State, BIS Revise Proposed Definition Of 'Specially Designed'

The Directorate of Defense Trade Controls of the U.S. State Department (DDTC) and the U.S. Commerce Department's Bureau of Industry and Security (BIS) concurrently published highly anticipated revisions to their July 15, 2011, proposed definition of "specially designed" in the Federal Register today, June 19, 2012.

The DDTC proposed rule is available by clicking here the BIS proposed rule is available by clicking here. Comments on the proposed rules are due by August 3, 2012.

The term ''specially designed'' (not to be confused with the undefined term "specifically designed" as used in the International Traffic in Arms Regulations (ITAR)) is used widely throughout the Commerce Control List (CCL), as well as in the control lists of multilateral regimes to which the U.S. is a signatory. The agencies hope to obtain several goals by creating clear, well-defined terms for use in the Export Administration Regulations (EAR) and the ITAR.

First, the agencies seek to avoid inadvertently de-controlling items that are now ITAR-controlled as a result of being "specifically designed, modified or configured" for a military application, with the exception of items such as fasteners, wire and solder. As many, if not most, items controlled under the ITAR are currently not enumerated on the USML, and are controlled purely as a result of being specifically designed, modified or configured for military application, attempting to transition such items to the CCL without a catch-all would be virtually impossible. Also for this reason, the agencies have attempted to create definitions that are as similar as reasonably possible, to avoid an item "falling between the cracks" for control purposes.

Second, the agencies wish to move away from a highly subjective and moveable target – the current "specifically designed" rule and its reliance on design intent – to create a more "positive" control list based on objective, performance based factors. The intent is to maintain controls over items that are not enumerated on either control list, but which have properties that uniquely create or support performance levels that warrant control. At the same time, the agencies seek to avoid capturing items that clearly do not warrant strong controls simply because they are modified for use with a military item or end-item. In fact, a central goal of Export Control Reform is to remove restrictions to the export of items where such controls place U.S. businesses at a substantial...