Fact Sheet: Implementation of Export Control Reform

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For Immediate Release March 08, 2013 Fact Sheet: Implementation of Export Control Reform

Today, the Administration announced two key steps to further the goals of President Obama’s Export Control Reform Initiative, which is a common sense approach to overhauling the nation’s export control system.  President Obama signed an Executive Order today to update delegated presidential authorities over the administration of certain export and import controls under the Arms Export Control Act of 1976, and yesterday the Administration notified Congress of the first in a series of changes to the U.S. Munitions List.

Executive Order

Executive Order 11958 delegated authority to control exports of defense articles and services to the Secretary of State and delegated the comparable authority to control imports to the Secretary of the Treasury.  The Department of State controls the export of defense articles and services on its U.S. Munitions List (USML); the Department of Justice controls their import pursuant to the U.S. Munitions Import List (USMIL) administered by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).  The USMIL was previously a subset of State’s USML.  The most recent comprehensive delegation of these authorities was in Executive Order 11958 of January 18, 1977.  The President’s new Executive Order updates delegated authorities consistent with the upcoming changes to our export control lists.  It supersedes and replaces Executive Order 11958 and amends Executive Order 13222 of August 17, 2001, that pertains to the Department of Commerce-administered controls.  The new Executive Order makes the following changes:

Consolidation of All Brokering Responsibilities with the Department of State:  The Arms Export Control Act requires the registration and licensing of brokering activities for defense articles and services for both exports and imports.  A broker is a person who acts as an agent for others in negotiating or arranging contracts, purchases, sales or transfers of defense articles or services.  The Executive Order consolidates and delegates to the Secretary of State all statutory responsibility for maintaining registration and licensing requirements for brokering of defense articles and services on either the State or ATF lists which both control defense articles and services under the Arms Export Control Act.  This one-stop approach provides better clarity for the defense trade community and makes it easier for industry to comply and for the U.S. Government to enforce.

Elimination of Possible “Double Licensing” Requirements:  Today the Department of State licenses entire systems, including any accompanying spare parts, accessories, and attachments, yet many of these items will be moved to the Commerce list which may mean that an exporter would need two licenses instead of one.  The President’s delegation, via an amendment to Executive Order 13222, will allow the Department of State to authorize those accompanying items that may have moved to the Commerce list and prevent any potential double-licensing requirement.  This ensures that the prioritization of our controls, in which we facilitate secure trade with Allies and partners, does not add new red tape.  Items licensed or otherwise approved by the Secretary of State under this delegation remain subject to the jurisdiction of the Department of Commerce, including for enforcement purposes.

Congressional Notification Process:  The President has directed that the Department of Commerce establish procedures for notifying Congress of approved export licenses for a certain subset of items that are moved or that may move from the State list to the Commerce list.  A key feature of the President’s reform initiative is to enhance transparency with Congress and the public in the administration of our export control system.  This Executive Order ensures that, going forward, the Executive Branch will continue this transparency and notify Congress about export licenses for those certain items that, while no longer subject to the statutory notification requirements of the Arms Export Control Act, warrant continued transparency and notification to Congress.

Other Administrative Updates:  The Executive Order delegates to the Attorney General the functions previously assigned by Executive Order 11958 to the Secretary of the Treasury, reflecting the 2003 move of ATF to the Department of Justice from the Treasury (accommodated by Executive Order 13284).  It also makes a number of other necessary updates to ensure that the authorities to administer our export control system are current.

Changes to the U.S. Munitions List

The cornerstone of the President’s Export Control Reform Initiative is the rebuilding of the two primary export controls lists, State’s USML and the Department of Commerce’s Commerce Control List (CCL) which primarily controls dual-use items, i.e., commercial items with possible military applications, and some military items of lesser sensitivity.  By law, everything on the USML is controlled equally, whether an F-18 fighter or a bolt that has been modified for use on that F-18, and each of these items requires an individual license.  This system has created significant obstacles and delays in providing equipment to Allies and partners for interoperability with U.S. forces in places like Afghanistan, and harms the health and competitiveness of the U.S. industrial base. Rebuilding our export control lists and moving less sensitive items from the State to the Commerce list will provide us the flexibility to more efficiently equip and maintain our partner’s capabilities while allowing us to focus on preventing potential adversaries from acquiring military items that they could use against us.

The Administration notified Congress yesterday of the first in a series of changes to the USML, as required by Section 38(f) of the Arms Export Control Act.  Once the Congressional notification period concludes, these changes -- to current Department of State- administered controls on Aircraft and Gas Turbine Engines -- will be published, with an effective date of 180 days after publication.  The revised USML will enable the United States to better focus its resources on items that deserve the highest levels of export protection and on destinations of concern, while providing American companies with a streamlined export authorization process for thousands of parts and components. The remaining USML changes will be published on a rolling basis throughout 2013, and ultimately will update every category of defense articles to better meet current national security and economic challenges. These actions will improve our national security by better utilizing our export licensing and enforcement resources to focus on those items, destinations, and end-uses of greatest concern, improve interoperability with Allies and partners, and bolster the U.S. defense industrial base.  To follow developments in the President’s Export Control Reform Initiative, visit www.export.gov/ecr/.

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