Federal Register

On December 19, 2007, an amendment to the ITAR was published that revised the licensing procedures with regards to third party/dual nationals for technical assistance and manufacturing license agreements. It is no longer required that additional approval for a release of technical data, defense services, and access to defense articles for third part/dual national employees from NATO, EU, Australia, New Zealand, Japan, and Switzerland. Read More

“Beware of apparently good news.” — John Black

In the December 19, 2007 Federal Register, the Directorate of Defense Trade Controls (DDTC) of the State Department announced its new policy for dual and third country nationals. The change primarily is related to the requirement that when you apply for a Technical Assistance Agreement (TAA) or Manufacturing License Agreement, you must identify the foreign nationalities of the foreign signatories to the agreement. Read More

It used to be that the International Traffic in Arms Regulations allowed a US citizen employee of a US exporter to carry export-license-required-technical data (technology) out of the country on his/her laptop while the EAR did not allow the same thing to happened. That has now changed.In the December 12, 2007 Federal Register, the Bureau of Industry and Security, Commerce has revised the Export Administration Regulations (EAR) to expand the export license exceptions Temporary Imports, Exports, and Reexports (TMP) and Baggage (BAG) to allow for certain exports and reexports of technology between two U.S. persons or their employees traveling or those that are temporarily assigned abroad.

The rule expands the availability of License Exceptions TMP and BAG but does not authorize any new release of technology. Any technology exported under the new rule may only be released to persons who may receive that same technology pursuant to other provisions of the EAR which means it will still be subject to restrictions applicable to technology exports and reexports. Read More

Effective November 7, 2007, the Department of Commerce will control the licensing of the QRS11-00100-100/101 and the QRS11-00050-443/569 Micromachined Angular Rate Sensors. The Department of State previously held the licensing jurisdiction for the sensor, as it was found on the United States Munitions list. Many industry inquiries about incorporating the part into civil automatic flight control systems and standby systems led to its removal from the Munitions List causing the part to no longer be under the jurisdiction of the state. The instrument systems, automatic flight control systems and the aircraft which would house the sensor will remain subject to the EAR.

More information:

Federal Register Notice

The Bureau of Industry and Security has proposed a rule that would require that export and re-export license applications, classification requests, encryption review requests, License Exception AGR notifications and related documents be submitted to the BIS (Bureau of Industry and Security) via its Simplified Network Application Process (SNAP-R) system.

The SNAP-R is an improvement of the BIS’s latter system, SNAP. The new system includes the ability to include documents related to a submission in the form of PDF files as “attachments” to the submission. The system also includes a feature that allows BIS personnel to request additional information from the submitting party and for the party to submit that information in a manner that ties the chain of communication to the submission.

SNAP-R is intended to reduce processing times and simplify compliance with the administration of export controls. The system should provide improved efficiency in submission and processing and will hopefully improve end-user security through rights management and an updated application and security infrastructure.

Under the proposal, paper submissions will only be accepted if:

1. The party has had only had one submission in the twelve months immediately preceding the current submission
2. The party does not have access to the internet
3. BIS has rejected the party’s electronic filing registration or revoked its eligibility to file electronically
4. BIS has determined that the party submit on paper for a particular transaction
5. BIS has determined that certain conditions justify allowing paper submissions on a particular instance.

More information:

Federal Register Notice (PDF)

In the October 19, 2007 Federal Register the Bureau of Industry and Security published the names of the five entities in China who are the first BIS has designated to be Validated End-Users (VEU) eligible to receive certain items without export/reexport licenses. The five VEUs are:

• Applied Material China: supplier
• Boeing Hexcel AVIC I Joint Venture National Semiconductor Corporation
• Semiconductor Manufacturing International Corporation
• Shanghai Hua Hong NEC Corporation
• National Semiconductor Corporation

Each VEU has a list of specific Export Control Classification Numbers (ECCNs) that they may receive license-free under the VEU program. The eligible ECCNs vary from one VEU to the next. The new rule also identifies which facilities for each VEU are eligible to receive license-free exports/reexports.

