[Federal Register Volume 77, Number 120 (Thursday, June 21, 2012)]
[Proposed Rules]
[Pages 37346-37349]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15070]
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DEPARTMENT OF STATE
22 CFR Parts 120, 121, 123, 124, 125, 126, 127, 128, 129, and 130
[Public Notice: [7927]]
Export Control Reform Transition Plan
AGENCY: Department of State.
ACTION: Proposed policy statement, request for comments.
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SUMMARY: As part of the President's export control reform initiative,
the Directorate of Defense Trade Controls (DDTC) seeks public comment
on the proposed implementation plan for defense articles and defense
services that will transition from the jurisdiction of the Department
of State to the Department of Commerce. The intent of this plan is to
provide a clear description of DDTC's proposed policies and procedures
for the transition of items to the jurisdiction of the Department of
Commerce. The revisions
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to this rule are part of the Department of State's retrospective plan
under E.O. 13563 completed on August 17, 2011. The Department of
State's full plan can be accessed at http://www.state.gov/documents/organization/181028.pdf.
DATES: The Department of State will accept comments on this proposed
policy statement until August 6, 2012.
ADDRESSES: Interested parties may submit comments within 45 days of the
date of publication by one of the following methods:
Email: DDTCResponseTeam@state.gov with the subject line,
``ECR Transition Guidance.''
Internet: At www.regulations.gov, search for this notice
by using this notice's docket number, DOS-2012-0020.
Comments received after that date will be considered if feasible,
but consideration cannot be assured. Those submitting comments should
not include any personally identifying information they do not desire
to be made public or information for which a claim of confidentiality
is asserted because those comments and/or transmittal emails will be
made available for public inspection and copying after the close of the
comment period via the Directorate of Defense Trade Controls Web site
at www.pmddtc.state.gov. Parties who wish to comment anonymously may do
so by submitting their comments via www.regulations.gov, leaving the
fields that would identify the commenter blank and including no
identifying information in the comment itself. Comments submitted via
www.regulations.gov are immediately available for public inspection.
FOR FURTHER INFORMATION CONTACT: Ms. Candace M. J. Goforth, Director,
Office of Defense Trade Controls Policy, U.S. Department of State,
telephone (202) 663-2792, or email DDTCResponseTeam@state.gov. ATTN:
ECR Transition Guidance.
SUPPLEMENTARY INFORMATION: The Directorate of Defense Trade Controls
(DDTC), U.S. Department of State, administers the International Traffic
in Arms Regulations (ITAR) (22 CFR parts 120-130). The items subject to
the jurisdiction of the ITAR, i.e., ``defense articles,'' are
identified on the ITAR's U.S. Munitions List (USML) (22 CFR 121.1).
With few exceptions, items not subject to the export control
jurisdiction of the ITAR are subject to the jurisdiction of the Export
Administration Regulations (``EAR,'' 15 CFR parts 730-774, which
includes the Commerce Control List (CCL) in Supplement No. 1 to part
774), administered by the Bureau of Industry and Security (BIS), U.S.
Department of Commerce. Both the ITAR and the EAR impose license
requirements on exports and reexports. Items not subject to the ITAR or
to the exclusive licensing jurisdiction of any other set of regulations
are subject to the EAR.
Transition Plan
The Departments of State and Commerce described in their respective
Advanced Notices of Proposed Rulemaking (ANPRM) in December 2010 the
Administration's plan to make the USML and the CCL positive, tiered,
and aligned so that eventually they can be combined into a single
control list (see ``Commerce Control List: Revising Descriptions of
Items and Foreign Availability,'' 75 FR 76664 (December 9, 2010) and
``Revision to the United States Munitions List,'' 75 FR 76935 (December
10, 2010)). Since that time, DDTC has published proposed revisions to
several USML Categories, which, when implemented, will transition a
significant number of items to the jurisdiction of the Department of
Commerce.
Because an immediate effective date would impose undue compliance
burden on the defense industry, DDTC has developed the following phased
implementation plan for items that will transition from the USML to the
CCL, and will become effective for those items upon publication of each
revised USML category. This phased implementation plan is designed to
mitigate the impact on U.S. license holders, while assuring that all
defense trade that should be licensed remains so. Under the plan U.S.
license holders will continue to use their approved licenses at the
time the transition takes place.
