This alert is our final installment in our four-part series dedicated to the proposed State and Commerce rules to revise U.S. export controls over firearms and ammunition. The proposed rules, published simultaneously in the Federal Register on May 24, 2018, describe in detail the transition of most firearms and ammunition from the license requirements of the U.S. Department of State's International Traffic in Arms Regulations (
ITAR) to the U.S. Department of Commerce's Export Administration Regulations (EAR). The Department of State proposed rule, along with instructions on how to submit comments, is accessible here. The Department of Commerce's companion publication is accessible here, and includes comment instructions as well.
In our previous alert, we reviewed the State Department, Directorate of Defense Trade Controls' (DDTC's) proposed revisions to U.S. Munitions List (USML) Category II (Guns and Armament) and the Commerce Department, Bureau of Industry and Security's (BIS's ) companion proposed rules to revise the EAR.
In today's alert, we review the proposed revisions to USML Category III (Ammunition/Ordnance) and BIS's companion proposed revisions.
Proposed Transitions from USML Cat. III to CCL
As we have seen with the other USML categories, DDTC proposes to revise USML Cat. III to establish a clear distinction between the USML and the Commerce Control List (CCL). Currently, Category III is written very broadly to include ammunition and ordnance for the articles in Categories I and II, plus production and tooling equipment and components, parts, accessories, attachments and associated equipment specifically designed or modified for the articles in Category III. The rewrite would eliminate the broad catch-all entries and list only the specific ammunition controlled, consistent with the changes to Category I. All articles currently captured in Category III not listed in the rewrite will be subject to the EAR. Notably, this will include the production equipment and tooling.
Items removed from the USML Cat. III to the CCL would be transitioned to one of the new "500 series" Export Control Classification Numbers (ECCNs) below. We include the reasons for control and list-based exceptions for each new ECCN.
- 0A505 - Ammunition as follows:
a. Ammunition for firearms controlled by ECCN 0A501 and not enumerated in paragraph .b, .c or .d of this entry or in USML Category III.
b. Buckshot (No. 4 .24'' diameter and larger) shotgun shells.
c. Shotgun shells (including less than lethal rounds) that do not contain buckshot; and ''specially designed'' ''parts'' and ''components'' of shotgun shells.
Note 1 to 0A505.c: Shotgun shells that contain only chemical irritants are controlled under ECCN 1A984.
d. Blank ammunition for firearms controlled by ECCN 0A501 and not enumerated in USML Category III.
e. through w. [Reserved]
x. ''Parts'' and ''components'' that are ''specially designed'' for a commodity subject to control in this ECCN or a defense article in USML Category III and not elsewhere specified on the USML, the CCL or paragraph .d of this entry.
Note 2 to 0A505.x: The controls on ''parts'' and ''components'' in this entry include Berdan and boxer primers, metallic cartridge cases, and standard metallic projectiles such as full metal jacket, lead core, and copper projectiles.
Note 3 to 0A505.x: The controls on ''parts'' and ''components'' in this entry include those ''parts'' and ''components'' that are common to ammunition and ordnance described in this entry and to those enumerated in USML Category III.
Reasons for control:
National Security (NS), Regional Security (RS), Crime Control (CC), Firearms Convention (FC), United Nations (UN), and Anti-Terrorism (AT). How each is applied to the items controlled is listed in the ECCN.
Limited Value Shipments (LVS) - $100 for items in 0A505.x
Shipments to Country Group B (GBS) - N/A
Civil End-Users (CIV) - N/A
- 0B505 - Test, inspection, and production ''equipment'' and related commodities ''specially designed'' for the ''development'' or ''production'' of commodities enumerated or otherwise described in ECCN 0A505 or USML Category III, except equipment for the hand loading of cartridges and shotgun shells, as follows:
a. Tooling, templates, jigs, mandrels, molds, dies, fixtures, alignment mechanisms, and test equipment, not enumerated in USML Category III that are ''specially designed'' for the ''production'' of commodities controlled by ECCN 0A505.a or .x or USML Category III.
b. Equipment ''specially designed'' for the ''production'' of commodities in ECCN 0A505.b.
c. Equipment ''specially designed'' for the ''production'' of commodities in ECCN 0A505.c. d. Equipment ''specially designed'' for the ''production'' of commodities in ECCN 0A505.d.
e. through .w [Reserved]
x. ''Parts'' and ''components'' ''specially designed'' for a commodity subject to control in paragraph .a of this entry.
