US-China Trade: New Sanctions

June 5, 2024 by Leave a comment

The United States and China continue to snipe at one another through their export and import laws. The latest actions appear to have the potential to affect the aviation community.

US Import Tariff Increases

The United States announced increased import duties for certain goods imported from China. Duties are paid by the U.S. importers, so the tariffs that impose these duties are intended to incentivize importers to source their goods from nations other than China.

The new tariff changes were proposed by the USTR on May 28, and they are open for comment through June 28, 2024. The new tariffs changes that are most likely to affect the aerospace industry include (this is a partial list only!):

GoodTariff CodesOld TariffNew TariffProposed Effective Date
certain steel and aluminum productsmany codes in headings 7206 – 7229, 7301-7306, and 7601-76090-7.5%25%
August 1, 2024
Certain electronic integrated circuits8542.31.00
8542.32.00
8542.33.00
8542.39.00
8542.90.00		25%50%January 1, 2025
lithium-ion batteries (non-EV)8507.60.002207.5%25%January 1, 2026
battery parts8507.90.407.5%25%August 1, 2024

Chinese Export Restrictions

Reuters is reporting that China’s Commerce Ministry has announced new export controls on certain aviation components. The new regulations will impose licensing requirements on additional aviation components. These will apparently apply beginning on July 1, and are intended to protect China’s national security and interests.

Earlier today, Chinese Premier Li Qiang emphasized China’s rule-of-law approach. He called on Chinese government officials to raise their awareness of the rule of law and perform their duties in accordance with the law to ensure law-based government work. This seems likely to cause stricter adherence to China’s export restrictions.

ASA reviewed releases from the Ministry of Commerce and the State Council but could not yet find the details of these export restrictions. We will continue to monitor for details.

Filed under Uncategorized Tagged with , , , , , ,

New Treasury Export Reporting Procedures

May 8, 2024 by Leave a comment

The Treasury Department’s export-related functions will soon eliminate paper filings in favor of electronic filings. The Office of Foreign Asset Control (OFAC) plans to issue the new rule in this Friday’s Federal Register.

The current OFAC regulations set forth standard reporting and recordkeeping requirements, license application procedures, and other procedures relevant to the export programs administered by OFAC. OFAC is amending several regulations to require electronic submissions and to remove options for mail submission. The rule change will remove the addresses for physical delivery of such correspondence, and require such correspondence to be communicated electronically according to the new regulatory instructions. Some of the reporting mechanisms that are changed by the rule will be:

  • Annual Reports of Blocked Property (31 C.F.R. § 501.603(d))
  • Reports of rejected transactions (31 C.F.R. § 501.604(d))
  • Required notice to the government of litigation that may affect blocked property or retained funds (31 C.F.R. § 501.605)
  • Seeking export licenses (31 C.F.R. § 501.801)
  • Petitioning for rulemaking (31 C.F.R. § 501.804)
  • Seeking records under the Freedom of Information Act (FOIA) (31 C.F.R. § 501.805)
  • Petitioning for the unblocking of property (31 C.F.R. § 501.806)
  • Petitioning to be removed from a SDN or blocked person list (31 C.F.R. § 501.807)

The rule is expected to be issued as an interim final rule on Friday. This means that the rule will be issued as a direct final rule, but the public is allowed to comment on the final rule, and a subsequent change could be made based on public comments.

The rule is expected to be effective 90 days after publication (if everything stays on schedule then that means August 9, 2024).

If you complete your filings electronically, then be sure to maintain evidence to prove that the filing was properly made. This can include screen shots, copies of sent emails with routing information, etc.

Resources

Filed under Uncategorized Tagged with , , , , , ,

US Changes Export Licensing Requirements for Certain Aircraft Parts Transactions

May 1, 2024 by Leave a comment

The United States has changed the export licensing standards for aircraft parts bound for Australia and/or the United Kingdom (“UK”). This is being accomplished under the recently-published AUKUS rules. There are two main changes:

  • Elimination of most destination-based licensing restrictions when exporting to Australia or the UK (in the Commerce Country Chart)
  • Expansion of the AVS exception for aircraft parts bound for Australia and the UK

Commerce Country Chart Changes

Under the exporting rules, the exporter must look at the export destination and compare it to the reason for control in the Commerce Country Chart. The licensing obligations for Australia and the UK have changed dramatically!

