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White House: President Issues Executive Order: “Administration of Reformed Export Controls”

ADMINISTRATION OF REFORMED EXPORT CONTROLS

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Arms Export Control Act, as amended (22 U.S.C. 2751 et seq.) (the "Act"), and section 301 of title 3, United States Code, it is hereby ordered as follows:

Section 1. Delegation of Functions. The following functions conferred upon the President by the Act, and related laws, are delegated as follows:

       (a) Those under section 3 of the Act (22 U.S.C. 2753), with the exception of subsections (a)(1), (b), (c)(3), (c)(4), and (f) (22 U.S.C. 2753(a)(1), (b), (c)(3), (c)(4), and (f)), to the Secretary of State. The Secretary of State, in the implementation of the delegated functions under sections 3(a) and (d) of the Act (22 U.S.C. 2753(a) and (d)), is authorized to find, in the case of a proposed transfer of a defense article or related training or other defense service by a foreign country or international organization not otherwise eligible under section 3(a)(1) of the Act (22 U.S.C. 2753(a)(1)), whether the proposed transfer will strengthen the security of the United States and promote world peace.

       (b) Those under section 5 (22 U.S.C. 2755) to the Secretary of State.

       (c) Those under section 21 of the Act (22 U.S.C. 2761), with the exception of the last sentence of subsection (d) and all of subsection (i) (22 U.S.C. 2761(d) and (i)), to the Secretary of Defense.

       (d) Those under sections 22(a), 29, 30, and 30A of the Act (22 U.S.C. 2762(a), 2769, 2770, and 2770a) to the Secretary of Defense.

       (e) Those under section 23 of the Act (22 U.S.C. 2763), and under section 7069 of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2012 (Public Law 112-74, Division I) and any subsequently enacted provision of law that is the same or substantially the same, to the Secretary of Defense to be exercised in consultation with the Secretary of State and, other than the last sentence of section 23(a) (22 U.S.C. 2763(a)), in consultation with the Secretary of the Treasury, except that the President shall determine any rate of interest to be charged that is less than the market rate of interest.

       (f) Those under sections 24 and 27 of the Act (22 U.S.C. 2764 and 2767) to the Secretary of Defense. The Secretary of Defense shall consult with the Secretary of State and the Secretary of the Treasury in implementing the delegated functions under section 24 (22 U.S.C. 2764) and with the Secretary of State in implementing the delegated functions under section 27 (22 U.S.C. 2767).

       (g) Those under section 25 of the Act (22 U.S.C. 2765) to the Secretary of State. The Secretary of Defense shall assist the Secretary of State in the preparation of materials for presentation to the Congress under that section.

       (h) Those under section 34 of the Act (22 U.S.C. 2774) to the Secretary of State. To the extent the standards and criteria for credit and guaranty transactions are based upon national security or financial policies, the Secretary of State shall obtain the prior concurrence of the Secretary of Defense and the Secretary of the Treasury, respectively.

       (i) Those under section 35(a) of the Act (22 U.S.C. 2775(a)) to the Secretary of State.

       (j) Those under sections 36(a) and 36(b)(1) of the Act (22 U.S.C. 2776(a) and (b)(1)), except with respect to the certification of an emergency as provided by subsection (b)(1) (22 U.S.C. 2776(b)(1)), to the Secretary of Defense. The Secretary of Defense, in the implementation of the delegated functions under sections 36(a) and (b)(1) (22 U.S.C. 2776(a) and (b)(1)), shall consult with the Secretary of State. With respect to those functions under sections 36(a)(5) and (6) (22 U.S.C. 2776(a)(5) and (6)), the Secretary of Defense shall consult with the Director of the Office of Management and Budget.

       (k) Those under section 36(b)(1) with respect to the certification of an emergency as provided by subsection (b)(1) and under sections 36(c) and (d) of the Act (22 U.S.C. 2776(b)(1), (c), and (d)) to the Secretary of State.

       (l) Those under section 36(f)(1) of the Act (22 U.S.C. 2776(f)(1)) to the Secretary of Defense.

       (m) Those under sections 36(f)(2) and (f)(3) of the Act (22 U.S.C. 2776(f)(2) and (f)(3)) to the Secretary of State.

       (n) Those under section 38 of the Act (22 U.S.C. 2778) to:

       (i) the Secretary of State, except as otherwise provided in this subsection. Designations, including changes in designations, by the Secretary of State of items or categories of items that shall be considered as defense articles and defense services subject to export control under section 38 (22 U.S.C. 2778) shall have the concurrence of the Secretary of Defense. The authority to undertake activities to ensure compliance with established export conditions may be redelegated to the Secretary of Defense, or to the head of another executive department or agency as appropriate, who shall exercise such functions in consultation with the Secretary of State;

       (ii) the Attorney General, to the extent they relate to the control of the permanent import of defense articles and defense services. In carrying out such functions, the Attorney General shall be guided by the views of the Secretary of State on matters affecting world peace, and the external security and foreign policy of the United States. Designations, including changes in designations, by the Attorney General of items or categories of items that shall be considered as defense articles and defense services subject to permanent import control under section 38 of the Act (22 U.S.C. 2778) shall be made with the concurrence of the Secretary of State and the Secretary of Defense and with notice to the Secretary of Commerce; and

       (iii) the Department of State for the registration and licensing of those persons who engage in the business of brokering activities with respect to defense articles or defense services controlled either for purposes of export by the Department of State or for purposes of permanent import by the Department of Justice.

