June 23, 2015

On the Move: DDTC and BIS Publish Proposed Rules to Move USML Categories XIV and XVIII Items to CCL – Impacting Companies Working with Toxicological Agents, Directed Energy Weapons, and Related Items

by Gwen Green

The biohazard icon. Biohazard symbol. FlatOn June 17, 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 transfer certain items from U.S. Munitions List (“USML”) Category XIV (toxicological agents, including chemical agents, biological agents, and associated equipment) and Category XVIII (directed energy weapons) to the less restrictive Commerce Control List (“CCL”). BIS and DDTC have stated the proposed revisions are intended to create a “bright line” regarding control of these items between the USML and CCL.  The proposed rules are only a small part of the President’s broader Export Control Reform (“ECR”) effort to streamline the U.S. export control system.

The DDTC proposed rule would amend the International Traffic in Arms Regulations (“ITAR”) to revise USML Categories XIV and XVIII to more precisely describe the items still warranting control on the USML. Items no longer controlled in the revised USML Categories would be transferred to new “600 Series” Export Control Classification Numbers (“ECCNs”) on the CCL. Affected Category XIV items consist primarily of dissemination, detection and protection “equipment” and related items. Affected Category XVIII items consist primarily of tooling, production “equipment,” test and evaluation “equipment,” test models and related items. The DDTC proposed revisions are part of the Department of State’s retrospective plan under Executive Order 13563 completed on August 17, 2011.

The BIS proposed rule would move items no longer controlled under USML Category XIV to new ECCNs 1A607, 1B607, 1C607, 1D607, and 1E607.  Likewise, items no longer controlled under USML Category XVIII would move to new ECCNs 6B619, 6D619 and 6E619. Once under the jurisdiction of the Export Administration Regulations (“EAR”), the transitioned items will be eligible for greater license exceptions, which will allow for the export and re-export of such items without the need for export licenses or other prior governmental authorizations.

If implemented, the rules could significantly change affected companies’ export compliance responsibilities.  Potentially affected companies involved in toxicological agents, directed energy weapons, and related items might consider the impact of these proposed changes and submitting relevant comments to the DDTC and BIS prior to the August 17, 2015 deadline.  At the same time, these companies should assess the impact of these rule changes on global markets and international product development efforts.