Tips for Repair Stations with Foreign Clients

Many repair station professionals think that repairs are not covered by export regulations.  This is not the case!  Items intended to be repaired, and items that have been repaired, are generally subject to export regulations when they cross international borders.  The regulations often offer exceptions and loopholes that make it easy to make these transactions comply with the regulations; but it is important to recognize that these are export transactions because a failure to meet the requirements of an exception can potentially lead to a non-compliance.

When an article is imported into the United States from a point outside the United States for maintenance or alteration, this transaction is considered to be an import.  When the same article is returned to the non-US source, then that will be considered an export from the United States.  

The first question will be whether the import is subject to import tariffs.  Most aircraft parts are not subject to import tariffs, but there are some parts explicitly excluded from that duty-free treatment.  If the part that you are importing falls into this category, and it is subject to import tariffs, then you will need to identify an import exception that permits duty-free entry into the United States.  

One such exception applies to US goods being returned to the United States.  Such articles are usually eligible for duty-free entry into the United States. The harmonized tariff code 9801.00.10.xx allows U.S. made products to return to the U.S. without duty requirements; but one important stipulation is that the articles may not have been increased in value (nor their condition improved) while abroad.  In other words, if an item was repaired or altered while it was outside the United States, then the importer may owe an import duty that correlates to the increase in value associated with the foreign repair or alteration.
 
The more specific code 9801.00.10.12 applies to US goods being returned for repair or alteration.  This code can also be applied to foreign goods that were previously in the United States and are returned to the US within three years of leaving.  

But what if your articles were not made in the US and have not been in the US within the preceding three years?  For example, UK-manufactured aircraft servos being imported into the US for repair?  An article like this is likely to be considered an aircraft part subject to the tariff code 8803.30.00.30.  This typically falls under the duty-free entry category.

Categorization under the harmonized tariff codes can be complicated and this article is not a complete discussion of the subject, so be sure to seek professional help as necessary to assign the correct tariff code.

Export

The next step is export.  Yes, I totally skipped over the intermediate step of performing the maintenance or alteration.  That is up to you.

When you are returning an aircraft parts to a non-US customer, you will need to identify whether it is subject to any sort of restrictions, including restrictions that require a license to overcome.  For a more complete discussion of how to perform this analysis, you can see one of my articles on general export compliance, or attend one of my export workshops.  If your analysis shows no restrictions, then you are free to export in accordance with applicable laws.  

If your analysis shows that the export is subject to restrictions, then the next step may be to analyze whether a licensing exception exists that can allow you to circumvent the restriction.  This is especially import in situations where time is of the essence in order to maintain an aircraft’s operational expectations (such as preventing AOG situations).

Most civil aircraft articles are subject to Commerce Department export jurisdiction (this means it is identified by an export commodity classification number, or ECCN), then one useful exception to the licensing rules is the RPL exception.

Some articles remain subject to the International Traffic in Arms Regulations or ITARs.  The ITARs are administered by the US State Department.  Articles subject to the ITARs almost always require a license for export – the exceptions are few and narrow.  When an ITAR-regulated article is imported into the United States for the purpose of repair, there is a license exception that can apply.  The temporary import license exception can apply to unclassified US-origin articles brought into the United States for maintenance or alteration.  The article must be identified at the time of import by a declaration on the applicable U.S. Customs and Border Protection document that states  “This shipment is being imported in accordance with and under the authority of” 22 CFR 123.4(a)(1) (for maintenance) OR 22 CFR 123.4(a)(2) (for alteration).

There are many limits and caveats on this ITAR provision so be sure you understand the regulations fully before using this exception.  But if the exception is properly used, then it will permit the return of the article to the foreign end-user without obtaining an additional license for that export. 
Most civil aircraft articles are subject to Commerce Department’s export jurisdiction (this means the article is identified by an export commodity classification number, or ECCN).  One useful exception to the licensing rules for these articles is the RPL exception.

RPL requires that the original export of a US-produced article from the United States must have been a legal export.  But if the article is entering the US for the first time (e.g. it is foreign produced) then RPL can also be used for this article.

RPL typically requires that the work you perform on the article cannot change it.  This means that some alterations may be forbidden if you intend to use RPL as a license exception.  The official metric is whether the alteration improves the basic characteristic of the equipment.  An example taken from Commerce Department guidance is:

If a replacement part is predicted to increase the flow rate of a pump from 20 m3/hr to 22 m3/hr – but it still falls within the tolerance design flow range of the original pump – you can use RPL for that replacement part. In contrast, if the replacement part increases the flow rate of the pump from 20 m3/hr to 60 m3/hr (which is beyond the tolerance design flow range of the original pump), then this would be considered a change in its basic characteristics. 
Another example would be an upgrade in avionics software that changes the functionality of the unit.  For example, the upgrade to TCAS software that permitted aircraft to fly in RVSM space [MOPS 7] changed the functionality of the TCAS unit so this software upgrade would render the unit ineligible for export under the RPL license exception.

How to Use RPL

Once it is determined that the export transaction is eligible for RPL, the following steps are necessary:
Place a destination control statement on your commercial invoice acknowledging you are in full compliance with the EAR.  This statement and the regulations that control it were recently amended – you can find more details about this at aviationsuppliers.wordpress.com/2017/01/03/destination-control-statement.
If the export requires an electronic export information filing (e.g. if the value of the export exceeds $2500), then go to the Automated Commercial Environment (ACE) and enter the ECCN of the item, enter the symbol RPL for the license authority, and enter a description of the item.

Export your article.

Maintain all records as required in your files.
There are other exceptions that can apply to an aircraft parts transaction, so if RPL does not work for you, then do not despair.  But be sure you are in full compliance before you return the article to your foreign customer.

WARNING: This article discussed basic legal issues to help persons identify possible compliance issues, but it is not legal advice designed to address a specific fact pattern, and actual fact patterns can sometimes generate complicated analyses.  For this reason, person seeking legal advice should engage an export lawyer with appropriate experience to assist in identifying your compliance path.  Since 1992, Jason Dickstein has supported the legal and regulatory needs of the aviation community, including export advice.
 

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