Category Archives: Licensing

ITAR Definitions to be Reorganized, New Agreement Guidelines Released, Even More Commerce Russia Sanctions!

ITAR Reorganization Begins With Definitions in Part 120

On March 23, 2022, the Department of State, Directorate of Defense Trade Controls (DDTC) issued an interim final rule (87 FR 16396) that will consolidate International Traffic in Arms Regulations (ITAR) definitions into ITAR Part 120.  The long-awaited rule is effective September 6, 2022 and begins what DDTC describes as “the first of a multi-year, multi-rule project to better organize the ITAR.”

The rule primarily consolidates and organize definitions currently distributed throughout the ITAR into Part 120, eliminating redundant text in the process.  While DDTC has stated that the rule does not make substantive revisions or impose new requirements, there are some changes that reflect longstanding policy, for example (all citations to the revised ITAR):

  • § 120.11(c) – Integration of controlled items. Defense articles described on the USML are controlled and remain subject to this subchapter following incorporation or integration into any item not described on the USML, unless specifically provided otherwise in this subchapter.
  • § 120.17 – End-use monitoring
  • Pursuant to section 40A of the Arms Export Control Act (22 U.S.C. 2785) and related delegations of authority, the Department of State is required to establish a monitoring program in order to improve accountability with respect to defense articles and defense services, sold, leased, or exported under Department of State licenses or other approvals under section 38 of the Arms Export Control Act and this subchapter.
  • All exports of defense articles, technical data, services, and brokering activities made pursuant to this subchapter are subject to end-use monitoring by the Department of State through the Blue Lantern program.
  • § 120.23(c) –Wassenaar Arrangement background and country list
  • § 120.57 – Includes exemptions included within definition of authorization

To assist with the transition, DDTC also published the following documents on their website:

For additional information and how to submit comments, please refer to the Federal Register Notice.  Comments will be accepted through May 9, 2022.  The rule is scheduled to take effect September 6, 2022, but may be revised before then.

New Agreement Guidelines

On February 14, 2022, DDTC released Revision 5.0 of the “Guidelines for Preparing Agreements.”  The revised guidelines are 105 pages in length, down from 225 in 2016’s Revision 4.4b.  The new guidelines include some substantive changes, while reducing redundancy and moving some items to separate guidance documents.  A summary of noteworthy changes is included on page 1, including:

  • Under certain circumstances, cover letters are no longer required with executed copies of TAAs and WDAs (see Section 5.2.1)
  • Expedited Execution is expanded to include the removal of sublicensees (see Section 13.1)
  • The U.S. Sublicensing statement is no longer required (see Section 9.1)
  • Optional language when utilizing § 126.18 is now provided (see Section 10.3.1)
  • Clarification that the description of end-use includes the identification of platforms (throughout Part 1)
  • Clarification on identifying and documenting foreign end users (see Section 12)
  • Clarification on the “deployment clause” (see Section 17)
  • Update to documentation of space launch territories on the DSP-5 vehicle (see Section 18)
  • Clarify that the 124.4(b) letter must provide an estimate of the quantity of the articles authorized to be produced. Additionally, MLAs involving the licensed manufacture of defense article abroad should identify the estimated quantity as part of the scope of the agreement (see Section 1.1.1, 2.1.1, and 5.2)

The summary also notes that:

Applicants are not required to submit an amendment for the sole purpose of conforming an agreement to any language or format change presented in these Guidelines. Any changes presented in the Transmittal Letter or Agreement format are intended as an aid to the applicant. These changes are not mandatory. Applications that contain additional information or a different format will still be processed.

The new guidelines and other guidance can be found in the agreements section of the DDTC website.

Commerce Expands Russia/Belarus Sanctions

On April 14, 2022, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (87 FR 22130) which expands the license requirements for Russia and Belarus to include all items on the Commerce Control List (CCL).  Effective April 8, 2022, the rule also removes license exception eligibility for Belarusian aircraft.

Our previous Russia sanctions roundup had noted that the Export Administration Regulations (EAR) §746.8 imposed a license requirement on Categories 3-9, with a presumption of denial.  This now applies to Categories 0-9, or all items identified with an Export Control Classification Number (ECCN) on the CCL.

For additional information, please refer to the Federal Register Notice.  BIS also maintains a policy guidance page on Russia-Belarus.

BIS Updates: Wassenaar, Human Rights, and License Extensions!

We have a handful of developments out of the Commerce Department, with revisions to controlled items, human rights review, and license extensions.  At the end, there are two developments out of Middle East

Commerce Implements 2018 & 2019 Wassenaar Revisions

On September 11, 2020, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (85 FR 56294) implementing changes to the Wassenaar Arrangement List of Dual-Use Goods and Technologies made at the December 2018 Plenary meeting.