The United States has removed the licensing obligations for all articles being exported to Australia or the UK except for articles controlled for chemical or biological weapons reasons under column “CB1” (which still require a license).

One of the common aircraft articles that may be affected by this rule change is inertial reference units (IRUs) which are export-controlled for missile technology (“MT1”) reasons. Until the recent rule change, an article controlled under the MT1 provisions needed an export license when exported to any jurisdiction other than Canada. The new rule adds Australia and the UK to the list of exceptions where the destination does not drive a license obligation for MT1 exports (this is also codified at 15 C.F.R. § 742.5(a)(1)).

This would also affect many 600-series articles (defense articles) destined for Australia or the UK, because the Australian and UK restrictions on exports controlled for reasons of regional stability (RS) and national security (NS) have also been removed.

Other licensing provisions may still apply! For example, if the aircraft parts is ordered by a business on the BIS entity list then a license will be required for the transaction, even if that company is located in the UK.

License Exception AVS

The rule change also expands the utility of license exception “AVS.”

Previously, license exception AVS applied (inter alia) to exports of aircraft parts for use on U.S. or Canadian registered airplanes, as long as they are ordered by the owner/operator and the aircraft is not located in Cuba or a Country Group D:1 nation (excluding China). This has been expanded to include parts ordered by the owners/operators of Australian-registered aircraft and UK-registered aircraft. See 15 C.F.R. § 740.15(c)(1).

AVS also allowed US and Canadian airlines to order aircraft parts to be exported to their installations (e.g. airline-operated line stations) and their agents (such as an MRO). This exception has been expanded to include Australian airlines and UK airlines. This may not be used to export to Cuba or a Country Group D:1 nation (excluding China). See 15 C.F.R. § 740.15(c)(2).

Hot Section Technology

As an additional relevant note, the United States has also removed restrictions on the export of certain engine technology to Australia or the UK. This is limited to hot section technology for the development, production or overhaul of commercial aircraft engines controlled under certain subsections of ECCN 9E003. This matches Australia and the UK with the export treatment of Canada for this technology.

Public Comments

These changes are part of an interim final rule. This means that the rule was published and becomes immediately effective, but the rule is open to public comment. Public comment remains open until June 4.

Filed under Uncategorized Tagged with , , , , , , ,

New Sanctions Against Belarus

March 4, 2022 by 1 Comment

The United States is issuing new sanctions against Belarus. In practice, they will prevent – or make very difficult – most aircraft parts transactions in support of commercial aviation in Belarus. In fact, they will generally prevent a wide range of transaction in goods that would be exported to Belarus.

The new sanctions will probably limit transactions with Belarusian air carriers like Belavia.

The Federal Register Notice will begin with the phrase “In response to Belarus’s substantial enabling of the Russian Federation’s (Russia)’s further invasion of Ukraine …” so there is no question about why these sanctions are being issued. And this also suggests that we can expect Belarus to be treated to a similar level of sanctions as Russia. You can see this being implemented through the addition of Belarus directly to the new Russia-specific sanctions programs.

Here is an outline of the new sanctions leveled against Belarus

  • General licensing requirement for most exports
  • Limit on the use of license exceptions
  • Added to country groups D:2 and D:4
  • New MEU sanctions
  • New MEIU sanctions

Discussion of Belarusian Sanctions Programs

Recently, the US Government added a new regulation at 15 C.F.R. § 746.8. This new regulations applied a broad set of sanctions against Russia. In summary, anyone exporting aircraft parts (and many other BIS-controlled articles) now requires a license to export those goods to Russia (a license that will likely be denied). That same set of sanctions has been applied against Belarus. The new rule will apply 15 C.F.R. § 746.8 to Belarus, as well as to Russia.

