Export Control Regulations

SYRIA UPDATE

In August 24, 2026 The Department of State rescinded Syria’s designation as a State Sponsor of Terrorism.

In a statement by Secretary Rubio ” I authorized the formal rescission of Syria’s designation as a State Sponsor of Terrorism (SST), following the conclusion of the mandatory 45-day Congressional notification period.  I have also delisted Hay’at Tahrir al-Sham’s (HTS) designation as a Specially Designated Global Terrorist (SDGT). These actions represent another historic step by President Trump to give the Syrian people a path to prosperity…..This eliminates the final major barriers for private sector investment in Syria and promotes Syria’s economic recovery and reintegration into the global economy.”

Below is an overview of the current restrictions.

  • OFAC
    • Comprehensive sanctions targeting Syria were terminated in 6/2025.
    • OFAC removed al-Nusrah Front, also known as Hay’at Tahrir al-Sham (HTS), as a Specially Designated Global Terrorist organization on 8/24/2026. HTS helped topple the Assad regime.
    • OFAC removed Syria from its Sanctions Programs page
    • List-based sanctions remain on Bashar al-Assad and his associates, human rights abusers, Captagon drug traffickers, and other destabilizing regional actors who remain on the Department of the Treasury’s List of Specially Designated Nationals and Blocked Persons (SDN List).
  • DDTC (ITAR)
    • Syria is a proscribed country under 126.1
    • A regulatory amendment to the ITAR that eases exports of USML items to Syria is expected following the Secretary of State’s August 2026 waiver of the Syria Accountability Act.
    • A regulatory amendment to the ITAR that eases restrictions on U.S. sales to Syria under the Arms Export Control Act, on licenses for the export to Syria of items on the USML, on U.S. foreign military financing to Syria, and on Syrian-owned or controlled air transportation to or from the United States is expected following the Secretary of State’s August 2026 waiver of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 and a 20-day notification period to Congress.
  • BIS (EAR)
    • BIS published a final rule on 9/2/2025 that eased restrictions on exports to Syria. The rule:
      • Permits the exports and reexports of EAR99 items to Syria under license exception Syria Peace and Prosperity (SPP), provided that the transactions do not otherwise require a license based on the end-use or end-user.
      • Requires export licenses for all items specified on the CCL that do not qualify for a license exception specified in 746.9.
      • “ BIS will review license applications under a presumption of approval for exports and reexports of items on the CCL to Syria for commercial end uses that support economic and business development in Syria or that support the Syrian people, including through the improvement or maintenance of telecommunications, water supply and sanitation, power generation, aviation, or other civil services that support peace and prosperity in Syria without making a significant contribution to the military potential of Syria or the ability of Syria to support acts of international terrorism.”
      • License Exceptions authorized under 746.9 are:
        • TMP, RPL, GOV, TSU, BAF, AVS, and CCD.

If you have any questions, please contact us at 703-847-5801 or email us at info@fdassociates.net

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Agendas available on our website

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ITAR FUNdamentals September 29 – October 2, 2026

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SYRIA UPDATE Read More »

Drone Export Requirements Relaxed

A Final Rule with effective August 14, 2026 has been issued by the Department of Commerce that eases export controls on certain Unmanned Aerial Vehicles (UAVs or Drones) and related parts, components, accessories, attachments, technology and software regulated under the EAR.

Specifically, ECCN 9A012 that regulated controls on UAVs/Drones is revised eliminating wind just tolerance as a parameter for determining UAVS controls and increases the control parameter for endurance to less than or greater than 3 hours.

Drones with less than 3 hours of endurance, provided that they are not MT controlled based on range and payload, are exportable to most countries without a license.

Drones with an endurance greater than 3 hours are NS1 controlled meaning export licenses are required except for Canada, United Kingdom and Australia.

New ECCN entries are added in 9A012 to capture drones/UAVs incorporated cameras described in ECCN 6A003.b.3, 6A003.b.4.b, and radars in 6A008.d to .h.

UAV and unmanned airships incorporating lasers enumerated in ECCN 6A005 and inertial measuring equipment or systems using accelerometers or gyros specified in ECCNs 7A001, 7A002, 7A003 or 7A005 are also described in the expanded ECCN 9A012.

Conforming changes are made to remove national security controls on software and technology for UAVS with an endurance under 3 hours.

The EAR maintains military end user/end user controls for UAVS with the lower endurance drones and their associated technology and software. To effect this change BIS has added ECCNs 9A012, 9D001, 9D002 and 9E001 to supplement no. 2 to part 744 – Items Subject to Military End Use End User Restrictions.

To date UAVs have not been regulated in ECCN 9A610, based on historical aspect of military UAVs, however as UAVs have evolved with commercial UAVs being modified after development for military use, and smaller or less capable UAVs being designed and developed for military application that provide significant military advantage, but not a critical one that would warrant control in the ITAR USML. BIS identified that after interagency review it has been agreed that some military UAVs and remotely piloted vehicles can be captured in ECCN 9A610.a rather than ECCN 9A012 when “specially designed” to provide military capabilities not described on the ITAR USML. Provided as illustrative reference is Supplement No 1 to Part 744 which described “military end uses” which BIS believes is informative in assessing design or modification for military under ECCN 9A610.a including performing military reconnaissance, surveillance or combat support.

The Final Rule also updates the availability for use of license exception Strategic Trade Authorization for certain transactions involving UAVs.

The link to the Final Rule is HERE

If you have any questions, please contact us at 703-847-5801 or info@fdassociates.net

UPCOMING ITAR WEBINARS

 

Drone Export Requirements Relaxed Read More »

New Foreign UAS Systems Shutdown by the FCC

ByGeorge (Jorge) Cánovas, J.D. • Vice President Compliance, FD Associates
LinkedIn
This article was originally posted to FD Associates’ LinkedIn page .

