By Donald Pearce, Sentinel LLC
ECTI Core Instructor
On October 1, 2026, the Directorate of Defense Trade Controls (DDTC) published a notice of proposed rulemaking to amend the International Traffic in Arms Regulations (ITAR). The proposal seeks to revise the U.S. Munitions List (USML), update related definitions, and introduce a new licensing exemption. The changes seek to improve transparency and reduce compliance burdens on the U.S. defense industrial base.
Issued under the authority of the Arms Export Control Act (AECA) and guided by Executive Order 14268, the proposed changes seek to narrow ITAR controls to the most sensitive and sophisticated technologies that provide critical military or intelligence advantages to potential adversaries.
Restructuring Exclusions and New Guidance on Demilitarized Commodities
The notice proposes the restructuring of definitions for defense articles and defense services. The rule would add a new §120.35 to identify explicit exclusions from ITAR control. Under this provision, unclassified baseline marketing information about a product’s function, purpose, or general system description would fall outside ITAR controls when it does not disclose technical design specifications or operational requirements.
The rule includes guidance on demilitarized commodities, making clear that simply removing visible military components, such as armor or weapons, is not sufficient if core structural engineering designs uniquely tailored for military functions remain intact. For instance, a combat helicopter with airframe properties that support the delivery of munitions remains in Category VIII even after the removal of armament-related commodities and technology. However, if it is possible to remove all weapons systems, leaving only properties common to commercial variants, it would no longer be subject to ITAR regulations.
Revised "Specially Designed" Framework
The proposal revises the “specially designed” framework in §120.41 to clarify equivalent form. By removing “and fit” from the (b)(3) definition in the catch and release process, DDTC seeks to clarify that it applies solely to fit purposes. Confusion sometimes arose since the definition of equivalent at § 120.42(e) requires a difference in fit. By removing the phrase “and fit” DDTC is maintaining focus: if the fit is the same, any change in form is irrelevant.
The Department proposes adding paragraph (b)(7) to § 120.41 to prevent certain items from falling under a USML catch-all control. This change excludes an item from the ITAR "specially designed" definition if it meets three conditions:
- It was designed for a defense article but was not captured on the USML within one year of leaving development.
- It is later used in another defense article without triggering a catch-all description.
- Any subsequent modifications to the item are made solely for fit purposes.
The rule also adds paragraph (b)(8) to § 120.41, expanding the list of commodities excluded from catch-all controls. Like the existing paragraph (b)(2)—which excludes basic items like fasteners that lack critical military or intelligence value—this new paragraph removes specified commodities from USML catch-all restrictions. The list identifies basic commercial items frequently found in defense articles, such as knobs, tires, light fixtures, and analog gauges.
Clarifying Development and Production Phases
The notice also clarifies the distinction between development and production phases under §120.43. The development phase would end once functional designs are finalized and approved for serial production, and routine enhancements would not cause an item to re-enter development. By contrast, the production phase would cover serial manufacturing, with re-entry into development occurring only when modifications fundamentally alter core capabilities.
Manufacturers should track product lifecycles; while routine enhancements will not pull items back into the development phase, modifications that fundamentally alter core capabilities will trigger the re-entry from production.
USML Category Adjustments
In addition, the notice further narrows controls across several §121.0 USML categories and would transfer less-sensitive items to the Export Administration Regulations (EAR):
- Category II, covering guns and armament, the proposal would remove smooth-bore, fixed-barrel canister launchers.
- Category VIII, addressing aircraft, would remove paragraph (h)(10) regarding certain radar altimeters.
- Category X, which covers personal protective equipment, would be limited to specialized optical gear that protects against nuclear flashes or specific laser wavelengths.
- Category XX, governing submersible vessels, would be restructured to designate naval nuclear propulsion items as Significant Military Equipment while narrowing generic submarine parts categories.
New Exemption for Foreign-Origin Articles
The proposal also introduces a new exemption for servicing and repair under §123.26. This exemption would allow the temporary export of unclassified foreign-origin defense articles back to original equipment manufacturers or service providers for maintenance, repair, or calibration without a license. Note that this exemption does not relate to the import requirements that may be imposed by the United States Munitions Import List, which is administered by the Bureau of Alcohol, Tobacco, Firearms & Explosives.
Have Your Voice Heard
The proposed changes reflect a continuing effort to focus ITAR controls on technologies with the greatest national security significance while reducing unnecessary regulatory burdens for lower-risk commodities and technology, and seek comments to ensure that the changes do so. Public comments are due by November 30, 2026, and you can submit your feedback directly through the Federal Regulations portal.
Without your input, DDTC will not be able to take industry-specific challenges into consideration when establishing the final rule. Along with general comments, DDTC listed specific questions highlighting potential blind spots it has identified, and hopes that these are adequately addressed by the defense industrial base. For example, question 3 seeks comments on how to avoid misclassification and enhance clarity and understanding when using USML paragraph (x) entries in shipments containing both USML- and EAR-controlled contents. Remember; no one knows your business the way you do.