In practice this means:

  1. Aircraft parts that are controlled under an CCL categories 3 through 9 (like ECCN 9A991) will need a BIS license to be exported to Belarus or to Russia;
  2. There is a presumption of denial for most such licenses;
  3. Generally, license exceptions will not be permitted to be used, BUT a short list of exceptions can be used in specific cases; and
  4. Among the license exceptions permitted to be used, most of them cannot be used to export aircraft parts to Belarusian and/or Russian customers.

This license requirement is the most important change for aircraft parts exporters. It means that you cannot export aircraft articles to Belarus (nor to Russia) without a BIS license, and because of the presumption of denial it will be difficult to obtain such a license.

Licensing and License Exceptions

For those who want to pursue a BIS license for exports to Belarus or Russia, the U.S. government has opened the door to license sin support of “safety of flight,” but the burden will be on the applicant to demonstrate that the transaction will not benefit the Russian or Belarusian government or defense sector. The presumption of denial, though, makes any license application an uphill battle, so we recommend using a law firm with experience in export licensing to pursue such a license (yes, a firm like ours).

The license exceptions that typically can be available are mostly forbidden. Only a short list of exceptions is available and for most civil aircraft article transactions there are limitations that will prevent them from being used to support Belarusian aircraft. The available license exceptions look like this:

  • TMP: Temporary exports for use by the news media only.
  • GOV: exports in support of the US government.
  • TSU: software updates for US-related companies.
  • BAG: for personal baggage.
  • AVS: this applies to aircraft parts but it excludes exports for aircraft registered in D:1 nations, or owned/operated by nationals of D:1 nations. Both Belarus and Russia are D:1 nations.
  • ENC: encryption hardware and software for US-related companies.
  • CCD: applies to consumer devices like computers, TVs, phones and cameras.

If one of these license exceptions looks like it might apply to your fact pattern then read the regulation and get legal help before using it! There are plenty of details that potentially limit the applicability of each of these license exceptions. Note that the loopholes that are left are generally for supporting non-Belarusian parties who happen to be in Belarus; for example AVS may permit exports for an aircraft that is AOG in Belarus as long as the aircraft has no other connections to Belarus or Russia.

BIS maintains country groups in order to better manage sanctions programs and to limit exceptions. Belarus has been added to country groups D:2 and D:4 for additional nuclear and missile technology restrictions. Belarus was also removed from country group A:4, which was a nuclear suppliers group.

Belarus has been added to the MEU restrictions of 15 C.F.R. § 744.21 and the MEIU restrictions of 15 C.F.R. § 744.22. This imposes an additional restriction on exports for military end uses (or destined for military end users), including military intelligence end use and end users.. Remember that the list of military end users typically includes private companies who represent a “threat of diversion” to military end use, so the coverage of this rule is broader than just strict military entities.

Implementation is Now

The Belarusian sanctions Federal Register notice is expected to be published on March 8. It was posted for public inspection on the evening of March 2, though. It is expected to be effective for all transactions beginning on the public inspection date of March 2, 2022.

Filed under Uncategorized Tagged with , , , , , , , ,

Russia Sanctions FAQ: Intermediaries, Including MROs

February 28, 2022 by Leave a comment

QUESTION – Intermediaries, Including MROs: I have been contacted by an MRO that wants to buy aircraft articles. The MRO is located in a country where it is legal to export most aircraft articles without an export license. Last week, though, I got the same exact purchase order from a Russian air carrier, so I strongly believe that the MRO is buying on behalf of the Russian air carrier. Can I sell to the MRO despite this belief?

Short Answer

The short answer is that this export looks like it is likely to be prohibited unless you have an appropriate export license. The reason for this is because it appears from the fact pattern that the article is intended to be installed on a foreign aircraft and the foreign aircraft appears to be subject to Russian operational control. This makes the transaction subject to the new Russia sanctions published by BIS.

Analysis

It is important to remember that there is a special rule under the U.S. export regulations that requires additional due diligence for aircraft articles destined for installation on a foreign aircraft. If you know that the article you plan to export is intended for installation on a foreign aircraft then you need to identify at least three pieces of information (per 15 C.F.R. § 744.7(a)):

  • The country in which the aircraft is located, and
  • The country in which the aircraft is registered (I usually ask for the registry number as well, for verification), and
  • Who currently controls / leases / charters the aircraft and their nationality.

