State Dept

Electro-Glass Products was found guilty of violating the Arms Export Control Act in July 2007; in September 2007 the conviction caused the company to be debarred. The DDTC has recently posted the policy regarding new approvals for companies requesting Electro-Glass Products.

Transaction Exceptions will be granted to companies requesting Electro-Glass Products with respect to the following:

• Overriding US foreign policy or national security interests;
• Law enforcement interests that are consistent with foreign policy or national interests of the United States; or
• Other compelling interests that are consistent with the foreign policy or national security interests of the United States. Read More

The State Department’s DDTC issued a correction for 22CFR Part 121.1(b) of the United States Munitions List. On page 19780 of the list, in the first column, in Sec. 121.1(b), in the first line, “(b)” will now read “*(b)”.

More information:

• Federal Register Notice

The United States Government has decided to take another small step to aid the peoples of Southern Sudan by agreeing to approve certain exports of defense articles to Southern Sudan to support the peace arrangement between Southern Sudan and the murderous Government of Sudan which, along with its Janjaweed henchmen, is known to support or be involved in the murdering and burning of babies, women and children as part of its genocide against certain groups in Sudan.

The Department of State alongside with Foreign Operations has authorized the US to provide non-lethal defense services to the Government of Southern Sudan. This will include military assistance, military education and training, and defense services controlled under the International Traffic in Arms Regulations. It has been determined by State that this is in the best interest of the United States and Southern Sudan and that the assistance may be provided pursuant to section 666(e) of the ITAR.

More information:

• Federal Register Notice

The Department of State has posted job opportunities for Compliance Specialists. The salaries range from $58k to $127k: the posted openings can be accessed at USAJobs.gov.

Just think you can hit the ground running by turning in your former company after you get the job!

The Center for Strategic and International Studies, a Washington research group has released a 63 page report on the Health of the US Space Industrial Base and the Impact of Export Controls. The main concern from the report was that the US export controls that were tightening almost 10 years ago are hindering the US share of the global space markets.

The US tightened space technology-transfer rules in 1999 after investigators found China has acquired sensitive technology from US built commercial satellites. When the new rules were implemented they put commercial communications satellites, subsystems, and components on a munitions list that became subject to State Department licensing even if the product could be easily purchases worldwide.

The overall health of the top-tier manufactures in the industry such as Lockheed Martin Corp., Boeing Co. and Northrop Grumman Corp. all had “good financial health” despite the US industry’s loss of shares overseas. The report shows that Russia, China and others are gaining space market share aided by the US policy. Jeffery Foust, a space and telecommunications expert at Futron Corp explained that the US policy backfired in space. “The US is actually hurting national security by making it more difficult for the space companies it depends on to compete in the global market,” he said.

The study concluded that the ability for the government and industry to meet program execution commitments is inadequate and that there was a unanimous agreement that the export control process can be improved without adversely affecting national security.

More information:

• CSIS Briefing
• International Trade Law News article

Beginning January 22, 2008 the State Department, Directorate of Defense Trade Controls Web site got a new format. DDTC says the changes are designed to assist users in searching for defense trade information. Many of the pages have been updated and most of the content from the current site can be found on the new site.

More information:

www.pmddtc.state.gov/new_look_for_website.htm

President Bush issued an Export Control Directive on January 22, 2008, the directive is presumed to improve the way in which the Department of State responds to the many licenses it receives for the export of defense equipment, services, and technical data. Bush promised, “a more efficient and transparent export license process” and better “dispute resolution mechanisms” but was sure to include that there will remain a strong monitor on protecting national security.

The specific changes include:

1. Additional financial resources and intelligence support to provide timely adjudication of defense trade licenses
2. New guidelines requiring decisions by the U.S. Government on defense trade export license applications within 60 days unless there is strong reason for additional time which must be approved
3. The electronic licensing system will be upgraded to allow all types of defense trade licenses and their submission
4. An interagency will be created to allow for timely resolution of licensing jurisdiction issues under the Commodity Jurisdiction process
5. A multi-agency working group will be created to improve procedures for export enforcement investigations

Read More

On December 19, 2007, the Department of State issued an amendment to the International Traffic in Arms Regulations concerning exports and sales which were prohibited by United Nations Security Council embargoes. The amended list will add countries subject to such embargos. The current list includes: Cote d’Ivoire, Democratic Republic of Congo, Iraq, Iran, Lebanon, Liberia, North Korea, Rwanda, Sierra Leone, Somalia, and Sudan.

More information:

Federal Register 72FR71575.pdf (PDF)

60-Day Deadline Imposed

On December 13, the U.S. Department of State announced changes to the Voluntary Disclosure provisions of the International Traffic in Arms Regulations (ITAR), effective immediately. The amended regulations now impose a requirement that a complete voluntary disclosure be submitted within 60 calendar days of initial notification to State of the discovery of a violation, which must be supplied immediately after the discovery.

The voluntary disclosure regulations, found at 22 C.F.R. § 127.12, are designed to encourage disclosure to the Directorate of Defense Trade Controls (DDTC) of any violations of the export control provisions of, or any authorizations issued under the authority of, the Arms Export Control Act. Specifically, the regulations provide that a disclosure may be considered a mitigating factor in determining whether and to what degree administrative penalties may be imposed for the violation. In practice, many companies have found the voluntary disclosure program to be an effective tool, and have taken advantage of the opportunity to benefit from penalty mitigation in exchange for explaining to DDTC their prior violations and how they will be prevented from recurring.

