June 3, 2015

Export Control Reform Marches On: DDTC and BIS Publish Proposed Rules to Harmonize Key Definitions in the ITAR and EAR

by Gwen Green

Internet Security SystemOn June 3, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) and the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published proposed rules to amend the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”) to harmonize key definitions and terms between the two regulations. The proposed rules are a part of the continuing Export Control Reform (“ECR”) initiative to enhance U.S. national and economic security, facilitate compliance with export controls, and streamline the U.S. export control system.

Harmonization of Definitions Between ITAR and EAR

DDTC and BIS have identified a series of similar terms in the ITAR and the EAR that are defined differently and that warrant either harmonization or the creation of similar structures that would identify more unambiguously the differences in how similar concepts are treated under the two regulations.  DDTC proposes to therefore revise the ITAR’s definitions of the terms “defense article,” “defense services,” “technical data,” “public domain,” “export,” and “reexport or retransfer,” and create definitions for the terms “required,” “technical data that arises during, or results from, fundamental research,” “release,” “retransfer,” and “activities that are not exports, reexports, or retransfers.” Likewise, BIS proposes amendments to the EAR regarding the definitions of the terms “technology,” “required,” “peculiarly responsible,” “proscribed person,” “published,” results of “fundamental research,” “export,” “reexport,” “release,” “transfer,” and “transfer (in-country).”

To the extent possible, similar definitions would be harmonized both substantively and structurally. Substantive harmonization will mean using the same words for the same concepts across the two export control regulations. Structural harmonization will mean setting forth similar definitions in a paragraph order that plainly illuminates their similarities and differences. The proposed rules note this structural harmonization may require reserving certain paragraphs in an ITAR definition if the corresponding paragraph does not already exist in the EAR definition, or vice versa.

Other Notable Proposed Changes

DDTC’s proposed rule would also create new sections in the ITAR to detail the scope of licenses, unauthorized releases of information, and the “release” of secured information. In addition, the proposed rule would establish that the electronic transmission of unclassified “technical data” abroad is not an “export,” provided that the data is sufficiently secured to prevent access by foreign persons. The proposed rule would also allow for the electronic storage of unclassified “technical data” abroad, provided that the data is secured to prevent access by parties unauthorized to access such data.

Additionally, the BIS proposed rule would amend the EAR to update and clarify the application of controls to electronically transmitted and stored technology and software.

As the rules are not final, interested exporters should consider providing relevant comments to DDTC and BIS prior to August 3, 2015.