Once we have this information, then we need to analyze the information to assess compliance. Each of these locations needs to be cleared (either [i] no license required, or [ii] appropriate license obtained, or [iii] license exception found to be applicable). If any one fo them leads to a license obligation, then the license obligation must be cleared (e.g. license or exception) in order to perform the export.

An Example

Let’s see how this looks in a real-world hypothetical. Imagine that you get a purchase order from an MRO in Turkey. The purchase order seeks a set of articles that are all controlled under ECCN 9A991. Imagine that the MRO reveals that the articles are intended to be installed on a Irish-registered aircraft that is leased to and operated (controlled) by a Russian air carrier. Even though you are exporting to Turkey, you also need to consider the other nations identified in this analysis. Exporting an ECCN 9A991 article to Turkey or Ireland does not require a license based on destination (we will omit the other analyses, such as party-level restrictions); however the recently-promulgated Russia sanctions do require that these articles be licensed to be exported for the purpose of installation on an aircraft subject to Russian operational control.

In this hypothetical we need to find a way to address the Russian operational control of the aircraft. Typically we might turn to the AVS license exception. The new Russian Sanctions regulations explicitly permit reliance on subsections (a) and (b) of that AVS license exception. BUT – and this is important – the AVS license exception we would use (in section 740.15(b)) cannot be used for country group D:1 nations. And Russia is a D:1 nation. So the AVS license exception for aircraft articles is unavailable for this export transaction.

Unless we have a transaction that fits into another sort of license exception, we are probably going to need a license for this transaction.

What Else Can I Do?

Information is your friend in situations like this., The more information you have, the more you can explore other options, like special exceptions that might apply to your transaction.

For example, it might turn out that the bill of materials requested is part of a service bulletin, and the fact that a Russian carrier sought the same bill of materials might be an understandable coincidence. In such a case, though, I might ask the customer-MRO to provide assurances that the articles are being installed in a manner consistent with U.S. law. I would take this additional step because of a red-flag that was raised by the similarities between the purchase orders.

You also might identify another license exception that applies to the transaction.

Some exporters might tend to prefer an information-free transaction on the grounds that what-they-don’t-know-can’t-hurt-them. This is not always true in export cases. Remaining willfully blind to the facts may not shield you from liability. Instead, willful blindness to the facts is often more likely to lead to trouble.

The most important thing for exporters to recognize is that they have a role in preventing circumvention of the U.S. export regulations. Failure to fulfill that role undermines the regulations, but it also potentially puts you in jeopardy of administrative or criminal penalties for your support of an illegal export transaction.

Filed under Uncategorized Tagged with , , , , , , ,

BIS Issues New Regulations Implementing Sanctions Against Russia

February 25, 2022 by 3 Comments

We have written over the last few days about the implementation of new rounds of sanctions against Russia. Effective February 24, and to be published March 3 in the Federal Register, BIS has finalized its own regulation implementing sanctions measures against Russia. The goal of the sanctions is to restrict Russia’s access to items it needs to project power and includes “sophisticated technologies designed and produced in the United States, as well as certain foreign-produced items that contain or are based on U.S.-origin technology.” These controls primarily target Russia’s defense, aerospace, and maritime sectors. The following is a brief summary of BIS’s sanctions implementation.

ECCN License Requirements

The most significant change for aircraft parts distributors appears in new § 746.8(a)(1) of the EAR, which imposes a license requirement on any item subject to an ECCN in categories 3 through 9 of the CCL. This would obviously include common industry ECCNs like 9A991.d and 7A994, as well as more tightly controlled CCL 7 and CCL 9 ECCNs. Further, license applications are subject to a presumption of denial, making licenses difficult to obtain. The preamble to the regulation specifically cites ECCN 9A991.d as an example of an item subject to a low level of control that did not previously require an export license to Russia that will now require a license.

