Monthly Archives: November 2013

Export Control Assistance in Mongolia

Mongolia LegalCTP recently managed a cooperative activity in Mongolia, gathering experts from the U.S. Department of State and the Government of Mongolia to further refine their draft law on Strategic Trade Controls.  This event, held Nov. 5-7th at the Government House, is CTP’s most recent task in our long running support of the Export Control and Border Security (EXBS) office, totaling over 600 activities in 60+ countries over nearly twenty years. This and other workshops are conducted with cooperating countries under the auspices of UN Security Resolution 1540, designed to help prevent the proliferation of weapons of mass destruction (WMD).

In the photo, from right:

  • G. Narangua, Government Officer, Cabinet Secretariat
  • Toomas Raba, Expert , CTP, EXBS,
  • Robin Schwartzman, Senior Legal Expert, CTP, EXBS
  • N. Enkhtuya, Head of Legal Department, Cabinet Secretariat
  • David Wyche, Economic/Commercial Section Chief
  • P. Darisuren Economic Assistant

Details available on the U.S. Embassy site:

‘Cheat Sheet’ on Export Control Reforms

Many of our colleagues in the compliance world already follow the weekday release of Jim Bartlett’s terrific newsletter: The Export/Import Daily Update (“The Daily Bugle”).  If you don’t, we recommend that you click our Private Sector page (see grey banner above), find Exporter Resources in the right hand menu, and select “Newsletters & Blogs” for sign-up instructions.  In the meantime, we’d like to share a post from Jim’s Friday, Nov. 15th newsletter that does a particularly good job of summarizing the ECR initiatives to date.  This was contributed by another well-known local expert, Gary Stanley, whose contact information is also listed in our Exporter Resources section.  Full credit and thanks to Jim and Gary for sharing their expertise with the compliance community.

7. G. Stanley: “Here’s a ‘Cheat Sheet’ on the Obama Export Control Reforms”


* Author: Gary Stanley, Esq., Global Legal Services, PC,, 202-352-3059

The initial Obama export control reforms became effective on Oct 15th.  Although these reforms promise less licensing, they come at the price of more complex controls and more extensive record keeping.  The new rules must be approached in a systematic manner.   Here’s a “cheat sheet” to help you take advantage of these significant changes to U.S. export and re-export controls.

Order of Review

Under the Obama reforms, there are effectively three control lists:  (1) the U.S. Munitions List, (2) the “600 series” ECCNs within the Commerce Control List (CCL) covering most items that have moved from State to Commerce, and (3) the traditional dual-use ECCNs within the CCL.  The key to determining commodity jurisdiction and classification for an item is to review systematically each list starting with the USML and ask two questions with respect to each list:  (1) Is my item specifically enumerated in this list? (e.g., revised USML Category VIII(a) calls out specific types of military aircraft); and (2) Even if  my item is not specifically enumerated, is it nevertheless “caught” and “held” as an item specially designed for something that is specifically enumerated in the list? Pay special attention to items specifically enumerated in sub-paragraph .y of the new “600 series” ECCNs, as these are controlled for export or re-export only to China, Cuba, North Korea, Sudan, and Syria.  This six step process (3 lists/2 steps for each) is the Order of Review described in new ITAR § 121.1(b) and Supp. No. 4 to EAR Part 744.

ITAR and EAR “Specially Designed” Definitions

The new term “specially designed” defined in ITAR § 120.41 and EAR § 772.1 is based around the fishing practice of “catch” and “release.” Sub-paragraphs (a)(1) and (a)(2) in both definitions “catch” items, but then there are several subsequent (b) sub-paragraphs that may “release” particular items if they satisfy any one of the enumerated criteria

For example, sub-paragraph (a)(2) is very broad and captures any part, component, accessory, attachment, or software for “use in or with” any item specifically enumerated in the revised USML or “600 series” ECCNs.  Sub-paragraph (b)(3) in each definition, on the other hand, would release the item from, first, the USML and, potentially, the otherwise applicable “600 series” ECCN if it has the same function, performance capabilities, and the same or “equivalent” form and fit, as a commodity or software used in or with an item that (i) is or was in production and (ii) is not specifically enumerated in the USML or CCL, or is described in an ECCN controlled only for Anti-Terrorism reasons. In both definitions, sub-paragraph (b)(2) releases fasteners (e.g., screws, bolts, nuts, nut plates, studs, inserts, clips, rivets, pins), washers, spacers, insulators, grommets, bushings, springs, wire, and solder, but not wiring harnesses.

It is very important to understand not only the structure of these definitions, but also the defined terms within each (e.g., “production,” “development,” and “equivalent”).  Mastering the specially designed concept offers the best chance of moving your products and software off the revised USML and even off the new “600 series” ECCNs.

