Monthly Archives: April 2018

Leveling the Playing Field—We Now Have a New Conventional Arms Transfer (CAT) Policy

On April 19, 2018, the White House released a new Conventional Arms Transfer Policy (CAT).  This is a high level policy which directs the Departments of State, Defense, Commerce, and Energy to coordinate on the policy considerations for arms transfers.  Replacing the 2014 Conventional Arms Transfer Policy, it adds “Economic Security” to the list of factors used in evaluating proposed armed transfers, retaining the factors of national security, relationships with allies and partners, and nonproliferation.  “Economic Security” includes the effect of a proposed transfer on the defense industrial base and the availability of comparable foreign systems.

The State Department’s Directorate of Defense Trade Controls (DDTC) has posted a statement on the new CAT policy which includes some useful examples:

Specifically, we will increase opportunities for pre-deployment training and simulations of complex operational environments to help partners avoid civilian casualties. We will also encourage acquisitions of U.S. technology and training to enable more accurate battlespace awareness and more accurate targeting. We will also continue training to assist security forces in carrying out operations in a manner that respects human rights.

DDTC welcomes submission of stakeholder comments to ArmsTransferProcess@state.gov.

It remains to be seen what effect these changes will have on particular license applications, but the consideration of foreign availability is one of the major factors driving the simultaneous reevaluation of unmanned aerial systems (UAS) policy.

The State Department released a fact sheet on the new UAS export policy which seeks to increase trade opportunities for U.S. companies, enhance partner security and counterterrorism capabilities, and strengthen bilateral relationships while preserving U.S. military advantage and preventing the weapons of mass destruction delivery system proliferation.  UAS transfers remain subject to the Missile Technology Control Regime (MTCR).

For additional background on the Conventional Arms Transfer and UAS policies from Peter Navarro, Assistant to the President and Director of the Office of Trade and Manufacturing Policy, click here.

Finally, DDTC has announced the launch of a redesigned website effective April 30, 2018, intending “a number of significant enhancements including improved navigation, searchability, and accessibility, with a consistent, full-featured experience across mobile devices.”  The redesign has changed many links, so bookmarks and other saved references may need to be updated.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

Seize the Opportunity to Review & Test State/DDTC’s Electronic Disclosure Form!

The Department of State, Directorate of Defense Trade Controls (DDTC) has published the following notice on their website:

Industry Notice: Industry Feedback on Electronic Disclosures (DS-7787) (4.12.18) DDTC is developing an electronic version of the current DS-7787: Disclosure of Violations of the Arms Export Control Act form, also known as Disclosures. As an alternative to paper and mail, the online version will allow Industry personnel to submit Disclosures directly through DDTC’s Defense Export Compliance and Control System (DECCS). In an effort to improve this electronic form, DDTC is enabling a test version of the new online process for Industry feedback between April 16, 2018 – April 30, 2018, prior to it being publicly available online. If you are interested in participating, please visit https://pmddtcqa.service-now.com/um/ for more information on how to access and use the test version. Once you have completed testing, you can submit feedback or comments through the Provide feedback button.

As disclosures are an important part of compliance programs, this is a great opportunity to see what DDTC is developing and help make it more useful and user-friendly in the future.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)

EAR Amended to Reflect Australia Group Decisions; DTAG Meeting; More Penalty Inflation Adjustments

Australia Group EAR Amendments

On April 2, 2018 (83 FR 13849), the Department of Commerce amended the Export Administration Regulations (EAR) to revise the following Export Control Classification Numbers (ECCNs) based on 2017 Australia Group decisions:

  • 1C350 (toxic chemical agent precursors)
  • 1C351 (human and animal pathogens and toxins)
  • 1C353 (genetic elements and genetically-modified organisms)
  • 2B350 (chemical manufacturing facilities and equipment)
  • 2B351 (toxic gas monitors and monitoring systems)
  • 2B352 (equipment capable of use in handling biological materials)

The specific changes, largely intended to clarify the entries, are detailed in the Federal Register Notice.

In addition, due to the admission of India to the Australia Group in January, an international forum for harmonizing for chemical and biological export controls, the Country Commerce Chart (Supplement No. 1 to part 738 of the EAR) was revised to remove the “X” in India’s entry for the CB 2 column (Chemical and Biological Weapons) and India was added to the Australia Group column (A:3) in the Country Groups chart (Supplement No. 1 to part 740 of the EAR).

DTAG to Meet in May

The Defense Trade Advisory Group (DTAG) will meet on May 10, 2018 to discuss the following topics:

  1. Address one remaining task not briefed as final by the IT working group at the February 1 plenary meeting. Pass any remaining work by way of recommendations for further study;
  2. Provide recommended changes to ITAR § 123.17 exemption that would cover other commonly carried Government Furnished Equipment (GFE); and
  3. Further discussion and recommendations with regards to the Defense Services Working Group.

The DTAG meeting is open to the public, with seating limited to 125 persons.  For meeting and registration information, click here for the meeting notice.

OFAC and DHS Inflation Adjustments of Civil Monetary Penalties

On March 19, 2018, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published inflation adjustments for civil monetary penalties under multiple sets of regulations.  The changes are detailed in the Federal Register Notice, 83 FR 11876.

On April 2, 2018, the Department of Homeland Security (DHS) published inflation adjustments for civil monetary penalties under DHS components, including the Chemical Facility AntiTerrorism Standards (CFATS), U.S. Customs and Border Protection (CBP), U.S. Immigration and Customs Enforcement (ICE), and the U.S. Coast Guard.  The changes are detailed in the Federal Register Notice, 83 FR 13826.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)