AEA Comments on Commerce Department's Export Controls on U.S. Origin Parts

NEWS RELEASE
Feb. 20, 2009

WASHINGTON, D.C. — The Aircraft Electronics Association (AEA) responded this week to the request for comments regarding the Department of Commerce, Bureau of Industry and Security’s “Effects of Export Controls on Decisions to Use or Not Use U.S.-Origin Parts and Components in Commercial Products and the Effects of Such Decisions” (74 FR 263, Jan. 5, 2009).

Click here to view the AEA’s comments to the FAA regarding export controls.

The AEA’s more than 1,300 member companies represent a valuable part of the U.S. aerospace industry — which, as a whole, was responsible for a trade balance of $60.4 billion in 2007. The export of aerospace parts, including general aviation electronics components, makes up a vital piece of U.S. industry and trade.

Among the many comments the AEA submitted regarding export controls are (in abbreviate form):

• Many avionics require export licenses. Avionics are particularly vulnerable to U.S. export restrictions. Although many U.S. exports subject to Commerce Department export jurisdiction do not require export licenses, this does not hold true when applied to avionics. A significant percentage of commercial avionics are subject to missile technology (MT) restrictions under the current export regulations. Export articles subject to MT restrictions usually need export licenses (except to Canada).

The export rules are complex, and businesses fear non-compliance. Aviation is a global marketplace; however, there are some U.S. companies that have affirmatively decided to only sell to domestic customers and have actively refused to service non-U.S. customers. The main reason for turning away this business is because companies fear they cannot export properly in compliance with the often-bewildering export regulations.

General aviation avionics often cannot rely on aviation industry license exceptions. The need to obtain export licenses can significantly impede an unplanned transaction. If a foreign aircraft operator needs replacement avionics on an expedited basis, it might be far more reasonable to purchase the avionics from a foreign manufacturer rather than buying American and waiting for the appropriate licenses to issue.

Eliminate conflicting guidance. The State Department issued a rule Aug. 14, 2008, which was announced as “clarifying” the State Department’s policy with respect to which aircraft parts are considered commercial for export purposes and which ones are considered governed by the International Traffic in Arms Regulations (ITARs). The true effect of this rule, however, was to expand the range of civil aircraft parts considered to potentially fall within the State Department’s export jurisdiction — but it actually seems to have made the proper categorizations of many aircraft parts more confusing rather than achieving the clarification Congress had requested and the State Department had promised. Deciding which regulatory regime applies to an export can be difficult.

Conclusion. There are a number of steps that can be taken to ease the adverse impact of export regulations on U.S. exports.

The licensing exception found at 15 CFR §740.10 does not include parts that have been altered or modified. This leads to both a loss of business for the U.S. economy and a diminution of safety for the rest of the world. Including “authorized alterations” of articles manufactured under FAA production approval and defining “authorized alterations” to mean those meeting the requirements of Title 14, Chapter 1, of the Code of Federal Regulations would not jeopardize U.S. policy interests and it would support U.S. repair business while supporting global safety.

The Commerce Department has primary jurisdiction over civil aircraft exports under Export Administration Act, Section 17©. State Department initiatives threaten to encroach on this jurisdiction. It is important for the Commerce Department to stand up for the industry and guard its jurisdiction over civil aircraft parts.

FOR MORE INFORMATION:
Contact Ric Peri, vice president of government & industry affairs for AEA, by email at ricp@aea.net or by phone at 202-589-1144.

Regulatory