By: Holly Thorne
(Source: http://www.bis.gov.uk/exportcontrol)
If you a UK end-user or consignee company that handles material covered by the United States’ controls specified by the International Traffic in Arms Regulations (ITAR) then, you should make yourself aware of an important ITAR rule change and associated guidance information. This rule change issued by the US Department of State concerns Dual and Third Country National (DTCN) employees. The rule change came into force on 15 August 2011.
To help UK industry comply with this particular aspect of the US ITAR controls, the UK government have issued a number of guidance documents concerning the rule change including a Technology Security Plan and a Question and Answer Matrix. This guidance has been produced in consultation with industry representatives from the Export Group for Aerospace and Defence (EGAD).
The Notice to Exporters (published by the UK’s Export Control Organization) below provides an overview of the rule change and links to guidance documents (published on the export control pages of both the Department for Business and Businesslink websites). It also includes some initial questions to understand how the rule change might impact on you and your company.
Details of ITAR rule change (76 FED REG 28174)
1. The US Department of State (DoS) has issued a final rule amending the International Traffic in Arms Regulations (“ITAR”)[1] to include a new license exemption for transfers of defence articles[2] to Dual National or Third Country National (DTCN) employees[3] of foreign end-users. The new rule came into force on 15 August 2011 and eliminates the need to obtain prior approval from DoS for the transfers of unclassified defence articles (including unclassified technical data) to DTCN employees of foreign business entities, foreign government entities, or international organisations that are approved end-users or consignees (including approved sub-licensees) for such defence articles.
2. Those UK end users/consignees who handle US ITAR controlled material should be aware that the exemption is subject to satisfying certain screening and recordkeeping requirements. In particular, in lieu of prior approval, the new ITAR Section 126.18 requires eligible companies and organisations to implement “effective procedures to prevent diversion to destinations, entities, or for purposes other than those authorised by the applicable export license or other authorisation.”
3. To this end, the US Government and Her Majesty’s Government (HMG) have agreed an approach confirmed in a diplomatic Exchange of Notes.[4] This means that HMG’s pre-existing Baseline Personnel Security Standard (BPSS) constitutes a screening process meeting the screening requirements of ITAR 126.18(c)(2). Those UK end users/consignees who decide not to adopt the BPSS will have to introduce their own screening arrangements in order to comply with the rule change. Further information can be found in the guidance documents, which can be referred to in the links at paragraph 4 (below).
Published guidance material
- Following a number of meetings between the Export Group for Aerospace and Defence (EGAD) and HMG officials[5] a series of guidance documents have been agreed to help UK End Users/Consignees comply with the rule change. The guidance documents include:
- A copy of the Exchange of Notes agreed between the US and UK Governments – see the UK Note and US Note
- A model Technology Security Plan (including a Non Disclosure Agreement)
- A Question and Answer matrix
These documents are published on the export control pages of the Businesslink website at:
https://www.gov.uk/guidance/exporting-military-goods-to-the-united-states
You can also download the documents from the Department for Business website at: http://www.bis.gov.uk/policies/export-control-organisation/eco-summary-guidance
5. UK end users/consignees should also note that the Ministry of Defence intends to communicate the guidance through the Defence Contracts Bulletin and Acquisition Operating Framework in due course.
6. The US Dept of State has been consulted on all of the UK’s guidance documents and has endorsed the approach taken. The US Dept of State also intends to issue its own guidance to US exporters making them aware of the specific bilateral arrangements/protocols, which have been agreed between the US Government and HMG.
Initial questions about the rule change
7. To understand how the rule change might impact on you and your company see the questions below:
Ques1: This is a ruling from the International Traffic in Arms Regulations (ITAR). I do not manufacture or trade in arms related equipment – will this ruling affect me?
Answer: Yes it could. ITAR controls the import and export of all defence related items and services on the United States Munitions List.
Ques2: I employ British citizens and some US citizens – does this security procedure apply to me?
Answer: Yes if either you or your employees handling US ITAR unclassified material are dual nationals or third country nationals
Ques3: If I want to adopt BPSS screening procedures what should I do?
Answer: You should refer to the guidance contained in the Technology Security Plan referred to at paragraph 4 above.
Ques4: I already comply with UK Export Control requirements and have licenses in place. Do I also need to comply with these ITAR requirements?
Answer: Yes – the ITAR requirements are separate from UK export control requirements.
[1] ITAR is the set of United States government regulations that control the export and import of defence-related articles and services on the US Munitions List (USML).
[2] ‘Defense Articles’ mean items or technical data designated in Ch 121.1 of the US ITAR regulations. This includes technical data, recorded or stored in any physical form (including electronic transfers), models and mock ups.
[3] DoS defines a Third Country National as ‘an individual holding nationality from a Country or Countries other than the Country of the foreign signatory to the agreement. A Dual National is defined as an individual who ‘holds nationality from the Country of a foreign signatory and one or more additional foreign Countries.
[4] Exchange of Notes refers to the agreement between the US Government and Her Majesty’s Government on 11 August 2011 confirming that the UK’s BPSS meets the screening requirements of the new Rule Change.
[5] Ministry of Defence, Foreign & Commonwealth Office, Dept for Business, Innovation and Skills and the UKTI Defence & Security Organisation