More information and the complete final rule are available at:

Federal Register Notice

BIS Announcement

Effective September 12, 2007, the Bureau of Industry and Security (BIS) will amend the Export Administration Regulations (EAR) to reflect changes to the “Control List of Biological Agents”. This rule will amend the EAR to reflect the admission of Croatia into the Australia Group and revises the CCL entry which controls equipment that is can be used in handling any type of biological materials. Lastly, the new rule will amend the list of countries that are States Parties to the Chemical Weapons Convention, Barbados will now be joining the party.

More information:

Federal Register Notice

In the August 30, 2007 Federal Register, the Office of Foreign Assets Control (OFAC) made several amendments to the Cuban Assets Control Regulations, Burmese Sanctions Regulations, Sudanese Sanctions Regulations, and Iranian Transactions Regulations to extend the general licensing to cover services in connection with written publications. A key element of the amendments applies to electronic publications that are already exempt from OFAC jurisdiction. The amendments extend the exemption for informational materials to also apply to embedded software that is embedded in the informational materials and used to search, view or read the electronic publications.

On June 5, 2007, Assistant Secretary of Export Administration Christopher A. Padilla has issued the following: BIS is revising the EAR by amending a general order published in the Federal Register on June 5, 2006 and later amended on September 6, 2006 to add nine additional persons. The general order imposed a license requirement for exports and reexports of all items subject to the EAR where the transaction involved Mayrow General Trading (“Mayrow”) or entities related, as specified in that general order. The order also prohibited the use of License Exceptions for exports or reexports of any items subject to the EAR involving such entities.

This rule will expand the general order and add sixteen additional persons to it. Pursuant to the expansion, the general order will cover: (i) Persons regarding whom the U.S. Government possesses information of affiliation or relationship to Mayrow; and (ii) other persons regarding whom the U.S. Government possesses information concerning the acquisition or attempted acquisition of commodities capable of being used to construct IEDs, as well as persons who are related to or affiliated with such persons 2E The order will apply to persons specifically listed who fit within either of these two groups. To reflect this expansion, this rule will update the heading of the general order to use the term “persons”.

Details from Department of Commerce

— Hannah Bandalan

So, you pay a $100 million penalty for ITAR violations and the Directorate for Defense Trade Controls (DDTC) will give you a special deal so that your entire corporation is not debarred under the ITAR. Actually, that is a pretty good deal. If your corporation is debarred, then the general rules are it may not use any ITAR license or approved agreement and it may not use any ITAR exemptions. In addition, no other party may use a license, agreement, or exemption to export any items obtained from the debarred party. Clearly, a debarment is the kiss of death for a company heavily involved in the defense business.

ITT Night Vision in Roanoke, VA set the record for highest known settlement agreement for ITAR violations, and its problems continue, and maybe even the worse is yet to come.

But, for now, let’s talk about the ITAR debarment. DDTC possibly could have debarred the entire ITT Corporation, one of the biggest defense contractors in the United States. It appears that ITT Corporation was able to negotiate limits on the debarment DDTC imposed as a result of ITT Night Vision’s agreement to plead guilty to ITAR violations. Generally speaking, the debarment focuses on ITT Night Vision. Read More

Includes Chinese, Singaporean, Malaysian, and Mexican Entities

In the April 17, 2007, Federal Register the US State Department announced sanctions on 14 new entities due to actions that potentially make a material contribution to the development of Weapons of Mass Destruction in Iran and Syria. The sanctions prohibit export license approvals and US Government procurement from, assistance to, and exports to the listed entities. The sanctions have little impact on the newly listed entities in Syria and Iran because those countries are already subject to comprehensive US trade sanctions.

