The Trump administration may not trumpet it, but U.S. export control reform continues unabated and exporters should stay tuned.
In this era of global tariffs and the NAFTA renegotiation, it’s easy for export control regulations to be overshadowed by the more seismic shifts happening in trade policy.
But if you ask the State Department, export control reform (ECR), which was started by the Obama administration in 2010, continues unabated.
“White House-led joint efforts by the departments of State, Commerce and Defense to streamline and modernize export controls and maintaining an up-to-date and positive U.S. Munitions List (USML) remain ongoing, active and more important than ever,” a State Department official said in an email.
The State Department seeks to publish changes this year to the USML categories VI (surface vessels of war and special naval equipment); VII (ground vehicles); XII (fire control, range finder, optical and guidance and control equipment); and XX (submersible vessels and related articles), the official said.
The State and Commerce departments also have submitted to the White House Office of Management and Budget (OMB) proposed rules to shift items to the Commerce Control List (CCL) from the three USML categories that the previous administration didn’t touch — categories I (firearms, close assault weapons and combat shotguns), II (guns and armament), and III (ammunition/ordnance).
Under the pending proposed rules, transfers from the USML to CCL will involve firearms and related items widely available in retail outlets and will entail new listings in the so-called “500 series” of controls, remaining subject to export licensing requirements, interagency review and monitoring of commercial entities involved in export and sales, the official said.
The Commerce Department’s Bureau of Industry and Security (BIS), in charge of regulating CCL exports, anticipates publication of proposed rules to shift goods on USML categories I-III to the CCL “in the near future,” an agency spokesperson said.
OMB completed its review of those proposed rules on April 11, but they have not yet been signed off for publication, the spokesperson said.
In terms of goods to be transferred from USML categories I-III to the CCL, “exports will continue to be restricted where the risk of human rights abuses or illicit diversion are of concern,” the State official said.
That official emphasized that the proposed rules won’t impact the ability of Americans to exercise Second Amendment rights and apply only to exports and temporary imports of some types of firearms and ammunition.
Firearms and related articles “inherently for military end use” or not otherwise widely available for retail will remain under the State Department’s export licensing controls, the official said.
It is anticipated that several firearms manufacturers, including small businesses, currently required to register with the State Department will be relieved from an “annual fee burden” under one of the proposed rules, the official said.
BIS doesn’t have registration requirements or export licensing fees, the official noted.
“The Department of Defense and the Department of State will remain active in the process of determining how an item is controlled and reviewing export license applications for national security and foreign policy reasons, including the prevention of human rights abuses,” the official said. “The U.S. government will continue its longstanding end-use monitoring efforts, including vetting of potential end users, to help prevent human rights abuses.”
The State Department and BIS also are reviewing comments they collected through April 13 on export controls implemented during the shift of items from USML categories V (explosives and energetic materials, propellants, incendiary agents and their constituents), X (personal protective equipment), and XI (military electronics) completed during the Obama administration’s ECR efforts.
This is all going on while President Trump in an April 19 memorandum tasked the State Department, in coordination with the Commerce, Defense and Energy departments, with developing new export policies for conventional arms exports and drone exports by June 18.
According to the memorandum, the new policies should provide “appropriate advocacy and trade promotion activities” to firms as well as seek to simplify the U.S. regulatory environment, improve financing options and add contract flexibility.
That’s an explosion of activity coming during a period of comprehensive re-examination of traditional U.S. trade policy.
Meanwhile, the Trump administration is in the process of transition for its BIS director position after former agency chief Mira Ricardel was appointed to work at the National Security Council.
Forwarders and other compliance professionals interested in exporting State Department- and/or BIS-regulated items might want to carve out some time to understand how this Trump administration iteration of ECR will affect them.
While it seems to follow the same general process of the previous administration’s ECR efforts, involving all the widespread technicalities of USML to CCL shifts and comment collections on any potential further controls for USML and CCL goods, it seems that the current process is imposing a higher compliance burden on businesses, if only because there’s a lot more going on in the policy and compliance space.
It would bode well for firms to intensify their efforts in export compliance fundamentals amid the unsettled U.S. trade landscape.
As high-level trade policies and tweets force the trade community to scramble, a steady hand in trade compliance cornerstones like export controls is more valuable than ever for companies and their customers.
Compliance 360: Minding export control reform