As the focus on compliance has increased in recent years, so has the number of disclosures submitted to DDTC and the time involved in managing the program. In order to expedite the process, and to eliminate perceived abuses by exporters, DDTC has amended the regulations to require full disclosure within the 60 calendar day period following initial notification. A failure to complete full disclosure to DDTC’s satisfaction within the 60-day period may result in a determination by DDTC not to consider the notification as a mitigating factor in its assessment of the appropriate penalties. An allowance has been made for the request of an extension of the period where a full investigation and reporting of the violation cannot be completed within the 60 days. Read More

The GAO has analyzed State Department arms export case data for fiscal years 2003 through April 30, 2007 in order identify the reasons why it takes the State Department such a long time to process export applications. On November 30, 2007 the GAO produced a report of their findings and the need to address the inefficiencies and challenges in the arms export process.

There were three key trends that the GAO reported that seem to be holding up the DDTC in processing export licenses and other arms cases. One major issue is that the number of export cases processed has increased by 20 percent in the past 3 years. The second issue is that during this jump in cases came a median processing time that nearly doubled, because of this, the number of open arms export cases increased by 50 percent causing the third issue that the DDTC is faced with, numerous open cases. In September alone there were over 10,000 cases still open and the number is continuing to grow.

At the beginning of fiscal year 2007, the DDTC launched a new campaign to reduce the amount of open cases; they cancelled staff training, meetings, and industry outreach to ensure that cases would be closed. DDTC was able to cut the number of open cases by 40 percent in only 3 months, the problem is that this is not a long term solution and does not address how to fix the inefficiencies and problems they are faced with.

More information:

GAO Report (PDF)

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

Terry Davis is the Acting Director for the Office of Defense Trade Controls Licensing at the State Department effective September 7, 2007. Sue Clark previously held the position. According to DDTC Ms. Clark “will continue to apply her knowledge and expertise on issues concerning the office,” although it is hard to tell what she is going to do from here.

More information:

DDTC Announcement

Well, these are a bit more solid than rumors:

First: the State Department has said that it relaxed its burdensome dual-national/third country national requirements for foreign nationals from NATO, Australia, Japan and New Zealand. If an employee of a company on a TAA or MLA is a national of one of these countries, they will be considered to be authorized to receive the US defense articles covered by the TAA and MLA and the applicant will no longer be required to obtain a non-disclosure agreement form such nationals. This policy change should reduce the current TAA and MLA burdens once (if) the State Department actually implements the policy.

Second: State plans to put out new brokering regulations soon. We will not know if this is good news or bad news until the regulations come out.

Part 1: Expedited License Review

Don’t Tell Anybody-Expedited Treatment Available for ITAR Exports to Australia?

According to Kerry Clarke AO, in the Australian Department of Defence, the US State and Defense departments have agreed to give streamlined processing for exports to Australia under two new policies known as Expedited License Review I (ELR I) and Expedited License Review II (ELR II).

But, according to Kerry Clarke, the expedited processing might not yet be in operation and is “dependent on the continued implementation of D-Trade — [which] — the State Department hopes — to have fully implemented by the end of 2007. Until then, licence and TAA approvals may take longer than the 10 and 30 day target times, but hopefully less than the current approval times.”

(Not sure I agree with the hopefulness of Kerry Clarke.)

OK, so the bottom line appears to be that the expedited system might not be in operation yet and hopefully it will be up and running by the end of the year. (I personally am not going to use up my limited supply of personal hope hoping for streamlined processing. I plan to spend all my hope on hoping I win the lottery so I can retire to the mountains.)

Anyway, according to an Australian Department of Defence memo (see end of this article for a copy), here are the two expedited procedures the US and Australian agreed upon:

Read More

On Thursday, September 20, 2007, from 9 a.m. to 12 noon, the Defense Trade Advisory Group (DTAG) will meet in the East Auditorium at the U.S. Department of State, Harry S. Truman Building, Washington, DC. Entry and registration will begin at 8:15 a.m. The members of this advisory committee are made up of private sector trade specialists who are appointed by the Assistant Secretary of State for Political-Military Affairs to advise the Department on policies, regulations and technical issues affecting defense trade. The aim of the meeting is to talk over current issues and topics concerning trade defense.

This meeting is open to the public along with participation in the discussion. Any non-member or DTAG member interested in attending must provide the following items to the DTAG Secretariat contact person, Nicholas Memos, via e-mail at MemosNi [at] state.gov:

• name
• company or organizational affiliation
• phone number
• date of birth
• identifying data such as driver’s license number, U.S. Government ID, or Military ID

Persons wishing to attend must contact the DTAG Secretariat by COB Thursday, September 13, 2007. On arrival one of the following forms of valid photo identification will be required for admission: U.S. driver’s license, passport, U.S. Government ID, or other valid photo ID.

For Further Information Contact:
Nicholas Memos, PM/DDTC, SA-1, 12th Floor,
Directorate of Defense Trade Controls, Bureau of Political-Military Affairs,
U.S. Department of State, Washington, DC 20522-0112;
telephone (202) 663-2804;
fax (202) 663-261-8199;
or e-mail MemosNI [at] state.gov