There has been a lot of discussion lately about the implications the President’s Export Control Reform initiative will have on businesses, and tomorrow, October 15th, the plan will go into effect. It is important to understand the implications this Initiative will have on your company and to effectively communicate the expected change to your employees, stakeholders and customers.
The main objective of the Reform is to rebuild the nation’s two main export control lists: the Department of State’s U.S. Munitions List (USML) and the Department of Commerce’s Commerce Control List (CCL), which controls dual-use items that may be useful for both commercial and military.
By law, each item on the USML is controlled equally and requires an individual license. This technicality has created barriers on exportation, which in turn has caused delays in providing equipment to Allies and partners overseas. The rebuilding of the export lists will allow less sensitive items to be moved from the USML to new categories referred to as the “600 Series” on the CCL. This will allow for more efficiency and flexibility in exportation.
Specifically, the initiative outlines a few new rules considering the licensing of export items controlled within Category VIII (Aircraft and Related Articles) and Category XIX (Gas Turbine Engines) of the International Traffic and Arms Regulations (ITAR). Such items are now under the Export Administration Regulations’ (EAR) Export Control Classification Numbers 9A610 and 9A619.
License exceptions can be used for many of the items in the new 600 Series categories. Without the need for export licenses or other approvals, there will likely be an increase in international cooperation between subsidiaries of U.S. companies. The Control Reform will certainly be an adjustment for all parties involved, and will have many implications to you as a business owner, supply chain manager, OEM, etc. The reform goes into effect tomorrow, October 15th, and communication will be key in the success of your company’s transition to adhering to the Reform’s changes.
A Few Steps to a Smooth Transition:
1. Provide Thoughtful Consideration to What This Means for Exporting Products
2. Establish Necessary Processes and Procedures
3. Control Expectations – This does not mean that items will not have to be licensed (unless they fall under a licensing exception); this just means that they will be licensed differently.
4. Communicate to Customers and Suppliers What This Means for Them
5. Adjust Compliance Programs
Preparedness is imperative to ensure that the change spreads seamlessly throughout your company to your influences, suppliers and end-users. It is not too late to start communicating!
