DDTC Proposes Revised Definition of “Regular Employee”
On May 27, 2021, the Department of State, Directorate of Defense Trade Controls (DDTC) issued a proposed rule (86 FR 28503) to revise the International Traffic in Arms Regulations (ITAR) §120.39 definition of “regular employee.” Following temporary measures adopted for the COVID-19 pandemic, the proposed amendment would permanently “allow certain individuals to work remotely, and further proposes to clarify the contractual relationships that meet the definition of regular employee.” Significantly, the “criterion that an individual must work at a company’s facilities will be removed in the revised definition to allow for remote work.” The proposed rule also clarifies the treatment of contract employees and the meaning of “long term contractual relationship” as well as consideration of security clearances and secondment.
“Regular employee” is a key definition in the ITAR §126.18 exemptions for dual nationals and third country nationals (DN/TCNs). Under the 126.18 exemptions, foreign companies can allow access to ITAR-controlled articles and technical data by employees who are nationals of other countries without DDTC approval when the specific conditions are met.
Comments on the proposed definition will be accepted through July 26, 2021. Please refer to the Federal Register Notice for the full proposal and how to comment.
In a related action, DDTC published a rule (86 FR 30778) on June 10, 2021 temporarily extending the suspension of certain ITAR provisions “to provide for continued telework operations during the current SARS-COV2 public health emergency.” The suspension is intended to continue until the regular employee final rule is published.
Russia: 126.1 Policy and Country Group D:5
Following the addition of Russia to ITAR §126.1, DDTC has released a fact sheet summarizing the effect of the listing and several FAQs, with particular attention to the effect on commercial space launches.
The Department of Commerce has not yet amended the Export Administration Regulations (EAR) Country Group D:5, which parallels ITAR §126.1. However, Country Group D:5 includes the following note:
If there are any discrepancies between the list of countries in this table and the countries identified by the State Department as subject to a U.S. arms embargo (in the Federal Register), the State Department’s list of countries subject to U.S. arms embargoes shall be controlling.
Even without a formal EAR amendment, D:5 should be understood to contain Russia.
CCL Wassenaar Updates
On March 29, 2021, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (86 FR 16482) to revise the Commerce Control List (CCL) to implement changes to the Wassenaar Arrangement List of Dual-Use Goods and Technologies (WA List) that were decided upon at the December 2019 Wassenaar Arrangement Plenary meeting. Other changes from the December 2019 meeting were published in 2020.
The recent changes are largely related to eliminating reporting requirements and license exceptions for some encryption items, but also include revisions to twenty-two Export Control Classification Numbers (ECCNs) (0A502, 0A503, 0A606, 1A002, 1A005, 1A006, 1A613, 1B002, 1C001, 1C002, 1C006, 1C010, 2A001, 3B001, 3E002, 5A002, 6A004, 6A005, 6A008, 9A011, 9D515, and 9E003).
Opportunity to Influence Export Controls: BIS Seeks Technical Advisory Committee Members
On April 28, 2021, BIS published a notice (86 FR 22390) announcing the recruitment of candidates for its seven Technical Advisory Committees (TACs). These committees advise the Commerce Department on the technical parameters and administration of export controls in the following areas of responsibility:
- Information Systems TAC: CCL Categories 3 (electronics), 4 (computers), and 5 (telecommunications and information security)
- Materials TAC: CCL Category 1 (materials, chemicals, microorganisms, and toxins)
- Materials Processing Equipment TAC: CCL Category 2 (materials processing)
- Sensors and Instrumentation TAC: CCL Category 6 (sensors and lasers)
- Transportation and Related Equipment TAC: CCL Categories 7 (navigation and avionics), 8 (marine), and 9 (propulsion systems, space vehicles, and related equipment)
- Emerging Technology TAC (identification of emerging and foundational technologies that may be developed over a period of five to ten years with potential dual-use applications)
- Regulations and Procedures TAC (focuses on the EAR and its implementation)
TAC members are appointed by the Secretary of Commerce, serve terms of not more than four years, and must obtain secret-level security clearances prior to appointment. Resumes will be accepted through September 30, 2021. For more information, including how to apply, please refer to the Federal Register Notice.
UAE Removed from Treasury Antiboycott List
On April 8, 2021, the Department of the Treasury published a notice (86 FR 18374) removing the United Arab Emirates (UAE) from the list of countries which “require or may require participation in, or cooperation with, an international boycott.”
This list is routinely published for the purposes of compliance with Part 999 of the Internal Revenue Code of 1986, which includes reporting requirements for certain activities in the listed countries.
The UAE was removed following its August 2020 repeal of a law mandating a boycott of Israel and subsequent actions. Last December’s version of the antiboycott list included a comment that anticipated the UAE’s removal following its normalization of relations with Israel.
The remaining countries on the list are:
- Iraq
- Kuwait
- Lebanon
- Libya
- Qatar
- Saudi Arabia
- Syria
- Yemen
While this removes one set of requirements specifically required for the UAE, EAR Part 760 (Restrictive Trade Practices or Boycotts) continues to apply to transactions with any country.
In addition, on June 9, 2021, BIS published an interpretation to Supplement No. 17 to Part 760 (86 FR 30535) which clarifies that some requests from the UAE are no longer presumed to be boycott-related if made after August 16, 2020. This only addresses a presumption and the general requirements of Part 760 continue to apply.