Where Industry and Security Intersect
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MINUTES OF MEETING
Department of Commerce, Washington, DC
HCHB, Room 3884
July 28, 2009
The SITAC meeting was held at the Department of Commerce in Room 3884 from 9:30 am to 12:30 pm. There was a closed session for this meeting.
Open Session.
The open session covered the following topics:
1. Welcome and Introductions
2. Remarks from the Bureau of Industry and Security Management
3. Industry Presentations
4. New Business
The closed session covered the (1) implementation of the new rule which affects certain uncooled cameras incorporating microbolometer focal plane arrays, (2) jurisdiction of the cameras which contain more than 111,000 pixels, (3) a discussion by Jennifer Watts on the impact of export controls on “Green Technology” items, and (4) comments on the latest Wassenaar Arrangement activities.
Welcome and Introductions.
The SITAC chair, Mr. John Goodrich opened the meeting with an introduction of the attendees. The Department of State was represented by Dr. John Albert. The Department of Defense was represented by Todd Carr and Art Kron at the meeting. Several companies did teleconference into the meeting including Mine Safety Appliances, Tyco International, and Sunpower.
Remarks from the Bureau of Industry and Security Management.
Matthew. Borman, acting Assistant Secretary for Export Administration, briefly commented on the success of the publication of the RS rule which had taken several years of negotiation. He asked the participants for their initial feedback to the 22 May publication.
Mr. Steve Tribble (FLIR) commented that there are two distinct parts to the rule. The fully packaged systems and the cores. He agreed that the first part was working as expected however there was concern that the cores might be a challenge as there was some jurisdictional issues to overcome and a better understanding of “embedding” was needed.
Mr. Larry Konsin (MSA) stated that licensing for cameras used in fire fighting applications had gotten more problematic as multiple authorizations needed to be obtained prior to export due to the military end use restriction imposed by new rule.
Dr. Frank Vallese (Electrophysics/Sofradir) agreed that there was improvement for some of his products but that the jurisdictional issue surrounding cameras that incorporate a 640 x 480 microbolometer focal plane array needed to be resolved quickly and in Commerce’s favor.
Mr. Mike Decelle (NoblePeak Vision Corporation) commented that his cameras were not included in the recent rule but hoped that attention could now begin on the short wave cameras.
Mr. John Goodrich (Fluke) acknowledged the hard work done to secure the latest revisions to the regulations and noted that Fluke was finally able to compete on a much more level playing field with their foreign competition.
All companies said that it was a good regulation however much needed to be done in order to fully understand its intent. It was suggested that Commerce lead an outreach program not only to those exporters that attended the SITAC meetings but more importantly to those who may not.
Matthew Borman was asked two other questions.
- How the CJ issues would be resolved. He said that he hoped that much of the problem came from everyone understanding what is suppose to be listed captured under the USML and what the criteria for USML control was.
- He was also asked by Mr. Tribble if the delay of the rule publication was the result of differences between management and rogue employees. Matt Borman was not sure but hoped it was simply a misunderstanding.
Dr. Costanzo, Designated Federal Official (DFO), summarized the licensing statistics for night vision cameras occurring between 1 October 2008 to 20 July 2009. There were 1196 export applications closed out which were valued at $187,393,661 USD. Of these 957 were approved, 234 were RWA’d, and 5 were denied. Of the approved cases, 590 license applications were shipped against. The top seven destinations for US infrared cameras were by value Germany ($76M), Sweden ($55M), UK($6M), Mexico ($4M), Japan ($3M), Spain ($2M), and France ($2M). The average processing time was 27 days. During the same time period in the previous fiscal year, there were 1774 license applications closed with 1574 were approved, 5 denied, and 195 RWA’d. Of the approved cases, 1007 were shipped against. This represents a 33% decline in export licenses for cameras with an ECCN of 6A003.
Mr. James Thompson, Director of the Sensors and Aviation Division, provided some general comments on the latest Wassenaar meetings. The US delegation included John Varesi, Joe Young, Randy Pratt, Jim Harrington, John Albert, Greg Tarr, Art Kron, and Mike Grenn. He stated that he had attended the intercessional meeting which discussed some low light level controls. There was also discussion aimed at transferring underwater video cameras currently captured in Category 8 to Category 6.
- Mr. Tribble (FLIR) asked if electron multiplied charge coupled devices (EMCCDs) were listed on the CCL yet. Mr. Thompson stated that the 2007 regulation has not yet been published due to interagency disagreement on which regional stability control should be placed on the devices and cameras.
- Mr. Bill Keating (Roper Scientific) stated that they are losing market share to their European Union (EU) competitors.
- John Varesi stated that the Department of Commerce considers EMCCDs properly classified as EAR99 and can be exported without an Individual Validated License to most entities.
- Mr. George Gasparian (Teledyne Judson Technologies) mentioned that he has concerns with shortwave infrared cameras (SWIR) which are considered to be USML by DTSA but are treated as dual use in the European Union. The EU allows such cameras to be shipped within the EU and to the US under a general license provision, not an individual validated license.
- Mr. James Thompson continued stating that the US had a proposal for solid state lasers and stack arrays. The discussions during the intercessional meeting sought to refine text but no agreement had been reached. He also mentioned that there were discussions on diver detection systems which looked as if agreement would be made this year. Controls on bathometric survey systems were also being revised. He was doubtful that any agreement could be reached this year unless acceptance of a validity note could be reached.
