Jan
5
Census Blog Miffs Export Rules
Posted by Clif Burns at 5:15 pm on January 5, 2011
Category: DDTC • ITAR
This may look like U.S. Government blog week on ExportLawBlog, but it’s purely a coincidence. Yesterday we highlighted the Treasury blog and today the subject is the U.S. Census blog with the somewhat enigmatic title of Global Reach. Because not much was popping in the Census world — something I imagine is more or less always the case — the industrious bloggers at Census thought that they would educate their readers about the mysteries of defense exports and the International Traffic in Arms Regulations with a post* titled “Understanding Basic Directorate of Defense Trade Controls (DDTC) License Requirements.”
As you continue to file shipments against your DDTC license, your license will become ‘decremented’ with each additional filing. This simply means that your license balance will decrease by the value of each accepted shipment. When the license balance is fully exhausted, an informational message will be sent stating:
176 DDTC LIC NOW EXHAUSTED:
At this time, your company must apply for an amendment to add more value onto the license or apply for a new license.
Um, no. There is so much wrong with the statement quoted above, it’s hard to know where to start. But I’ll start with the statement that decrementing means decreasing the balance by the “value” of each accepted shipment. Decrementing reduces the remaining quantity and the remaining value, not just the remaining value. If you are entitled to export 5 widgets with a value of $50 and you export 5 with a value of $35, the quantity on your license is decremented to zero and the license is kaput. You can’t export $15 more of widgets. You’re done.
Second, you can’t amend a license to increase quantity or value. Section 123.25(c) of the ITAR makes that perfectly clear as to increases in licensed quantities. You need a new license for the additional quantities. This notice posted on the DDTC website indicates that a new license is needed to add additional value to the license.
Here’s an idea: in the unlikely event that DDTC ever starts a blog, it should agree that it won’t post anything on the procedures for challenging population estimates if Census agrees not to post anything ever again on the ITAR.
*The original post disappeared from the Census blog a little while ago, apparently after Census received one or more emails pointing out the howler in the post. Of course, thanks to the miracle of the Google cache, nothing ever really dies on the Internet, and the link to the Census post above is a link to it in the Google cache. In case that ever disappears, here is a pdf version of the post for posterity.
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Copyright © 2011 Clif Burns. All Rights Reserved.
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7 Comments:
Oh, you’re killing me. Did someone somewhere hire a cadre of bloggers to write for the government, perhaps to increase “transparency”? Bloggers that don’t work at Census or OFAC, for example? 😉
The value/quantity decement rule you mention is true excpet for a most licenses granted for “minor parts and components” that are allowed to be shipped in “lots” (the only hardware that can be, I believe). The quantity is listed as “1 lot”. In that case, unless the DDTC makes an exception and requests itemization, decementing only reduces the value. I agree though, Census should know that is the exception not the rule.
Let us not forget the Census blog posting from 12/22 that included this doozy: “The State Department does not license shipments to APO or FPO addresses.” It was pulled off the Census blog within a few hours, but you can see a cached version of the posting at: http://webcache.googleusercontent.com/search?q=cache:-NjwFdI0W28J:blogs.census.gov/globalreach/2010/12/sending-packages-to-service-members-abroad.html
While I too agree that the quality of Census’ blog is poor, I believe the point that they were trying to make in the post is that THEIR SYSTEM (AES) itself does NOT decrement quantities – only value. So while you are 100% correct that the exporter must self-track quantity decrementation, it is a fact that the AES system itself does not decrement quantities. It WILL let you file more than the allowed quantity, while it WILL not let you file over the license value (with the tolerance). Exporters need to know and understand this so that they are not relying on AES to catch/warn of quantity overshipments on DDTC licenses. Additionally, while Census failed mierably again on this blog post, I give them some credit for trying. AES filing on DDTC licenses is an important topic that does warrant a correct, competent advice posting, particularly now with the DDTC concept of “program status” licensing for certain aircraft platforms. Unfortunately because of the interagency issue (Census / DDTC regs) there is lack of clarity in certain areas on this topic. But sadly, at the end of the day, no information is probably better than bad information. I have commented to Census on their previous posts (and advice offered by other means) that I actually believe HURT rather than help the exporter’s cause.
Mary – The “lot” issue, too, is not a settled point. It varies from port to port. At least one port treats an export against a license’s one lot as expending the entire license line item, regardless if value is still left on the license lot line item. We have been “required” to obtain DSP-05 licenses with hundreds of lots to address this issue (or risk shipments being held up indefinitely at the port). Not a hugely big deal, but it does make lot valuation a little tricky. My advice – Establish a good relationship with the ports you use most, and, when you get static, ask the folks at your port what they want you to do. As long as you can take what the port wants you to do and make that jive with the folks at DDTC, you’ll be miles ahead of those folks unwilling to conform to particular port peculiarities.
Thank you for the good advice, MJ. I’m glad to be aware of all possibilities.
I agree that government agencies should stick to writing about their own policies and regulations. People with thorough understanding of ITAR can discern the flawed statements from the Census Bureau but unfortunately some readers do walk away misinformed. Mixed messages can cause a lot of unnecessary confusion and misunderstanding. I’ve also noticed that the BIS is talking more frequently about the DDTC at the BIS Updates and in press releases. I understand the intent of bringing different agencies together to make it at least appear to be a more coherent group. However, improvements need to be made on the execution side of things. It is completely frustrating to watch a regulatory agent trying to dabble in another set of regulation to which he/she is not familiar with.