The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is a global multilateral export control regime, covering both conventional weapons and sensitive dual-use goods and technologies.  Participants agree to control exports and retransfers of items on a control list of dual-use goods and technologies and munitions.  Its Plenary meeting normally occurs once a year in December in Vienna, Austria.  CCL revisions take effect when officially amended through a Federal Register notice

BIS previously issued a rule in May 2019 that added and revised five ECCNs based on the December 2018 Plenary meeting.  The new rule reflects the changes that were remaining:

Revisions to 28 ECCNs:

  • 0A617
  • 1C001
  • 2A001, 2B003, 2B006
  • 3A001, 3A002, 3B001, 3E003
  • 5E001, 5A002, 5D002, 5E002, 5E992
  • 6A003, 6A005,
  • 7A002, 7A003, 7A005, 7D003, 7D005,
  • 8A001, 8A002
  • 8B001, 9A010, 9A610, 9B001, & 9E003.

License Exception Revisions to ECCNs:

  • 1C004 (GBS)
  • 8A001 (LVS & STA)
  • 8D001 (TSR, STA)
  • 8E001 (TSR, STA)

New ECCN:

  • 6B002 (masks and reticles for optical sensors specified in 6A002.a.1.b or 6A002.a.1.d).

Conforming Changes to Eight ECCNs:

  • 0A606
  • 1A008
  • 3A991
  • 6A002, 6E001, 6E002
  • 8D001 & 8E001.

A series of corrections to the September ECCN revisions were published on December 4, 2020 (85 FR 78684), affecting some technical specifications and revising technical notes.

On October 5, 2020, BIS published a rule (85 FR 62583) implementing changes to the Wassenaar Arrangement List of Dual-Use Goods and Technologies made at the December 2019 Plenary meeting.  The changes harmonize the Commerce Control List (CCL) with the multilateral Wassenaar Arrangement by adding six emerging technologies:

  1. Hybrid additive manufacturing/computer numerically controlled tools
  2. Computational lithography software designed for the fabrication of extreme ultraviolet masks
  3. Technology for finishing wafers for 5 nanometer integrated circuit production
  4. Digital forensics tools that circumvent authentication or authorization controls on a computer and extract raw data
  5. Software for monitoring and analysis of communications and metadata acquired from a telecommunications service provider via a handover interface
  6. Sub-orbital spacecraft

The specific Export Control Classification Numbers (ECCNs) affected are as follows:

Revised: 2B001, 3D003, 5E001, 5A004, 9A004
Revised: 5D002, 5E002, 9A012, 9A515
Corrected: 5D001
Added: 3E004

Eligibility to use the License Exception ENC was also revised to include digital forensics items (investigative tools).

For complete details on the revisions, refer to the Federal Register Notice.  BIS also published a press release on these and related changes to the CCL.

Proposed Controls on Nucleic Acid Assembler and Synthesizer Software

On November 6, 2020, BIS published a proposed rule (85 FR 71012) which would control software related to nucleic acid assemblers and synthesizers.  The proposed rule would create a new ECCN 2D352 related to existing ECCN 2B352.j.  Both ECCNs would be controlled under CB (chemical and biological weapons) column 2 and AT (anti-terrorism) column 1.  This proposal is in addition to current Wassenaar or Australia Group controls.  Comments may be submitted through December 21, 2020.

Commerce Announces Human Rights Reviews & Controls on Water Cannons

On October 6, 2020, BIS published a rule (85 FR 63007) amending the Export Administration Regulations (EAR) to provide for human rights review for items controlled for CC (crime control) purposes, as well as all license applications (“except for items controlled for short supply reasons”).  In the Federal Register Notice, BIS notes that:

BIS will generally consider license applications favorably on a case-by-case basis unless there is civil disorder in the country or region of destination or unless there is evidence that the government of the importing country may have violated internationally recognized human rights.

This follows on the September release of surveillance and human rights guidance by the Department of State, Bureau of Democracy, Human Rights, and Labor (DRL).

Also on October 6, 2020, BIS published a rule (85 FR 63009) which creates a license requirement for “water cannon systems for riot or crowd control and parts and components specially designed therefor.”  The new rule creates ECCNs 0A977, 0D977 and 0E977 which will require licenses for export to countries designated under CC (crime control) Column 1 of the Commerce Country Chart.

This action was directed by Public Law 116-77 “to prohibit the commercial export of covered munitions items to the Hong Kong Police Force,” but also affects exports to other countries.  The license requirement will apply to most countries except for NATO allies and some other military allies and subjects water cannons to human rights review.

Revised National Security Review for China, Venezuela, and Russia

On October 29, 2020, BIS published a rule (85 FR 68448) “to revise the license review policy for items controlled for national security reasons destined to the People’s Republic of China (PRC), Venezuela, or the Russian Federation (Russia).”  The focus of the policy will be whether the National Security (NS) controlled items “make a material contribution” to those countries’ weapons systems subject to a presumption of denial.

