Export Control Reform
Level Set
MOMENTUM WEBINAR
JULY 8, 2014
Agenda
1.
ECR Background
2.
ECR Revisions
3.
Doing Business Under the ECR
4.
ECR and U.S. Exports
2
Export Control Reform
Background
ECR Background
Aug 2009 President Obama orders a broadbased review of export controls
Apr 2010
Defense Secretary Gates
announces fundamental reform of
export control system
Dec 2011
First proposed rules for revising
USML and CCL
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ECR Background
Oct 2013 First round of ECR revisions
goes into effect.
Jan 2014 Second round of ECR
revisions goes into effect.
Jul 2014
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Third round of ECR
revisions goes into effect.
Export Control Reform
Revisions
ECR Revisions – Generally
“High walls around a smaller yard”
 Make the USML a positive list
 Move many items from USML to CCL
 New definition of “Specially Designed”
common to USML and CCL
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ECR Revisions - Generally
ITAR Controls:
License required to all destinations
Former “catch-all”
items
EAR Controls:
More export opportunities
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Specially Designed – “Catch”
An item is specially designed if:
1. As a result of “development”
2. Has properties peculiarly responsible for
3. Achieving or exceeding performance
specifications
4. In the relevant CCL or USML paragraph.
A part, accessory, attachment, component or
software is specially designed if:
1. It is for use “in or with”
2. Items in the relevant CCL or USML paragraph.
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Specially Designed – “Release”
1. For any item: if listed in a paragraph
not containing “specially designed”
2. For any part: if a fastener (screw, nut,
rivet, pin, etc.)
Released from “specially designed”
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Specially Designed – “Release”
For parts, attachments, accessories, components, or software:
3.If the item has the same capabilities, function, and form as an item
in production not enumerated on CCL or USML
4.If the item was developed with knowledge it would be used in or
with items not enumerated on CCL or USML
5.If the item was developed as a general purpose commodity or
software
6.If the item was developed with knowledge it would be used with
EAR99 commodities
Released from “specially designed”
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ECR Revisions – To Date
USML Category
Effective Date
VIII - Aircraft and Related Articles
10/15/2013
XVII – Classified Articles, Technical Data and
Defense services
10/15/2013
XVIII – Gas Turbine Engines
10/15/2013
XXI – Articles, Technical Data and Defense
Services Otherwise Not Enumerated
10/15/2013
VI – Surface Vessels of War and Special Naval
Equipment
01/06/2014
VII – Ground Vehicles
01/06/2014
XIII – Materials and Miscellaneous Articles
01/06/2014
XX – Submersible Vessels and Related Articles
01/06/2014
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ECR Revisions – To Date
USML Category
Effective Date
IV – Launch Vehicles, Guided Missiles, Ballistic
Missiles, Rockets, Torpedoes, Bombs, and Mines
07/01/2014
V – Explosives and Energetic materials,
Propellants, Incendiary Agents, and Their
Constituents
07/01/2014
IX – Military Training Equipment
07/01/2014
X – Personal Protective Equipment
07/01/2014
XVI – Nuclear Weapons Related Articles
07/01/2014
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ECR Revisions – To Come
USML Category
Effective Date
XV – Spacecraft and Related Articles
11/10/2014
XI – Military Electronics
12/30/2014
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ECR: Cat XV Spacecraft
 Commercial communications
satellites move from USML to CCL
 International Space Station parts
move from USML to CCL
 New “500 Series” controls remain
subject to NS, RS, and MT controls
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ECR: Cat XI Military Electronics
 Cryogenic and superconducting
technology and software to CCL
 Missile Technology Controls on
narrowed EAR items
 Numerous electronic systems
specified in the USML
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Doing Business Under
The ECR
Jurisdiction and Classification
1. Review the USML
-
Review enumerated items
Catch-and-release under “specially designed” definition
2. If not on the USML, review the CCL
3. Determine CCL category and product group
4. Review applicable “600 series” entries
-
-
Specifically enumerated items
Categories .x and .y
5. Review applicable non-600 series entries
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Licensing
 Existing licenses remain effective
for two years or to expiration
 Exporter may obtain a BIS license
for transitioned products
 All new licenses after effective
date must conform with new
categories
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Licensing
 Revised USML Categories include
subcategory (x)
 EAR commodities, technology, or
software used in or with USML
items
 DDTC license may cover both
USML and CCL items
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ECR and U.S. Exports
Administration’s ECR Goals
 Publish remaining proposed and final rules in
2014
 Publish important definitions, e.g.:
-
public domain
publicly available
technical data
technology
fundamental research
 Address new subject matters, e.g.:
-
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Encryption
Cloud computing
Cybersecurity
Looking to the Future
 Four consecutive years of
increased exports
 2013 exports up nearly $700 billion
from 2009, a nearly 45% increase
 TTIP, TTP, bilateral agreements
reducing Non-Tariff Barriers
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QUESTIONS?
THANK YOU
J. Scott Maberry
smaberry@sheppardmullin.com
Fatema Merchant
fmerchant@sheppardmullin.com
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