       (o) Those under section 39(b) of the Act (22 U.S.C. 2779(b)) to the Secretary of State. In carrying out such functions, the Secretary of State shall consult with the Secretary of Defense as may be necessary to avoid interference in the application of Department of Defense regulations to sales made under section 22 of the Act (22 U.S.C. 2762).

       (p) Those under the portion of section 40A of the Act added by Public Law 104-164 (22 U.S.C. 2785), to the Secretary of State insofar as they relate to commercial exports licensed under the Act, and to the Secretary of Defense insofar as they relate to defense articles and defense services sold, leased, or transferred under the Foreign Military Sales Program.

       (q) Those under the portion of section 40A of the Act added by the Antiterrorism and Effective Death Penalty Act of 1996 (Public Law 104-132) (22 U.S.C. 2781), to the Secretary of State.

       (r) Those under sections 42(c) and (f) of the Act (22 U.S.C. 2791(c) and (f)) to the Secretary of Defense. The Secretary of Defense shall obtain the concurrence of the Secretary of State and the Secretary of Commerce on any determination considered under the authority of section 42(c) of the Act (22 U.S.C. 2791(c)).

       (s) Those under section 52(b) of the Act (22 U.S.C. 2795a(b)) to the Secretary of Defense.

       (t) Those under sections 61 and 62(a) of the Act (22 U.S.C. 2796 and 2796a(a)) to the Secretary of Defense.

       (u) Those under section 2(b)(6) of the Export-Import Bank Act of 1945, as amended (12 U.S.C. 635(b)(6)) to the Secretary of State.

Sec. 2. Coordination.

       (a) In addition to the specific provisions of section 1 of this order, the Secretary of State and the Secretary of Defense, in carrying out the functions delegated to them under this order, shall consult with each other and with the heads of other executive departments and agencies on matters pertaining to their responsibilities.

       (b) Under the direction of the President and in accordance with section 2(b) of the Act (22 U.S.C. 2752(b)), the Secretary of State, taking into account other United States activities abroad, shall be responsible for the continuous supervision and general direction of sales and exports under the Act, including the negotiation, conclusion, and termination of international agreements, and determining whether there shall be a sale to a country and the amount thereof, and whether there shall be delivery or other performance under such sale or export, to the end that sales and exports are integrated with other United States activities and the foreign policy of the United States is best served thereby.

Sec. 3. Allocation of Funds. Funds appropriated to the President for carrying out the Act shall be deemed to be allocated to the Secretary of Defense without any further action of the President.

Sec. 4. Revocation. Executive Order 11958 of January 18, 1977, as amended, is revoked; except that, to the extent consistent with this order, all determinations, authorizations, regulations, rulings, certificates, orders, directives, contracts, agreements, and other actions made, issued, taken, or entered into under the provisions of Executive Order 11958, as amended, and not revoked, superseded, or otherwise made inapplicable, shall continue in full force and effect until amended, modified, or terminated by appropriate authority.

Sec. 5. Delegation of Functions under the International Emergency Economic Powers Act. Executive Order 13222 of August 17, 2001, is amended as follows:

       (a) Redesignate section 4 as section 6.

       (b) Insert the following new sections 4 and 5 after section 3:

"Sec. 4. The Secretary of Commerce shall, to the extent required as a matter of statute or regulation, establish appropriate procedures for when Congress is to be notified of the export of firearms that are subject to the jurisdiction of the Department of Commerce under the Export Administration Regulations and that are controlled for purposes of permanent import by the Attorney General under section 38(a) of the Arms Export Control Act (22 U.S.C. 2778(a)) and appropriate procedures for when Congress is to be notified of the export of Major Defense Equipment controlled for purposes of permanent export under the jurisdiction of the Department of Commerce.

Sec. 5.         

       (a) The Secretary of State is hereby authorized to take such actions and to employ those powers granted to the President by the Act as may be necessary to license or otherwise approve the export, reexport, or transfer of items subject to the jurisdiction of the Department of Commerce as agreed to by the Secretary of State and the Secretary of Commerce.

       (b) Notwithstanding subsection (a) of this section, items licensed or otherwise approved by the Secretary of State pursuant to this section remain subject to the jurisdiction of the Department of Commerce."

Sec. 6. General Provisions.

       (a) Nothing in this order shall be construed to impair or otherwise affect:

       (i) the authority granted by law to an agency, or the head thereof; or

       (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

       (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

       (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

BARACK OBAMA

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5. White House Fact Sheet on Implementation of Export Control Reform

(Source: http://www.whitehouse.gov/the-press-office/2013/03/08/fact-sheet-implementation-export-control-reform)

March 08, 2013.  Today, the Administration announced two key steps to further the goals of President Obama’s Export Control Reform Initiative, which is a common sense approach to overhauling the nation’s export control system.  President Obama signed an Executive Order today to update delegated presidential authorities over the administration of certain export and import controls under the Arms Export Control Act of 1976, and yesterday the Administration notified Congress of the first in a series of changes to the U.S. Munitions List.

