By: J. Scott Maberry
In Episode I, “The Basics,” we showed you some of the basics of the President’s new export control reform initiative. In Episode II, we helped you understand how to make sense of the impending changes in U.S. Munitions List Category VIII aircraft parts. In Episode III, we took you through the critically important license exemptions and exceptions.
And now, just as in the Star Wars epic, we come to the best part: Episode IV: the new definition of “specially designed.”
Why you need to know: Perhaps you actually read through to the end of Episode II. Or perhaps (even more unlikely) you have read the flood of Federal Register notices on export reform. Either way, sooner or later you will need to know what the term “specially designed” means under the new ITAR. For example, in new USML Category VIII, certain parts and components are only ITAR-controlled if they are “specially designed” for certain listed items. This is known as the “catch-all” concept in the new regulations.
Where to find the definition: Fortunately, your friendly government regulators have given you a shining new definition of the term “specially designed.” Unfortunately, it’s a bit buried. To find it, you can turn to the Federal Register notice published on April 16, 2013 (78 Fed. Reg. 22659), available here. In the notice, the new definition of “specially designed” is found at pages 22728 to 22729.
Why the definition is so long: In creating a definition that worked for the “catch-all” provisions in both the ITAR and the Export Administration Regulations (a fundamental tenet of the President’s Export Control Reform Initiative) the regulators tried single sentence definitions but found they were too vague or ambiguous. They then decided it was clearer to provide a definition that tells what is not “specially designed.”
How it works (general): To implement this new approach to “catch-all” rules for U.S. Munitions List “specially designed” items, part (a) of the definition provides the broad “catch,” and part (b) provides several “releases.” This marks the first time, to our knowledge, a fishing analogy has been used to write export control regulations.
To determine whether an item is “specially designed” and thus controlled under the USML, one answers a series of yes/no questions in the definition. In applying the regulation, be sure to apply applicable definitions of terms appearing in quotation marks in the regulation (such as “development,” “production,” “knowledge” “part,” “component,” and “end item”). Those definitions are available in the Federal Register notice too. We’ve omitted those quotation marks in several places here to aid readability.
How it works: the “Catch”: an item is specially designed if it:
- As a result of “development” has properties peculiarly responsible for achieving or exceeding the performance levels, characteristics, or functions in the relevant ECCN or U.S. Munitions List (USML) paragraph; or
- Is a part, component, accessory, attachment, or software for use in or with a commodity or defense article enumerated or otherwise described on the CCL or the USML.
How it works: the “Releases”: A part, component, accessory, attachment, or software that would be controlled by paragraph (a) is not “specially designed” if it falls within the “releases” listed in paragraph (b), such as the following:
- If the item has been identified in an official Commodity Jurisdiction determination as an “EAR99” item, it is not specially designed; and if the item has been identified in an official Commodity Classification Automated Tracking System (CCATS) as a non-USML item, it is not specially designed.
- If the item is a fastener (e.g., screw, bolt, nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer, insulator, grommet, bushing, spring, wire, or solder, it is not specially designed.
- If the item has very specific functions, performance, form, and fit compared to certain existing EAR99 items or low-control EAR items (those controlled for “Antiterrorism,” or AT reasons only), it is not specially designed.
- If the item was developed with knowledge that it was for use in an EAR99 item or an AT-only item, it is not specially designed.
- If the item was developed with no knowledge it was for use in a particular ITAR commodity (e.g., an F/A-18) or type of ITAR commodity (e.g., a military aircraft) it is not specially designed.
Consult the actual definition and related defined terms before proceeding. And please don’t consider this blog legal advice on any of the following: (1) the definition, (2) Star Wars, or (3) fishing. We hope this helps you in your initial foray into the world of “specially designed” parts and components under the new ITAR. Thanks to Kevin Wolf, Assistant Secretary of Commerce for Export Administration, whose many helpful public presentations on this issue we’re largely re-tweeting here.