News Column

Industry & Security Bureau Adds Military Electronic Equipment Control and Other Items Under U.S. Munitions List

July 1, 2014



Targeted News Service

WASHINGTON, July 1 -- The U.S. Bureau of Industry and Security published the following rule in the Federal Register:

Revisions to the Export Administration Regulations (EAR): Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML)

A Rule by the Industry and Security Bureau on 07/01/2014

Publication Date: Tuesday, July 01, 2014

Agencies: Department of Commerce

Bureau of Industry and Security

Dates: Effective dates--This rule is effective December 30, 2014, except for the addition of software and technology for certain wing folding systems to ECCNs 0D521 and 0E521 via Supplement No. 5 to part 774 of the EAR (amendatory instruction number 24), which is effective July 1, 2014.

Entry Type: Rule

Action: Final rule.

Document Citation: 79 FR 37551

Page: 37551 -37575 (25 pages)

CFR: 15 CFR 774

Agency/Docket Number: Docket No. 120330233-4307-03

RIN: 0694-AF64

Document Number: 2014-14683

Shorter URL: https://federalregister.gov/a/2014-14683

Action

Final Rule.

Summary

This final rule adds to the Commerce Control List military electronics, technology and software for certain wing folding systems, certain superconducting and cryogenic equipment, and related items the President determines no longer warrant control under the United States Munitions List (USML). This also amends ECCNs 7A006 and 7A106 to apply the "missile technology" reason for control only to items in those ECCNs on the Missile Technology Control Regime (MTCR) Annex. This rule is being published simultaneously with a Department of State rule that amends the list of articles controlled by USML Category XI to control only those articles the President has determined warrant control in that category of the USML. Both rules are part of the President's Export Control Reform Initiative. The revisions in this rule also are part of the Department of Commerce's retrospective plan under EO 13563 completed in August 2011.

DATES:

Effective dates--This rule is effective December 30, 2014, except for the addition of software and technology for certain wing folding systems to ECCNs 0D521 and 0E521 via Supplement No. 5 to part 774 of the EAR (amendatory instruction number 24), which is effective July 1, 2014.

ADDRESSES:

The Department of Commerce's full retrospective regulatory review plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.

FOR FURTHER INFORMATION CONTACT:

Brian Baker, Director, Electronics and Materials Division, Office of National Security and Technology Transfer Controls, (202) 482-5534, brian.baker@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

The Export Control Reform Initiative

This final rule is part of the Administration's Export Control Reform Initiative, the objective of which is to protect and enhance U.S. national security interests. The Initiative began in August 2009 when President Obama directed the Administration to conduct a broad-based review of the U.S. export control system to identify additional ways to enhance national security. In April 2010, then-Secretary of Defense Robert M. Gates, describing the initial results of that effort, explained that fundamental reform of the U.S. export control system is necessary to enhance national security. Once the Department of State's International Traffic in Arms Regulations (ITAR) and its U.S. Munitions List (USML) are amended so that they control only the items that provide the United States with a critical military or intelligence advantage or otherwise warrant such controls, and the Export Administration Regulations (EAR) are amended to control military items that do not warrant USML controls, the U.S. export control system will enhance national security by (i) improving interoperability of U.S. military forces with allied countries, (ii) strengthening the U.S. industrial base by, among other things, reducing incentives for foreign manufacturers to design out and avoid U.S.-origin content and services, and (iii) allowing export control officials to focus government resources on transactions that pose greater concern.

The changes described in this rule and the State Department's rule amending USML Category XI are based on a review of that category by the Defense Department, which worked with the Departments of State and Commerce in preparing the amendments. The review was focused on identifying the types of articles that are now controlled by the USML that either (i) are inherently military and otherwise warrant control on the USML, or (ii) if of a type common to civil applications, possess parameters or characteristics that provide a critical military or intelligence advantage to the United States and that are almost exclusively available from the United States. If an article was found to satisfy either or both of those criteria, the article remains on the USML. If an article was found not to satisfy either criterion, but is nonetheless a type of article that is "specially designed" for military applications, then, generally, it is identified in one of the new "600 series" ECCNs created by this rule.

Section 38(f) of the Arms Export Control Act (AECA) obligates the President to review the USML "to determine what items, if any, no longer warrant export controls under" the AECA. The President must report the results of the review to the Congress and wait 30 days before removing any such items from the USML. The report must "describe the nature of any controls to be imposed on that item under any other provision of law." 22 U.S.C. section 2778(f)(1). The Department of State has delivered the required report to the Congress.

