Update of Lifting of US Sanctions on India and Pakistan
October 2001
The US Government has taken several steps to implement President Bush’s executive order waiving export and trade sanctions on India and Pakistan. The United States decided to relax its sanctions against India and Pakistan because of their cooperation in the US antiterrorism campaign. Bush’s executive order of September 22, 2001 effects both the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), as well as trade US trade financing rules.
In the October 1, 2001 Federal Register the Commerce Department revised the EAR to:
a) Remove a significant number of Indian and Pakistani entities from the EAR Entity List, including, for example, the Aerospace Division of Hindustan Aeronautics and Bharat Electronics. Formerly, all items subject to the EAR required a license for these entities. The EAR Entity List, however, does still include Indian and Pakistani entities.
b) Remove the license denial policy for exports and reexports to India and Pakistan of items controlled for nuclear proliferation (NP) or missile technology (MT) reasons. License applications to transfer items controlled for NP and MT reasons will now be reviewed on their merits under a presumption of approval policy.
c) Allow the use of license exceptions to export NP (but not MT) items to India and Pakistan.
The State Department has not yet amended the ITAR to implement President Bush’s executive order. It looks like the State Department will soon take these steps to remove its sanctions on transfer of defense items to India and Pakistan:
a) Remove the presumption of denial for all applications for exports and reexports to India and Pakistan. Once this step is taken, a serious impediment would remain for applications for Pakistan. Because the US Government has identified the Pakistani Ministry of Defense as being involved in weapons proliferation, the State Department is not authorized to approve licenses for the Pakistani MOD without first notifying Congress of its intent to approve the license. This process adds significant time delays to the processing of applications. It is possible that the State Department might request that Congress waive this notification requirement, perhaps on a temporary basis.
b) Authorize the use of ITAR license exemptions for exports and reexports to India and Pakistan. This would allow US exporters to make certain exports without licenses, according to the license exemptions. For example, a US company could provide basic maintenance training under ITAR 124.2(a) without a license.
None of these ITAR changes have happened yet, so do not start using exemptions. It would be reasonable, however, to go ahead and submit to State applications for India and Pakistan even though the ITAR has not yet changed.