However, two notes to this general policy are important to aircraft parts distributors. First, BIS will apply a case-by-case review policy to export license applications intended to ensure inter alia safety of flight. Second, License Exception AVS paragraph (b) remains available to overcome the new license requirement. AVS paragraph (b) provides:

Equipment and spare parts for permanent use on an aircraft, when necessary for the proper operation of such aircraft, may be exported or reexported for use on board an aircraft of any registry, except an aircraft registered in, owned or controlled by, or under charter or lease to a country included in Country Group D:1, Cuba, or a national of any of these countries.

Note that Russia is a D:1 country, so AVS would not be allowed for Russian registered, owned, or operated aircraft, but non-Russian operators in AOG situations in Russia may be able to be supported under this exception.

This license exception and case-by-case review policy should allow distributors to continue to serve some civil operators in Russia (again, with the note that to support a Russian operator will require an export license), but we caution anyone seeking to use such an exception to consult with their export compliance counsel.

Additional Restrictions

Foreign Direct Product

The sanctions create two new “foreign direct product”(FDP) rules: one applicable to Russia as a whole and one applicable to Russian military end users. These restrictions apply to the export or re-export of foreign-produced items that are the product of U.S.-controlled technology or software. In the case of the FDP rule applying to Russia broadly, the relevant foreign produced products are those produced from controlled technology or software in CCL 3-9, and are subject to comparable license requirements, presumptions, and exceptions as the ECCN rule above. In the case of FDP to military end-users, all CCL chapters are restricted and no license exceptions are available (with certain very case-specific exceptions).

Expanded Military End-Use and Military End User Control

The sanctions expand the restrictions on items that can be exported without a license to Russian military end users and end-uses. Previously, those items listed in Supplement No. 2 to part 744 required a license for export to a military end use or military end user. The sanctions expand the ECCNs that require a license to a Russian military end use/user to all items subject to the EAR except food and medicine designated EAR99 and items subject to ECCNs 5A992.c and 5D992.c (and even those not to Russian government end users or state-owned enterprises). In short, practically every item subject to the EAR will require a license for export to a Russian military end user or for a Russian military end-use, and those licenses will be presumptively denied.

Russian MEU Listed Entities to the Entity List

Finally, BIS transitioned 45 Russian entities from the Military End User (MEU) list (Supplement No. 7 to part 744) to the Entity List (Supplement No. 4 to part 744; 15 C.F.R. § 744.16) to reflect the heightened restrictions and licensing requirements reflected by the expanded military end-user and end-use controls described above. BIS also added and modified certain entities.

Conclusion

This is a highly complex and dynamic regulatory environment. The baseline presumption is that all aerospace exports to Russia of virtually anything subject to the BIS regulations will require a license. For the purposes of civil aviation, license exception AVS (to non-Russian aircraft) and case-by-case license review may offer some limited relief, but make sure to consult with your export compliance counsel before undertaking any new transactions. Also remember that the sanctions and regulations continue to change: what was a legal export yesterday may not be legal tomorrow. Keep your eye on this space for more updates.

Filed under Uncategorized Tagged with , , , , , ,

US Imposes New Sanctions on Cuba – Affect on Aircraft Parts Exports is Unclear

April 17, 2019 by Leave a comment

The President announced today that the United States would impose new sanctions on Cuba.  Rough details are available through the White House Fact Sheet, but we are still awaiting complete details.  It is unclear what effect this might have on current licenses to sell aircraft parts to entities in Cuba, which are permitted under BIS policy.  ASA will continue to monitor this situation to ascertain whether the new sanctions adversely affect aircraft parts export licenses.

Filed under Uncategorized Tagged with , ,

Doing Business With Iran Under a JCPOA License? Get Your Transactions Completed by August 6, 2018.

June 13, 2018 by 1 Comment

As we reported on May 8, the United States’ decision to end the JCPOA agreement with Iran means that existing JCPOA-based licenses will be revoked on August 6.  A number of ASA members have these export licenses, which permit aircraft-parts-business with the specified Iranian parties.

On May 8, the President announced his decision to discontinue the United States’ participation in the Agreement with Iran, and to reimpose sanctions against Iran.

The Treasury has published a document explaining the wind-down process, including answers to frequently asked questions.  The wind-down document explains that the United States government plans to revoke JCPOA-related authorizations, such as the aircraft and aircraft parts-related export licenses that were issued pursuant to the US-Iran Agreement.  Those export licenses are scheduled to be terminated as of August 6, 2018.

