Ethiopia Sanctions and 126.1
Following the announcement of sanctions targeting the conflict in Ethiopia on September 17, the Department of State, Directorate of Defense Trade Controls (DDTC) announced on its website that it intends to add Ethiopia to ITAR §126.1 and revise the entry for Eritrea.
While the main effect of this change will be that defense articles may no longer be exported or reexported to Ethiopia (where approvals would already have been unlikely), there are a number of follow-on effects of the §126.1 listing that may catch some companies by surprise. Such effects include the following:
- Proposed and final sales: Broad prohibition includes proposals and presentations as well as actual sales and exports.
- Disclosures: An affirmative duty to immediately inform DDTC of any “proposed, final, or actual sale, export, transfer, reexport, or retransfer of articles, services, or data.”
- Exemptions: Most exemptions are not available for §126.1 countries.
- Dual/Third Country Nationals: §126.18(c)(2) will require screening for substantive contacts with Russia.
- Brokering: Additional restrictions under Part 129.
Through its addition to §126.1, Ethiopia will also be added to the Commerce Department’s Export Administration Regulations (EAR) Country Group D:5.
Ethiopia will be the second addition to §126.1 this year, following Russia’s listing in March.
Cyprus §126.1 Revision Extended
In other ITAR §126.1 news, last year’s temporary modification of the policy towards Cyprus was extended for another year. The modification potentially allowing the export of non-lethal defense articles and services is now in effect until September 30, 2022, unless extended (86 FR 54044).
Cyprus, a member of the European Union since 2004, was originally listed in §126.1 with the objective to prevent an arms race on the island. Cyprus is currently divided between the Republic of Cyprus and the internationally unrecognized Turkish Republic of Northern Cyprus, a division which followed the 1974 Turkish invasion. The relaxed §126.1 policies are based on the cooperation of Cyprus on additional U.S. foreign policy objectives of anti-money laundering and denial of ports for Russian military vessels.
USML Category XI(b) Extended for Five Years
In what had become an annual or biennial event, on August 30, 2021 DDTC published a notice (86 FR 48021) continuing the current text controlling intelligence-analytics software in USML Category XI(b). DDTC and its interagency partners have been unable to resolve how Category XI controls such software, and are now deferring to a wholesale revision of the category expected by 2026.
Export Control Reform measures were originally scheduled to remove “software” from XI(b) as well as the capability to analyze and produce information from the electromagnetic spectrum. Some software would remain controlled under XI(d). Based concerns that a revised category would no longer clearly control “certain intelligence-analytics software,” DDTC has continued to “amend” XI(b) to maintain the original text.
DTAG Meeting Announced
On September 24, 2021, DDTC published a notice (86 FR 53137) announcing that the next Defense Trade Advisory Group (DTAG) open meeting will be on November 4, 2021. The meeting will be held virtually with discussion on the following topics:
(1) Advise on best practices for conducting internal audits to evaluate ITAR compliance programs, and
(2) provide sources for recordkeeping and reporting requirements for all licenses, agreements, and exemptions, as well as industry perceptions of the return on investment of said requirements, plus any recommendations for improvement.
The meeting is open the public and accepts questions by email. For more information on the meeting including how to register, please refer to the Federal Register Notice.
Commerce Revises EAR Controls
On August 19, 2021, the Department of Commerce, Bureau of Industry and Security (BIS) published a rule (86 FR 46590) making corrections and clarifications to the “0x5zz” firearms Export Control Classification Numbers (ECCNs), including edits, new notes, and some changes to the ECCNs effective September 30, 2021. Refer to the Federal Register Notice for more information.
On October 5, 2021, BIS published two separate rules (86 FR 54807 and 86 FR 54814). The first rule makes a series of targeted editorial corrections and clarifications throughout the Export Administration Regulations (EAR). The second establishes controls on nucleic acid assembler and synthesizer software under new ECCN 2D352, implementing an Australia Group decision from May 2021. BIS also issued a press release on the new control.
On October 6, 2021, BIS and the Nuclear Regulatory Commission (NRC) issued companion rules (86 FR 55492 and 86 FR 55476) transferring responsibility for licensing exports of deuterium for non-nuclear end use from the NRC to BIS. Exports of deuterium for nuclear end use remain under NRC jurisdiction. The revision affects ECCN 1C298, which currently includes graphite, and will take effect December 6, 2021.