Archive for the ‘Export Reform’ Category



Arms Treaty Foe Cites Export Reform As Reason for Opposition

Posted by at 1:26 pm on April 23, 2013
Category: Arms ExportExport Reform

Baker Spring (Fair Use)
ABOVE:Baker Spring

I don’t know who Baker Spring is, other than some flak for a Washington think tank, but he has, for some reason, decided to join Iran, North Korea and Syria in opposing the U.N. Arms Trade Treaty. According to Baker, the treaty will interfere with the export control reform process:

There are many reasons to dislike the ATT, but one of them … it [sic] that it urges signatories to regulate a wide range of arms exports just as the U.S. reform process is trying to build higher walls around fewer items.

For instance, the new rules on aircraft and turbine engines transfer these items from the strict and inflexible Munitions List, maintained by the Department of State, to the more flexible Commodity Control List, maintained by the Department of Commerce. …

The review process has been meticulous, involving the Departments of Defense, State, and Commerce; the White House; Capitol Hill; industry; allied governments; think tanks; and other interested parties. The specialists in the Administration who have worked in this complex area of federal regulation deserve to be commended for achieving this major milestone in the reform effort. Their work should not be frustrated by uncertainties created by the ATT.

Let’s leave aside for the moment the silliness of this argument given that the White House, which is spearheading export reform, also supports the Arms Trade Treaty. The United States did, after all vote for it. (As did everyone else in the world but North Korea, Syria, and Iran.) If the White House thought that the treaty would gum up export control reform, it’s doubtful it would have supported the treaty.

The bigger problem with Baker Spring’s argument is that he apparently has not read the treaty that he is criticizing or, at least, he does not understand it. The treaty simply requires adherents to impose export controls on the items listed in Article 2, which the United States already does and which it will continue to do whether the item is on the USML or the CCL.

Baker Spring also has not read, or, at least he does not understand, the export control reform proposals that were just adopted. Certainly if he did, he wouldn’t have come up with this whopper quoted above:

For instance, the new rules on aircraft and turbine engines transfer these items from the strict and inflexible Munitions List … to the more flexible Commodity Control List …

Er, no, aircraft and turbine engines are not being transferred to the CCL. Some are and some aren’t. Article 2 of the ATT covers “combat aircraft” and it is safe to say that all those aircraft remain on the USML. As to turbine engines, they are not even covered by the Arms Trade Treaty at all. Article 4 covers “parts and components” such as aircraft engines but only “where the export is in a form that provides the capability to assemble the conventional arms covered under Article 2,” in other words, only when the entire aircraft or other article is exported in the form of disassembled parts and components. An export of a turbine engine by itself obviously fails to meet that criterion.

Somehow I suspect that Baker Spring’s objections to the Arms Trade Treaty are the result of considerations other than the flimsy excuses he proffered in the article at hand.

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Copyright © 2013 Clif Burns. All Rights Reserved.
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Export Control Final Transition Plan Announced

Posted by at 11:25 pm on April 16, 2013
Category: DDTCExport Reform

CH-53Ds landingToday DDTC released its final transition plan for the first wave of export control reform under which certain items in Category VIII of the USML are transitioned to a new “600 series” of controls in Category 9 of the CCL. Of course, a major concern of exporters has been where to file licenses for the transitioned items between the date of the publication of the rule and its effective date.

This concern was exacerbated by some confusing language in the proposed transition plan released last summer. That was this language:

License applications [for transitioned items] received by DDTC within the 45 days following the final rule’s publication, but before the rule becomes effective, will be adjudicated only when the applicant provides a written statement certifying that the export or temporary import will be completed within 45 days after the effective date of the final rule.

The concern here, of course, was what would happen to licenses for these items that were filed after the 45 days from publication but before the effective date of the rule when, presumably, BIS would be able to issue licenses for the transitioned items. When informal information subsequently suggested that the period between publication and effective date would be 180 days, the concern was magnified: this would create a licensing limbo of 135 days when DDTC would not accept or grant applications and BIS would not grant them.

Under the final version of the transition plan, this problem goes away:

License applications will be accepted by both DDTC and BIS for items moving from the USML to the CCL, but BIS will not issue approved licenses for such items until on or after the applicable effective date.

Licenses for transitioned items granted by DDTC during the 180-day transition period will be valid for two-years unless an earlier expiration date is specified in the license.

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How Many Lawyers Does It Take to Export a Lug Nut?*

Posted by at 6:12 pm on March 12, 2013
Category: Arms ExportExport Reform

U.S. Air Force Photo (Public Domain)Michèle Flournoy, a former undersecretary of defense, writes today in the Wall Street Journal in favor of export law reform in an op-ed piece (subscription required) titled “Want to Export an F-16 Fighter Jet?” Probably a better title would have been “Want to Export F-16 Fighter Jet Parts?” since that’s what her whole piece is about.