Those ASA members who hold JCPOA export licenses (which are being terminated) may consider applying for replacement licenses under the safety of flight statement of licensing policy found in 31 C.F.R. § 560.528. That provision permits licenses on a case-by-case basis for exporting to Iran in order to ensure the safety of civil aviation and safe operation of U.S.-origin commercial passenger aircraft.  Historically, the United States government has not issued many of these licenses, but if the transaction is valuable to the United States then the transaction might be considered for licensing.

Filed under Uncategorized Tagged with , , ,

The New “600 Series” ECCNs Effective Today!

October 15, 2013 by 1 Comment

As of today, October 15, a significant change to the export regulations will remove many articles from the ITARs and move them to the Commerce Department’s export jurisdiction.  This is a tremendous benefit for the civil aviation industry, which has found it difficult at times to correctly classify parts under the right export regime.  This change means that most dual use items (article used on both civil and defense aircraft) are transferred to the export jurisdiction of the Commerce Department’s Bureau of Industry and Security (BIS) where they will be regulated under the Export Administration Regulations (EARs).

Note that the rule change was largely aimed at aircraft parts, and non-aviation items may not be affected by this change.

So after the change, which aircraft parts remain subject to Directorate of Defense Trade Control (DDTC) export jurisdiction? Here is a partial list:

  • Certain enumerated articles (and their parts) that are specially designed for controlled aircraft:
  • Inertial Navigation Systems (INS)
  • Inertial Measurement Units (IMUs)
  • Attitude and Heading Reference Systems (AHRS)
  • Parts for DoD-funded developmental aircraft
  • Parts for B-1B, B-2, F-15SE, F/A-18E/F/G [parts for earlier models are subject to the EAR], F-22, F-35, F-117
  • Parts found in a positive list:
  • List is published at 22 C.F.R. 121.1 – VIII(h)
  • List includes articles with defense-specific purposes, like:
    • Threat-adaptive flight control systems;
    • Wing folding systems;
    • Certain high velocity gearboxes;
    • Defense-specific parts, like tail hooks, wing folding systems and bomb racks;
    • Certain technical related to export-controlled items;
    • Classified items;
    • “Commodities, software, and technical data subject to the EAR (§ 120.42 of this subchapter) used in or with defense articles controlled in this category.”

These above-referenced parts remain on the United States Munition List (USML), which is part of the International Trade in Arms Regulations (ITARs).  So their exports will continue to be subject to ITAR control.  But what is important is what is no longer on this list!

Parts that were previously described on the USML and were thus subject to DDTC/ITAR export jurisdiction but that are now moved to BIS/EAR jurisdiction have mostly been moved to the 600 series Export Commodity Classification Numbers (ECCNs).  These are ECCNs with the number “6” in the middle spot of the five-character ECCN. The 600-series is designated for Wassenaar Arrangement Munitions List (WAML) articles and for former USML articles.

As of today, the Commerce Control List (CCLs) on the Commerce Department website did not include the 600-series ECCNs, and the fact that the government is shut down suggests that they might not be updated soon.  But you can still see the new ECCNs by looking at the Federal Register publication of the final rule.

Many aircraft parts that are no longer regulated under the DDTC ITARs are moved to ECCN 9A610.  If an article remains on the USML, like an Attitude and Heading Reference Systems (AHRS), then its unclassified software may have moved to a BIS/EAR 600 series ECCN; the unclassified software and technology indirectly related to such USML articles move to new ECCNs 9D610/9E610 (aircraft software/technology) or 9D619/9E619 (engine software/technology).  There is also new ECCN for military commodities outside the US that are derived from “600 series” controlled content (ECCN 0A919 – Category 0 includes miscellaneous items).

In some cases, the precise placement of an article may depend on whether it is “specially designed” for 600-series articles or for non-600 series articles.  BIS has provided an online decision tree-based tool to help with the “specially designed” determination and it is available at http://www.bis.doc.gov/index.php/specially-designed-tool.

