CST: 29/09/2016 10:16:45   

Break Down the Latest Updates to the Export Control Reform

250 Days ago

Interview With Bryce Bittner, Director of Global Trade Compliance, Textron

ARLINGTON, VA --(Marketwired - January 22, 2016) - For exporters and manufacturers whose articles, services or technologies are on USML or CCL lists, the responsibility of proper ITAR and EAR compliance regulations is fundamental in avoiding costly penalties and ensuring proper execution. An overwhelming amount of classification information is still confusingly defined. As issues surrounding specially designed products and commodity jurisdiction continue, new concerns regarding recently implemented procedures are beginning to take shape.

Bryce Bittner, Director of Global Trade Compliance at Textron, recently spoke with marcus evans about some of the trends within the current environment of the Export Control Reform (ECR):

Why should companies be concerned with ensuring proper classification and reclassification under the ECR?

BB: How a company's products and technologies are controlled under the export laws drives every aspect of the company's export compliance program, including which of the company's transactions require government export approvals, and which do not. 

Before the end of each Wave of ECR, companies must determine how the Wave affects its existing ITAR licenses and agreements and update them or replace them with EAR licenses/exceptions, depending on how ECR impacts the classification of the products/technologies at issue. For example, if a company does not bring its Wave 1 (Aircraft and Engines) ITAR agreements up to code by October 15, 2016, it won't be able to export against those agreements, which could have a huge impact on the company's business.

Moreover, if a company does not classify its products and technologies correctly, it runs the risk of serious violations for exporting without the required approvals, but it also won't be able to take advantage of the benefits that ECR provides (such as additional license exceptions under the EAR, the ability to pre-position licenses before obtaining a contract/P.O., and the lack of Congressional Notification Requirements for most transactions). 

What is an aspect of ECR that is still confusing for many exporters?

BB: An issue that we struggle with is how to classify technical data/technology for aircraft that are ITAR-controlled in U.S. Munitions List Category VIII, but which comprise primarily EAR-controlled parts and components. 

Prior to ECR, most of the parts specifically designed or modified for military aircraft fell under USML Category VIII(h), and the corresponding technical data for the parts fell under USML Category VIII(i). Since ECR, the majority of these parts have moved to the new 600 series under ECCN 9A610, and the corresponding technology required for the development, production, etc. of the parts falls under ECCN 9E610. 

The problem is where to draw the line between the technical data that relates to the entire airframe, and which, therefore, should continue to fall under USML Category VIII(i), versus the technology that can now be classified under ECCN 9E610. This has important implications for which agency, DDTC or BIS, has jurisdiction over the transaction, the process and timing needed to obtain the required export approvals, and whether a license exception might be available.

How can exporters ensure they are properly implementing all changes related to ECR?

BB: I think it is crucial to devote sufficient time and an appropriate level of resources to implement ECR to ensure full compliance. The companies that seem to have the most success create multi-functional teams that include legal/compliance, engineering, and IT experts who work together to understand the changing regulations, identify how the changes affect their products and technologies, and design IT solutions to manage the new regulatory environment. 

Companies can run into serious problems if they misread the regulations, don't understand their products/technologies at a sufficient technical level, and/or have an IT system that cannot differentiate between something like ECCN 9A610.x, which requires a license to almost all destinations, and ECCN 9A610.y, which only requires a license to a few destinations.

Join Bryce at the 6 th Advanced ITAR and EAR Compliance Conference, February 24-25, 2016 at the Crowne Plaza National Airport in Arlington, VA. For more information, take a look at the conference agenda or contact Tyler Kelch, Digital Marketing Manager, marcus evans at Tylerke@marcusevansch.com.

About marcus evans

Marcus evans conferences annually produce over 2,000 high quality events designed to provide key strategic business information, best practice and networking opportunities for senior industry decision-makers. Our global reach is utilized to attract over 30,000 speakers annually; ensuring niche focused subject matter presented directly by practitioners and a diversity of information to assist our clients in adopting best practice in all business disciplines.

Tyler Kelch
Digital Marketing Manager
marcus evans
Tylerke@marcusevansch.com