Export Control Reform (ECR) Series Episode VII: Livin’ in a Materials World – Changes to US Munitions List Category XIII
If you manufacture or export Auxiliary Military Equipment controlled under Category XIII of the U.S. Munitions List, you may rightly consider the category number unlucky. The current scope of Category XIII controls is broad and can be difficult to interpret. The category includes SCUBA gear and might be read to cover materials for an army shed or the green paint slapped on to that shed. On January 15, 2014, amendments to Category XIII go into effect. Those amendments, briefly described below, both narrow and clarify the Category XIII controls. Congratulations: it looks as if your luck may be changing.
As in the other ECR changes we have discussed in this blog, Category XIII will now cover a smaller, clearer, positive list of items, software, and technical data. The list will reduce the penumbral scope of Category XIII items and technical data designed or modified for military use. Items formerly covered under Category XIII will, for the most part, now fall under the EAR Controls in category 0(_)617. The blank represents a letter A-E determined by whether the thing moved from ITAR to EAR was an item (A), testing equipment (B), material (C), software (D), or technology (E).
Other former Category XIII items will find their way into CCL categories outside Category 0. For example, Self-Contained Underwater Breathing Apparatus will be removed from Category XIII(c) and moved to ECCN 8A620.f.
Category XIII(b) will still cover information security systems, including military cryptographic equipment, but the subparagraphs will be slightly amended to clarify what is and is not included. The amended definition of “Specially Designed” (discussed here) will also help sharpen the boundaries of the new Category XIII(b).
The controls on structural materials and concealment equipment have been amended to better describe the articles that they cover. Many of the items no longer covered by those controls will fall under ECCNs 0A617 and 0C617, but certain structural materials will move under other ITAR controls in USML Category VI (Surface Vessels of War and Special Naval Equipment), Category VII (Ground Vehicles), and Category VIII (Aircraft and Related Articles).
Category XIII(e) currently covers the broad category of armor, not elsewhere specified, that has been designed or modified for military use. The revised XIII(e) will cover only an enumerated list of armor types. That list will describe specific objective measures for the characteristics of controlled armor.
What the Changes Mean to You
First, if you make or export SCUBA gear, you can breathe a little easier (see what we did there?), your equipment is now controlled under the EAR.
Structural materials moved from USML subcategory XIII(f) and other equipment from subcategories XIII(d), XIII(e), and XIII(g) will also likely be controlled under the EAR. However, manufacturers and exporters who believe that their item (or technical data or software) will be removed from the USML should be certain to review the other USML categories listed above. You will want to be sure that the item has not simply been moved and that it is not now under a different USML category.
Finally, a new USML subcategory XIII(x) has been added to allow ITAR licensing for commodities, software, and technical data subject to the EAR, provided they are used in or with defense articles controlled under Category XIII. This category helps companies avoid a dual (ITAR and EAR) licensing requirement. For example, if you are working under an agreement that authorizes the export of items covered under the ITAR but, after January 15, the authorization will include an item that has been moved to the EAR, you may simply submit a minor amendment to DDTC, changing the category of control for that item to XIII(x).
Like all ECR changes, these amendments are designed to streamline the export control regimes and make compliance less burdensome. In general, manufacturers and exporters should find their export control compliance requirements reduced by these changes. However, all regulated parties should recognize that ECR changes do not lift controls entirely. The amendments are somewhat nuanced, and should be thoroughly reviewed as you decide how to change your compliance practices to adjust to the new rules. Compliance under the new Category XIII is not something to trust to luck.