In late December 2025, the Federal Communications Commission (FCC) issued a national security determination (Pubic Notice DA-25-1086) concluding that unmanned aircraft systems and certain UAS critical components produced outside the United States pose an unacceptable risk to national security and to the safety and security of U.S. persons. The determination focused on specific risks tied to unauthorized surveillance, sensitive data collection, remote system access, and the ability to alter, degrade, or disable system functionality through software or firmware updates after deployment.

Based on that determination, the FCC placed foreign-produced UAS and UAS critical components on its Covered List, prohibiting those items from operating in the United States, unless a specific national security determination is issued by the Department of Defense or the Department of Homeland Security concluding that a particular system or component does not present those risks.

The national security are issued through an interagency national security review led by the Department of Defense or the Department of Homeland Security, typically involving intelligence, cybersecurity, and supply-chain risk offices, and focus on how a specific UAS or critical component is designed, manufactured, controlled, updated, and accessed over its lifecycle. The review examines communications architecture, component origin, firmware and software update authority, remote access capabilities, data collection and transmission pathways, and the ability to alter or disable system functionality after deployment.

If the reviewing department concludes that the system or component does not present the identified national security risks, it issues a specific determination covering that system or class of systems, which the FCC then implements ministerially by updating the Covered List, rather than through an FCC-run application, appeal, or waiver process.

The practical effect is immediate for new UAS equipment seeking authorization. Covered drones and components may not be imported into the United States unless they are first cleared through the applicable national security review process. The FCC will not grant equipment authorization for covered systems to operate in the United States, and operating such systems without authorization is unlawful.

The issue here is not flight safety or airspace regulation, but the communications systems embedded in these platforms and the national security risks they present.

FCC Covered UAS and Critical Components

Rather than publishing a finite or part-numbered list, the FCC adopted a functional approach focused on system operation, communications, and control. Any foreign-produced component that is essential to the operation of a UAS, particularly where it enables communications, navigation, control, or data transmission, may fall within scope.

Covered items include, but are not limited to:

  • Complete unmanned aircraft systems and associated elements required for safe and effective operation
  • Communications radios and radio frequency transmission equipment
  • Data transmission and telemetry devices
  • Flight controllers and integrated control units
  • Ground control stations and UAS controllers
  • Navigation systems, including GPS, GNSS, and inertial navigation units
  • Sensors, payload sensors, and cameras
  • Motors and motor controllers
  • Batteries and battery management systems
  • Associated software and firmware required for operation, control, communications, or updates

Because the scope is functional rather than categorical, a single foreign-produced communications or control component can prevent FCC authorization for an entire drone system, regardless of where final assembly occurs or how the product is marketed.

Recent FCC clarification adds a limited, temporary carve-out. In a January 7, 2026 Public Notice (See FCC DOC DA-26-22A1), the FCC announced that certain foreign-produced UAS and UAS critical components will be removed from the Covered List on a time-limited basis, including systems appearing on the “Defense Contract Management Agency Blue UAS Cleared List” (See The Blue UAS Cleared List and Blue UAS Framework) and products that qualify as domestic end products under the Buy American Standard. These removals are not permanent. They expire on January 1, 2027, after which covered foreign-produced UAS and components will again be ineligible for FCC authorization absent a new national security determination. The FCC emphasized that these temporary allowances do not reflect a change in its underlying national security assessment and should be viewed as transitional measures rather than long-term relief.

What the Rule Does and Does Not Do

The FCC is not enforcing export laws. Its action is based on communications authorization and national security risk. The consequence for drone companies is straightforward: new systems containing covered foreign-produced components will face challenges upon importation and to lawfully operated in the United States.

The rule does not turn on whether a drone is described as civil or commercial, nor does it depend on historical acceptance of a platform. The analysis focuses on foreign production and the presence of covered functionality tied to foreign communications, system control, or data transmission.

How This Plays Out in Practice

In practice, the FCC rule often surfaces earlier in the business cycle than companies expect.
A product, component, or fleet is first identified for import, sale, deployment, or continued operation in the United States. This may be tied to a new product launch, a customer procurement, or a review of systems already in use.

The system is then examined at the component level to identify foreign-produced elements tied to communications, navigation, control, data transmission, or firmware. This is frequently where issues surface, particularly with radios, GNSS modules, flight controllers, sensors, and embedded software.

If the system contains covered foreign-produced UAS or critical components, FCC equipment authorization is unavailable unless a specific national security determination applies. At that point, the question is no longer abstract compliance, but whether the product can be imported or lawfully operated at all.

For existing fleets, this risk arises primarily when systems are modified, upgraded, or otherwise require new or amended FCC authorization. For new products, it can halt sales, integration, or deployment entirely.

Companies are then forced into business decisions. Options may include redesigning systems, re-sourcing components, segmenting product lines for different markets, adopting alternative platforms, or exiting certain use cases altogether. These decisions are driven by technical feasibility, cost, and time to market, not regulatory preference.

What the FCC Actually Examines During Authorization

FCC authorization reviews are grounded in detailed technical disclosures. Companies are required to explain, with specificity:

  • How the drone communicates with ground control stations and other systems
  • Which components enable command, control, telemetry, navigation, and data transmission
  • Where those components are designed, manufactured, and integrated
  • How firmware and software updates are delivered and who controls them
  • Whether the system allows remote access, diagnostics, or configuration after deployment
  • How data is collected, stored, transmitted, and accessed

These are not peripheral details. They go directly to whether the FCC will authorize operation of the system in the United States.

Why This Is More Complicated Than It First Appears

For many drone companies, risk does not reside solely in the airframe. It resides in subsystems selected years earlier for cost, performance, or availability, long before national security screening became decisive.

Communications modules, navigation units, sensors, and firmware stacks are often globally sourced and deeply embedded in the system architecture. As a result, a drone assembled in the United States can still be disqualified because of a single foreign-produced radio, control board, or software dependency that cannot easily be replaced without redesign.