Commerce Offers License Extensions

On October 16, 2020, BIS announced that exporters may request a six-month extension for licenses due to expire on or before December 31, 2020.

Requests should be sent by email to LicenseExtensionRequest@bis.doc.gov and BIS expects to review and approve extensions within two to three business days.

Antiboycott & Anti-Terrorism Updates for UAE & Sudan?

Two developing stories that we are watching, but that have not yet been reflected in regulations are based on diplomatic agreements with the United Arab Emirates (UAE) and Sudan.

The Department of the Treasury released its current list of “countries which require or may require participation in, or cooperation with, an international boycott” (85 FR 64615).  The list includes:

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

There are no changes compared to last year’s release (84 FR 54730, October 10, 2019), but the notice does state that “Treasury is monitoring the situation of the United Arab Emirates, which has announced the issuance of a decree repealing its boycott law.”  The UAE and Israel recently agreed to normalization of relations.  A similar agreement was reached between Israel and Bahrain, but Bahrain was not included on the Treasury list.

On October 23, 2020, the White House announced the President’s intention to “formally rescind Sudan’s designation as a State Sponsor of Terrorism.”  This action is based on an agreement reached with Sudan resolving “certain claims of United States victims of terror and their families.”  Following a 45-day Congressional notification window, the designation may be rescinded.  Sudan is currently the only country designated as requiring export licenses for Anti-Terrorism (AT) purposes on the Commerce Country Chart that is not subject to comprehensive restrictions.  This requirement should be revised following the formal rescission.

IMPORTANT–Breaking Developments in Export Policies Towards China and Hong Kong. DOD Releases List of Communist Chinese Military Companies which should be of significant interest to your company!

On June 24, 2020, the Department of Defense released the following list of “Communist Chinese military companies”:

  • Aviation Industry Corporation of China (AVIC)
  • China Aerospace Science and Technology Corporation (CASC)
  • China Aerospace Science and Industry Corporation (CASIC)
  • China Electronics Technology Group Corporation (CETC)
  • China South Industries Group Corporation (CSGC)
  • China Shipbuilding Industry Corporation (CSIC)
  • China State Shipbuilding Corporation (CSSC)
  • China North Industries Group Corporation (Norinco Group)
  • Hangzhou Hikvision Digital Technology Co., Ltd. (Hikvision)
  • Huawei
  • Inspur Group
  • Aero Engine Corporation of China
  • China Railway Construction Corporation (CRCC)
  • CRRC Corp.
  • Panda Electronics Group
  • Dawning Information Industry Co (Sugon)
  • China Mobile Communications Group
  • China General Nuclear Power Corp.
  • China National Nuclear Corp.
  • China Telecommunications Corp.

This list, required by section 1237 of the National Defense Authorization Act for FY 1999, has not previously been released and does not immediately affect export controls.  The listed companies, however, could potentially be the subject of future sanctions and inclusion on the list should be considered a “red flags” under the expanded restrictions on Chinese military end-users.  Some companies, such as Huawei, are already sanctioned under other authorities.

Commerce Issues Military End User FAQs

The revised rule on Chinese Military End Users (MEUs) in the Export Administration Regulations (EAR) came into effect on June 29, 2020.  The Department of Commerce, Bureau of Industry and Security (BIS) released a series of FAQs on those changes.

The FAQs refer frequently to the revised definitions and the importance of due diligence, but do not provide a list of known military end users.  The answer to Q21 does state that a request for an Advisory Opinion may be submitted if there is a question about whether a specific end user or end use is restricted under the new rule.  We expect BIS to be swamped with these requests as companies begin to deal with exports under the new rules.

It is worth noting that BIS’s existing know your customer guidance states: “You can rely upon representations from your customer and repeat them in the documents you file unless ‘Red Flags’ oblige you to take verification steps.”  This does not allow conscious disregard or willful avoidance of facts, however, and an appropriate effort must be made to ascertain the true end user and end use.  As noted above, inclusion on the list of Communist Chinese military companies is a definite red flag, but there will be many others.

EEI Filing Requirement Partially Delayed

The requirement for Electronic Export Information (EEI) filings for any items destined China, Russia, or Venezuela regardless of value, unless shipped under License Exception GOV took effect on June 29th for ECCNs listed in Supplement No. 2 to Part 744.  According to the FAQs, the requirement for EEI filings for all other CCL items has been delayed for 90 days until September 27, 2020.  The new rule does not require EEI filings for EAR99 items or intangible exports.

Hong Kong’s Special Status Ending

On June 29, 2020, the Department of State and Department of Commerce released statements on the revocation of Hong Kong’s special status under U.S. export controls.  This follows the “G7 Foreign Ministers’ Statement on Hong Kong” from June 17th which expressed concern with China’s imposition of a new “national security law” that reduces Hong Kong’s preexisting autonomy.

