain valid until expired, returned, an amendment is required, or for two years from the effective date, whichever occurs first. License applications for items transitioning to the CCL received prior to publication of the final rule will be adjudicated until the effective date of the rule, unless the applicant requests that the application be returned without action. Applications received within 45 days of publication of the final rule, but before it becomes effective, will be adjudicated only when a written statement certifying that the export or temporary import will be completed within 45 days after the final rule becomes effective is provided. Similarly, amendment requests received within 45 days of final publication, but before the final rule becomes effective, will be adjudicated only when the applicant certifies that the export or temporary import will be completed within 45 days after the effective date of the final rule.
Technical assistance agreements, manufacturing license agreements, and warehouse and distribution agreements approved prior to the publication of the final rule will remain valid until expired, unless they require an amendment, or for a period of two years from the effective date of the transition, whichever occurs first. Any agreement in which all items are transferring to the CCL must be terminated, and the applicant must seek new authorization from the Department of Commerce. Commodity jurisdiction determinations for items transitioning to the CCL will be invalid after the transition date.
DDTC Registration – Manufacturers, exporters, and brokers are required to register with the Department of State if their activities involve USML defense articles or services. Registrants are required to notify DDTC when they are no longer in the business of manufacturing, exporting, or brokering USML defense articles or services. Under the proposed implantation plan, exporters that determine all of their activities involve articles or services that will transition from the USML to the CCL, and are therefore no longer required to register, must notify DDTC per instructions provided on the DDTC website. Registrants must maintain registration until the effective date of the transition. Those who have registration renewal dates that occur after publication of the final rule but before its effective date may request to the have their expiration dates extended to the effective date of the transition and not be charged a registration fee.
Reexports and Retransfers – Following the effective date of the transition, foreign persons (i.e., end-users, foreign consignees and foreign intermediate consignees) who receive, via a Department of State authorization, an item that they are certain has transitioned to the CCL (e.g., confirmed in writing by manufacturer or supplier), should treat the item as such and submit requests for post-transition reexports or retransfers to the Department of Commerce, as may be required by the EAR. Foreign persons or US persons abroad that have USML items in their inventory as of the effective date of transition should review both the USML and the CCL to determine the proper jurisdiction. If doubt exists, the foreign person should contact the original exporter. If the item is clearly controlled by the Department of Commerce, any reexport or retransfer must comply with the requirements of the EAR.