By: John Black
In the August 17, 2016 Federal Register the Bureau of Industry and Security (BIS) and the Directorate of Defense Trade Controls (DDTC) announced that effective November 1, 2016, the same Destination Control Statements (DCS) will be required for exports under the Export Administration Regulations (EAR) and exports under the International Traffic in Arms Regulations (ITAR). The good news is that exporters no longer will have to use one statement for EAR exports and a different statement for ITAR exports.
The bad news is neither the current EAR DCS nor the current ITAR DCS will be required under the new rules. When it comes to reprogramming our software that prints documents, it might have been easier if the government had chosen one of the existing statements already in use. On the other hand, several adjustments to the ITAR and EAR will make life easier for exporters in the long run.
Practical Considerations When Implementing the Change
As you prepare to comply with the requirement to comply with the new rules beginning on for the November 15, 2016, here are some important considerations.
The New DCS:
‘‘These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.’’
(Interestingly to me, the EAR Federal Register notice does not put a period after the last word “regulations” in the EAR DCS while the ITAR Federal Register notice does place a period after the last word “regulations” in the ITAR DCS. I doubt anybody else noticed that. I also doubt this is a deliberate conspiracy by DDTC and BIS to set up exporters who do not properly include or not include the period in their DCS.)
When the DCS Is Required:
- ITAR: For all defense articles exported in tangible form
- EAR: For all items exported in tangible form except a DCS is not required for EAR99 items and items eligible for license exceptions BAG or GFT.
ITAR and EAR DCS Required only for Tangible Shipments. A DCS is not required for items being exported in intangible form such as electronic, oral or visual exports.
Where Do You Have to Put the DCS: The new DCS must be put on the commercial invoice, and not on the airway bill, bill of lading, or other documents.
Other Information You Must Put on the Commercial Invoice: The ITAR and EAR will require the following be put on the commercial invoice, in addition to the DCS:
- ITAR: 1) The country of ultimate destination,
2) The end-user, and
3) The license or other approval number or exemption citation.
- EAR: The ECCN for any 9×515 or 600 series items
Information Required When Using ITAR Authorizations to Export EAR-Controlled Items: The new rule clearly requires that when an ITAR license or authorization (exemption) is used to export EAR controlled items, the exporter must give the ECCN or EAR99 classification for each EAR-controlled item to the end-user and consignees.
Removal of Special Requirements for Certain EAR Exports to India: The new EAR rule will remove the special DCS requirement for exports to India of items controlled for crime control column 1 or 3 reasons or regional stability column 2 reasons.
Other ITAR Changes
Exports of EAR Items under ITAR Exemptions: The rule clarifies that EAR Items may be exported under ITAR exemptions only if they are being shipped with ITAR items.
Changes to Required Language in ITAR Agreements and Transmittal Letters: The rule makes several changes to the required language and clauses in ITAR agreements and transmittal letters.
To see the new EAR and ITAR rules, go to http://www.bis.doc.gov/index.php/regulations/federal-register-notices#fr54721