Both departments previously distinguished between Hong Kong and the People’s Republic of China for export control purposes.

The Department of State, Directorate of Defense Trade Controls (DDTC) previously approved licenses for Hong Kong on a case by case basis.  China was already listed as a prohibited destination under the International Traffic in Arms Regulations (ITAR) §126.1.

BIS listed Hong Kong separately in its country chart and country groups.  While BIS licensing requirements were largely the same as China (minus CB column 3), Hong Kong’s listing in Country Group A:6 and Country Group B made it eligible for some license exceptions, including Shipments to Country Group B (GBS), Shipments of Limited Value (LVS), some use of the Strategic Trade Authorization (STA).  These exceptions will no longer be available for exports to Hong Kong.

Huawei Cleared for Standards Organizations

On June 18, 2020, the BIS released an interim final rule (85 FR 36719) which authorizes the release of certain technology to Huawei in support of international standards organizations.  The rule replaces a previous advisory opinion and a Temporary General License, by amending the Huawei Entity List entries to include the following under “License requirement”:

For all items subject to the EAR, see §§ 736.2(b)(3)(vi), and 744.11 of the EAR, EXCEPT for technology subject to the EAR that is designated as EAR99, or controlled on the Commerce Control List for anti-terrorism reasons only, when released to members of a “standards organization” (see § 772.1) for the purpose of contributing to the revision or development of a “standard” (see § 772.1).

This is intended to prevent regulatory roadblocks to U.S. participation in international standards setting in areas such as 5G and autonomous vehicles.

The rule was effective upon publication and comments will be accepted through August 17, 2020.  BIS also issued a press release on this topic.

Xinjiang Supply Chain Business Advisory

On July 1, 2020, the Department of State issued a supply chain business advisory related to forced labor human rights abuses in the Xinjiang Uyghur Autonomous Region (Xinjiang) of the People’s Republic of China:

Businesses, individuals, and other persons, including but not limited to academic institutions, research service providers, and investors… that choose to operate in Xinjiang or engage with entities that use labor from Xinjiang elsewhere in China should be aware of reputational, economic, and, in certain instances, legal, risks associated with certain types of involvement with entities that engage in human rights abuses, which could include Withhold Release Orders (WROs), civil or criminal investigations, and export controls.

The advisory provides substantial background to the situation in Xinjiang, red flags, and due diligence advice.  The document relates both to activities known to be occurring in Xinjiang and facilities in other regions using labor or goods from Xinjiang.  Page 15 of the advisory includes a map identifying 19 developed cities and provinces that have established satellite factories in Xinjiang.

Industries of concern include:

  • Agriculture (including such products as hami melons, korla pears, tomato products, and garlic)
  • Cell Phones
  • Cleaning Supplies
  • Construction
  • Cotton Yarn, Cotton Fabric, Ginning, Spinning Mills, and Cotton Products
  • Electronics Assembly
  • Extractives (including coal, copper, hydrocarbons, oil, uranium, and zinc)
  • Fake Hair and Human Hair Wigs, Hair Accessories
  • Food Processing Factories
  • Hospitality Services
  • Noodles
  • Printing Products
  • Footwear
  • Stevia
  • Sugar
  • Textiles (including such products as apparel, bedding, carpets, wool)
  • Toys

The advisory does not create any new export compliance obligations, but is intended to assist with the due diligence needed to avoid problems ranging from reputational risk to export compliance violations.

January Export Compliance Updates – DDTC, BIS, and More!

Following the big Christmas vacation announcement of the new International Traffic in Arms Regulations (ITAR) cloud rule, even more changes have materialized for export compliance.

DECCS is Coming

In a January 14th webinar, the Department of State, Directorate of Defense Trade Controls (DDTC) announced another long-awaited change: DDTC’s cloud-based Defense Export Control and Compliance System (DECCS) will launch licensing and registration applications in February.  The target date is currently February 3rd with deployment anticipated no later than February 17th.  The DTrade licensing application will be taken offline for data migration prior to the DECCS launch.

DECCS will feature:

  • An updated DS-2032 registration form with a new payment process and no request for Social Security numbers
  • Current license forms from DTrade
  • Access to existing, unexpired DTrade licenses
  • New GC forms for brokering and retransfer requests
  • More digital certificate options (DTrade ACES certificates will work with DECCS until their July 2020 expirations)

Users can enroll now, but will not be able to view or use the new features until the upgrade is deployed.  Visit the DECCS Industry Portal for more information or to begin the enrollment process: https://deccspmddtc.service-now.com/deccs

DDTC Releases Defense Services FAQs

DDTC released a series of FAQs on the provision of defense services by U.S. persons abroad.  The FAQs are intended to assist with determining whether an authorization is required for a U.S. person to assist a foreign entity with defense articles, technical data, or military training and to outline for process for requesting approval.  Notably, when authorization is required for such services, the request should be submitted as a General Correspondence (GC) request under ITAR §126.9(b).