Specifically, the sanctions on the entities are:

1. No department or agency of the U.S. Government may procure goods, technology or services from listed entities.
2. No department of agency of the U.S. Government may provide assistance to listed entities.
3. No department or agency of the U.S. Government may sell any item on the United States Munitions List to listed entities.
4. No new licenses for transfer of items controlled under the EAR or the Export Administration Act of 1979 will be granted and all existing licenses will be suspended for transfer to listed entities.

The Listed Entities are:

• China National Precision Machinery Import/Export Corporation (CPMIEC) (China) and any successor, sub-unit, or subsidiary thereof
• Shanghai Non-Ferrous Metals Pudong Development Trade Co. Ltd. (China) and any successor, sub-unit, or subsidiary thereof
• Zibo Chemet Equipment Company (China) and any successor, sub-unit, or subsidiary thereof
• Challenger Corporation (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Target Airfreight (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Defense Industries Organization (DIO) (Iran) and any successor, sub-unit, or subsidiary thereof
• Hizballah and any successor, sub-unit, or subsidiary thereof
• Sokkia Singapore PTE Ltd. (Singapore) and any successor, sub-unit, or subsidiary thereof
• Army Supply Bureau (Syria) and any successor, sub-unit, or subsidiary thereof
• Syrian Air Force (Syria) and any successor, sub-unit, or subsidiary thereof
• Syrian Navy (Syria) and any successor, sub-unit, or subsidiary thereof
• Industrial Establishment of Defense (Syria) and any successor, sub-unit, or subsidiary thereof
• Challenger Corporation (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Target Airfreight (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Aerospace Logistics Services (Mexico) and any successor, sub-unit, or subsidiary thereof
• Arif Durrani (Pakistan)

The penalties will be in effect for 2 years unless the Secretary of State deems otherwise.

Source:

• Federal Register - April 23, 2007 (Volume 72, Number 77, pp. 20158-20159)

In late March, 2007, the Department of Treasury released the most current list of countries which require, or may require, cooperation with an international boycott within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986.

The list includes:

• Kuwait
• Lebanon
• Libya
• Qatar
• Saudi Arabia
• Syria
• United Arab Emirates
• Yemen

Republic of Iraq is not on this list but its status is currently under review by the Department of Treasury and it may be added in the future.

Source:

• Federal Register - April 3, 2007 (Volume 72, Number 63, Page 15934)

This is a new GPO beta site for integrating Federal Register notices almost immediately into the full body of the CFR.

e-CFR site

In the February 7, 2007’s Federal Register, the State Department amended section 126.1 of the ITAR to include Venezuela in the list of countries not cooperating fully with anti-terrorism efforts. This just makes the policy announced last year officially a part of ITAR 126.1.

The Secretary of State determined that Venezuela, along with Cuba, Iran, North Korea and Syria, would be placed on the list beginning October 1, 2006. The AECA prohibits the sale or licensing of defense articles and services to those countries on the list for the term of one fiscal year beginning October 1, 2006. Additionally, the State Department issued a policy of denial of the export or transfer of defense articles to and revocation of existing authorizations for Venezuela on August 17, 2006.

Federal Register notice

On February 7, 2007, the Department of State amended the ITAR regarding its trade policy with Libya. In May of 2006, the US rescinded Libya’s designation as a state sponsor of terrorism. As a result of this, Libya has been removed from sections 126.1(a) and 126.1(d) of the ITAR and added to 126.1(k). This specifies the following:

“It is the policy of the United States to deny licenses, other approvals, exports or imports of defense articles and defense services destined for or originating in Libya except, on a case-by-case basis, for:

1. Non-lethal defense articles and defense services,
2. Non-lethal safety-of-use defense articles (e.g., cartridge actuated devices, propellant actuated devices and technical manuals for military aircraft for purposes of enhancing the safety of the aircrew) as spare parts for lethal end-items.”

As Libya is still proscribed in 126.1, exemptions other than 123.17 do not apply with respect to articles originating in or for export to Libya. Also, in terms of proposed sales, the requirements of 126.1 still apply.

Federal Register notice