Export Controls

The White House is finalizing draft legislation that will detail how the administration plans to create a single export licensing agency and a single export control list, Inside U.S. Trade reported on Friday. The effort is the third and final phase of the export-control reform process.

Michael Froman, deputy national security adviser for international economic affairs, said draft legislation that would spell out how to implement these changes is "nearly ready to go."

"We envision a single licensing agency, a merger of the two control lists and the consolidation of two of our export enforcement units, all of which has to be done through legislation," he said at a July 25 event on export control reform at the Hudson Institute. Further:

Brian Nilsson, the National Security Council's point person on export control reform, said the administration has been working on the legislation for the past year in consultation with Congress. However, he admitted there is still a lot of work to do in the current phase two of the reform initiative before the final phase would move forward.

"By looking at what we envision for phase three, it helps us make sure we didn't miss anything in phase one and two," he told reporters after the event.

Phase two of the reform initiative will involve the implementation of a process that will move thousands of items from the strict control of the U.S. Munitions List (USML) to comparatively less stringent Commerce Control List (CCL), where they will be eligible for more license exceptions and export to additional countries.

The administration is currently in the process of consulting with Congress on this issue because the transfer of items from one list to the other requires congressional notification under Section 38(f) of the Arms Export Control Act (AECA).

A July 15 proposed Commerce Department rule would create a framework for this to occur by describing where the former USML items would be located on the control list. This would mean the creation of a special "600 series" of Export Control Classifications Numbers (ECCNs) where these former USML products will be placed.

Some 600 series items will be restricted from using certain license exceptions (Inside U.S. Trade, July 22).

Nilsson explained that the administration has previewed to Congress the method through which it plans to start the transfer of USML items to the CCL, and said there was "some comfort level" from Congress in the "two rule" approach.

This two-rule approach involves using two simultaneous rules to describe what would be coming off the USML and how it would be placed on the CCL. The "first rule" would describe the revised USML category, showing a positive list of items that were found to still require control under the USML. Any items not listed in that positive list would be either decontrolled or transferred to the CCL.

The "second rule" would apply the July 15 Commerce proposal to provide a clear picture of how transferred items will be controlled by the CCL. This would consist of a "positive list . . . describing what will go under the Commerce Control List," Nilsson said.