The rule also reaches beyond new sales. Fleet operators, integrators, and service providers must consider whether systems already deployed can continue operating lawfully if they rely on covered components that cannot receive authorization. Replacement parts, upgrades, firmware changes, or shifts in who controls software updates are often the trigger point. Systems that were lawfully authorized at deployment can face new scrutiny when their configuration, control pathways, or update mechanisms change over time.

What This Means for U.S. Drone Companies

U.S. manufacturers, distributors, integrators, operators and brokers must now look at end platforms and a component-level view of their products and operations.

Companies that manufacture drones domestically but rely on foreign-produced critical components face the same authorization barrier for new systems as fully foreign-manufactured systems. Companies importing foreign-produced drones for resale, integration, or specialized use must assess whether those platforms can be authorized at all.

The impact is especially acute where civil drones are being used or adapted for government, public safety, critical infrastructure inspection, or defense-adjacent missions. In those contexts, national security risk is assessed more conservatively, and tolerance for foreign control or access is lower.

Downstream activities matter as well. Software updates, configuration changes, maintenance, and technical support can all be relevant where authorization turns on who controls system behavior over time.

For some companies, compliance will require redesign, re-sourcing, or segmentation of product lines. For others, the rule may eliminate U.S. market access for certain platforms entirely.

The Bottom Line

The FCC has not issued a blanket ban on drones. It has conditioned U.S. market access on national security clearance for foreign-produced unmanned aircraft systems and critical components.

For drone companies operating in or selling into the United States, the issue is no longer abstract. Product architecture, component sourcing, system control, and lifecycle management now determine whether a drone can be imported, authorized, or lawfully operated.

This is an operational gate to the U.S. drone market, and it requires a level of technical and supply-chain scrutiny that many companies have not previously needed to apply.

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New Foreign UAS Systems Shutdown by the FCC Read More »

Following the 50% Rule .. BIS Adds 29 Entries to the Entity List

On October 9, 2025 via 90 Fed. Reg. 48193 (“FRN”), the Department of Commerce Bureau of Industry Security (“BIS”) added 29 entries (26 entities and 3 addresses) located in China, Hong Kong, Turkey, and the U.A.E. to the Entity List . These entities were involved  in diverting U.S. origin commodities to Iran for use in Unmanned Aircraft Systems (UAS)/ Unmanned Aircraft Systems (UAVs) or aircraft in violation of the U.S. Export Administration Regulations (EAR).

 

Why This Matters

  • First Update to the Entity List since Implementation of the BIS Affiliate Rule (AKA 50% Beneficial Ownership Rule)

Under the new Affiliate Rule, implemented on September 29, 2025, companies are prohibited from engaging in a transaction without prior USG authorization with an unlisted entity that is 50% or more owned, in the aggregate, by an entity or entities identified on the BIS Entity List (EL) and the Military End User (MEU) list and the Dept. of Treasury’s Office of Foreign Asset Controls (OFAC) Specially Designated National List (SDN) List.

Companies must obtain the parent companies and owners of an entity up through to the ultimate beneficial owner and screen the entities against the EL, the MEU, and SDN for potential matches and ownership that is greater than then 50% threshold.

The requirement to screen for 50% ownership is not a new requirement – it is a requirement under the OFAC sanction programs – however under the BIS Affiliate Rule companies must review the licensing requirements or prohibitions for each owner identified on SDN, the EL, and MEU and apply the most restrictive requirement to the transaction.

 

  • Companies Must Adopt New Strategies and Tools to Comply with the Expanded Use of the 50% Beneficial Ownership Rule and Frequent Updates to the Lists

Performing 50% Beneficial Ownership screening and managing the rescreening of parties to a transaction (e.g. purchase, end user, freight forwarder, supplier, etc.) due to frequent updates to the lists will be challenging for companies with limited resources. Since September 29 when the Affiliate Rule was implemented, OFAC and BIS collectively added more than 150 entities over five different updates to the SDN and Entity list.

 

To manage these compliance requirements more efficiently, companies should use third-party sanctioned/restricted party ownership research services that dive deep into the Beneficial Ownership structure to augment existing sanctioned/restricted party screening tools. These tools should include persistent screening of the parties to the transaction against changes to the sanctioned/restricted party lists or a mechanism to regularly upload a list of parties for screening. Companies not using such services should supplement standard third-party services with internal sanction ownership research by utilizing publicly available information (e.g. investor reports, business documents filed with government, information from media outlets etc.) to fill potential gaps that exist between when an entity is added to a list to when the third-party service completes their research and updates their lists.

 

Lastly, company personnel conducting the screenings must be trained not only to use the screening tools but also to conduct sanctioned/restricted ownership research, identify and mitigate compliance risk or escalate to senior management when the risk cannot be mitigated.

 

On Our Radar

  • U.S . Origin Components Were Recovered from the UAS/UAV wreckage

The US Government stated in the FRN that it has identified the entities who diverted U.S. origin commodities to Iran from information found on the U.S. origin commodities recovered in the UAS/UAV  wreckage, presumably manufacturer’s name or logo, part number serial number, etc.

 

The FRN does not mention the manufacturer's role in the investigation, nonetheless, this underscores the importance of screening the parties to the transaction and particularly the end use/end user of the exported commodities. Moreover, companies should keep records of their due diligence efforts, such as end use statements or other documents,  if their products are later found in an unauthorized country or application, to assist the government in their investigation.

  • The Additions Included the China and Hong Kong Subsidiaries of Arrow Electronics, a U.S. Electronics  Distributor

BIS added the China and Hong Kong subsidiaries of Arrow Electronic to the BIS EL for facilitating the purchase of U.S. origin electronics  found in the wreckage of UAS operated by Iranian proxies. Arrow Electronics stated they are in discussions with BIS to resolve this issue. It will be interesting to see if the compliance actions taken by BIS are contained to the China and Hong Kong subsidiaries or if at a later date it spills over to the parent company.