Licenses from BIS will still be required to export and reexport most 600 series items worldwide (except to Canada), unless an EAR license exception is available.  If you have an article that was subject to the DDTC/ITAR jurisdiction and has been moved to BIS/EAR jurisdiction, then your existing ITAR licenses may remain valid.  Details on how this works and when your license may remain valid are available in last week’s post about grandfathering existing export licenses.

Got questions?  ASA provides export training through its workshops and through its Annual Conference.  We look forward to seeing you at one of our upcoming events!  The Washington Aviation Group continues to provide export legal advice.  So if you need to get really creative, please give the Washington Aviation Group a call and let them work with you to find a solution.

Filed under Uncategorized Tagged with , , , , , , ,

Exporting During the Shutdown

October 14, 2013 by Leave a comment

The Federal Government continues to be shut down while our elected officials debate how to tackle our nation’s debt.  This has the potential to adversely affect exports, so it is important to have strategies for ensuring you can export in the absence of new licenses.

As a result of the shutdown, the Department of Commerce Bureau of Industry and Security (BIS) is no longer accepting export license applications.  All pending export license applications are being held without action by BIS until the shutdown ends.  This can have a significant effect on some distributors who need export licenses in order to support their customer base.

If you are an applicant who needs a license for national security reasons, then you can request emergency processing of your export license application by submitting an email request to Deputy Assistant Secretary for Export Administration Matthew Borman at Matthew.Borman@bis.doc.gov; however most civil aviation export licenses are not related to national security.

So what can you do to support a non-US customer need for parts that does NOT have national security implications, but that would ordinarily require a license?

The best way to approach the transaction is to think about how to structure it to make use of a license exception.  There are a number of license exceptions that can apply to common aircraft parts transactions, including the Replacement Parts/Servicing and Replacement Exception [RPL] (15 C.F.R. 740.10) and the Aircraft and Vessel Exception [AVS] (15 C.F.R. 740.15).  We’ve covered the use of these exceptions in ASA Workshops and during the ASA Annual Conference, but if you’ve missed the presentations, then we ordinarily advise potential exception-users to read the regulatory language carefully before using the exceptions.  Make sure that you can meet each and every requirement for the use of the exceptions.

For example, use of the AVS exception is often limited based on details related to the aircraft on which the part is expected to be installed. If the aircraft on which the part is to be installed is identified, then you should collect the following information:

  • The country in which the aircraft is located, and
  • The country in which the aircraft is registered, or will be registered in the case of an aircraft being manufactured, and
  • The country of citizenship of whoever currently owns, controls, leases, and/or charters the aircraft (more the one country may be implicated by this analysis).

These data will serve as an important foundation for the analysis implied by the requirements for the AVS exception.

If no exception would apply to your transaction, then another option might be to find someone with an existing license that will permit the export of your article, and include that party in your transaction as the exporter of record.  While you cannot use a third party exporter for purposes that circumvent the law (for example, a Denied Party cannot use a third party to circumvent their Denied Party status), it is permissible to sell the parts to an intermediary and have the intermediary export to your customer under the intermediary’s existing (applicable) license, as long as it is not for the purpose of circumventing legal prohibitions that would have prohibited you from getting a license.  The danger of this advice is that an intermediary who is also a copmetitor may use this as an opportunity to steal customers, so be careful to only deal with an intermediary whose business ethics are trustworthy.

Once you are in a position to be able export, you may run into some problems in assembling the data that you need to complete the electronic export information requirements on AESDIrect.  For example, the the Schedule B search engine on http://www.census.gov is not available. During this time you may use the following alternate address to identify schedule B numbers: https://uscensus.prod.3ceonline.com/.

As always, the Washington Aviation Group continues to provide export advice.  So if you need to get really creative, please give the Washington Aviation Group a call and let them work with you to find a solution.

Another issue that is facing the industry is the new release of the 600-series ECCNs that becomes effective tomorrow (to facilitate the movement of certain articles from the US Munitions List (USML) to the Commerce Control Lists (CCLs).  We will talk about that in tomorrow’s blog post.

Filed under Uncategorized Tagged with , , , , , , ,