May 12, 2016

Export Controls

Chris Mitchell, Gardner Peckham

international-relations-iconThe US Departments of State and Commerce could publish as early as next month final revisions to Category XIV (toxicological agents) and XVIII (directed energy weapons). These rules will describe more clearly what articles within these categories warrant coverage on the US Munitions List (USML) and which articles will migrate to the Commerce Control List (CCL).

Once published, the State Department will have finalized rewrites of 17 of 21 USML categories. Obama Administration officials have made a commitment to complete an initial review of all 21 USML categories by year’s end.

Of the four remaining categories, State and Commerce have issued a second set of proposed rules for XII (night vision equipment) but have yet to turn their full attention to I (firearms), II (large guns) or III (ammunition). Some in Congress have charged that the Administration has politicized the USML rewrite by intentionally delaying revisions to I, II, and III. State has also delayed publishing a final rule on defense services. The proposed rule encountered resistance over its proposed “prior restraint” on the publication of certain technical data

Politics aside, export control reform is likely to be one of the Obama Administration’s most significant, but least heralded policy achievements. When elected to office, exporters and policymakers alike agreed the export control regime was inefficient, inadequately protecting both homeland and economic security. In its place, an interagency team set about to establish higher walls around a smaller number of truly defense articles. The result has been largely successful. Thousands of articles have moved from the USML to the CCL, resulting in a 57% decline in the number of the State Department license applications for those categories that have been revised. Conversely, the number of export transactions related to the CCL are skyrocketing, suggesting that exporters are taking advantage of the more flexible licensing process.

In addition to the USML rewrite, the US Government has established the USXPORTS, a single, internal licensing database that allows Commerce, Defense and State Department officials to better inform export licensing decisions by allowing reviewers to see what licenses have been approved and denied across federal agencies. The USXPORTtrade-iconS database is a prerequisite to creation of a single portal through which exporters in the future will be able to submit process requests. Work on that single portal has already begun.

The challenge for the next president will be to maintain momentum for continued reform. The initial rewrite needs to be completed, regular category reviews and updates need to be undertaken, and the single portal needs to be developed and taken online. Ultimately, in addition to this regulatory reform, legislative changes will be required to further modernize the US export control regime.

The work ahead, however, shouldn’t detract from the substantial  and laudable progress this Administration has achieved.  We applaud this exercise in good government and encourage Congress to do its part to complete the reform.


Chris Mitchell

With more than fifteen years of experience in public policy, Chris offers clients’ strategic counsel and advocacy on a variety of policy issues before Congress and Executive Branch agencies. He works primarily with the firm’s technology and transportation clients. His experience on transnational issues, including those that impact the digital currency industry, makes him a valued member of our foreign policy and trade practice. Prior to joining Prime Policy Group, Chris spent more than eight years working for members of Congress from the State of California.

Gardner Peckham

Gardner manages the firms international practice. He has 30 years of experience in the design and implementation of federal policy on foreign relations, national security and international trade. Gardner co-leads our practice which services clients on issues related to the Transatlantic Trade and Investment Partnership (TTIP) negotiations.