License Exception STA

There are several EAR License Exceptions that may be available with respect to “600 series” items (e.g., RPL, TMP, LVS, and TSU), but the one with potentially the most utility is License Exception STA.  It enables exports (and re-exports) without a license of many “600 series” items to 36 countries (Country Group A:5 in Supp. No. 1 to EAR Part 740) + the United States; provided certain requirements and conditions are met.  An additional eight countries (Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa, and Taiwan) have more limited eligibility.

The three key conditions are that the exporter or re-exporter: (i) furnish the ECCN of each item to be shipped to the foreign consignee; (ii) have the foreign consignee sign before shipment a 7-paragraph statement acknowledging the use and limitations of License Exception STA; and (iii) provide the foreign consignee with notice (best done on the invoice and bill of lading) that the shipment is under License Exception STA.

Note that a foreign consignee cannot use the de minimis rule with respect to “600 series” items (0% percent U.S. content for ITAR § 126.1 proscribed countries and 25% U.S. content for all others) if it receives the shipment pursuant to License Exception STA because the foreign co-signee has pledged via the 7-paragraph statement to not re-export/re-transfer outside the STA countries without first obtaining a BIS re-export license.  This means that U.S. suppliers and their foreign consignees will need to coordinate closely as to when to use and not use License Exception STA.

Proposed ITAR “Defense Services” Definition

DDTC proposed a revised “defense services” definition in April 2011, but it has not yet published anything in final form.  The proposed definition contains a previously unwritten DDTC policy that providing technical assistance in connection with the “integration” of a “600 series” or other ECCN item into an item described on the USML constitutes a defense service for which a TAA will still be needed.  To the extent that U.S. suppliers provide such help, this could drag them back into the ITAR world even if their products have moved to the CCL.


The bottom line here is that existing ITAR licenses and agreements will remain valid and ready for use until they expire, need to be amended, or two years after the applicable revised USML becomes effective (e.g., Oct. 15, 2015, for USML Category VIII and XIX items), whichever comes first.  Any new or amended licenses or agreements will need to reflect the revised commodity jurisdiction and classification of the items they cover.  Exporters and their foreign counterparts need to plan now to start amending their licenses and agreements so that they don’t end up in a huge DDTC/BIS backlog six months before their current authorizations reach the two-year mark.

For more information on how export control reform will affect you,  contact Gary Stanley and request his  pre-recorded webinar titled  “Export Control Reform: Why Less Licensing = More Complexity”.

Turbulence After New Fly-By-Wire Entries on the CCL

On June 20, 2013 U.S. Department of Commerce published revisions to the Export Administration Regulations based on the most recent agreements in Wassenaar. These EAR changes to the Commerce Control List (CCL) in Category 7 implementing the Wassenaar agreement significantly reduced the level of technology control for Fly-by-Wire technology in ECCN 7E004b. To compensate, Commerce added Fly-by-Wire technology controls to OA521E, a catch all entry intended for emerging technology coverage. These later revisions came about because, subsequent to the USG agreeing to the Wassenaar revisions, DoD/DTSA realized the new agreed level of control would release technologies DoD deemed to be still militarily significant.

According to Dennis Krepp, BIS Director of Sensors and Aviation Division, DoD required DOS/BIS to reinstate the removed technology controls from 7E004b., and place them under ECCN 0E521. The specific technology covered by 0A521 is enumerated in Technology List No.6 of Supplement 5, to EAR Part 774. DoD’s intent was to have BIS maintain the same license requirement as under the old ECCN 7E004b. Technology proposed for export and controlled under the old 7E004 b. would still require a license, either through the requirements of the new 7E004 or 0E521. It is important to note verbiage of the new Supplement 5 description is not identical to the old 7E004b. and would appear to cause some confusion in identifying items intended for control by 0A521.

DOC/DOS/DOD intends to go back to Wassenaar to reintroduce the controls.  Past experience shows that once something is decontrolled in Wassenaar, it is unlikely to be re-controlled.

According to the EAR, 0E521 has only a one year validity. Additional controls would need to be implemented in order to maintain DoD’s desired are implemented.

By way of comparison, see OLD and NEW postings below: 

(OLD) 7E004  Other “technology” as follows (see List of Items Controlled).

License Requirements

Reason for Control: NS, MT, AT

b. “Development” “technology”, as follows, for “active flight control systems” (including fly-by-wire or fly-by-light):

b.1. Configuration design for interconnecting multiple microelectronic processing elements (on-board computers) to achieve “real time processing” for control law implementation;

b.2. Control law compensation for sensor location or dynamic airframe loads, i.e., compensation for sensor vibration environment or for variation of sensor location from the center of gravity;

b.3. Electronic management of data redundancy or systems redundancy for fault detection, fault tolerance, fault isolation or reconfiguration;

Note: 7E004.b.3. does not control “technology” for the design of physical redundancy.

b.4. Flight controls that permit inflight reconfiguration of force and moment controls for real time autonomous air vehicle control;

b.5. Integration of digital flight control, navigation and propulsion control data, into a digital flight management system for “total control of flight”;

Note: 7E004.b.5 does not control:

1. “Development” “technology” for integration of digital flight control, navigation and propulsion control data, into a digital flight management system for “flight path optimization”;

2. “Development” “technology” for “aircraft” flight instrument systems integrated solely for VOR, DME, ILS or MLS navigation or approaches.

b.6. Full authority digital flight control or multisensor mission management systems, employing “expert systems”;

 (NEW) 7E004 Other “technology” as follows (see List of Items Controlled).