Regardless of outcome, this action highlights the importance of ensuring that your foreign subsidiaries and affiliates compliance with U.S. export regulations are imperative and validating end use/end user and screening the parties to the transaction are mandatory not optional.

 

What’s Next?

  • Education - business functions, e.g. business development, purchasing, order entry/contract etc., that engage in transactions with foreign parties on the new requirements. Include foreign subsidiaries and affiliates in this process.
  • Discuss strategies for collecting and screening ultimate beneficial ownership information to ensure compliance.
  • Explore third-party screening solutions to augment and streamline your existing screening processes.

Following the 50% Rule .. BIS Adds 29 Entries to the Entity List Read More »

Out With The New, Back To The Old Ways BIS Rescinds Biden Era Firearms Restrictions On Exports

ByJohn J. Herzo, J.D. • Senior Compliance Associate

On September 29, 2025 via 90 Fed. Reg. 47170, the Department of Commerce’s Bureau of Industry and Security (“BIS”) rescinded in part Interim Final Rule, 89 Fed. Reg. 34680 (“Firearms IFR”), that imposed additional export requirements on the export of EAR regulated firearms, related ammunition and components thereof.

The Firearms IFR imposed a range of additional requirements, including:

  • A “presumption of denial” for exports to non-governmental user (civilian and commercial entities) to the following 36 “high-risk” countries: Bahamas, Bangladesh, Belize, Bolivia, Burkina Faso, Burundi, Chad, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Indonesia, Jamaica, Kazakhstan, Kyrgyzstan, Laos, Malaysia, Mali, Mozambique, Nepal, Niger, Nigeria, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Suriname, Tajikistan, Trinidad and Tobago, Uganda, Vietnam, and Yemen;
  • Export license requirements on sporting shotguns and optics to U.S. allies;
  • Limited the use of EAR License Exceptions BAG 15 CFR § 740.14 and LVS § 740.3;
  • Additional documentation requirements for license applications:

o  Purchase Order for all license applications for EAR regulated firearms, related ammunition and components;

o  Import Certificate or Equivalent Document for all license applications for EAR regulated firearms, related ammunition and components; and

o  Passport or National ID Card for all license applications for exports of EAR regulated firearms, related ammunition and components to individuals (Natural Persons);

  • Shorter validity period, one (1) Year as opposed to four (4) Years for other BIS 748P licenses for all BIS 748P licenses for the permanent export of EAR regulated firearms, related ammunition and components.

The current rule, 90 Fed. Reg. 47170, revokes a majority of the changes made to the EAR by the Firearms IFR, 89 Fed. Reg. 34680, and restores a majority of the export rules for EAR regulated firearms, related ammunition and components that previously existed. However, the current rule retains the four new ECCNs (0A506, 0A507, 0A508, and 0A509) implemented by Firearms IFR, 89 Fed. Reg. 34680, and does not remove the requirements to obtain BIS 748P licenses for most exports of EAR regulated firearms, related ammunition and components.

The current rule, 90 Fed. Reg. 47170, revokes the purchase order requirements for BIS 748P license applications for EAR regulated firearms, ammunition and components and the requirement for an Import Certificate or Equivalent Document. However, an Import Certificate or Equivalent Document is still a requirement for BIS 748P license applications for exports to countries that require these documents for entry of firearms, ammunition and components into their country. It should be noted that the Import Certificate or Equivalent Document in these instances was a requirement of the EAR prior to implementation of Firearms IFR, 89 Fed. Reg. 34680.

The current rule, 90 Fed. Reg. 47170, also revokes the requirement for a Passport or National ID Card to support a BIS 748P license application for export to individuals (Natural Persons).

Lastly, the current rule, 90 Fed. Reg. 47170, reinstates the four (4) year validity period for BIS 748P licenses for firearms, ammunition and components.

What does the current rule, 90 Fed. Reg. 47170, mean for U.S. exports of EAR regulated firearms, ammunition and components:

  • There is a wider range of countries to which EAR regulated firearms, ammunition and components can be exported to without the BIS 748P license application being reviewed with a presumption of denial;
  • There are less supporting documentation requirements to obtain a BIS 748P license EAR regulated firearms, ammunition and components;
  • EAR License Exceptions BAG § 740.14 and LVS § 740.3 may be available for the export of EAR regulated firearms, ammunition and components;
  • BIS 748P licenses for the export of EAR regulated firearms, ammunition and components will now be valid for four (4) Years.

What is not clear in the current rule, 90 Fed. Reg. 47170, is whether any BIS 748P licenses that were either revoked or modified by the Firearms IFR, 89 Fed. Reg. 34680, will be reinstated or reinstated without their modifications.

FD Associates suggests that any exporter that had their BIS 748P license revoked or modified contact Benjamin Barron, Supervisory Export Policy Analyst, Bureau of Industry and Security, Department of Commerce, Phone: 202-482-4252, or Ronald Rolfe, Supervisory Export Policy Analyst, Bureau of Industry and Security, Department of Commerce, Phone: 202-482-4563 or by Firearms@bis.doc.gov to determine if their revoked or modified license(s) will be reinstated.

Out With The New, Back To The Old Ways BIS Rescinds Biden Era Firearms Restrictions On Exports Read More »

The Department of State Published a Proposed Rule to Create an Exemption for Certain Exports, Reexports, Retransfers, Or Temporary Imports Of Defense Articles Or Defense Services, Or Certain Brokering Activities Between or Among Authorized Users Within Australia, The United Kingdom, And The United States (AUKUS)

By John Herzo, Senior Compliance Associate, FD Associates, Inc.

