The US drone business may benefit from commerce coverage

As the U.S. drone industry evolves, new developments in trade regulations can make it easier for U.S. drone manufacturers to enter the global marketplace.

Flexibility is the key to Airpower: Further developments in drone export controls

By DRONELIFE guest author Dawn MK Zoldi *

On January 12, 2021, the U.S. Department of Commerce’s (USDOC) Bureau of Industry and Security (BIS) issued a new rule that changed license review guidelines to increase flexibility for the export of unmanned aerial systems (UAS), which are controlled for missiles technology (MT) reasons.

The rule amends the United States (US) Export Administration Regulations (EAR) to reflect the President’s policy updates dated July 24, 2020. These updates mitigated the implementation of the Missile Technology Control Regime (MTCR) strong presumption of denying transmission of Category I systems and instead addressed “a carefully selected subset of MASR Category I UAS (maximum airspeed less than 800 km / h) as Category II. ”This enables a more liberal individual examination and opens up trade opportunities for some US drone manufacturers. The rule takes effect immediately.

The MCTR, founded in 1987, of which the USA is a founding member, is a multilateral measure to combat the proliferation of missiles. Its mission is to “coordinate national export licensing efforts to prevent the proliferation of unmanned delivery systems capable of delivering weapons of mass destruction.” To this end, the 35 member states jointly set international guidelines for jointly controlled goods and the associated export policy in order to use a benchmark for their own national policies. Members voluntarily agree to adopt the regime’s Guidelines for Sensitive Missile Relevant Transfers (MTCR guidelines) and restrict the transfer of items attached to the regime’s equipment, software and technology.

The appendix consists of two categories. The most sensitive category I comprises missile systems and UAS with a range of 300 km and more and a payload of 500 kg and more as well as their production facilities and important subsystems. Category II, less sensitive and with many other uses for the delivery of weapons of mass destruction, includes missile systems and UAS with a range of 300 km or more but below a payload of 500 kg. Because of this distinction, the guidelines make a strong presumption of license refusal for Cat I drones and allow a milder individualized review of Cat II drones. The US previously adopted this approach in Section 742.5 of the EAR.

For the past four years, the US has tried unsuccessfully to reach consensus to update MCTR guidelines in line with US policy and “address the ongoing revolution in both UAS technology and its applications”. So this last step is one-sided.

The rule adds paragraph (b) (1) of EAR Sec. 742.5, largely rejecting the strong presumption of Cat I drone denial and replacing it with the same case-by-case verification standard used for Cat II. The basic principle is that Cat I drones can also be used for non-safety commercial purposes.

There is one major limitation here. The new USDOC rule still draws the line for Cat I drones, which are widely used in intelligence, surveillance and reconnaissance (ISR) missions and also for the delivery of weapons of mass destruction (e.g. cruise missiles, hypersonic aircraft and advanced unmanned aerial vehicles) Fighter aircraft) can be used vehicles). These will continue to be subject to a strong presumption of denial if they are to be used as WMD delivery systems or if they pose a risk of diversion to such end use in order to strike a balance in the desire to allow the commercial drone industry to thrive with the need to to take non-proliferation seriously.

This is the same strong presumption of denial of export licenses that came into play in recent updates to the US economic blacklist. In late December 2020, the BIS added DJI to this list to help control the flow of U.S. articles, technology, and source code to and from individuals, organizations. An additional license is now required for exports, re-exports or transfers to the China-based company. However, applications are likely to be rejected. Conversely, this USDOC rule discards the presumption of US exports of certain MT drones “to help allies and partners meet their urgent national security and trade requirements”.

USDOC estimates that this rule change will affect twenty license applications per year. As they say, “Flexibility is the key to air power.” So also with export controls.

* The views and opinions contained in this article are those of the author and do not reflect those of the DOD. They do not represent the approval of an organization named here and are not intended to influence the actions of the federal authorities or their employees.

Dawn MK Zoldi (Col., USAF, retired) is a licensed attorney and a 25-year Air Force veteran. She is an internationally recognized expert in the law and politics of unmanned aircraft systems, a columnist for Law-Tech Connect ™ for Inside Unmanned Systems magazine, recipient of the Woman to Watch in UAS (Leadership) Award 2019 and CEO of P3 Tech Consulting LLC. You can find more information on their website at: https://www.p3techconsulting.com.

Miriam McNabb is editor-in-chief of DRONELIFE and CEO of JobForDrones, a marketplace for professional drone services, and a fascinating observer of the emerging drone industry and the regulatory environment for drones. Miriam has written over 3,000 articles focusing on the commercial drone space and is an international speaker and recognized figure in the industry. Miriam graduated from the University of Chicago and has over 20 years experience in high-tech sales and marketing for new technologies.
For advice or writing in the drone industry, email Miriam.

TWITTER: @spaldingbarker

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