Licenses (DSP-5, DSP-61, and DSP-73)
Licenses for items transitioning to the CCL that are issued in the
period prior to the date of final rule publication for each revised
USML category will remain valid until expired, returned by the license
holder, a license amendment is required, or for a period of two years
from the effective date, whichever occurs first. Any limitation,
proviso or other requirement imposed on the DDTC authorization will
remain in effect. The Department of Commerce may be consulted regarding
the applicability of the EAR to the subject commodity.
License applications for items transitioning to the CCL that are
received by DDTC prior to final rule publication for each revised USML
category will be adjudicated up until the effective date of the rule,
unless the applicant requests that the application be Returned Without
Action.
License applications 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.
License applications that do not contain this certification will be
Returned Without Action. The validity period for licenses issued in
this timeframe will be limited to the date 45 days after the effective
date of the final rule.
License amendment requests (i.e., DSP-6, DSP-62, and DSP-74)
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. Amendment requests that do not
contain this statement will be Returned Without Action. The validity
period for amended licenses issued in this timeframe will be limited to
the date 45 days after the effective date of the final rule.
All license requests, including amendments, received after the
effective date for items that have transitioned to the CCL will be
Returned Without Action with instructions to contact the Department of
Commerce.
Technical Assistance Agreements, Manufacturing License Agreements, and
Warehouse and Distribution Agreements
Agreements approved prior to the date of relevant final rule
publication 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 activity conducted under an
agreement will remain subject to all limitations, provisos and other
requirements stipulated in the agreement.
Agreement amendments that incorporate items moving to the CCL prior
to the date of publication of the final rule will remain valid until
expired or for a period of two years from the effective date of the
transition, whichever occurs first.
Agreements and amendments received after the final rule is
published, but before it becomes effective, will be Returned Without
Action if the agreement contains both USML and CCL
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items. The agreement holder will be required to amend the agreement to
remove all CCL items. Any agreement in which all items are
transitioning to the CCL must be terminated and the applicant must seek
a new authorization from the Department of Commerce, as applicable.
Agreements and agreement amendments for items moving to the CCL
which are received after the effective date will be Returned Without
Action with instructions to contact the Department of Commerce.
Reporting Requirements
All reporting requirements for Manufacturing License Agreements
under ITAR Sec. 124.9(a)(6) and Warehouse and Distribution Agreements
under ITAR Sec. 124.14(c)(6) must be complied with and such reports
must be submitted to the Department of State while the agreement is
relied upon as an export authorization by the exporter.
Commodity Jurisdiction Determinations
Previously rendered commodity jurisdiction (CJ) determinations for
items deemed to be USML, but that are subsequently transitioning to the
CCL pursuant to a published final rule, will no longer be valid after
the transition date. Exporters are encouraged to review each revised
USML category along with its companion CCL category to determine
whether their items have transitioned to the jurisdiction of the
Department of Commerce. Consistent with the recordkeeping requirements
of the ITAR and the EAR, licensees and foreign persons subject to
licenses must maintain records reflecting their assessments of the
proper regulatory jurisdiction over their items. Licensees who are
unable to ascertain the proper jurisdiction of their items may request
a CJ determination from DDTC through the current, established
procedure.
Licensees who are certain their items have transitioned to the CCL
are encouraged to review the appropriate Export Control Classification
Number (ECCN) to determine the classification of their item. Licensees
who are unsure of the proper ECCN designation may request a Commodity
Classification Automated Tracking System (CCATS) determination from the
Department of Commerce through the current, established procedure. See
15 CFR 748.3.
Reexport/Retransfer of USML items that have transitioned to the CCL
Following the effective date of 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 U.S. persons abroad that have USML items in
their inventory at the effective date of transition should review both
the USML and the CCL to determine the proper jurisdiction. If doubt
exists on jurisdiction of the items, 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.
Regulatory Oversight Responsibilities
For those items transitioning from the USML to the CCL, the
Department of Commerce will exercise regulatory oversight, effective on
the transition date, for the purposes of licensing and enforcement of
exports from the United States where no Department of State
authorization is being used. The Department of State will continue to
exercise regulatory oversight concerning all Department of State
licenses, agreements, and other authorizations, including those where
exporters, temporary importers, manufacturers, and brokers continue to
use previously issued Department of State licenses and agreements after
the effective date of the final rule.
