May 16, 2018 |
Orchid Advisors Releases Statement on Export Control Reforms
Announcement on Export Control Reform
The U.S. Department of State, Directorate of Defense Trade Controls (DDTC) has announced on its website the long-awaited Export Control Reform (ECR) rules applicable to U.S.M.L. Categories I, II and III. The proposed new rules will be published in the Federal Register within the next few days and then will be subject to a 45-day comment period. It is too soon to say when the new rules will go into effect. That will depend on the public comments received and the Governments response to the comments.
The proposed rules will effect far-reaching changes in the way the U.S. Government controls the export of non-automatic and semi-automatic firearms, as well as their components and the ammunition they use.
The following are among the most significant changes that will be affected by the new rules:
- Non-automatic and semi-automatic firearms that are currently controlled under Categories I or II of the ITAR will be controlled under the Export Administration Regulations (EAR). The same will apply to components for these firearms and the ammunition they use.
- Automatic firearms and their principal components will remain in ITAR Category I, as well as firearms designed to fire caseless ammunition and certain other firearms and firearms systems designed for military applications.
- Ammunition that is belted or linked (i.e., for automatic firearms) will remain in U.S.M.L. Category III. Ammunition for non-automatic and semi-automatic will move to the EAR.
- All the items moving from the ITAR to the EAR will continue to be subject to licensing requirements but under the EAR, not the ITAR. The EAR rules will contain “license exceptions” that will permit certain components and other items to be exported without a license, but there will continue to be a licensing requirement for complete firearms.
- Services (known as “defense services” under the ITAR) relating to non-automatic and semi-automatic firearms and the other items that move to the EAR will no longer be export-controlled.
- Manufacturers, exporters, gunsmiths and others who are currently required to register under the ITAR and pay a $2,250 registration fee but who have no involvement with the items that will remain on the U.S.M.L. will no longer be required to register with DDTC or pay an annual fee. There is no registration fee under the EAR and no fee for export licenses (in contrast to the $250/license fee under the ITAR).
We are just beginning to sort through the new rules. As we digest them and analyze their implications, we will be in touch with clients in the coming days, weeks and months to explain how the new rules will affect their businesses and the new opportunities the rules will create.
Industry personnel seeking additional information about the DDTC and BIS announcements and the new rules can contact Orchid’s Export / ITAR Services Practice for immediate assistance.
Need Additional Information? Contact us today