State Dept. Drafting 'Specially Designed' Rulemaking While Trying to Fill Key Positions
SANTA CLARA, Calif. -- The State Department’s export controls chain of command is in transition, as State is currently drafting a rule to define technical parameters for certain goods “specially designed” for military end users, Dan Cook, chief of Compliance, Registration, and Enforcement in State’s Office of Defense Trade Controls Compliance (DTCC), said during the Export Control Forum. State has identified a hoped replacement for Acting DTCC Director Arthur Shulman, but hasn’t publicly named the individual, as it is looking to obtain an exception from the White House’s Jan. 23-announced federal hiring freeze to install the person, Cook said. The position of Under Secretary for Arms Controls and International Security, which is one position below Secretary of State Rex Tillerson and oversees State’s role in defense trade, remains vacant after Tom Countryman in January was asked to leave his acting capacity in that role.
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During a brief interview after a panel session, Cook said that State could issue a proposed or interim final rule accepting comments on controls related to items “specially designed for a military end user” that are classified in U.S. Munitions List (USML) Category XII (Fire Control, Laser, Imaging, and Guidance Equipment) as early as this summer. “Our policy folks are actually working on that. I don’t have a specific, direct time period for that. I would think summer,” he said. “We tried to do some of these things [in the past], but they were so contentious and things that people didn’t like or didn’t understand, so that’s part of it.” State in January opened a two-month public comment period on alternatives to controls on certain items “specially designed for a military end user,” as it seeks to establish a clearer line between goods produced for military and civil end uses (see 1701120069). State is accepting comments through March 14. State has received zero comments so far, according to Regulations.gov (here). State didn’t comment.
Speaking more broadly about the USML designation of items “specially designed for a military end user,” Cook said that while State is improving on establishing precise enough parameters to allow it to move away from the general nomenclature, it would be nearly impossible to classify all controlled items using hard parameters. “We get about ninety percent, and then that other ten percent is things that tend to be case-specific, and unique things that are so unique that they’re just not quite accounted for or thought about,” he said.
Cook also provided some recent State licensing statistics. While the department has issued about half the number of licenses since export control reform started in 2013 as it did previously, the number of registrants and reviewed mergers, acquisitions, and divestitures has crept upward, according to slides from Cook’s briefing. The number of entities registering with State rose 3.5 percent from 2015 to 2016, from 12,503 to 12,824, and the number of mergers, acquisitions, and divestitures rose more than 13 percent during the same period, to 374 in 2016.