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will require many shipyard suppliers whose operations currently are subjectexclusively to the ITAR to familiarize themselves with the EAR in order to en- sure export compliance under the new regime. However, for most suppliers, ITAR compliance will remain a priority, insofar as they will continue to require access to technical data directly related toITAR controlled vessels and components even if their own products become sub- ject to CCL controls. Therefore, the end result of export reform will be that many in the shipyard supply chain will be forced to master both the ITAR and EAR control regimes. Furthermore, a steep learning curve will be imposed even for those whose operations already are sub-ject to both the ITAR and the EAR, given that the reform proposals contemplatenumerous amendments to the EAR li-cense exceptions in order to avoid the in- congruous result of tighter controls underthe EAR for items previously subject to more permissive ITAR exemptions in certain circumstances.Shifting of items to the EAR will not,however, completely eliminate current ITAR restrictions on exports and re-ex- ports to arms embargoed countries (in- cluding China) or Congressionalnotification requirements. In order to avoid the additional com- plexities that an immediate effective date would impose on the defense industry, the Administration has proposed a phased implementation plan. Licenses andagreements issued prior to publication ofthe final rule for each USML category will remain valid for up to two years from the effective date. Other transitional pro- visions address licenses in process at thetime of publication and through the ef-fective date of the final rule. The transi- tion plan also contemplates interim reg- istration fee relief for those who will nolonger be required to register with DDTC as a result of the new rules ? although, as noted above, as a practical matter regis- tration will still be required in order toemploy foreign nationals or engage in offshore procurement where access to ITAR controlled technical data related to the vessel is involved, even if the regis- trant?s own products have transitioned to the CCL. Registrants will, however, ben- efit from lower registration fees as li- censing volume declines due to transfer of previously licensed exports to the CCL. Additional proposed rules are con- templated, but while the publication of proposed rules continues, the Adminis- tration hopes to begin phasing in trans- fers from the USML to the CCL. The naval vessel and marine categories will not, however, be the first categories to be revised, so it will be next year at the ear- liest before a more sensible ? if not sim-pler ? reformed export control approach is implemented in the nation?s shipyards. August 2012 marinelink.com23The Authors Barbara Linney (blinney@milchev.com) is a member of the Washington D.C. law firm of Miller & Chevalier. Kevin Miller is an International Trade Special- ist in the firm?s International Depart- ment, concentrating in the areas of export controls, economic sanctions, and defense security. NotesThis article reflects developments through July 27, 2012, the date of submission for publication.The views expressed herein are those of the au- thor, do not necessarily reflect the opinion of the firm or other members of the firm, and should notbe construed as legal advice or opinion or a sub-stitute for the advice of counsel.1 The author?s overview of the export reform process can be found in the May 2011 edition of Maritime Reporter (?U.S. Export Control Reform: What It Means for Shipyards?). The author?s analysis of the challenges faced by shipyards and their suppliers under the current system can be found in the April 2009 edition ofMaritime Reporter (?Complying With U.S. Export Controls?). MR#8 (18-25):MR Template 8/8/2012 11:12 AM Page 23
