Export Control Reforms Leads to Changes in Permanent Import Regime of Defense Articles and Services

by Sheppard Mullin Richter & Hampton LLP
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In light of the upcoming changes associated with the Export Control Reform Initiative, the Department of Justice’s Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) issued a final rule in April 22, 2013, which amends its regulations to clarify restrictions on the permanent importation of defense articles and services.

The rule was effective upon publication.  In summary, the rule -

(i) removes the language adopting the United States Munitions List (USML);

(ii) clarifies that the Attorney General exercises delegated authority pursuant to the Arms Export Control Act (AECA) and Executive Order 13637 to designate defense articles and defense services as part of the statutory USML for purposes of permanent import controls, regardless of whether the Secretary of State controls such defense articles and defense services for purposes of export and temporary import; and,

(iii) clarifies that defense articles and defense services controlled pursuant to the Attorney General’s delegated AECA authority are a subset of the statutory USML (along with those that are controlled for export and temporary import by the Secretary of State), but that list of defense articles and defense services controlled by the Attorney General is labeled the U.S. Munitions Import List or “USMIL” to distinguish it from the list of defense articles and defense services in the ITAR that are controlled by the Secretary of State.

ATF notes that this rule does not change the content of the USMIL and that any such revisions will be addressed in a separate rulemaking.

Companies wishing to permanently import USMIL articles are required to register with ATF by making an application on ATF Form 4587 and submitting the appropriate registration fee which varies depending on required period of registration, from $250 for 1 year to $1000 for 5 years (fees paid in advance for future years are refundable).  Following registration, importers are required to obtain a permit to import an USMIL item by filing a Form 6 – Part 1 – which once issued, is valid for one year.

A permit is not required for the importation of certain defense articles from Canada.  However, U.S. policy is to deny approvals from with respect to defense articles and services originating in certain countries (Afghanistan, Belarus, Cuba, Iran, Iraq, Libya, Mongolia, North Korea, Sudan, Syria and Vietnam) as well as countries with respect to which the U.S. maintains an arms embargo (e.g. Burma, China, DR Congo, Sudan, etc.).

There are 3 exemptions to the above provisions:

  1. Importations by the United States or any agency thereof;
  2. Importation of components for items being manufactured under contract for the Department of Defense; and,
  3. Importation of articles (other than firearms) manufactured in foreign countries for persons in the United States pursuant to Department of State approval.

Any unlawful importation, including failing to register and obtaining a permit to import an USMIL item, can lead to fines of up to $1 million and/or jail time up to 10 years.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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