In her op-ed, she says

Over the past six decades, Washington has developed a system that applies one-size-fits-all bureaucratic requirements to defense exports. The system is plagued by maddeningly lethargic timetables for approving technology transfers. It handles airplane windshield wipers essentially the same way it handles air-to-air missiles. It forces American companies and foreign partner militaries to await separate approvals for every latch, wire and lug nut on an F-16 fighter jet—even though the U.S. government has already approved the export of the whole aircraft.

Although I see what Ms. Flournoy is trying to get at, she hasn’t said it very accurately at all. For starters, not every latch, wire and lug nut on an F-16 requires separate export approvals when shipped separately from an F-16. Parts that are not “specifically designed and modified” for military or civil aircraft don’t require separate export approval. If an item is usable on both civil and military aircraft but is standard and integral equipment covered by a civilian aircraft type certificate it is controlled by Department of Commerce regulations, which means it will not require a license for exports to most destinations. And not to be too picky but Ms. Flournoy’s point also ignores the exemption in section 123.16(b)(2) of the ITAR for exports of low value parts to a previously approved end user.

This is not to say that there is not room for reform in how the U.S. government handles exports of aircraft parts; it’s only to say that not every latch, wire and lug nut requires a license right now.

*One, but the lug nut really has to want to be exported.

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Why Mom and Pop Don’t Export

Posted by at 5:50 pm on January 10, 2013
Category: Export Reform

ExportsCommon wisdom is that for the United States to increase its exports, it needs to increase the number of exporters. And since most current exports are made by the largest companies, the Department of Commerce has argued that we need to increase exports by small and medium companies.

A recent study presented at the World Bank, and reported yesterday by the Washington Post, suggests that this strategy may be doomed to failure. According to the study,

Big companies grow bigger and export because they are already successful; they don’t become successful and large because they export.

Of course, seasoned exporters probably snicker at the concept of encouraging Mom and Pop companies to start exporting given the complexity of export regulations, the overwhelming costs of compliance, and the massive penalties imposed by State, Commerce and Treasury (not to mention criminal prosecutions) on companies that don’t get every last detail right. Part of the reason why exporting is principally a pastime of the big boys is that they are the only ones who can afford to pay the costs and run the risks involved. For those who can’t, better (and safer) to sell your widgets to people in Muncie and Peoria.

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Proposed USML Category X Reforms Praised by Jason Voorhees

Posted by at 6:28 pm on June 14, 2012
Category: BISDDTCExport Reform

MacheteThe Bureau of Industry and Security (“BIS”) and the Directorate of Defense Trade Controls (“DDTC”) have announced proposed reforms to Category X of the United States Munitions List (“USML”). Category X covers protective personnel equipment and shelters.

For those wondering about the title of the post, one aspect of the reforms has nothing to do with Category X. The proposed rules published by BIS indicate that machetes, favorite of many rebel forces and villains in teen slasher flicks, are to be classified as EAR99. Machetes are currently controlled under ECCN 0A988 and require licenses for exports to Iraq, North Korea and Rwanda. One of the advantages of taking machetes off of the Commerce Control List is that it would eliminate the need to figure out the difference between what is considered a machete controlled by the rule as opposed to a really big knife which, presumably, is not.

The thrust of the proposed reforms deals with hard and soft body armor. Currently body armor is controlled based on the level of protection as measured by the NIJ Standard, with types IIIA and below subject to BIS control under ECCN 1A005 and everything above that (Types III and IV) are on the USML in Category X. (A frequent source of confusion is the NIJ standard for Type IIIA is, somewhat counter-intuitively, below, and provides less protection than, Type III). Current controls do not depend upon whether the body armor was specifically designed for military use or not.

Under the proposed rules, soft armor that meets Type III standards or that is “manufactured to military standards” would be moved to the new ECCN 1A613. Hard armor plates meeting Type III standards would also be moved to the new ECCN 1A613. All Type IV armor would remain in Category X of the USML. The new ECCN 1A613 would be subject to NS Column 1 controls which are stricter than the NS Column 2 controls applicable to the body armor covered by ECCN 1A005. Items controlled under NS Column 1 require a license to all destinations other than Canada. The proposed rule would mitigate this restriction somewhat by making items controlled by ECCN 1A613 eligible for license exception STA which permits unlicensed exports, if certain other conditions are met, to a number of countries including most of Europe.

Probably the most significant of the proposed changes is that body armor, other than Type IV armor still on the USML, may now be exported under license exceptions TMP and BAG. This means that body armor may be exported, in checked luggage or separately, for personal use without the requirement for a license. There has been considerable public criticism of the current regime which makes it difficult, if not impossible, for U.S. employees travelling to dangerous destinations to carry protective gear with them.

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Copyright © 2012 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)