Commerce Controls Geospatial Imagery Analysis Software

On January 6, 2020, the Department of Commerce, Bureau of Industry and Security (BIS)  published an interim final rule (85 FR 459) controlling “software specially designed to automate the analysis of geospatial imagery” under the Export Administration Regulations (EAR) Export Control Classification Number (ECCN) 0D521.

ECCN 0D521 controls “Any software subject to the EAR that is not listed elsewhere in the CCL, but which is controlled for export because it provides at least a significant military or intelligence advantage to the United States or for foreign policy reasons” and requires a license for export or reexport to all countries other than Canada.  Items in the 0Y521 series (0A521, 0B521, 0C521, 0D521, and 0E521) are specified in Supplement No. 5 to Part 774 of the EAR.

The rule was effective January 6, 2020 and comments will be accepted through March 6, 2020.  Please refer to the Federal Register Notice for how to submit comments.

Commerce Seeks Technical Advisory Committee Representatives

BIS also announced that it is recruiting representatives from industry, academia, and the U.S. government to serve on one of seven Technical Advisory Committees (TACs).  These committees advise the Department of Commerce on the technical parameters and administration of dual-use export controls.

The TACs advise on the following areas:

  1. Information Systems: Categories 3 (electronics), 4 (computers), and 5 (telecommunications and information security);
  2. Materials: Category 1 (materials, chemicals, microorganisms, and toxins);
  3. Materials Processing Equipment: Category 2 (materials processing);
  4. Sensors and Instrumentation: Category 6 (sensors and lasers);
  5. Transportation and Related Equipment TAC: Categories 7 (navigation and avionics), 8 (marine), and 9 (propulsion systems, space vehicles, and related equipment);
  6. Emerging Technology: identification of emerging and foundational technologies; and
  7. Regulations and Procedures: Export Administration Regulations (EAR) and EAR implementation.

TAC members must obtain secret-level clearances prior to their appointment.  See their Federal Register Notice (84 FR 72292) for more information.

Civil Monetary Penalties Adjusted for Inflation

Inflationary adjustments to civil monetary penalties were issued by both the Department of Commerce (85 FR 207) and the Department of State (85 FR 2020).  Maximum penalties depend on the specific kind of violation.

The ITAR §127.10 civil penalties were amended as follows:

  • § 127.10(a)(1)(i) increased from $1,163,217 to $1,183,736.
  • § 127.10(a)(1)(ii) increased from $845,764 to $860,683 (or five times the amount of the prohibited incentive payment, whichever is greater).
  • § 127.10(a)(1)(iii) increased from $1,006,699 to $1,024,457.

The Department of Commerce increased the maximum penalty for a violation of the Export Control Reform Act of 2018 from $300,000 to $305,292.

New CFIUS Regulations Issued

On January 13, 2020, the Department of the Treasury issued regulations to implement changes to the Committee on Foreign Investment in the United States (CFIUS) required by the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA).  One notable development is the definition of excepted investors which, subject to some restrictions, starts with persons and entities from Australia, Canada, and the United Kingdom.

Please refer to the CFIUS website for the new regulations, fact sheets, and FAQs.

Watch this Space – USML Categories I-III Reforms Moving Again

After even longer review than the ITAR cloud rule, the Departments of State and Commerce are moving forward with reforms to USML Categories I-III (firearms, guns, and ammunition).  We will have a summary of the new rule and what it means for manufacturers and exporters.

DOD Acronym Scramble: DSCA, meet DCSA

On June 24, 2019, the Department of Defense, Bureau of Industry and Security (BIS) announced the renaming of the Defense Security Service (DSS) to the Defense Counterintelligence and Security Agency (DCSA).

The name change was directed by Executive Order 13869 (April 24, 2019), which transferred the responsibility for background investigations from the Office of Personnel Management (OPM), National Background Investigations Bureau (NBIB) to the Department of Defense.

The DCSA is now the primary entity for background investigations.  It continues to administer the National Industrial Security Program as well as responsibilities relating to continuous vetting and, insider threat programs.  While its website has been retitled, it currently remains at dss.mil.

Notably, DCSA should not to be confused with DSCA (Defense Security Cooperation Agency) whose mission includes administering the Foreign Military Sales (FMS) and other security cooperation programs for the Department of Defense.  Both agencies have relevance and responsibilities under the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR).  Multiple ITAR sections related to classified technical data and other classified defense articles continue to refer to the Defense Security Service.  These sections should eventually be amended to reflect the new agency name, but there has not yet been a formal announcement.

