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International Trade Update - September 26, 2013

New Export Control Rules for Military Aircraft and Aircraft Parts and Components

Companies that produce military aircraft and aircraft parts and components controlled under the International Traffic in Arms Regulations (“ITAR”) should take note of some significant changes that will become effective October 15, 2013. On April 16, 2013, as part of the U.S. Export Control Reform initiative, the Directorate of Defense Trade Controls (“DDTC”) at the U.S. Department of State and the Bureau of Industry and Security (“BIS”) at the U.S. Department of Commerce issued concurrent final rules implementing reforms to, among other things, U.S. Munitions List (“USML”) Category VIII (Aircraft and Associated Equipment).1 The final rules narrow the types of aircraft and related articles that will be controlled under the ITAR and transfer many aircraft parts and components to the jurisdiction of the Commerce Department under the Export Administration Regulations (“EAR”), where different, and potentially more flexible, license requirements and license exceptions may apply.

 

Specifically, changes to USML Category VIII that will go into effect on October 15th include the following:

  • The definition of “aircraft” controlled under the ITAR is significantly narrowed (see detailed discussion below).
  • Category VIII of the USML will no longer contain controls on all generic parts, components, accessories, and attachments specifically designed or modified for a military aircraft. Instead, Category VIII will now contain a “positive list” of specific types of parts, components, accessories, and attachments that continue to be controlled.
  • All other parts, components, accessories, and attachments not explicitly covered by the positive list contained in the revised USML will be subject to the jurisdiction of the Commerce Department under the EAR and will generally be controlled under Export Control Classification Number (“ECCN”) 9A610 on the Commerce Control List.
  • Unclassified technology required for the development, production, operation, installation, maintenance, repair, overhaul or refurbishing of ECCN 9A610 items will also be subject to Commerce Department jurisdiction and will be controlled under ECCN 9E610.
  • As a result of this move, many of the transferred items and related technology will be eligible for export to NATO countries and other close U.S. allies without the need for a U.S. government license pursuant to the EAR’s License Exception STA (Strategic Trade Authorization).
  • Gas turbine engines for aircraft and associated equipment controlled in USML Category VIII will be moved to the newly established USML Category XIX.

I. USML Category VIII: Aircraft and Related Articles

A. Aircraft

USML Category VIII currently defines the term “aircraft” broadly as “aircraft, including but not limited to helicopters, non-expansive balloons, drones, and lighter-than-air aircraft, which are specifically designed, modified, or equipped for military purposes.” Under the revised USML Category VIII, aircraft are now defined more narrowly as:

  1. Bombers;
  2. Fighters, fighter bombers, and fixed-wing attack aircraft;
  3. Turbofan- or turbojet-powered trainers used to train pilots for fighter, attack, or bomber aircraft;
  4. Attack helicopters;
  5. Unarmed military unmanned aerial vehicles (UAVs) (MT if the UAV has a “range” equal to or greater than 300km);
  6. Armed unmanned aerial vehicles (UAVs) (MT if the UAV has a “range” equal to or greater than 300km);
  7. Military intelligence, surveillance, and reconnaissance aircraft;
  8. Electronic warfare, airborne warning and control aircraft;
  9. Air refueling aircraft and strategic airlift aircraft;
  10. Target drones (MT if the drone has a “range” equal to or greater than 300km);
  11. Aircraft incorporating any mission system controlled under this subchapter;
  12. Aircraft capable of being refueled in flight including hover-in-flight refueling (HIFR); or
  13. Optionally Piloted Vehicles (OPV) (MT if the OPV has a “range” equal to or greater than 300km).

B. Parts

As of October 15, 2013, all aircraft parts and components that are “specially designed” for a military aircraft other than those specifically identified in revised USML Categories VIII (Aircraft and Related Equipment) and XIX (Gas Turbine Engines and Associated Equipment) will be controlled under ECCN 9A610 on the Commerce Control List.2 Technology “required” for the development, production, operation, installation, maintenance, repair, overhaul or refurbishing of 9A610 items will now be subject to ECCN 9E610.

License requirements for reasons of national security (NS) (Column 1) and anti-terrorism (AT) (Column 1) will apply to all items controlled by ECCNs 9A610 and 9E610. Notably, exports of 9A610 items and 9E610 technology to Canada or Canadian nationals will not generally be subject to export license requirements.

II. License Exception STA Under the EAR

Provided that certain terms are observed, License Exception STA will generally authorize export of items controlled by ECCN 9A610 and 9E610 to the following countries (and nationals thereof): Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, or the United Kingdom.3

III. Conclusions

While certain military aircraft and aircraft parts and components, as discussed above, will no longer be controlled by the ITAR, they will still be subject to export controls under the EAR. Manufacturers and exporter continue to be responsible for determining the proper export classification for goods and technology that they manufacture and/or export and for implementing appropriate export control compliance policies and procedures.

Similar rules affecting military vehicle and vehicle parts and components will be going into effect in January 2014.

 

 

178 Fed. Reg. 22740 (April 16, 2014) (ITAR Revisions); 78 Fed. Reg. 22659 (April 16, 2013) (EAR Revisions).
2Revisions to the Export Administration Regulations: Initial Implementation of Export Control Reform; Amendment to the International Traffic in Arms Regulations: Initial Implementation of Export Control Reform; Final Rules, 78 Fed. Reg. 22659 (April 16, 2013).
315 C.F.R. § 740.20(c)(1). Paragraph (c)(2) of License Exception STA may not be used for any item in 9A610 or 9E610. Thus, these items would not be eligible for unlicensed export to (c)(2) countries, which are as follows: Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, or Taiwan, or to any other countries not covered under paragraph (c)(1).

 

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