89 Fed. Reg. 35028

On April 19, 2024, FD Associates, Inc., advised its followers of the U.S. Department of Commerce, Bureau of Industry and Security’s (“BIS”) amendment to the Export Administration Regulations (“EAR”) to remove license requirements, expand the availability of license exceptions, and reduce the scope of end-use and end-user-based license requirements for exports, reexports, and transfers (in-country) to or within Australia and the United Kingdom (“UK”) to enhance technological innovation among the three countries and support the goals of the Governments of Australia, United Kingdom, United States (“AUKUS”).

The Department of State’s (“the Department”) proposed rule for exports by and between AUKUS member nations has been published. On May 1, 2024, the Department of State published a proposed rule in the Federal Register (89 Fed. Reg. 35028) that, if finalized, would create an exemption for certain exports, reexports, retransfers, or temporary imports of defense articles or defense services, or certain brokering activities between or among authorized users within Australia, the United Kingdom, and the United States. The exemption would be available for all defense articles or defense services, except for those contained within a limited excluded list. The proposed rule would also introduce a provision to allow for certain transfers of classified defense articles to certain dual nationals and would codify an expedited license review process for Australia, the United Kingdom, and Canada. Industry may submit comments regarding the proposed rule to the Department by May 31, 2024.

The Department has proposed to amend the International Traffic in Arms Regulations (ITAR) to support the goals of the AUKUS partnership, the enhanced trilateral security partnership among Australia, the United Kingdom, and the United States. This exemption is designed to foster defense trade and cooperation between and among the United States and two of its closest allies. It is reflective of the nations’ collective commitment to implement shared security standards on protecting defense technology and sensitive military know-how.

The proposed new exemption, designed to implement the provisions of new section 38(l) of the Armes Export Control Act (AECA), would be located in ITAR § 126.7 and would provide that no license or other approval is required for the export, reexport, retransfer, or temporary import of defense articles; the performance of defense services; or engagement in brokering activities between or among designated authorized users within Australia, the United Kingdom, and the United States provided certain requirements and limitations are met. These include a list of excluded defense articles and defense services not eligible for the exemption, which can be found in a proposed Supplement No. 2 to Part 126. The scope of excluded defense articles and defense services remain subject to revision and the Department welcomes comment on proposed Supplement No. 2 to Part 126.

 

A summary of the key details regarding the requirements and limitations of the proposed exemption are as follows:

  • In § 126.7(b)(1), the exemption may only be used for transfers to or within the physical territory of Australia, the United Kingdom, or the United States;
  • In § 126.7(b)(2), the pool of eligible members, known as authorized users, is created to facilitate secure defense trade and cooperation. Australia and the United Kingdom’s members will undergo an authorized user enrollment process, in coordination with DDTC, and those members will be listed through the DDTC website. Members located in the United States must be registered with DDTC and not debarred under ITAR § 127.7.
  • In § 126.7(b)(3), the defense articles and defense services listed in Supplement No. 2 to Part 126 are not eligible for this proposed exemption. These items are excluded from eligibility under the proposed exemption because (1) they are exempted from eligibility by statute, including AECA section 38(j)(1)(C)(ii), or (2) are specifically exempted by either the UK, Australia, or the United States, per AECA section 38(l)(4)(A). These items are, however, subject to the expedited licensing procedures listed in § 126.15 and may be reviewed and revised during the lifetime of the exemption.
  • In § 126.7(b)(4), transferors that use this proposed exemption must abide by this requirement for recordkeeping purposes, and such records must be made available to DDTC upon request.
  • In § 126.7(b)(5), the limitations provided exclude exemption use for transfers that would require certification to Congress pursuant to sections 36(c) and 36(d) of the AECA.
  • In § 126.7(b)(6) and (7), the Department is reiterating other ITAR provisions to underscore that the proposed exemption is subject to other requirements within the subchapter, and the named sections are not an exhaustive list.
  • In § 126.7(b)(8), the Department is establishing that classified defense articles and defense services are eligible for transfer under this exemption provided the authorized users in the United States, Australia, and the United Kingdom meet their respective industrial security requirements. For authorized users in the United States, this is the National Industrial Security Program Operating Manual (NISPOM) (32 CFR part 117) and, for Restricted Data, the Atomic Energy Act of 1954, as amended. For Australian authorized users, this is the Defence Security Principles Framework (DSPF) Principle 16 and Control 16.1, Defence Industry Security Program, and for United Kingdom authorized users this is the Government Functional Standards (GovS) 007: Security.
  • The Department is also proposing to add a provision to the exemption in ITAR § 126.18 to allow certain dual nationals of Australia and the United Kingdom to receive classified defense articles without a separate license from DDTC. These persons must be authorized users of the exemption in § 126.7 or regular employees of such authorized users in § 126.7, hold a security clearance approved by Australia, the United Kingdom, or the United States that is equivalent to the classification level of SECRET or above in the United States, and be located within the physical territory of Australia, the United Kingdom, or the United States or be a member of the armed forces of Australia, the United Kingdom, or the United States acting in their official capacity.
  • Lastly, the Department is proposing to revise § 126.15 per the provisions of section 1344 of the NDAA for Fiscal Year 2024. This revised text would note the review of license applications for exports of certain commercial, advanced-technology defense articles and defense services to or between the physical territories of Australia, the United Kingdom, or Canada, and are with government or corporate entities from such countries, shall be processed within certain timeframes. The subject export must not be eligible for transfer under an ITAR exemption. License requests related to a government-to-government agreement between Australia, the United Kingdom, or Canada and the United States must be approved, returned, or denied within 30 days of submission. For all other license applications subject to this section, any review shall be completed no later than 45 calendar days after the date of the application.

Please contact your FD Associates consultant for guidance on transactions with Australia and the UK.

