International Trade Law News

Published by Jacobson Burton Kelley PLLC

This evening the U.S. House of Representatives held 40 minutes of debate on H.R. 5916, the Security Assistance and Arms Export Control Reform Act of 2008. Following the debate, a vote on the bill was postponed until tomorrow.

If enacted, H.R. 5916, which was introduced by House Foreign Affairs Committee Chairman Howard Berman (D-CA) less than two weeks ago, would make a number of significant changes to arms export control procedures.

For example, Subtitle A of Title I of the bill, referred to as the Defense Trade Controls Performance Improvement Act of 2008, would require the Department of State's Directorate of Defense Trade Controls (DDTC) to institute specified performance goals to improve the review and processing of applications for export licenses (particularly for major allies such as Israel, South Korea, Japan, Australia, New Zealand, and members of NATO).

These performance goals include:

• The processing time for review of each application for a license to export items on the United States Munitions List shall be not more than 60 days from the date of receipt of the application.

• The processing time for review of each application for a commodity jurisdiction determination shall be not more than 60 days from the date of receipt of the application.

In order to meet these goals, the bill would require DDTC to have three staff members dedicated to requests on commodity jurisdiction and one licensing officer for every 1,250 license applications.

The Congressional Budget Office (CBO) has estimated that DDTC would need an additional 55 employees to meet the requirements of the bill: 35 licensing officers, five staff members to review commodity jurisdiction, four staff members to oversee and review processing goals, one person to review regulations and the U.S. Munitions List, and 10 staff members for compliance and enforcement of export controls. The CBO estimates that DDTC would require additional appropriations of $6 million in 2009 and $31 million during the period 2009-2013 period.

To help pay for this increased staff, section 107 of the bill would authorize the State Department to spend up to $10 million in civil penalties collected each year over the 2008-2012 period for DDTC expenses.

In what would be a dramatic change to the commodity jurisdiction (CJ) process, the bill states "that the complete confidentiality surrounding several hundred commodity jurisdiction determinations made each year" by DDTC "is not necessary to protect legitimate proprietary interests of persons or their prices and customers, is not in the best security and foreign policy interests of the United States, is inconsistent with the need to ensure a level playing field for United States exporters, and detracts from United States efforts to promote greater transparency and responsibility by other countries in their export control systems."

Therefore, the bill would require DDTC to publish CJ determinations on DDTC's website within 30 days after the CJ is made. Specifically, the bill would require the following CJ information to be posted:

1. the name of the manufacturer of the item;
2. a brief general description of the item;
3. the model or part number of the item; and
4. the USML category under which the item has been designated.

The bill specifies that the name of the person or business organization that sought the CJ will not be published if the person or business organization is not the manufacturer of the item and the names of the customers, the price of the item, and any proprietary information relating to the item indicated by the person or business organization that sought the CJ will also not be published.

The complete text of H.R. 5916 can be found here. The report accompanying the bill, 110-626, can be found here.

Update: The House of Representatives did not consider or vote on H.R. 5916 on May 14th.

Labels: Congress, DDTC, Export Controls, ITAR