This change is effective November 9, 2009. BIS has stated that “shipments of items removed from eligibility for a license exceptions or NLR as a result of this ruling that were on dock for loading, on lighter, laden aboard an exporting or reexporting carrier, or en route abroad a carrier to a port of export/reexport on November 9, 2009 pursuant to actual orders for export/reexport to a foreign destination may proceed to that destination under the previous eligibility for a license exception or NLR as long as they are exported/reexported before December 9, 2009.”

Federal Register: http://edocket.access.gpo.gov/2009/E9-26961.htm

MTCR met and made changes to the Annex in November 2007. BIS is now amending the EAR to coincide with those modifications. Here are the changes:

• Section 772.1 (Definition of Terms) changes the terms of the definition of “payload”. Under (e); Other UAVs-“Payload” includes: will now include munitions supporting structures and deployment mechanisms.

The CCL will also be affected by changes to the MTCR Annex:

• ECCN 1C111 paragraph (b) is amended by adding additional text to clarify the scope on the materials;
  • b.1 will now state that CTPB also includes carboxyl-terminated polybutadiene
  • b.2 will now include that HTPB includes hydroxyl-terminated polybutadiene.
• ECCN 1C116 is amended by adding text to the heading; the description of Maraging steels will now include precipitates to produce strengthening and age-hardening of the alloy
• ECCN 2B116 paragraph (a) will be changed slightly by merely replacing “and” with “while”

BIS expects that these amendments will have minimal if any impact on license applications.

BIS expects the following to cause an increase in license applications, so pay attention:

• · ECCN 9B106 heading will now read “Environmental chambers usable for rockets, missiles, or unmanned aerial vehicles capable of achieving a ”range” equal to or greater than 300km and their subsystems, as follows (see List of Items Controlled)”
  • paragraph (a) will be changed to include a technical note that includes controls on environmental chambers that are capable of incorporating shaker units or vibration test equipment, even if the shaker units or vibration test equipment are not included at the time of export.
  • a.1 will be removed and a.2 will be designated as the new a.1
  • a.2 will be an entirely new paragraph that will include a new control parameter

Prior to the change you could export shaker units or vibration test equipment without them being subject to an MT control when they were exported separately from the environmental chambers.

There is a savings clause that will allow exports or reexports in route, including those on docks for loading to proceed to their destinations under previous eligibility if they would be affected by the amendments above as long as they are exported or reexported before midnight, July 16, 2008. As of midnight, July 16, 2008 a license will be required in accordance with this rule.

More information:

• Federal Register Notice

Bottom Line:

This new export licensing requirement that the United States is implementing consistent with a United Nations decision is good for a laugh. Now that North Korean Government officials can’t get I-Pods and stereos, they most certainly will end their nuclear weapons program. (OK, I am not so naïve as to think this new requirement will keep Kim Il Jung from getting an I-Pod.) Seems like the United Nations is developing a taste for useless symbolic export controls so long favored by the United States just because it’s better to do something that doesn’t help than to do nothing.

Due to the flagrant and defiant actions of North Korea over the past year relating to missile testing and the detonation of a nuclear device, the United States is imposing new export and reexport controls on North Korea. This new rule is in accordance with UN Security Council Resolution 1718 which prohibits the direct or indirect sale of arms and other specified items to North Korea by UN Member States.

Under the new rule, the Bureau of Industry and Security (BIS) will require a license for all items subject to the Export Administration Regulations (EAR) with the exceptions of food and medicines not on the Commerce Control List (CCL).

Luxury items to North Korea will generally be denied. Examples are yachts, gems, art, designer clothing and collectible items.

Non-food and non-medical humanitarian items intended for the benefit of the North Korean people will generally be approved by BIS

BIS will continue to generally deny applications for the export or reexport of arms and related materials controlled on the CCL and items controlled under the Missile Technology Control Regime, the Nuclear Suppliers Group, the Australia Group, and the Wassenaar Arrangement.

All other items subject to the EAR will be reviewed by BIS on a case-by-case basis.

The effective date of this rule is January 26, 2007. Items that did not require a license prior to the publication of this rule which are on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export on January 26th may be exported or reexported without being subject to the new rule as long as they are exported or reexported before midnight on February 9, 2007.

