One of the areas of government policy and regulation that affects manufacturers such as forgers is export controls on certain defense articles and related components and parts. Over the years, the regulatory regimes governing such exports have grown increasingly complex and confusing, with overlapping jurisdictions and inconsistent applications. U.S. manufacturers and their trade associations, including FIA, have long argued that this complexity has resulted in lost export opportunities for U.S. manufacturers.
A major effort to
revise and streamline these regulations started under the Bush Administration
and continued under President Obama with the goal of ensuring that items are
controlled when appropriate, but only to the level required to ensure U.S.
security. FIA has been monitoring this effort and recently provided comments to
both the U.S. Department of Commerce and the U. S. Department of State on
proposed revisions to regulations governing the export of aircraft and related
export-control regulatory scheme, aerospace forgings, while rarely “specially
designed” for military aircraft, are subject to the International Traffic in
Arms Regulations (ITAR) because they appear on the U.S. Munitions List (USML),
which is administered by the U.S. Department of State. (“Specially designed” is
a “term of art” used in export-control regulations having to do with form, fit
and function of the part/component as it relates to the defense item in
question.) Other aerospace forgings not subject to ITAR regulations (which at a
minimum require costly registrations and licenses) may still be subject to
control under the Export Administration Regulations (EAR), which is
administered by the U.S. Department of Commerce. Determining whether a forging
is subject to export controls, and which controls apply, is a challenging task
at best, and the penalties for mistakes can be severe, including loss of export
In general, the
Administration’s proposed revisions to Category VIII of the USML (aircraft and
components thereof) are intended to describe more precisely which military
aircraft and related defense articles warrant control by the USML; which
articles are subject to the EAR; and which articles require little to no export
controls consistent with international obligations.
On Dec. 22, 2011,
FIA filed comments stating its support for this general approach, under which
only those forgings that are “specially designed” for a specific list of
U.S.-origin aircraft that have low observable features or characteristics
(so-called stealth aircraft designed to avoid detection by radar) should be
subject to continued control on the USML. All other forgings “specially
designed” for a military aircraft should be subject to the jurisdiction of the
U.S. Department of Commerce consistent with the Wassenaar Arrangement Munitions
List (WAML), an international agreement supported by the U.S.
Under the WAML,
forgings and castings are subject to a control regime that applies to
unfinished products only when they are “identifiable by material composition,
geometry or function.” FIA argues that is a rare occurrence. Because many
forgings used in aircraft production are shipped to the customer in “raw” form,
requiring substantial additional machining and manufacturing processes, FIA
believes that many aircraft forgings are not “identifiable by material
composition, geometry or function” when they are shipped to the customer.
Therefore, FIA hopes that when the rules are finalized, most aerospace forgings
currently subject to ITAR regulations would be under the jurisdiction of the
Department of Commerce’s “dual use” export-control regulations – a significant
reduction in regulatory burden and red tape.
As part of the
finalization of the proposed rules, all public comments will be reviewed, and
the Administration will seek Congressional approval for removal of items from
the USML. FIA will continue to monitor this effort to ensure that the concerns
of forgers are taken into account.
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