Warning: hopelessly infected with editorial and opinion comments
– And Now We Get to Pay for Great Service: The Directorate of Defense Trade Controls (DDTC) plans on charging exporters for license applications and other submissions. The proposal is for DDTC to charge registrants $250 per application, to include license and agreement applications and amendments. The fees would be charged as part of the registration fees, and DDTC would look to the past two years of licensing activity as a basis for the charge. So if your company submitted 100 applications and amendments over the past two years, you registration fee would go up from $1,750 to $27,500 ($2,500 new higher registration fee + $250×100). The good news is that most exporters will probably wind up passing these costs back to the US Government in the form of higher charges for defense articles, so we’ll wind up with a massive money shell game scheme that will make everyone feel good. In DDTC’s defense, DDTC personnel indicated that the latest Presidential Directive stated that a substantial portion of DDTC’s budget had to be “self-financing” so they have not choice but to institute user fees of some sort. But can’t they just hold on for another eight months for another President? For more information click here: http://www.pmddtc.state.gov/docs/dtag/Federal_Register_Proposed_Rule.doc
– A Cold Bureaucratic Drizzle on the UK Treaty: DDTC is working hard on pushing out a new UK exemption ITAR amendment. It’s actually not really an exemption, but some other form of ITAR mish-mash approval. We have not fully digested the unpublished rule: http://www.pmddtc.state.gov/docs/dtag/Draft_UK_Treaty_Exemption_FRN_11_Jun_1930.doc; it’s one of those that makes you go cross-eyed as soon as you start reading it. But here’s a prediction not found in the press releases: The exemption will probably not be all that helpful to the bulk of exporters and you will still need to obtain approvals for many programs involving the UK. In order to keep things inconsistent, the UK exemption takes a whole different approach from the Canadian exemption. For example the UK exemption uses a positive list of USML categories which are eligible for the exemption, whereas the Canadian exemption uses a negative list of USML categories which can’t be utilized for that exemption. You may only use the UK exemption for an end use in the US or the UK. We’ll write more about it when we start understanding it.
– Regulation on Aircraft Parts Jurisdiction Nearing Release: DDTC is poised to release the new regulation on ITAR aircraft parts jurisdiction, which basically states that low level components that are used in both defense and civil aircraft are subject to the EAR. Thanks. Even the new rule does not totally explain how to treat a low level dual use part that was initially designed for a defense application but is later used in a civil application. But what’s left unclear becomes open to interpretation, so here goes another round of aircraft parts jurisdiction debate. The regulation draft can be found here: http://www.pmddtc.state.gov/docs/dtag/17_(c)_DTAG_version_6-12-08.doc
– Agreement Guidelines Rewrite: DDTC has embarked on a comprehensive rewrite of the Agreements Guidelines (”AG” - see http://pmddtc.state.gov/docs/agbook.pdf), which are increasingly taking on the role as a kind of ITAR supplement of ever shifting and half-baked policy and regulatory pronouncements. The current version is admittedly out of date, with various supplements on the website which negate whole sections in the core document which can make for a confusing read. But exporters have come to fear any AG change for what it might add. For example, the latest AG 9.4 rewrite shifted the burden of Agreements tracking from DDTC to the exporter, creating major new headaches for license application drafters. The new 9.4 also created a whole new class of red tape requirements that are making shipments through trading companies to major Japanese and European allies unbelievably complicated. So brace yourself with the new AG rewrite as it is likely create all kinds of unpleasant or unintended consequences. Prediction: The new Agreements Guidelines will be twice as long and twice as convoluted as the current draft. Brace yourself.
– Brokering still Broken For Now: The effort to rewrite and reissue the ITAR Part 129 brokering requirements have stalled and moved to the back burner. The last update we had was that the new revised clarifying rule would be out at the “end of 2007.” Now it seems other priorities have taken hold at DDTC and the new rules seem to be in indefinite limbo, which may not be such a horrible thing as the clarifying rules are unlikely to make things much clearer or easier for exporters.
