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Volume XII, Number 279

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Export Regulation Revisions: Harmonization of Destination Control Statements

New rules synchronize Destination Control Statements for EAR and ITAR.

On August 17, both the US Commerce Department’s Bureau of Industry and Security (BIS) and the US State Department’s Directorate of Defense Trade Controls (DDTC) issued final rules published in the Federal Register, both of which will become effective on November 15, 2016. The rules seek to harmonize the Destination Control Statement (DCS) in 15 CFR § 758.6 of the Export Administration Regulations (EAR) with the DCS in 22 CFR § 123.9 of the International Traffic in Arms Regulations (ITAR).

The rules are an ongoing part of US President Barack Obama’s Export Control Reform Initiative (ECR Initiative). To date, the ECR Initiative has transferred thousands of formerly ITAR-controlled defense article parts and components (along with other items) from ITAR’s United States Munitions List to the Commerce Control List in the EAR. This caused a change in agency jurisdiction for many parts and components of military and defense systems, which in turn resulted in certain export shipments containing articles subject to both the ITAR and EAR in the same shipment (formerly, export shipments were typically only subject to one or the other).

Both the EAR and ITAR have a mandatory DCS that must be stated verbatim on the export control documents for a shipment, such as bills of lading or commercial invoices. Since the pre-existing DCSs were created well before the ECR Initiative was implemented, certain shipments including items subject to both the EAR and ITAR could thus technically be subject to two sets of regulations’ mandatory language that were not consistent with each other. This caused confusion for exporters about which DCS to place on export documents, or whether they were required to include both the EAR and ITAR statements.

BIS and DDTC say that the DCS harmonization in the new rules will ease this regulatory burden on exporters.

Copyright © 2022 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VI, Number 235
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About this Author

Louis Rothberg, Morgan Lewis, Regulations attorney
Of Counsel

Louis Rothberg represents US and international enterprises in export license compliance and national security-related matters. Clients seek his counsel in matters related to munitions and dual-use export controls, economic sanctions and embargoes, and acquisitions in the United States by foreign persons concerning the Committee on Foreign Investment in the United States (CFIUS). Louis has experience with ITAR and EAR export controls, and with domestic and non-US company compliance with Office of Foreign Assets Control (OFAC) regulations involving US embargoed countries...

202-739-5281
Margaret Gatti, Securities Lawyer, Morgan Lewis
Partner

Margaret Gatti represents US and non-US companies, universities, and financial institutions in matters involving economic sanctions, export controls under the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), customs and import regulations, free trade agreements, antiboycott regulations (EAR and IRS), anticorruption laws (FCPA and UKBA), anti-money laundering legislation, international commercial sales terms (INCOTERMS), international e-commerce, and Bureau of Economic Analysis (BEA) reporting, as well as national security...

202-739-5409
Marynell Devaughn, Securities attorney, Morgan Lewis
Of Counsel

Marynell DeVaughn represents US and international clients in national security and international trade law matters, such as counseling clients on the Export Administration Regulations (EAR), encryption export controls and regulations, International Traffic in Arms Regulations (ITAR), economic sanctions and trade embargoes administered by the Office of Foreign Assets Control (OFAC), Foreign Corrupt Practices Act and anticorruption, military exports and defense offsets, antiboycott regulations, and the Committee on Foreign Investment in the United States (CFIUS). She...

202.739.5863
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