Destination Control Statement

January 3, 2017 by 2 Comments

Lately, we’ve been getting a lot of questions about the Destination Control Statement (DCS).  We emphasized the need to place this on commercial invoices subject to export when the rules were modified earlier this year.

The modification harmonized the different Destination Control Statements required by the State Department (for ITAR-controlled exports) and by the Commerce Department (for all other exports).  Now, they both require the same language.  The DCS requirement, however, existed before the recent change.  So the DCS is not a new thing.

The DCS provisions require that exporters include a warning statement on their commercial  invoices (note that the old regulations required the information on other places – so the new regulation reasonably limits our responsibilities).  The DCS statement should look like this:

“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 new requirement to place the modified DCS on commercial  invoices went “live” as of November 15.  The regulations requires the DCS on each commercial invoice whenever an items on the Commerce Control List (CCL) is exported in tangible form.  The regulations also require the DCS on each commercial invoice for an ITAR-controlled export.

This does not create any new licensing obligations.  Look at the language at the end of the DCS.  It limits your customer’s resale to situations where they first obtain a license or “or as otherwise authorized by U.S. law and regulations.”  So if no license is required for the transaction in question, then this does not impose a new license requirement.  If a licensing exception is available for use, then this DCS does not change that, either.  And if it was illegal to perform a transaction before the DCS, then that same transaction continues to be illegal after the DCS.

There are some limited exceptions where the DCS is not required.  The DCS is not required on Commerce-Department-regulated exports when the export is shipped under the BAG (baggage) exception or the GFT (gifts and humanitarian aid) exception.  It also does not apply when the article shipped under EAR99.  These exceptions typically do not apply to aircraft parts exports, so exports of aircraft parts will typically include the DCS.

Summary: Placing the DCS on the commercial invoice

For BIS-regulated items on a Commerce Control List (CCL), add this information to the commercial invoice:

  • The DCS – 15 C.F.R. § 758.6
  • Also add the ECCN for any 9×515 or “600 series” item (15 C.F.R. § 758.6(a)(2))

For DDTC-regulated items from the United States Munitions List (USML), add this information to the commercial invoice:

  • Country of ultimate destination (22 C.F.R. § 123.9(b)(1)(i))
  • End-user (22 C.F.R. § 123.9(b)(1)(ii))
  • License or other approval number or exemption citation (22 C.F.R. § 123.9(b)(1)(iii))
  • The DCS (22 C.F.R. § 123.9(b)(1)(iv))

 

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Export Alert: New Destination Control Statement Required

August 17, 2016 by Leave a comment

Under current law, the US regulations require exporters to include a destination control statement (“DCS”), on each commercial invoice that accompanies an export shipment.  The export control documents that are required to show this statement include the invoice, the bill of lading, the air waybill, and any other export control document that accompanies the shipment from its point of origin in the United States to the ultimate consignee or end-user abroad.

This is sometimes known as the ‘non-diversion statement’ because the current version includes language stating that “diversion contrary to U.S. law is prohibited.”  The purpose of the DCS was to alert parties outside the United States that the item is subject to the US export regulations.

The rules have always held that compliance with the comparable ITAR requirement was an acceptable means of compliance where the shipment included both ITAR and EAR-controlled articles.  The comparable ITAR requirement requires slightly different language.  Many people nonetheless found the different language in each regulation to be confusing.

The Commerce Department has changed their DCS language to harmonize it with the ITAR-required-language.  This is meant to make compliance easier.  Starting on the implementation date of the rule (November 15, 2016), exporters of articles subject to BIS jurisdiction (those with ECCNs) should use the following destination control statement on all exports:

“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”

In addition, the DCS should show the Export Commodity Classification Number (ECCN) for any 9×515 or ‘600 series’ (nx6nn) items being exported.

There are exceptions to this DCS requirement for EAR 99 exports and also for exports under license exceptions BAG (baggage) and GFT (gift parcels and humanitarian donations), but typically these do not apply to exports of aircraft parts.

Another important change that will take effect with the November 15th implementation affects where the DCS goes.  Under the old BIS rules, it went on the export control documents.  Now the DCS only needs to go on the commercial invoice.

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