Obama’s Export Licensing Regulation Reform Takes Step Forward

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WASHINGTON — If approved, a new rule from the U.S. Commerce Department could remove the need for thousands of weapon components to obtain export licenses.

The proposed regulation, published July 15, represents the next big step in U.S. President Barack Obama’s export control reform initiative, launched in August 2009. The rule describes how the administration plans to move items off the U.S. Munitions List (USML), which is administered by the State Department, and onto the Commerce Control List (CCL), overseen by the Commerce Department.

“Moving militarily less significant parts and components from the USML to the CCL is a major step in implementing the Administration’s common sense approach to export controls,” White House Chief of Staff William Daley said in a July 19 statement.

Items on the USML — from aircraft to generic parts and components — are all subject to the same controls. However, the CCL’s controls are tailored to what the item is and where it is being exported.

As items are transferred from the USML to the Commerce Department’s jurisdiction, they will be placed on a new list, which for now is being called the Commerce Munitions List.

There are 22 categories of items controlled by the USML. The Obama administration has selected category 7 — tanks and military vehicles — as a test case of sorts to demonstrate how such a transfer could take place.

Joel Johnson, executive director-international for the Teal Group, a market research firm based in Fairfax, Va., said vehicles were picked first because the category was considered one of the easier ones and many of the licenses issued each year are for items in this category.

The first step in the transfer is turning the USML into a “positive” list, meaning one that spells out exactly what is on it rather than relying on generic descriptions and open-ended definitions.

The Defense Department is writing a new positive list of defense articles that should be controlled under the stricter USML. According to a White House fact sheet, items not identified in the new positive USML will move to the Commerce Department.

After the shift, about 55 percent of the export licenses currently required for category 7 will no longer be needed at all, according to the White House.

How is this possible? To start, 11,000 of the 12,000 items currently in the USML’s category 7 will be allowed to move from the State Department to the Commerce Department’s list.

Of those 11,000 that have shifted, 15 percent will no longer need a license for export to almost all countries, either because the item is widely available on the commercial market or because it is easy to make.

Half of the items that move from the USML to the new Commerce Munitions List will be eligible for license-free treatment, “subject to certain compliance and re-export requirements to U.S. allies and regime partners.”

The remaining 35 percent of the items transferred in category 7 would continue to need a license, but would be eligible for license exemption for close U.S. allies and multilateral export control regime partners.

Every time an item is moved from the USML to Commerce Department jurisdiction, the agencies will have to notify Congress, which will have 30 days to respond.

In his statement, Daley said that export control reform is viewed as a national security imperative by the Obama administration.