The following is from the 20 July 2011 edition of the American Shipper.

A newly proposed regulation by the U.S. Commerce Department's Bureau of Industry and Security calls for amending the Export Administration Regulations to establish a process by which certain items moving from the Munitions List to the Commerce Control List would be made eligible for License Exception Strategic Trade Authorization (STA).

"This rule is the first step in implementing the administration's vision of eliminating easy cases so that U.S. government can focus its limited resources on items and end users that require more attention," said Eric L. Hirschhorn, Commerce undersecretary for industry and security at the BIS Update Conference in Washington Tuesday.

The Obama administration committed to a major overhaul of the country's Cold War-era export controls in August 2009. STA is part of this broad reform.

"STA facilitates trade and interoperability with our closest friends," he said. "The reduced license requirements are accompanied by new safeguards, however, to ensure that eligible items are not re-exported outside this group of countries without U.S. government authorization."

Two groups of countries are included within the STA. For 36 countries -- most of European countries, Australia, Canada, New Zealand, Japan, South Korea and Argentina -- nearly all items on the CCL that do not require a license for statutory reasons are eligible. For eight countries -- Albania, Hong Kong, India, Israel, Malta, Singapore, South Africa and Taiwan -- Wassenaar Basic List items are eligible.

Hirschhorn said STA "departs from the traditional licensing paradigm, wherein a license often has been required for the initial export but not the re-export. It establishes, in effect, a license free zone to cover the first transaction while creating new safeguards to ensure that items are not diverted outside the designated country group."

The rule would require exporters and re-exporters who use the STA exception to notify the purchaser of the applicable safeguard requirement. The foreign end user must also certify its willingness to comply with the conditions.

According to BIS, STA potentially eliminates 3,000 of the 22,000 licenses the agency issued last year.

BIS has begun reaching out to companies that are likely beneficiaries of the license exception. "We plan to enhance our outreach and compliance effort to guard against misuse and facilitate optimal usage of STA by exporters," Hirschhorn said.

"Our goal is to find that sweet spot between facilitating trade to trusted end users and ensuring that sensitive items do not find their ways into the hands of entities and nation states that seek to undermine our national security," said Kevin J. Wolf, Commerce assistant secretary for export administration.

"It takes a collection of activities from all interested stakeholders -- exporters, export counselors, licensing officers, enforcement agents, and prosecutors -- to make our system effective," he added. "But its underlying foundation must be strong. That's what the president's export control reform initiative aims to do." — Chris Gillis

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