New U.S. Export Rules Provide Clearer Guidance to the Aerospace Community

The rules for exporting aircraft parts from the United States are changing! This could be a tremendous benefit for US exporters and also for those outside the United States who need to obtain parts from the United States.
On April 16, the United States State Department and Commerce Department released sweeping new regulations that should make it easier for U.S. exporters to identify which regulatory regime applies to dual-use parts and other parts that have caused the aviation industry to be confused about compliance.

A problem that has been facing the industry is that there has been some ambiguity about the regulatory treatment of certain aircraft parts. The United States has two parallel regulatory systems for export: the State Department’s International Traffic in Arms Regulations (ITARs) which generally apply to defense related articles, and the Commerce Department’s Export Administration Regulations (EARs) which generally apply to everything else. While many aircraft parts clearly fit into one regime or the other, some aircraft parts fall into a grey area where it is difficult (or even impossible) for an exporter to identify the correct regulatory regime. Determining the correct regulatory regime for compliance is important because if you comply with the wrong standards when you export, you could be in violation of the other standards!
Clear identification of the correct export standards is also an economic issue. Compliance with the ITARs is often much more onerous than compliance with the EARs. So correctly identifying a part as being subject to the EARs can mean the difference between being able to service an AOG in a timely fashion, and leaving your customer unable to make use of the aircraft. The company that can correctly identify proper compliance mechanisms often will enjoy a significant competitive advantage over competitors that flounder with this sort of issue.

There are a number of sources of ambiguities that have caused problems for exporters, but a primary one is that the ITARs apply to parts that are designed, manufactured or modified for use on defense related aircraft. If a part was designed for use on defense related aircraft, but then was subsequently used on a civilian aircraft, then it may be subject to the ITARs. In some cases this applies to parts that may have been originally designed for use on defense related aircraft, but the manufacturer was unsuccessful in the bid for the contract, so the part may never have been manufactured for a defense purpose. Other exporters would have no way of knowing that these parts were ITAR-controlled, because the original defense design purpose was not obvious to a third party!

Another class of problem parts is parts that are dual-use (the part fits on both civilian and defense related aircraft). If the part was produced for the military corollary aircraft or engine and then removed from it, it would clearly be a part that was “produced for defense purposes.” If the part was produced for the civilian version of the aircraft or engine and then removed from it, it would clearly be a part that was NOT produced for defense purposes (assume for purposes of this hypothetical that the original design purpose was non-defense). But what if this same part is produced as a replacement part? If it is produced with no specific installation intent at the time of production (e.g. defense vs. non-defense), then is this dual-use part a defense part (subject to the ITARs) or not (and thus subject to the EARs)?

Problems like this have been a longstanding issue for the aviation community. This has been a priority for the industry—changing the regulations to provide clearer guidance about which regulations control the export of any given aircraft part. For a number of years, the aviation community has been working with the United States government to achieve a solution.

The April 16th regulations reflect that solution.
The essence of the new regulations will be that parts that only have a defense mission will remain subject to the State Department’s jurisdiction (subject to the ITARs). But parts with a civilian mission (including dual-use parts) will be clearly identified as being subject to the EARs. In order to facilitate this identification, the government has published a “positive list” which more precisely describes the types of aircraft parts that will remain subject to the ITARs.

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