The Proposed Rules

This final rule is the successor to two proposed rules, both entitled Revisions to the Export Administration Regulations (EAR): Control of Military Electronic Equipment and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML). The first proposed rule (herein the November 28 (military electronics) rule) published in the Federal Register on November 28, 2012 (77 FR 70945). The second proposed rule (herein the July 25 (military electronics) rule) was based on a review of the public comments to the first proposed rule and published on July 25, 2013 (78 FR 45026). Simultaneously, the Department of State published two proposed rules on November 28, 2012 (77 FR 70945) (herein the State November 28 (military electronics) rule) and on July 25, 2013 (78 FR 45018) (herein the State July 25 (military electronics) rule). This final rule is based on an evaluation of those comments by the Departments of Defense, State and Commerce with additional input from other Departments on various portions of the rules.

In addition, this rule adds provisions controlling development software and technology for certain wing folding systems to the EAR. These provisions are related to prior proposed rules of the Departments of State and Commerce: "Amendments to the International Traffic in Arms Regulations: Revisions of U.S. Munitions List Category VIII," November 7, 2011 (76 FR 68694) (herein the State November 7 (aircraft) rule) and "Revisions to the Export Administration Regulations (EAR): Control of Aircraft and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML)," November 7, 2011 (76 FR 68675) (herein the November 7 (aircraft) rule). Upon review of the current state of development of such software and technology, the Department of Commerce, with the concurrence of the Departments of Defense and State, concluded that they should be controlled for export under the EAR rather than the ITAR. This is because these items do not provide a critical military or intelligence advantage to the United States or otherwise warrant ITAR controls but they should be controlled because they provide at least a significant military or intelligence advantage to the United States or foreign policy reasons.

Overview of This Rule

This rule adds to the EAR's CCL certain military electronic equipment and related articles now controlled by the ITAR's USML Category XI and certain cryogenic and superconductive equipment that are now controlled by "catch all" provisions of the ITAR's USML Categories VI, VII, VIII, and XV. This rule also corrects two ECCNs in CCL Category 7 to apply the "missile technology" reason for control only to items that are on the Missile Technology Control Regime (MTCR) Annex. Finally, this rule controls under ECCNs 0D521 and 0E521 software and technology for the "development" of certain wing folding systems for aircraft powered by gas turbine engines while the United States seeks to have such software and technology added to the Dual-Use List of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement).

This rule also adopts the changes to the structure of the ECCNs and the elimination of the "Units" paragraphs from the ECCNs as set forth in the rule entitled "Revisions to the Export Administration Regulations (EAR) To Make the Commerce Control List (CCL) Clearer" published in the Federal Register on October 4, 2013 (78 FR 61874).

Alignment With the Wassenaar Arrangement Munitions List

The Administration has stated since the beginning of the Export Control Reform Initiative that the reforms are consistent with the obligations of the United States to the multilateral export control regimes. Accordingly, the Administration, in this and subsequent rules, exercises its national discretion to implement, clarify, and, to the extent feasible, align its control text with those of the regimes. This rule maintains the alignment that exists between the USML, in which military electronics are controlled under Category XI, and the Wassenaar Arrangement Munitions List (herein WAML), in which military electronic equipment is controlled under WAML category ML11, and by ECCN 3A611 by this rule. Similarly, 3B611 aligns with WAML category ML18, which, inter alia, controls "specially designed or modified `production' equipment for the `production' of products specified by the Munitions List, and "specially designed" components therefor."

This rule aligns cryogenic and superconducting equipment currently controlled in Categories VI, VII, VIII, and XV of the USML with WAML category ML20 by controlling them under ECCN 9A620. As with other "600 series" ECCNs, this rule follows the existing CCL numbering pattern for test, inspection and production equipment (3B611 and 9B620), software (3D611 and 9D620) and technology (3E611 and 9E620), rather than strictly following the Wassenaar Arrangement Munitions List pattern of placing production equipment, software and technology for munitions list items in WAML categories ML18, ML21 and ML22, respectively. BIS believes that including the ECCNs for test, inspection and production equipment, software, and technology in the same category as the items to which they relate results in an easier to understand CCL than would separate categories.

[*Federal RegisterVJ 2014-07-01]

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