Finally—ITAR Government Exemption Expanded – and Opportunities to Comment and Contribute to Future Export Controls

State Department Expands §126.4 Government Exemption

On April 19, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (84 FR 16398) that expands the International Traffic in Arms Regulations (ITAR) §126.4 licensing exemption for transfers made by or for an agency of the U.S. Government.  A proposed rule was originally published in 2015 and this revision, anticipated since last year, was effective immediately.

Notably, the new rule expands the exemption to include permanent exports, reexports, and retransfers.  It also clarifies when it can be used by contractors, by third parties, or in international agreements or security cooperation programs.

Please Note: The phrase “including technical data” was removed from the exemption as “defense article” is already defined at §120.6 to include technical data.  The notice states that “When the Department refers to defense articles, without modification, the reference includes technical data.”

Portions of the revised exemption (§126.4(a)(1) or (3) and (b)(1)) may be used for 126.1 countries.  As revised, §126.1(a) includes a double negative: “exemptions… except … §§126.4(a)(1) or (3) and (b)(1)… do not apply”).  As always, transactions involving 126.1 countries, even when the US government is involved, should be reviewed carefully and make sure to fully document their usage.  No one wants to be in a position of having to recreate records after a period of time.

Is this the same as the Export Administration Regulations (EAR) §740.11 GOV License Exception?  Almost, as the revised §126.4 exemption has moved closer to, but does not completely mirror, the §740.11 GOV exception.  The EAR exception has a different structure and more uses, including non-US governments and international organizations in some circumstances.  Please read it carefully and the full text of the Federal Register Notice for additional background.

We Finally Have It!!!—Be Sure to Review and Comment on Proposed DS-7788 Single Application Form

On April 19, 2019, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (84 FR 16554) requesting comments on the proposed DS-7788 Application for the Permanent Export, Temporary Export, Temporary Import, or Brokering of Defense Articles, Defense Services, and Related Technical Data.  The new form would consolidate existing forms including: DSP-5, DSP-61, DSP-73 and DSP-85 license applications; DSP-6, DSP-62, and DSP-74 license amendments; and proposed forms for changes in end use and brokering.

The proposed “single” form and instructions can currently be downloaded from the DDTC website in nine separate pdfs.

Comments will be accepted until June 19, 2019.  See the Federal Register Notice for more information.

This is an important opportunity to comment on how the proposed licensing changes would impact your business.

Space Enterprise Summit

The Departments of State and Commerce will co-host the Space Enterprise Summit on June 26-27, 2019.  Topics will include the government’s role in stimulating and regulating commercial space activity as well as international collaboration and responsible behavior.

The event will take place in the Loy Henderson Conference Room, Department of State, 2201 C Street Northwest, Washington, DC.

For more information, see the Federal Register Notice (84 FR 13737) or the Space Enterprise Summit webpage.

Commerce Seeks Technical Advisory Committee Representatives

The Department of Commerce, Bureau of Industry and Security (BIS), Department of Commerce is recruiting representatives from industry, academia, and the U.S. government to serve on one of seven Technical Advisory Committees (TACs).  These committees advise the Department of Commerce on the technical parameters and administration of dual-use export controls.

The TACs advise on the following areas:

  1. Information Systems: Categories 3 (electronics), 4 (computers), and 5 (telecommunications and information security);
  2. Materials: Category 1 (materials, chemicals, microorganisms, and toxins);
  3. Materials Processing Equipment: Category 2 (materials processing);
  4. Sensors and Instrumentation: Category 6 (sensors and lasers);
  5. Transportation and Related Equipment TAC: Categories 7 (navigation and avionics), 8 (marine), and 9 (propulsion systems, space vehicles, and related equipment);
  6. Emerging Technology: identification of emerging and foundational technologies; and
  7. Regulations and Procedures: Export Administration Regulations (EAR) and EAR implementation.

Resumes must be submitted before April 1, 2020 and TAC members must obtain secret-level clearances prior to their appointment.  See their Federal Register Notice (84 FR 12195) for more information.

SUBMIT YOUR ADVISORY OPINIONS ON-LINE TO DDTC! REVIEW AND MAKE COMMENTS ON THE NEW CJ FORM

Advisory Opinions Accepted Online Through DECCS

Following last year’s testing, the Department of State, Directorate of Defense Trade Controls (DDTC) has announced the release of their new Advisory Opinions application for DDTC’s cloud-based Defense Export Control and Compliance System (DECCS).

The new Advisory Opinions application covers the following ITAR requests:

  • 126.9(a) – Whether DDTC would likely grant approval for a particular defense article or service to a particular country.*
  • 126.9(c) – ITAR interpretation
  • 129.9 – Guidance on whether an activity constitutes brokering under Part 129.

