If you have ever exported, you know that the regulations are horribly written, overlapping, and open to a great deal of subjective interpretation. President Obama has been claiming for some time now that our export laws need revamping, and last week he took his first concrete steps towards realizing this goal by issuing a slew of new changes in export regulations. He calls his effort the Export Control Reform Initiative.
One of the most important proposed revisions is the creation of a new license exception called Strategic Trade Authorization (STA). A license exception is exactly what is sounds like. If the Export Administration Regulations require an export license to ship to a particular destination, there are a few loopholes available. This latest proposal seeks to create the most sweeping license exception ever. STA appears to be a license exception that swallows up the current licensing scheme for many controlled items. It effectively removes a bunch of items from the Commerce Control List so that an export license is required only for the most sensitive items.
The interesting part is that President Obama is making these changes through executive fiat, by amending the regulations. Obama, like a couple presidents before them, just can’t convince Congress to amend the export statutes (good luck with the IRS code). The problem is that when presidents bypass Congress, sometimes they get called on the carpet, they can get challenged, especially by those who stand to suffer from the changes in the law. But maybe I’m not giving the President sufficient credit. It is hard to imagine that many exporters will argue against this huge liberalization of US export controls that this proposed amendment would make.
Exporters must report to the BIS whenever they invoke the STA exception, which is different and an additional step from most license exceptions. Exporters also have to go back and forth with the consignee regarding some information, a new wrinkle in terms of license exceptions. STA will also require a special Destination Control Statement on your export documents. The exporter informs the consignee of certain information, including the ECCN. The exporter can ship after the consignee provides a written acknowledgment, a written commitment to comply with the EAR, and a promise to furnish information about the transaction if the US Government ever asks.
People have until February 7, 2011 to submit comments to the BIS.
Principal and a founding member of GRVR Attorneys.