License holders may decide to apply for and use Department of
Commerce authorizations for export of the newly transitioned CCL items
rather than continue to use previously issued Department of State
authorizations. In such cases, license holders must return the
Department of State licenses in accordance with ITAR Sec. 123.22, and
obtain the required Department of Commerce authorizations.
Violations and Voluntary Disclosures of Possible Violations
Exporters, temporary importers, manufacturers, and brokers are
cautioned to closely monitor ITAR and EAR compliance concerning
Department of State licenses and agreements for items transitioning
from the USML to the CCL.
On the effective date of each rule that adds an item to the CCL
that was previously subject to the ITAR, that item will be subject to
the EAR. Authorizations issued by DDTC before the transition date may
continue to be used as described above by exporters, temporary
importers, manufacturers, and brokers. The violation of a previously
issued DDTC authorization (including any condition of a DDTC
authorization) that is continued in use under the ITAR as described
above is a violation of the ITAR.
With respect to a transitioned item, should a possible violation of
the ITAR, the EAR, or any license or authorization issued thereunder be
discovered, the person or persons involved are strongly encouraged to
consult with DDTC or BIS as appropriate, to avail themselves of the
current, established procedures for submitting voluntary disclosures
and for requesting specific authorization to take any further actions
in connection with that item.
License holders and foreign persons must obtain Department of State
authorization before disposing, reselling, transshipping, or otherwise
transferring any item in their possession that remains on the USML.
Registration
Manufacturers, exporters, and brokers are required to register with
the Department of State if their activities involve USML defense
articles or defense services.
Registered manufacturers, exporters, temporary importers, defense
service providers and brokers (``registrants'') are reminded of the
requirement to notify DDTC in writing when they are no longer in the
business of manufacturing, exporting, or brokering USML defense
articles or defense services. Registrants who determine that all of
their activities involve articles or services that will transition from
the USML to the CCL and therefore are no longer required to register
with the Department of State must provide such written notification.
Instructions for providing such notification are accessible on the DDTC
Web site (www.pmddtc.state.gov). Note that DDTC will not cancel or
revoke those registrations, but will allow the registration to expire.
Registrants who determine that all of their activities will be subject
to Department of Commerce jurisdiction as a result of the transition
from the USML to the CCL must nevertheless maintain registration with
the Department of State until the effective date of the transition.
Registrants who determine they will no longer be required to
register with the Department of State after the effective date of
transition, and who have registration renewal dates that occur after
publication of the final rule but before its effective date, may
request to have their registration expiration date extended to the
effective date of transition and not be charged a
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registration fee. In those cases, registrants must insert the following
statement as the first paragraph in the written notification previously
mentioned: ``(insert company name) requests DDTC extend our
registration expiration date to the effective date of transition to CCL
for USML Category (insert Category number) items and waive the
registration fee. (insert company name) certifies that no changes in
our eligibility from what is represented in our previously submitted
DS-2032 Statement of Registration has occurred (otherwise specify
change in eligibility status). Registrants that avail themselves of the
opportunity to continue using previously issued Department of State
authorizations (licenses and agreements) for items that have
transitioned to the CCL must maintain current registration with the
Department of State, which includes payment of registration fees.
Request for Comments
DDTC requests public consideration and comment on the preceding
transition plan, taking into account the following specific questions:
1. Is the transition plan clear and understandable? Is it logical?
2. Does the plan adequately address all regulated scenarios?
3. Will industry compliance with existing export control law be
negatively affected by this plan?
4. Recognizing that this regulatory transition will unavoidably
create challenges for industry, does the plan as presented effectively
minimize these challenges?
5. Does the plan impose undue burden on industry, and if so, are
there any suggestions that will help mitigate them?
Dated: June 14, 2012.
Rose E. Gottemoeller,
Acting Under Secretary, Arms Control and International Security,
Department of State.
[FR Doc. 2012-15070 Filed 6-20-12; 8:45 am]
BILLING CODE 4710-25-P