Effective November 10, 2014, commercial communications satellites will move from the United States Munitions List (“USML”) and the jurisdiction of the Directorate of Defense Trade Controls (“DDTC”) to the Commerce Control List (“CCL”) and the jurisdiction of the Bureau of Industry and Security (“BIS”). While changes affecting commercial communications satellites are likely to garner the greatest amount of attention, the new rules are part of the Administration’s larger Export Control Reform (“ECR”) initiative, and effect numerous changes to USML Category XV, which covers spacecraft items. The first of these changes – moving radiation hardened microelectronic circuits previously controlled under the ITAR to the CCL – will take effect even earlier than the satellites rule. That change is effective June 27. Notably, in addition to rad-hardened microelectronic circuits, the International Space Station (“ISS”) and all specially designed parts will be moved from the USML to the CCL.
In light of the numerous jurisdictional and licensing changes effected by the new rules, from the outset, manufacturers and exporters of items formerly controlled in USML Category XV will need to assess carefully where their products will now fall. Items moving to the CCL will generally remain subject to licensing requirements to most destinations. Exporters must become familiar with these new controls. Many spacecraft items formerly controlled under the ITAR will move to a new “500-series” within CCL Category 9, specifically ECCN 9×515. As such, they will be subject to a combination of National Security (NS), Regional Stability (RS), and, in certain cases, Missile Technology (MT) controls. Knowing whether a spacecraft item moving to the CCL requires a license will necessitate a clear understanding of precisely where that item falls within ECCN 9×515 and will depend on its intended destination.
Notwithstanding the shift of commercial communication satellites from the ITAR (where China is a prohibited destination) to the EAR (where it is not), any pent-up Chinese demand for U.S. spacecraft items will remain so for the time being. Consistent with Congress’s mandate when it authorized the jurisdictional shift, BIS will apply a policy of denial to license requests to China for most spacecraft items moving to the CCL.