Executive Order

   Executive Order 11958 delegated authority to control exports of defense articles and services to the Secretary of State and delegated the comparable authority to control imports to the Secretary of the Treasury.  The Department of State controls the export of defense articles and services on its U.S. Munitions List (USML); the Department of Justice controls their import pursuant to the U.S. Munitions Import List (USMIL) administered by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).  The USMIL was previously a subset of State’s USML.  The most recent comprehensive delegation of these authorities was in Executive Order 11958 of January 18, 1977.  The President’s new Executive Order updates delegated authorities consistent with the upcoming changes to our export control lists.  It supersedes and replaces Executive Order 11958 and amends Executive Order 13222 of August 17, 2001, that pertains to the Department of Commerce-administered controls.  The new Executive Order makes the following changes:

1) Consolidation of All Brokering Responsibilities with the Department of State:  The Arms Export Control Act requires the registration and licensing of brokering activities for defense articles and services for both exports and imports.  A broker is a person who acts as an agent for others in negotiating or arranging contracts, purchases, sales or transfers of defense articles or services.  The Executive Order consolidates and delegates to the Secretary of State all statutory responsibility for maintaining registration and licensing requirements for brokering of defense articles and services on either the State or ATF lists which both control defense articles and services under the Arms Export Control Act.  This one-stop approach provides better clarity for the defense trade community and makes it easier for industry to comply and for the U.S. Government to enforce.

2) Elimination of Possible “Double Licensing” Requirements:  Today the Department of State licenses entire systems, including any accompanying spare parts, accessories, and attachments, yet many of these items will be moved to the Commerce list which may mean that an exporter would need two licenses instead of one.  The President’s delegation, via an amendment to Executive Order 13222, will allow the Department of State to authorize those accompanying items that may have moved to the Commerce list and prevent any potential double-licensing requirement.  This ensures that the prioritization of our controls, in which we facilitate secure trade with Allies and partners, does not add new red tape.  Items licensed or otherwise approved by the Secretary of State under this delegation remain subject to the jurisdiction of the Department of Commerce, including for enforcement purposes.

3) Congressional Notification Process:  The President has directed that the Department of Commerce establish procedures for notifying Congress of approved export licenses for a certain subset of items that are moved or that may move from the State list to the Commerce list.  A key feature of the President’s reform initiative is to enhance transparency with Congress and the public in the administration of our export control system.  This Executive Order ensures that, going forward, the Executive Branch will continue this transparency and notify Congress about export licenses for those certain items that, while no longer subject to the statutory notification requirements of the Arms Export Control Act, warrant continued transparency and notification to Congress.

4) Other Administrative Updates:  The Executive Order delegates to the Attorney General the functions previously assigned by Executive Order 11958 to the Secretary of the Treasury, reflecting the 2003 move of ATF to the Department of Justice from the Treasury (accommodated by Executive Order 13284).  It also makes a number of other necessary updates to ensure that the authorities to administer our export control system are current.

Changes to the U.S. Munitions List

       The cornerstone of the President’s Export Control Reform Initiative is the rebuilding of the two primary export controls lists, State’s USML and the Department of Commerce’s Commerce Control List (CCL) which primarily controls dual-use items, i.e., commercial items with possible military applications, and some military items of lesser sensitivity.  By law, everything on the USML is controlled equally, whether an F-18 fighter or a bolt that has been modified for use on that F-18, and each of these items requires an individual license.  This system has created significant obstacles and delays in providing equipment to Allies and partners for interoperability with U.S. forces in places like Afghanistan, and harms the health and competitiveness of the U.S. industrial base. Rebuilding our export control lists and moving less sensitive items from the State to the Commerce list will provide us the flexibility to more efficiently equip and maintain our partner’s capabilities while allowing us to focus on preventing potential adversaries from acquiring military items that they could use against us.

       The Administration notified Congress yesterday of the first in a series of changes to the USML, as required by Section 38(f) of the Arms Export Control Act.  Once the Congressional notification period concludes, these changes -- to current Department of State- administered controls on Aircraft and Gas Turbine Engines -- will be published, with an effective date of 180 days after publication.  The revised USML will enable the United States to better focus its resources on items that deserve the highest levels of export protection and on destinations of concern, while providing American companies with a streamlined export authorization process for thousands of parts and components. The remaining USML changes will be published on a rolling basis throughout 2013, and ultimately will update every category of defense articles to better meet current national security and economic challenges. These actions will improve our national security by better utilizing our export licensing and enforcement resources to focus on those items, destinations, and end-uses of greatest concern, improve interoperability with Allies and partners, and bolster the U.S. defense industrial base. 

       To follow developments in the President’s Export Control Reform Initiative, visit www.export.gov/ecr/.