Bulgaria was added to Country Group A:2 to reflect its newly-attained status as a member of the MTCR. In addition, the rule somewhat expands the definitions of “usable in” and “capable of” in the context of MTCR-controlled items in a change that could have the effect of capturing more items under the controls.

The bulk of the regulation is used to revise several Export Control Classification Numbers (ECCNs) and bring their definitions into line with changes agreed to the MTCR Equipment, Software and Technology Annex at the October meeting. ECCNs 1C007, 1C107, 1C111, 1C116, 2A001, 2B104, 2B116, 9A106, 9A107, 9B106, 9B117 are all affected. The details are too extensive to discuss in full detail here, but they vary from mere clarifications to expansions of existing control parameters and all the way to new MT controls for certain ECCNs. For their part, BIS says that “changes to three ECCNs are expected to result in some increase in licensing activity, however the majority of these amendments reflect clarifications to the CCL that will result in no actual change to the control parameters of the affected ECCNs.”

The rule also clarifies that exporters must seek a license for the export of any item subject to the EAR which “will be used, anywhere in the world, except by governmental programs for nuclear weapons delivery of NPT Nuclear Weapons States that are also members of NATO, in ‘the design, development, production or use of’ rocket systems or unmanned air vehicles, regardless of range capabilities, for the delivery of chemical, biological, or nuclear weapons. This is a revision of November 8, 2004 rule which neither excluded from a license requirement governmental nuclear programs in “NPT Nuclear Weapons States that are also members of NATO” (a convoluted way of saying France and the United Kingdom) nor specified that items used in the “design, development, production or use” of rocket systems or UAVs were themselves restricted.

ECCN 1C111: Commerce added new controls on mixed Oxides of Nitrogen

ECCN 7A103: Commerce adds new controls on “integrated navigation systems.” Specifically, the new 7A103 controls are: Integrated Navigation Systems, designed or modified for use in “missiles” and capable of providing a navigational accuracy of 200m Circular Error Probable (CEP) or less.

Technical Note: An “integrated navigation system” typically incorporates the following components:

1. An inertial measurement device (e.g., an attitude and heading reference system, inertial reference unit, or inertial navigation system);
2. One or more external sensors used to update the position and/or velocity, either periodically or continuously throughout the flight (e.g., satellite navigation receiver, radar altimeter, and/or Doppler radar);
3. Integration hardware and software.

Now, as a practical matter, the majority (maybe even all) of integrated navigation systems designed or modified for use in missiles fall under the jurisdiction of the US Munitions List (USML), not the new controls in 7A103. The inclusion of these controls in the CCL may confuse exporters. Instead on speculating on situations where items specially designed or modified for missile might fall under the jurisdiction of the CCL, I will offer practical advice: You can avoid such confusion when you are classifying an item by asking the correct questions in the correct order: First, always determine whether an item is on the USML or the CCL by reading the USML and the International Traffic in Arms Regulations. If determine that your missile navigation system is controlled by the US Munitions List, then you never would take the second step of reading the CCL and running into the perhaps confusing CCL controls on missile integrated navigation systems.

ECCN 9A106: Commerce added new controls on flight control servo valves. Specifically, 9A106 controls:

Flight control servo valves designed or modified for use in “missiles” and designed or modified to operate in a vibration environment of more than 10g RMS over the entire range between 20Hz and 2KHz.

Once again, you may wonder why the CCL controls servo valves designed or modified for use in missiles. Use the same approach to classification discussed above for integrated navigation systems and you may never have to really face this apparent confusing situation.

Commerce also revised these ECCNs to add cross-references and clarifications:

7A005: Cross-reference to 7A105 and 7A994 added.
7A105: Clarification and cross-reference to 7A005 and 7A994 added.
7A994: Clarification.

Commerce also added new definitions of “payload” and “range to Part 772 of the EAR.

Some of the changes are based on the September 2002 agreement by the Missile Technology Control Regime (MTCR) to change the MTCR Annex. The MTCR is a group of many technologically advanced countries and the MTCR Annex is the list of items for which each member country agrees to impose export controls.

The new regulation did not address the fact that the United States continues to violate the MTCR agreement by not requiring licenses for exports of dual-use and commercial MTCR items to Canada.