The Department of State Published a Proposed Rule to Create an Exemption for Certain Exports, Reexports, Retransfers, Or Temporary Imports Of Defense Articles Or Defense Services, Or Certain Brokering Activities Between or Among Authorized Users Within Australia, The United Kingdom, And The United States (AUKUS) Read More »

BIS Amends the EAR Removing Most Licensing Requirements to Australia and The United Kingdom to Support the Australia, United Kingdom, United States (AUKUS) Enhanced Trilateral Security Partnership

By John Herzo, Senior Compliance Associate, FD Associates, Inc.
Odyssey Gray III, Senior Associate, FD Associates, Inc.
April 19, 2024
89 Fed. Reg. 28594

Effective April 19, 2024, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) amended the Export Administration Regulations (“EAR”) to remove license requirements, expand the availability of license exceptions, and reduce the scope of end-use and end-user-based license requirements for exports, reexports, and transfers (in-country) to or within Australia and the United Kingdom (“UK”) to enhance technological innovation among the three countries and support the goals of the Australia, United Kingdom, United States (“AUKUS”) Trilateral Security Partnership. The full Federal Register Notice may be found at the following link:

https://www.federalregister.gov/documents/2024/04/19/2024-08446/export-control-revisions-for-australia-united-kingdom-united-states-aukus-enhanced-trilateral

On December 22, 2023, President Biden signed the National Defense Authorization Act (NDAA) for Fiscal Year 2024, Public Law 118-31, which enacted provisions related to streamlining defense trade between and among the United States, UK, and Australia, provided certain conditions are met. To support the United States' broader defense trade and technology cooperation with the AUKUS partners, BIS issued this change to remove certain license requirements for exports to Australia and the UK under the EAR.

On September 15, 2021, the leaders of Australia, the UK, and the United States announced their “resolve to deepen diplomatic, security, and defense cooperation in the Indo-Pacific region, including by working with partners, to meet the challenges of the twenty-first century” by creating AUKUS, an enhanced trilateral security partnership. Through AUKUS, partner governments strengthen each other's ability to support their collective security and defense interests, building on longstanding and ongoing bilateral ties. AUKUS consists of two main pillars. Pillar I focuses on trilateral submarine cooperation. Pillar II focuses initial partner collaboration efforts on advanced capabilities in the following areas: (1) advanced cyber, artificial intelligence (AI), and autonomy; (2) quantum technologies; (3) hypersonic and counter-hypersonic capabilities; (4) electronic warfare; (5) innovation; (6) information sharing; and (7) additional undersea capabilities.

The UK and Australia are two of the United States' closest allies, with longstanding collective defense arrangements. They are also members of all four multilateral export control regimes (i.e., the Wassenaar Arrangement on Export Controls for Conventional Arms and Related Dual-Use Goods and Technologies, Australia Group, Nuclear Suppliers Group, and Missile Technology Control Regime (MTCR)). They are also members of the Global Export Controls Coalition (GECC) of governments that have substantially aligned on export control measures in response to Russia's illegal war against Ukraine. The UK and Australia have robust export control systems and have taken additional measures in recent months to enhance technology protection and promote secure trade. Specifically, in December 2023, the United Kingdom's National Security Act 2023 came into force, providing for inter alia enhanced protections against the unauthorized disclosure of certain defense-related information. In March 2024, the Australian Parliament passed the Defence Trade Controls Amendment Act 2024 and the Safeguarding Australia's Military Secrets Act 2024, providing for inter alia controls on the reexport of items originally exported from Australia and disclosures of controlled technology to certain foreign persons within Australia, as well as controls on the provision of defense services. Following their passage in their respective parliaments, the UK and Australian actions received royal assent. These actions highlight the UK's and Australia's commitment to implementing robust export controls and technology protection measures.

 

Summary Of Changes To The EAR

With this rule, Australia and the UK will have nearly the same licensing treatment under the EAR as Canada. The liberal licensing treatment of items destined for Canada was made possible in part because Canada is included in the National Technology and Industrial Base (NTIB) (as defined in 10 U.S.C. 4801(1)). In 2017, this definition was broadened to include the UK and Australia. Accordingly, the regulatory changes in this rule not only advance the goals of the AUKUS Enhanced Trilateral Security Partnership but also further align the treatment of the UK and Australia under the EAR with fellow NTIB member Canada.

The biggest changes to the EAR pursuant to this rule are the removal of list-based license requirements for exports, reexports, and transfers (in-country) to Australia and the UK, including the removal of license requirements for national security column 1 (NS1), regional stability column 1 (RS1), and missile technology column 1 (MT1) reasons for control for the destinations of Australia and the UK. This is an important change as it removes licensing requirements for exports of ALL 600 Series ECCN items to Australia and the UK and many 9x515 satellite-related license requirements to Australia and the UK.

Other minor changes to the EAR pursuant to this rule include the applicability of License Exceptions under §§ 740.15, 740.16, and 740.17 (License Exceptions Aircraft, Vessels and Spacecraft (AVS), Additional Permissive Reexports (APR), and Encryption Commodities, Software, and Technology (ENC), respectively), for use to Australia, Canada, and the UK.

BIS also exempted Australia, the UK, and Canada from unilateral reporting requirements for thermal imaging camera transactions.

Consistent with recent changes to the EAR concerning thermal imaging cameras, the interim final rule removes military end-use and end-user-based license requirements for exports, reexports, and transfers (in-country) of certain cameras, systems, or related components detailed under § 744.9(a)(1)(i) and (a)(1)(iii) of the EAR which previously only applied to Canada.  The exception now applies to Australia, Canada, and the UK.

BIS requires certain transactions involving Canada to be reported in Electronic Export Information (EEI) filings, and these paragraphs now include Australia and the UK for clarity without changing existing EEI filing requirements. There is no change to the requirement to file EEI for shipments to Australia and the UK. For instances involving the use of a license exception or license, the usual EEI license codes apply. If exporting as No License Required, the license code is C33 in EEI.

