The State Department published today the attached proposed rule addressing the commodity jurisdiction of parts and components for civil and military aircraft.  http://edocket.access.gpo.gov/2008/pdf/08-1122.pdf

Unlike most State Department rules, there is a 30-day notice and comment period, with comments due  by  May 12.  Accordingly, we would like to urge all exporters who manufacture (or use) parts and components for the aircraft industry to sit down and review the rule carefully, determine whether and how it would affect the jurisdiction of your parts and components and, if it would have a significant effect, consider filing comments.

The following is a brief summary of the key elements of the rule:

1) Background:   The proposed rule would clarify how the criteria of Section 17(c) of the EAA ("Section 17(c)") of the Export Administration Act  ("EAA") should be applied to determine the jurisdiction of aircraft parts and components.  For reference, Section 17(c) states that any product (1) which is  standard equipment, certified by the Federal Aviation Administration ("FAA"), in civil aircraft and is an integral part of such aircraft, and (2) which is to be exported to a country other than a controlled country, shall be subject to export controls exclusively under the EAA.  

2) Clarification of 17(c) and the New 5-Part Test:   If adopted, State's proposed rule would reinstate a reference to 17(c) in Category VIII of the US Munitions List.  It  would also clarify  that the parts and components that meet the following 5-part test are subject to the Export Administration Regulations even without a Commodity Jurisdiction (CJ) Ruling.

Any part or component that:

(a) is "standard equipment;"

(b) is covered by a civil aircraft type certificate  (including amended type certificates and supplemental type certificates) issued by the Federal Aviation Administration for civil, non-military aircraft (this expressly excludes military aircraft  certified as restricted and any type certification of Military Commercial Derivative Aircraft); 

(c) is an "integral part" of such  civil aircraft;

(d)  is not "Significant Military Equipment or "SME"); and

(e)  no "doubt exists" as to whether the above criteria are met. 

The proposed rule then defines the terms "standard equipment" and "integral"  as follows :

(a) ``Standard equipment' is defined as:

1)     a part  or component manufactured in compliance with EITHER an established and  published industry specification or an established and published  government specification (e.g., AN, MS, NAS, or SAE) OR  unpublished civil aviation industry specifications and standards (e.g., pumps, actuators, and generators). 

2)     A part or component is NOT standard equipment if there are any  performance, manufacturing or testing requirements beyond such  specifications and standards.  

3)     However, simply testing a part or component to  meet a military specification or standard does not in and of itself  change the jurisdiction of such part or component unless the item  was designed or modified to meet that specification or standard.  

(b) "Integral" is defined as a part or component that is installed in the  aircraft. In determining whether a part or component may be  considered as standard equipment and integral to a civil aircraft  (e.g., latches, fasteners, grommets, and switches) it is important  to carefully review all of the criteria noted above. For example, a  part approved solely on a non-interference/provisions basis under a  type certificate issued by the Federal Aviation Administration would  not qualify. Similarly, unique application parts or components not  integral to the aircraft would also not qualify.

3) When a CJ IS Required:  The proposed rule says a CJ is required when a part or component is SME,  or when  "doubt exists" as to whether the 17(c) criteria have been met.   The proposed rule would grandfather out from its CJ requirement those SME parts or components that were integral to civil aircraft prior to the effective date of the rule.  [Note: the rule is not effective until after the notice and comment period so there is no effective date yet.]

4)The proposed rule calls out additional parts and components as SME (and therefore , if adopted,  would in future require a CJ to confirm jurisdiction).  In addition, to SME items that might appear in another USML category, the new & old Cat VIII SME parts and components are as follow:

*  (b)     Military aircraft engines, except reciprocating engines,  specifically designed or modified for the aircraft in paragraph (a)  of this category, and all specifically designed military hot section  components (i.e., combustion chambers and liners; high pressure  turbine blades, vanes, disks and related cooled structure; cooled  low pressure turbine blades, vanes, disks and related cooled structure; cooled augmenters; and cooled nozzles) and digital engine  controls (e.g., Full Authority Digital Engine Controls (FADEC) and  Digital Electronic Engine Controls (DEEC)).  [NOTE:  THE HIGHLIGHTED TEXT IS WHAT WOULD BE CHANGED AS A RESULT OF THE PROPOSED RULE]

* (c)     Cartridge-actuated devices utilized in emergency escape of  personnel and airborne equipment (including but not limited to airborne  refueling equipment) specifically designed or modified for use with the  aircraft and engines of the types in paragraphs (a) and (b) of this
category.  [WOULD NOT BE CHANGED AS A RESULT OF PROPOSED RULE]

* (e)     Inertial navigation systems, aided or hybrid inertial  navigation systems, Inertial Measurement Units (IMUs), and Attitude and  Heading Reference Systems (AHRS) specifically designed, modified, or configured for military use and all specifically designed components,  parts and accessories. For other inertial reference systems and related  components refer to Category XII(d).  [WOULD NOT BE CHANGED AS A RESULT OF PROPOSED RULE]

In a press release issued today (see below), Congressman Don Manzullo (R-IL) hailed the new State Department proposal as potentially saving U.S. aerospace industries billions of dollars, creating American jobs, and strengthening our national security.