By George W. Thompson
Our friends at the Directorate of Defense Trade Controls and Bureau of Industry and Security have issued another set of export control reform-related changes, this time to adopt identical verbiage for Destination Control Statements.
Each agency’s Destination Control Statement has served as a form of general reminder on commercial and shipping documents that a transaction is subject to U.S. export control requirements. The buyer and its agent, as well as logistics providers, presumably read it and are duly impressed into complying with the regulations. At least, if there is a violation, any party that received a document on which the statement appears will not be able to claim it was unaware of the regulatory coverage.
DDTC and BIS have always imposed different wording for their statements. Since relatively few shipments included goods subject to the ITAR and EAR in the pre-reform days, the likelihood that documents would have to set out both versions was low. Things have changed, however.
Export Control Reform Resulted in Mixed EAR/ITAR Shipments
One of the goals of export control reform is to move items posing a lower level of national security from ITAR coverage to the EAR. For example, the majority of “specially designed” parts and components that previously were subject to ITAR have been removed to BIS licensing authority. In the past, finished ITAR articles and their parts often were exported together, under authority of one or more DDTC licenses.
An exporter now had two licensing options in that circumstance: it can seek separate licenses from BIS for the EAR items and DDTC for the ITAR ones, or get a single DDTC license covering both sets of goods. In the latter case, goods classified in the EAR remain subject to those regulations even though DDTC is the “one-stop” licensing authority. No matter which option is used, the exporter may wish to continue shipping the product and parts together, under a single invoice and bill of lading.
The fact that DDTC and BIS have different Destination Control Statements means, in practice, that both are often printed on the same documents. Many exporters seem unaware of the current EAR provision that the documents need only include the ITAR statement when a mixed shipment is involved. This redundancy takes up space, and may cause readers to wonder why the document says more or less the same thing twice.
New Language for Both Agencies Effective on November 15, 2016
DDTC and BIS have been aware of that problem, and addressed it by establishing a single Destination Control Statement, reading as follows:
These items are controlled by the U.S. government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.
The agencies also reduced the number of documents on which the statement must appear. The current BIS requirement is that it be “entered on the invoice and on the bill of lading, air waybill, or other export control document” for the shipment from the United States, while the ITAR direct placement on “the bill of lading, air waybill, or other shipping document, and the purchase documentation or invoice whenever defense articles are to be exported, retransferred, or reexported.”
Under the amended rule, the Destination Control Statement need only appear on the commercial invoice.
The new requirement is effective on November 15, 2016.
The Federal Register notice for the ITAR amendment is published here and that for BIS is here.