 License Requirements

Reason for Control: NS, MT, AT

b. “Development” “technology”, as follows, for “active flight control systems” (including fly-by-wire or fly-by-light):

b.1. Photonic-based “technology” for sensing aircraft or flight control component state, transferring flight control data, or commanding actuator movement, “required” for fly-by-light “active flight control systems”;


b.3. Real-time algorithms to analyze component sensor information to predict and preemptively mitigate impending degradation and failures of components within an “active flight control system”;

Note: 7E004.b.3 does not include algorithms for purpose of off-line maintenance.

b.4. Real-time algorithms to identify component failures and reconfigure force and moment controls to mitigate “active flight control system” degradations and failures;

Note: 7E004.b.4 does not include algorithms for the elimination of fault effects through comparison of redundant data sources, or off-line pre-planned responses to anticipated failures.

b.5. Integration of digital flight control, navigation and propulsion control data, into a digital flight management system for “total control of flight”;

Note: 7E004.b.5 does not apply to:

1. “Development” “technology” for integration of digital flight control, navigation and propulsion control data, into a digital flight management system for “flight path optimization”;

2. “Development” “technology” for “aircraft” flight instrument systems integrated solely for VOR, DME, ILS or MLS navigation or approaches.

b.6. Full authority digital flight control or multisensor mission management systems, employing “expert systems”;

N.B.: For “technology” for “Full Authority Digital Engine Control Systems” (“FADEC Systems”), see ECCN 9E003.h.

Note: 7E004.b does not apply to “technology” associated with common computer elements and utilities, e.g., input signal acquisition, output signal transmission, computer program and data loading, built-in test, task scheduling mechanisms) not providing a specific flight control system function.

 (NEW) 0E521 Any technology subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons.

0E521 technology is subject to RS1 controls with no license exception eligibility other than License Exception GOV for U.S. Government personnel and agencies under § 740.11(b)(2)(ii) of the EAR, or an item-specific license exception identified in Supplement No. 5 to part 774 particular to an item covered under ECCN 0E521. The list of technologies determined to be classified under ECCN 0E521 controls is published in Supplement No. 5 to part 774. The license requirements and licensing policy relating to ECCN 0E521 are set forth in § 742.6(a)(7) of the EAR.


0E521. Technology. 

No. 6 “Technology”   for fly-by-wire control systems, as follows:a.   “Technology” according to the General Technology Note for the “development”   of “software” controlled by 0D521; orb.   “Development” “technology” for “active flight control systems” for control   law compensation for sensor location or dynamicairframe   loads, i.e., compensation for sensor vibration environment or for variation   of sensor location from the center of gravity. June 20, 2013 (ID) June 20, 2014 License Exception GOV under § 740.11(b)(2)(ii) only.



New DSP Forms 5, 6, 61, 62, 73, and 74 (v 8.0)

DTrade DSP forms and forms viewer have been upgraded to support SHA-256 digital certificates as required by federal mandate.  Effective November 25, 2013 the use of the new forms (v8.0) will be mandatory and users may begin using SHA-256 digital certificates to access DTrade, as well as digitally sign and submit the DSP forms listed above.   Until then, please submit DSP v.7.1 forms only.  Please note:  In order to access the newly revised forms, users must first download the new IBM Forms Viewer (v 8.0.1).   The new forms do not contain any functional changes, and include only minor behavioral changes (e.g., tool tips are displayed when the cursor is placed over a field).

Key Dates:

November 22, 2013 – DTrade will be taken offline at 5:00 pm in order to upgrade the system to accept SHA-256 certificates. Specific information regarding this outage and transition will be posted on the DDTC website.

November 25 – December 31, 2013 – DTrade will accept both SHA-1 and SHA-256 certificates. During this time:

–          Users can gain access to DTrade using either certificate type;

–          Users must purchase a SHA-256 certificate from one of the authorized ACES certificate vendors (IdenTrust or ORC);

–          Users must register their SHA-256 certificate with DTrade based on established guidelines; and

–          Users must download and use the new DSP v.8 forms, as well as the new IBM Forms Viewer 8.0.1.

January 1, 2014 – Only users who have purchased and registered their SHA-256 certificates will have access to DTrade.  SHA-1 certificates will no longer be accepted.