BIS Loosens License Review Policy on Some Drones

The Bureau of Industry and Security loosened its license review policy for exports of certain drones controlled under the Export Administration Regulations (see 2012150011). The move, following a similar announcement by the State Department in July (see 2007270035), will impose a case-by-case license review policy on certain unmanned aerial systems (UAS) as opposed to a review policy of presumption of denial. The change will impact drones controlled for missile technology (MT) reasons and that have a “range and payload capability equal to or greater than 300 kilometers/500 kilograms” and a “maximum true airspeed of less than 800 km/hour,” BIS said in a final rule. The agency said the case-by-case review policy will also apply to MT-controlled items for the design, development, production or use in such drones. The changes take effect Jan. 12.

Although BIS said the U.S. “remains committed to the goals” of the multilateral Missile Technology Control Regime, in which the drones are still controlled under a “strong presumption of denial,” the agency said “rapid advances” in drone technology and “growing commercial uses” for UAS warrant loosened export restrictions. BIS said it tried to propose this loosened licensing policy at MTCR in 2019, and although it had the support of New Zealand, the proposal failed. BIS said an “inflexible approach” to implementing the MTCR’s licensing policy “creates a competitive disadvantage” for U.S. companies and other MTCR members “by restraining industry globally from fully participating in the expanding commercial UAS market.” BIS added that the global UAS market increasingly includes suppliers who are not members of the MTCR.

The updated license review policy will also allow the U.S. to improve security relationships with countries that want to cooperate on counter-terrorism, border control and “other mutual security interests,” BIS said. “This change will strengthen U.S. national security by improving the capabilities of U.S. partners and will increase U.S. economic security by opening the expanding UAS market to U.S. industry,” the agency said. “This subset of UAS is widely used in intelligence, surveillance, and reconnaissance (ISR) missions and various commercial and other applications not involving [weapons of mass destruction (WMD)] delivery, so a case-by-case license review policy is warranted.”

BIS stressed that it will continue to impose a presumption of denial policy for certain UAS if they are intended for use as “WMD delivery systems” or if they risk diversion to that end use. This will include drones that “present higher risk” for uses with “cruise missiles, hypersonic aerial vehicles, and advanced unmanned combat aerial vehicles.” But BIS said it will continue implementing these restrictions “without unduly impeding exports for growing commercial and conventional military applications.”

The updated license review policy will likely lead to about 20 more license applications submitted to BIS each year, the rule said. BIS said “exporters that previously may have been deterred from applying for a license” may now “be motivated to apply for licenses.” But the agency added that the number of drones that will fall under this rule “is rather small” and that it expects a “minimal” increase in the number of license applications.