State Publishes New Agreements Guidelines

The Directorate of Defense Trade Controls (DDTC) issued new Guidelines for drafting Technical Assistance Agreements (TAA’s), Manufacturing License Agreements (MLA’s) and the like on its website.   You should immediately use the new guidelines and templates therein when preparing and submitting your TAA or MLA applications.

The new Guidelines are substantially more detailed than the old, though the actual MLA and TAA templates look virtually the same.  What’s different is the degree of explanations and clarifications contained in the new Guidelines that were not found in the old. They also contain new sample letters and templates.   A full accounting of all the changes is difficult, but notable changes include:

1. Warehousing and Distribution Agreements dropped from the new Guidelines - The new Guidelines drop templates for Warehousing and Distribution Agreements.  These Agreements were typically used for establishing distribution centers for defense articles outside the United States.  But their actual use has been discouraged for years.  Apparently, DDTC is discouraging their use even more by dropping them altogether from the Guidelines.
2. New Template for Proviso Reconsideration - How many of you have had conflicting provisos on your Agreement?  My personal favorite was an Agreement which had two provisos to the effect of 1) Shipment of hardware by separate license (e.g. DSP-5) is authorized and 2) Shipment of hardware by separate license (e.g. DSP-5) is not authorized.  The new Guidelines offer a suggested format for Proviso reconsideration to deal with those conflicting or impossible Provisos such as these.
3. Dual Nationals Disclosure - The new Guidelines advise that you list the nationalities of all third country nationals and dual nationals that may be employed by your overseas licensee - see section 10.2 of the Guidelines.   This is now an explicit written instruction on what has been provided as informal, and often ignored, verbal guidance in the past.
4. Foreign National Employees in the US - The Guidelines clarify that “most” foreign national employees should be licensed through a DSP-5, not a TAA.   A TAA must be used only when the employee must receive “technical training.”