- Dr. Albert commented that his goal was to cleanup the control text in different areas like underwater video cameras. He also wanted to look at sensor and camera definitions in the Wassenaar Arrangement (WA) list.
- Mr. Tribble asked Dr. Albert if the WA member countries were comfortable with the definition of camera and core. Mr. Gasparian also was interested in how readout integrated circuits (ROICs) were licensed by WA as dual use items. Dr. Albert seemed to think that WA would be looking closely at performance metrics in the September meeting.
John Varesi was introduced and discussed some frequently asked questions on the new rule that would be posted on the website. These questions and their answers are given below:
To what ECCNs does the new UTIC rule apply?
The majority of the new rule applies to ECCN 6A003.b.4.b (microbolometer UTICs). There are also changes to ECCNs 0A919, 6A993, & 6D994.
Did the rule change any UTIC technology controls?
No.
Does the new UTIC rule apply to previously exported UTICs?
Yes, upon publication the new regulations apply to all UTICs (with a one month grace period).
Are UTIC licenses issued prior to the new rule still valid?
Yes, but many to the specified countries* are no longer necessary.
Note: In cases where a license is no longer required, parties are no longer bound to any license conditions that go beyond standard EAR provisions (see Section 750.7(i) of the EAR).
Does de minimis still apply for civil products with embedded UTICs?
Yes.
Are licenses required for UTIC1 “core” exports to repair facilities within the specified countries* for repair of previously exported UTICs1?
No, but such UTIC1 “core” exports must be included in semi-annual reports.
Is license exception TMP available for 6A003.b.4.b items?
Yes.
Is license exception APR available for 6A003.b.4.b items?
A limited APR is technically available for reexports within the specified countries*, however there should be little reason to use it as it would typically apply to NLR exports and reexports. APR is no longer available for reexports to Group B and D countries (except for the specified countries*) for ECCN 6A003.b.4.b.
Is APR available for reexports of 6A003.b.4.b items to military end users within the specified countries*?
No.
Are any license exceptions available to 0A919 items?
No.
Who are military end users?
The rule defines military end-user as national armed services (army, navy, marine, air force, or coast guard), as well as the national guard and national police, government intelligence or reconnaissance organizations, or any person or entity whose actions or functions are intended to support “military end-uses” as defined in § 744.17(d). Local authorities are not typically considered military end users.
Do demonstrations of UTICs1 to military end users in the specified countries* require licenses?
No, but loans and sales do require licenses.
Are reexport licenses required for military end users of UTICs?
Yes.
Note: Reexport licenses for 0A919 items are not required for military deployments by the specified countries*.
What is the ECCN for UTICs being exported for incorporation into foreign-made military commodities?
The ECCN for UTICs remains 6A003.b.4.b. Only foreign-made military commodities containing UTICs are 0A919.
When must a license be obtained for a 6A993 UTIC going to China?
A license is required when the 6A993 UTIC is for a military end use (see Section 750.7(i) of the EAR).
For what UTIC exports is semi-annual reporting required?
Export of any UTICs without an individual validated license to the specified countries* must be reported.
Is semi-annual reporting required for UTIC1 reexports among the specified countries*?
No.
Must UTIC1 exports to certified integrators be reported semi-annually?
Yes.
Must UTIC exports using license exceptions be reported semi-annually?
Yes.
specified countries*- The specified countries are Australia, Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
UTIC1- UTIC containing focal plane arrays with 111,000 pixels or less.
Industry Presentations.
Mr. Goodrich provided a brief introduction to Ms. Kate Bishop. She is charged with outreach to industry trade associations for the Small Business Division of Export-Import Bank. In this capacity, she directs her efforts to manufacturing and service concerns. Kate’s career highlights include positions with SBC (now AT&T) where she was responsible for partnership development with Williams Communications and Solar Turbines (a Caterpillar subsidiary). Her government experience includes serving as project officer for the US Agency for International Development, international trade analyst for the US International Trade Commission, and supervisory trade specialist for the US Department of Commerce’s Foreign Commercial Service. She was also detailed to the United States Trade Representative’s Office of Congressional Affairs and to the Overseas Private Investment Corporation’s Office of Investments. Kate received an undergraduate degree from the University of Nevada and two masters’ degrees, one in International Management from the School for International Training in Brattleboro, VT and the other in International Relations/Economics from Johns Hopkins School for Advanced International Studies (SAIS).
Ms. Bishop explained that the Export Credit Agency (ECA) was established in 1934 and is headquartered in Washington, DC. Their mission is to promote and finance exports for the US and compete with other country ECA’s by providing loans, guaranties and export credit insurance. The objective of which is to expand outreach efforts through partnership to reach more exporters in the US. They accomplish this by (1) reducing the risk to companies seeking to export, (2) offering export financing to your customers past your lending limits, (3) allow customers to safely extend credit terms to foreign buyers, and (4) obtain guarantees for working capital loans to support the export of goods and services. The interest in her area has increased by 100% over last year. They have approximately 350 employees currently. They do offer low cost training several times a year to educate potential clients.
New Business.
None.
Meeting Adjournment.
Mr. Goodrich then adjourned the open session of the April SITAC meeting.