Updated Version

Presentation of DSP-61 and DSP-73 Licenses For CBP Decrementation No Longer Required

By Odyssey E. Gray, III, Associate, FD Associates, Inc.

Pursuant to a Final Rule issued in the Federal Register (Public Notice 9811, 82 FR 15 January 3 2017), with an effective date of December 31, 2016, exporters are no longer required to present their DSP-61 Temporary Import and DSP-73 Temporary Export licenses with Customs and Border Protection (“CBP”), prior to export, or import, to facilitate the physical decrementation of the licenses for the hardware that is the subject of the authorization.  The decrementation is now electronic in the Automated Commercial Environment (ACE), in the same manner as when exports of hardware are made under authority of a DSP-5 Permanent Export license. 

This action supports an Executive Order and the SAFE Port Act which called for electronic submission of data by businesses to import or export cargo.  This rule was actioned by the Directorate of Defense Trade Controls (“DDTC”) amending the ITAR pursuant to implementation by CBP of the International Trade Data System (“ITDS”).  This system permits exporters and importers to electronically submit the data referenced above.

DSP-61 and DSP-73

Exporters require, from time to time, the ability to temporarily import or temporarily export ITAR-controlled or ITAR regulated hardware into and from the United States for several types of business activities.  The DSP-61 and DSP-73 are the licensing vehicles used by DDTC to authorize these activities.

Temporary imports may be required, for example, to allow a business to conduct activities such as product demonstrations to potential customers, to participate in trade shows or to provide a manufacturing process to a foreign produced defense article.  The DSP-61 is the licensing vehicle to facilitate this.

Temporary exports may be required for many of the same reasons – marketing, trade shows or temporary use abroad to support a particular activity.  The DSP-73 is the licensing vehicle used for this purpose.

Decrementation

As part of its national security responsibility, DDTC must oversee the transfer of ITAR controlled or ITAR regulated commodities to ensure that U.S. controlled technology and hardware is not provided to unauthorized parties or entities.  DDTC’s licensing system is critical to the success of this objective.

Previously, when a temporary export or import was made against either an approved DSP-73 (export) or DSP-61 (import), exporters had to physically present their respective authorization to CBP so that the license could be pen and ink “decremented.”  This decrementation (marking the license, e.g., date, description, initial of the CBP personnel) was CBP’s physical verification that what was authorized to ship was being exported or imported.  CBP would decrement (verify) the temporary export or import license for the item(s) listed on the license when transiting a specific port.

While this manner of decrementation was effective in accomplishing the goals of DDTC in tracking the transit of ITAR controlled or ITAR regulated hardware in and out of the United States, it put an enormous burden on exporters and CBP in terms of managing the logistics of the movement of the actual hardware, as well as, coordinating delivery of the paper license for decrementation.  Copies of the original license were not acceptable for decrementation purposes, and, thus, non-compliant with the ITAR.  A lack of pre-coordination with a freight forwarder at port of entry or departure could lead to enormous difficulties, and, on occasion, administrative violations of the ITAR.

Electronic Submission is the Solution

The final rule incorporates the use of the Automated Export System in ACE for exports against DSP-61s and DSP-73s to electronically decrement the DSP-61 or DSP-73, while using the import portal within ACE for imports against DSP-61s and DSP-73s.  As a result, the DSP-61s and DSP-73s are now automatically decremented by ACE import entries and AES Electronic Export Information (EEI) submissions in ACE.

With the elimination of the need to present DSP-61 and DSP-73 licenses for decrementation, consistent with the goals of the referenced legislation, exporters will likely manage more efficient operations in connection with their temporary export and temporary import licensing requirements.

Exporters’ recordkeeping requirements remain intact, and, in fact, the weight of those responsibilities may have increased a notch or two as expectations for complete import records is added to the export records generated from AES in ACE.  As an example of the more stringent requirements, exporters must ensure that complete PGA Message Set information is included as part of their electronic filing for imports.  The PGA Message Set includes information such as License / Exemption type, the DDTC Registration number, and the Anticipated Arrival Date.  You will need to ask your freight forwarder not only for your complete AES record for exports, but also the ACE filing for imports including screen shots of the actual PGA Message Set information. 

The upside is exporters no longer have to be concerned with returning original licenses appropriately decremented to DDTC per ITAR 123.22, just like the DSP-5.  Nor do they need to worry about a shipment departing over the weekend not properly clearing CBP.

DDTC’s duties to track ITAR-controlled hardware has not lessened nor has the exporters duty to exert due diligence in connection with their export practices.  Changes such as these, however, may result in better controls and management of controlled commodities being temporarily imported and exported.

Post Script Update

As astute reader pointed out that transactions involving the use of a carnet document (duty relief for certain countries including the U.S. when hardware is for demonstration/marketing purposes) is not eligible for this procedure and the temporary licenses must still be presented to CBP for endorsement at time of import into the United States and export from the United States.

Additionally, readers should be aware that although the ITAR was amended to not require the presentation of the DSP-73 or DSP-61, not all ports are following the new requirements, thus while you can tell the CBP presentation for pen and ink decrementation is not required, you should remain prepared to present the license if requested by CBP. 

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