*Note that in many cases, it is preferable to submit a DSP-5 technical data license for marketing a defense article rather than a General Correspondence Advisory Opinion request.  While the new application is intended improve the submission and review process, a DSP-5 can avoid the need for two separate submissions for the same activity. (See DDTC’s 2016 guidance on advisory opinions.)

Other General Correspondence requests, such as §123.9 reexports or retransfers are still submitted in hard copy by mail.

The new application can be found at the DECCS Industry Service Portal: https://deccspmddtc.service-now.com/deccs

See the DDTC News & Events page (02/04/2019) for more information on this release.

Comment on Commodity Jurisdiction Form

In related DECCS news, on February 6, 2019, DDTC published a notice (84 FR 2295) requesting comments on the DS-4076 Request for Commodity Jurisdiction Determination form.  This request is part of the Office of Management and Budget (OMB) approval process.

Comments may be submitted until April 8, 2019.  Please see the Federal Register Notice for additional details.

Comment on DDTC Registration Form

On February 13, 2019, DDTC published a notice (84 FR 3846) requesting comments on the DS-2032 Statement of Registration form.  This request is also part of the OMB approval process.  Notably, DDTC plans to remove the fields for Social Security Numbers and home addresses for the various senior officers listed on the form.

Comments may be submitted until March 15, 2019.  Please see the Federal Register Notice for additional details.

State and Commerce Department Licensing On Hold During Shutdown

As the partial government shutdown continues, please note that the Departments of State and Commerce have put export licensing on hold.

The Department of State’s Directorate of Defense Trade Controls published the following notice on their website:

Industry Notice: Lapse in funding

Due to the lapse in funding affecting the Department of State that occurred at 12:01am on Saturday, December 22, 2018, services at the Directorate of Defense Trade Controls are significantly curtailed, including requests for licenses, advisory opinions, and retransfers except for those that provide direct support to the military, humanitarian aid, or other similar emergencies.  In addition, the 3pm daily pick-up and drop-off service is cancelled.  All D-Trade electronic submissions will be rejected by the system and returned to the applicant.  Requests that are currently in process at DDTC as of December 21, 2018, will remain in that status however; further review actions will be delayed until after restoration of funding. If industry applicants believe they have a case (either “In-Review” or new submission required) involving direct support to the military, humanitarian aid, or other similar emergencies, please email the DDTC Response Team (DDTCResponseTeam@state.gov). The subject line of your email MUST read “Request for Emergency License” and the message must include the license number (if already pending with DDTC) the applicant name and registration code, the end-use/end-user, justification for needing an emergency license, and a point of contact. The Directorate will contact the requestor with guidance on how to proceed if the request will be honored. (12.22.19)

Notably, D-Trade is not offline, but new applications will be rejected and will need to be resubmitted once normal operations resume.

SNAP-R, the Department of Commerce’s licensing application, has been taken offline and the following message posted:

Due to the lapse in government funding, snapr.bis.doc.gov and all associated online activities will be unavailable until further notice.

The Department of Defense is not affected by the shutdown and pending case statuses can still be viewed through ELISA.

Update, January 24, 2019

The Department of State’s Directorate of Defense Trade Controls has reopened and posted the following notice:

Effective Thursday, January 24, 2019, the Directorate of Defense Trade Controls (DDTC) will temporarily return to full operational status with all electronic application systems placed in normal operational mode and the 3pm daily pick-up and drop-off service restored. Priority will be placed on issuance of licenses in the system at the time of implementation of lapse of funding operations on December 22, 2018. New licenses will be accepted; however, industry is advised of the likelihood of longer than normal processing times due to the high volume of licenses DDTC expects to receive. The “Emergency License” process described in DDTC’s December 22, 2018 announcement below is hereby suspended.

Update, January 28, 2019

With the “temporary” end to the partial government shutdown, SNAP-R and the Consolidated Screening List are back online.  Licensing delays are anticipated as the offices get back to work.

State Department Requests Comments on License Forms, Agreement Vehicle, and Recordkeeping

License Application Forms and DSP-83

On February 26, the Department of State, Directorate of Defense Trade Controls (DDTC) published a notice (83 FR 8312) requesting comments on the following forms:

  • DSP-5 – Application/License for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data
  • DSP-61 – Application/License for Temporary Import of Unclassified Defense Articles
  • DSP-73 – Application/License for Temporary Export of Unclassified Defense Articles
  • DSP-85 – Application/License for Permanent/ Temporary Export or Temporary Import of Classified Defense Articles and Related Classified Technical Data,
  • DSP-6, DSP-72, and DSP-74 – Application for Amendment to License for Export or Import of Classified or Unclassified Defense Articles and Related Classified Technical Data
  • DSP-83 – Nontransfer and Use Certificate

Comments are requested to:

  • Evaluate the necessity of the information collection
  • Evaluate the accuracy of the forms’ estimated time and cost burden
  • Enhance the quality, utility, and clarity of the information collected
  • Minimize reporting burdens

Comments may be submitted at www.regulations.gov (Docket No. DOS–2017–0047), by email to DDTCPublicComments@state.gov, or by mail through April 27, 2018.  (Refer to the Federal Register Notice for additional information.)

