US Suspension of New Firearms Export Licenses Causes Surprise, Uncertainty

A Commerce Department decision last week to suspend new export licenses for certain firearms, parts and ammunition caught the industry by surprise and has caused confusion about what types of shipments will be impacted. The announcement came after an uptick in license processing times in recent months, an industry lawyer said, and could lead to a surge in purchases of U.S. firearms by foreign customers that fear the suspension could be a harbinger of permanent change.

“I don't know of anybody who was anticipating this,” said Johanna Reaves, a trade compliance lawyer with Reeves & Dola who specializes in firearms regulations. “Given the responses that I've been getting over the weekend, it's probably going to have a pretty big impact.”

The move, which took effect the same day it was announced on Oct. 27 (see 2310270068), included a 90-day suspension of new export licenses for certain firearms, components and ammunition to non-government end-users worldwide, apart from Ukraine, Israel or a nation listed in Country Group A:1.

As of press time, the announcement hadn’t been posted to an easily accessible place on the Bureau of Industry and Security's website. The document was shared among some in the industry only after a BIS licensing officer emailed the link last week to certain exporters, according to a person with knowledge of the situation. Others, including the National Shooting Sports Foundation, found out about the change from congressional staff members, who had been briefed by BIS, said Larry Keane, senior vice president for government and public affairs with NSSF.

“It did not go unnoticed that this unprecedented policy was issued on a Friday afternoon and buried” on the BIS website, Keane told Export Compliance Daily. “They didn’t bother to let industry know in advance or come to us and explain their concerns or rationale or look to work” with the industry “to address whatever concerns they claim to have.”

A BIS spokesperson didn’t comment. It remains unclear what specifically prompted the Biden administration to announce the change, including whether the measure is part of an effort to review the 2020 transfer of certain gun export controls from the State Department to the Commerce Department, a move that was met with criticism from Democrats, who said it loosened necessary controls over dangerous weapons (see 1904230049, 2110080045, 2104200027 and 1908130066).

“I don't think that anything is off the table,” Reaves said of the administration potentially considering moving that export control authority back to the State Department. “I think that could be in the realm of possibility.” The BIS announcement last week affects new export applications for Export Control Classification Numbers 0A501, ECCN 0A502, ECCN 0A504 and ECCN 0A505, which are the ECCNs included in the 2020 rule that transferred export control oversight from State to Commerce.

Reaves also said there’s a “lot of confusion” around the scope of the suspension, including from exporters who are misreading the change to say that BIS has suspended all licenses, not just new or pending ones. Others thought the move impacted exports to Israel, she said. BIS specifically carved out Israel, Ukraine and Wassenaar Arrangement participating countries from the suspension.

But even with carve outs, and even accounting for the fact that the suspension only impacts new license applications for non-government end users, it could still affect “quite a lot” of countries, Reaves said, noting that it could hurt overseas companies that manufacture products using those U.S. parts and components. South and Central America could particularly be impacted, Reaves said, specifically mentioning Brazil and Colombia.

“I've never seen this before,” Reaves said. “I've seen country policies, but I haven't seen something sweeping in this way.”

Keane said the NSSF is surveying its members to “determine the economic impact of this policy” and has begun speaking to lawmakers. “Our industry takes export compliance very seriously,” he said, adding that the foundation is concerned the suspension is an effort by the Biden administration to “curry favor with their anti-gun base” ahead of the 2024 presidential election.

“We look forward to speaking with BIS to better understand their reasons and concerns,” Keane said.

Reaves said the suspension was pushed out “very, very under the radar,” although she has been noticing longer processing times for certain export license applications in recent months. The longest one she has seen this year took 150 days. “The processing times have definitely been creeping up,” Reaves said.

She also said there’s a “possibility” the suspension causes an uptick in U.S. exports of firearms and their parts. “When the government does something like this, a drastic move, there absolutely can be panic exporting,” Reaves said. “Our foreign partners and customers may also be panic buying now because they may be saying, ‘well, what's going to happen at the end of the 90 days?'

“That's the big unknown.”