Reasons for control:
NS, RS, UN, and AT (please see the ECCN for how the controls are applied).
LVS - $3,000
GBS - N/A
CIV - N/A
- 0D505 - ''Software'' ''specially designed'' for the ''development,'' ''production,'' operation or maintenance of commodities controlled by 0A505 or 0B505.
The list of items controlled is contained in the ECCN heading.
Reasons for control:
NS, RS, UN, and AT (please see the ECCN for how the controls are applied).
CIV - N/A
Technology & Software under Restriction (TSR) - N/A
- 0E505 - ''Technology'' ''required'' for the ''development,'' ''production,'' operation, installation, maintenance, repair, overhaul or refurbishing of commodities controlled by 0A505.
Items: The list of items controlled is contained in the ECCN heading.
Reasons for control: NS, RS, UN, CC, and AT (please see the ECCN for how the controls are applied).
CIV - N/A
TSR - N/A
In addition to the above, the ability to use the license exception, Strategic Trade Authorization (STA), is limited.
Please also see Part 740 in the EAR (15 C.F.R. Pt. 740) for more information on license exceptions and restrictions.
Items to be Removed From USML Cat. III
below is a table showing the items that would be transitioned from USML Cat. III to the new ECCNs described above.
|Ammunition for firearms transitioning from USML Cat. I
||USML Cat. III(a)
|Tooling & equipment for production
||USML Cat. III(c)
|Parts and components
||USML Cat. III(d)
||USML Cat. III (d) - specially designed list, or ECCN 0A505
Articles Still Controlled Under USML Cat. III
- items that would remain under USML Cat. III would be positively listed as follows, including the corresponding paragraph (Significant Military Equipment (SME) is designated with an asterisk (*)). For ease of review, we have highlighted the main paragraphs in bold and blue.
*(a) Ammunition, as follows:
(1) Ammunition that incorporates a projectile controlled in paragraph (d)(1) or (3) of this category;
(2) Ammunition preassembled into links or belts;
(3) Shotgun ammunition that incorporates a projectile controlled in paragraph (d)(2) of this category;
(4) Caseless ammunition manufactured with smokeless powder;
Note to paragraph (a)(4): Caseless ammunition is ammunition without a cartridge case that holds the primer, propellant, and projectile together as a unit.
(5) Ammunition, except shotgun ammunition, based on non-metallic cases, or non-metallic cases that have only a metallic base, which result in a total cartridge mass 80% or less than the mass of a brass- or steel-cased cartridge that provides comparable ballistic performance;
(6) Ammunition employing pyrotechnic material in the projectile base and any ammunition employing a projectile that incorporates tracer materials of any type having peak radiance above 710 nm and designed to be observed primarily with night vision optical systems;
(7) Ammunition for fully automatic firearms or guns that fire superposed or stacked projectiles;
(8) Electromagnetic armament projectiles or billets for weapons with a design muzzle energy exceeding 5 MJ;
(9) Ammunition, not specified above, for the guns and armaments controlled in Category II; or
(10) Developmental ammunition funded by the Department of Defense and specially designed parts and components therefor.
Note 1 to paragraph (a)(10): This paragraph does not control ammunition (a) in production, (b) determined to be subject to the EAR via a commodity jurisdiction determination (see § 120.4 of this subchapter), or (c) identified in the relevant Department of Defense contract or other funding authorization as being developed for both civil and military applications.
Note 2 to paragraph (a)(10): Note 1 does not apply to defense articles enumerated on the U.S. Munitions List, whether in production or development.
Note 3 to paragraph (a)(10): This provision is applicable to those contracts or other funding authorizations that are dated (one year after publication of the final rule), or later.
(b) Ammunition/ordnance handling equipment specially designed for the articles controlled in this category, as follows:
(1) Belting, linking, and de-linking equipment; or
(2) Fuze setting devices.