DSP-5 “Vehicle” for Agreements

On February 27, the DDTC published a notice (83 FR 8563) requesting comments on the use of the DSP-5 “vehicle” to transmit proposed technical assistance, manufacturing, or distribution license agreements for DDTC approval.

As above, comments are requested to:

  • Evaluate the necessity of the information collection
  • Evaluate the accuracy of the forms’ estimated time and cost burden
  • Enhance the quality, utility, and clarity of the information collected
  • Minimize reporting burdens

Comments may be submitted at www.regulations.gov (Docket No. DOS–2018–0011), by email to DDTCPublicComments@state.gov, or by mail through April 30, 2018.  (Refer to the Federal Register Notice for additional information.)

Recordkeeping by DDTC Registrants

Finally, on February 27, DDTC also published a notice (also 83 FR 8563) requesting comments on the general record-keeping requirements imposed on registrants by the ITAR.  ITAR § 122.5 requires registrants to “maintain records concerning the manufacture, acquisition and disposition (to include copies of all documentation on exports using exemptions and applications and licenses and their related documentation), of defense articles; of technical data; the provision of defense services; brokering activities; and information on political contributions, fees, or commissions furnished or obtained, as required by part 130 of this subchapter” with additional conditions for storage methods and duration.

As with the other requests, comments are requested to:

  • Evaluate the necessity of the information collection
  • Evaluate the accuracy of the forms’ estimated time and cost burden
  • Enhance the quality, utility, and clarity of the information collected
  • Minimize reporting burdens

Comments may be submitted at www.regulations.gov (Docket No. DOS–2018–0009) or by email to DDTCPublicComments@ state.gov through April 30, 2018.  (Refer to the Federal Register Notice for additional information.)

Please be aware that comments are considered public record and should not include proprietary or other sensitive information.

South Sudan Policy of Denial; Will be Added to 126.1 Prohibited Destinations

The State Department’s Directorate of Defense Trade Controls (DDTC) has published a web notice announcing a policy change for South Sudan:

Change in Policy on Exports of Defense Articles and Defense Services to South Sudan (2.2.18)
Pursuant to section 38(a) of the Arms Export Control Act and the delegated authority of the Secretary of State thereunder, the Secretary has determined that it is the policy of the Department of State to deny, with limited exceptions, export licenses or other approvals for defense articles and defense services subject to the International Traffic in Arms Regulations (ITAR) and destined for South Sudan. This policy is effective immediately. DDTC will publish a rule in the Federal Register to implement a conforming change to ITAR §126.1.

Sudan is already listed as a prohibited destination under ITAR § 126.1, which includes a note on South Sudan’s previous post-independence status:

Note to §126.1. On July 9, 2011, the Republic of South Sudan declared independence from Sudan and was recognized as a sovereign state by the United States. This policy does not apply to the Republic of South Sudan. Licenses or other approvals for exports or imports of defense articles and defense services destined for or originating in the Republic of the South Sudan will be considered on a case-by-case basis.

The State Department has also published a more detailed press release on the policy change based on continuing violence in South Sudan.

UPDATE:  The amendment (83 FR 6457) adds South Sudan under 126.1(w) effective February 14, 2018:

(w) South Sudan. It is the policy of the United States to deny licenses or other approvals for exports of defense articles and defense services destined for South Sudan, except that a license or other approval may be issued, on a case-by-case basis, for:

(1) Defense articles and defense services for monitoring, verification, or peacekeeping support operations, including those authorized by the United Nations or operating with the consent of the relevant parties;

(2) Defense articles and defense services intended solely for the support of, or use by, African Union Regional Task Force (AU-RTF) or United Nations entities operating in South Sudan, including but not limited to the United Nations Mission in the Republic of South Sudan (UNMISS), the United Nations Mine Action Service (UNMAS), the United Nations Police (UNPOL), or the United Nations Interim Security Force for Abyei (UNISFA);

(3) Defense articles and defense services intended solely for the support of or use by non-governmental organizations in furtherance of conventional weapons destruction or humanitarian demining activities;

(4) Non-lethal defense articles intended solely for humanitarian or protective use and related technical training and assistance;

(5) Personal protective equipment including flak jackets and helmets, temporarily exported to South Sudan by United Nations personnel, human rights monitors, representatives of the media, and humanitarian and development workers and associated personnel, for their personal use only; or

(6) Any defense articles and defense services provided in support of implementation of the Comprehensive Peace Agreement, the Agreement on the Resolution of the Conflict in the Republic of South Sudan, or any successor agreement.