There are two sections under the EAR where Canada is still treated differently than Australia and the UK. Pursuant to § 742.7(a)(4), Canada remains exempted from certain crime control-related license requirements for non-firearms items. The text in this section has been edited to read “Canada only,” as these items still require a license to Australia and the UK. Firearms-related items and other CC-controlled items in ECCNs 0A501 (except 0A501.y), 0A502, 0A503, 0A504, 0A505. a, .b, and .x, 0A981, 0A982, 0A983, 0D501, 0D505, 0E501, 0E502, 0E504, 0E505, and 0E982 will continue to require a license when destined to and among the UK and Australia.

In addition, existing license requirements for the following items will remain in place:

  • Certain satellites and related items;
  • Certain items controlled pursuant to the Chemical Weapons Convention, and items controlled for short supply reasons (e.g., certain petroleum products and Western red cedar); and
  • Certain law enforcement restraints and riot control equipment, implements of torture or execution, and horses exported by sea.

 

Detailed Description Of The Specific Changes To The EAR

BIS made the following six major export control policy changes to further align the treatment of Australia, Canada, and the UK under the EAR:

  1. The first three changes involve the removal of list-based license requirements for exports, reexports, and transfers (in-country) to Australia and the UK. Specifically, BIS is removing license requirements for national security column 1 (NS1), regional stability column 1 (RS1), and missile technology column 1 (MT1) reasons for control for the destinations of Australia and the UK. As Australia and the UK are not currently subject to NS2 or RS2 controls, with this rule all Commerce Country Chart-based NS and RS controls are removed for these countries.
    • To facilitate this change, the Xs are removed from the Country Chart (supplement no. 1 to part 738) for NS1, RS1, and MT1 for Australia and the UK.
    • Corresponding to the Commerce Country Chart, provisions in part 742 of the EAR that specify the license requirements for NS, MT, and RS reasons (§§ 742.4(a), .5(a), and .6(a), respectively) are revised in order to fully remove the license for Australia and the UK.
  2. Based on the change above, “600 series” items, which are generally items on the Wassenaar Arrangement Munitions List, no longer require a license to Australia or the UK. In addition, items controlled under the EAR for missile technology reasons consistent with the MTCR Annex no longer require a license to Australia or the UK.
  3. Except for those items requiring a license to all destinations worldwide pursuant to § 742.6(a)(9), many 9x515 satellite-related items no longer require a license to Australia or the UK.
  4. The fourth policy change is consistent with the general RS1 removal. BIS maintains a special RS Column 1 license requirement in § 742.6(a)(3) applicable to military commodities described under ECCN 0A919. Specifically, the special RS1 control required a license for reexports to all destinations except Canada for items classified under ECCN 0A919 except when such items are being reexported as part of a military deployment by a unit of the government of a country in Country Group A:1 (see supplement no. 1 to part 740 of the EAR) or the United States. This final rule removes license requirements for 0A919 items to Australia and the UK.
  5. BIS removed military end-use and end-user-based license requirements for exports, reexports, and transfers (in-country) of certain cameras, systems, or related components detailed under § 744.9(a)(1)(i) and (a)(1)(iii) of the EAR. Prior to this rule, the only exception to the requirements under these paragraphs was for Canada. With the publication of this rule, the exception now applies to Australia, Canada, and the UK.
  6. BIS revised its treatment of significant items (SI) ( e., hot section technology for the development, production or overhaul of commercial aircraft engines, components, and systems) controlled under ECCN 9E003.a.1 through a.6, a.8, .h, .i, and .l, and related controls to allow these items to be exported, reexported, or transferred (in-country) to or within Australia and the UK without a license, consistent with the current exception for Canada. This provision is in § 742.14(a).

BIS also made the following minor changes to the EAR to further align the treatment of Australia, Canada, and the UK under the EAR pursuant to this rule:

  1. Under § 734.17(c)(1), precautions for internet transfers of products eligible for export under § 740.17(b)(2) shall include such measures as an access control system that, either through automated means or human intervention, checks the address of every system outside of the U.S. or Canada to check against transfers to foreign government end users, was edited to include Australia and the UK within the list of countries exempted from the required measures.
  2. Under §§ 740.15, 740.16, and 740.17 (License Exceptions Aircraft, Vessels and Spacecraft (AVS), Additional Permissive Reexports (APR), and Encryption Commodities, Software, and Technology (ENC), respectively), BIS expanded the explicit applicability of these License Exceptions for use to Australia, Canada, and the UK.
  3. Under § 742.2(a)(1), a license was required to all destinations, including Canada, for CB Column 1 items; with the publication of this rule the countries exempt from the license requirement is expanded to include Australia and the UK in the list for clarity, although the revision does not change existing license requirements.
  4. Under § 742.7(a)(4), Canada remains exempted from certain crime control-related license requirements for non-firearms items, but the text has been edited to read “Canada only” as these items are not available without a license in Australia and the UK.
  5. Under § 742.13(a)(1), Canada is mentioned as requiring a license for certain communications intercepting devices; with the publication of this rule, this phrase now includes Australia and the UK for clarity, although the revision does not change existing license requirements.
  6. Under § 742.18(a)(1), Canada is mentioned as requiring a license under the Chemical Weapons Convention; with the publication of this rule, this phrase now includes Australia and the UK for clarity, although the revision does not change existing license requirements.
  7. Under § 743.3(b), BIS exempted Australia, the UK, and Canada from unilateral reporting requirements for thermal imaging camera transactions.
  8. Under §§ 754.3(a), .4(a), and .5(a), a license is required for short supply reasons for control for certain items, including to Canada; these phrases now include Australia and the UK for clarity without changing existing license requirements.
  9. Under § 758.1(b)(3), (6), and (9), BIS requires certain transactions involving Canada to be reported in Electronic Export Information (EEI) filings, and these paragraphs now include Australia and the UK for clarity without changing existing EEI filing requirements.
  10. Under § 758.11(a), which covers the scope of export clearance requirements for firearms and related items, BIS now includes Australia and the UK alongside Canada for clarity as destinations to which certain clearance requirements continue to pertain.