(d) Parts and components for the articles in this category, as follows:
(1) Projectiles that use pyrotechnic tracer materials that incorporate any material having peak radiance above 710 nm or are incendiary, explosive, steel tipped, or contain a core or solid projectile produced from one or a combination of the following: tungsten, steel, or beryllium copper alloys;
(2) Shotgun projectiles that are flechettes, incendiary, tracer, or explosive; Note to paragraph (d)(2): This paragraph does not include explosive projectiles specially designed to produce noise for scaring birds or other pests (e.g., bird bombs, whistlers, crackers).
(3) Projectiles of any caliber produced from depleted uranium;
(4) Projectiles not specified above, guided or unguided, for the items controlled in USML Category II, and specially designed parts and components therefor (e.g., fuzes, rotating bands, cases, liners, fins, boosters);
(5) Canisters or sub-munitions (e.g., bomblets or minelets), and specially designed parts and components therefor, for the guns or armament controlled in USML Category II;
(6) Hardened cores, regardless of caliber, produced from one or a combination of the following: tungsten, steel, or beryllium copper alloy;
(7) Cartridge cases, powder bags, or combustible cases for the items controlled in USML Category II;
(8) Non-metallic cases, including cases that have only a metallic base, for the ammunition controlled in paragraph (a)(5) of this category;
(9) Cartridge links and belts for fully automatic firearms and guns controlled in USML Categories I or II;
(10) Primers other than Boxer, Berdan, or shotshell types; Note to paragraph (d)(10): This paragraph does not control caps or primers of any type in use prior to 1890.
(11) Safing, arming, and fuzing components (to include target detection and proximity sensing devices) for the ammunition in this category and specially designed parts therefor;
(12) Guidance and control components for the ammunition in this category and specially designed parts therefor;
(13) Terminal seeker assemblies for the ammunition in this category and specially designed parts and components therefor;
(14) Illuminating flares or target practice projectiles for the ammunition controlled in paragraph (a)(9) of this category; or
*(15) Any part, component, accessory, attachment, equipment, or system that: (i) Is classified; (ii) Contains classified software; or (iii) Is being developed using classified information.
''Classified'' means classified pursuant to Executive Order 13526, or predecessor order, and a security classification guide developed pursuant thereto or equivalent, or to the corresponding classification rules of another government or intergovernmental organization.
(e) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles enumerated in paragraphs (a), (b), and (d) of this category and classified technical data directly related to items controlled in ECCNs 0A505, 0B505, 0D505, and 0E505 and defense services using the classified technical data. (See § 125.4 of this subchapter for exemptions.).
(x) Commodities, software, and technology subject to the EAR (see § 120.42 of this subchapter) used in or with defense articles.
Note to paragraph (x): Use of this paragraph is limited to license applications for defense articles where the purchase documentation includes commodities, software, or technology subject to the EAR (see § 123.1(b) of this subchapter).
Notes to Category III:
1. This category does not control ammunition crimped without a projectile (blank star) and dummy ammunition with a pierced powder chamber.
2. This category does not control cartridge and shell casings that, prior to export, have been rendered useless beyond the possibility of restoration for use as a cartridge or shell casing by means of heating, flame treatment, mangling, crushing, cutting, or popping.
3. Grenades containing non-lethal or less lethal projectiles are under the jurisdiction of the Department of Commerce.
The rewrite of USML Categories I, II, and III is long overdue, though its implementation will not come without challenges for industry. While there are many positives that will come out of this effort, including the lack of registration or licensing fees at the Department of Commerce and arguably a more flexible licensing structure, there will be a learning curve as companies begin to operate under a largely new set of regulations (the EAR).
When the revised USML Categories become final, industry will need to undergo a review and reclassification of all inventory, including software and technical data, and will need to update internal processes, procedures, and systems to implement the changes. Training of both employees and customers (both foreign and domestic) will need to occur to ensure that the new requirements are understood and followed. While the Department of Commerce may have more flexible licensing requirements, you will need to understand the constraints of those requirements in order to take advantage of the new licensing structure.
As we have noted previously, both the State and Commerce Departments will be accepting written comments on the revised Categories until July 9, 2018. We strongly encourage industry to take time to carefully review the revised categories and provide actionable commentary to the proposed rules. This is a critical opportunity for industry to provide comments that would assist the government in reducing jurisdictional ambiguities and clarifying the articles that will remain subject to the ITAR. The specific instructions for submitting comments are included in each proposed rule.
Although this alert is the final installment of this particular series, we doubt it will be our last word on the topic! Stay tuned....