Among other things, license exception Aircraft, Vessels, and Spacecraft (AVS) treats exports to Canadian airlines in most destinations as an export to Canada. Since MT1 items do not require a license for export to Canada, the primary impact of this AVS eligibility is that Canadian airlines in most destinations may receive MT1 items as spare parts. Consistent with the removal in this rule of MT1 license requirements for the UK and Australia, and as discussed above, BIS added AVS eligibility for Australian and United Kingdom airlines to receive such items in most destinations. As a conforming change, BIS created two new definitions for what constitutes an “Australian airline” and “United Kingdom (or UK) airline.” These two definitions are added to § 772.1 and mirror the definition of “Canadian airline.”

Lastly, the following requirements will remain unchanged as a result of this rule. Under the EAR, firearms-related items and other CC-controlled items in ECCNs 0A501 (except 0A501.y), 0A502, 0A503, 0A504, 0A505. a, .b, and .x, 0A981, 0A982, 0A983, 0D501, 0D505, 0E501, 0E502, 0E504, 0E505, and 0E982 will continue to require a license when destined to and among the UK and Australia. This license requirement mirrors the license requirement for firearms-related items in ECCNs 0A501 (except 0A501.y), 0A502, 0A504 (except 0A504.f), and 0A505 (except 0A505.d) destined to Canada. Prior to this IFR, license requirements for these items to the UK and Australia were implemented through NS1/RS1 reasons for control. Since these license requirements are removed for the UK and Australia in this rule, BIS added a footnote to the Commerce Country Chart for the UK and Australia, which indicates that a license is still required for these 0x5zz firearms-related items in those two countries. This does not change the scope of the license requirements for these items to the UK and Australia that applied prior to the effective date of this rule.

Please contact your FD Associates consultant for guidance on transactions with Australia and the UK.

BIS Amends the EAR Removing Most Licensing Requirements to Australia and The United Kingdom to Support the Australia, United Kingdom, United States (AUKUS) Enhanced Trilateral Security Partnership Read More »

DDTC Announced Today A Temporary Suspension of the ITAR “See-Through Rule” For Certain High Energy Storage Capacitors Described on the USML

ITAR 120.11 (c)[1] pertains to the Order of Review and the Integration of controlled items described on the USML and states:

 

Defense articles described on the USML are controlled and remain subject to the ITAR following incorporation or integration into any item not described on the USML, unless specifically provided otherwise in this subchapter.

 

DDTC published the following announcement on their website as a notification to the Industry of temporary suspension of ITAR § 120.11(c) with respect to certain high energy storage capacitors

 

On November 21, 2022, the Deputy Assistant Secretary of State for Defense Trade Controls temporarily suspended for a period of six (6) months the applicability of § 120.11(c) of the International Traffic in Arms Regulations (ITAR) for certain capacitors described in U.S. Munitions List (USML) Category XI(c)(5).

 

USML XI(c) (5) controls the following types of capacitors.

(5) High-energy storage capacitors with a repetition rate of 6 discharges or more per minute and full energy life greater than or equal to 10,000 discharges, at greater than 0.2 Amps per Joule peak current, that have any of the following:

(i) Volumetric energy density greater than or equal to 1.5 J/cc; or

(ii) Mass energy density greater than or equal to 1.3 kJ/kg;

 

 

The Department assessed that it is in the security and foreign policy interests of the United States to facilitate commercial uses of certain capacitors when integrated into any item not described on the USML (for example, certain items used in energy exploration and commercial aviation).

 

Accordingly, pursuant to ITAR § 126.2, and the Department’s administration of the Arms Export Control Act (AECA), the Deputy Assistant Secretary of State for Defense Trade Controls ordered the temporary suspension of ITAR § 120.11(c) with respect to capacitors described in USML Category XI(c)(5) that have a voltage rating of one hundred twenty-five volts (125 V) or less and have been integrated into, and included as an integral part of, any item not described on the USML. Such articles are licensed by the Department of Commerce when integrated into and included as an integral part of items subject to the EAR.

 

This temporary suspension is valid for a period of six months, from November 21, 2022, to May 21, 2023, or when terminated by notice, whichever occurs first.

Capacitors described in USML Category XI(c)(5) remain subject to the controls of the ITAR in all other circumstances, including as stand-alone articles. The export, reexport, retransfer, or temporary import of technical data and defense services directly related to all defense articles described in USML Category XI(c)(5) remain subject to the ITAR.

 

Any violation of the ITAR, including any violation of the terms and conditions of any export license issued by the Department of State prior to the temporary suspension announced herein, remains a violation of the AECA. The Department of State strongly encourages the industry to disclose unauthorized exports, reexports, retransfers, or temporary imports of defense articles, including the subject capacitors, that occurred prior to this temporary suspension.

 

Editors comments:

Industry has seen the ITAR See Through rule overcome before. It's important to follow DOS issuance of CJs and Consent Agreements to get insight into the regulators thinking on export controls of certain items.

 

Both Boeing and Goodrich incorporated the QRS-11 chip into commercial items, the 777 aircraft, and a flight standby instrument. DDTC awarded them both hefty civil penalties for this action, thus validating the ITAR See-Through Rule's existence before it was formally adopted into the ITAR in 2022. In the QRS-11 case, after the fines were assessed to Boeing and Goodrich, the regulators incorporated specific exceptions into the ITAR and EAR pertinent to when the QRS-11 chip is installed/integrated into a civil item.

 

One has to wonder the cause of this suspension and opine there may be a Commodity Jurisdiction Request in process or a compliance case that is causing the regulators to rethink controls for certain high-energy storage capacitors meeting the technical levels noted. Stay tuned for further updates...

 

This notice also serves as a reminder of the criticality of reviewing your Bill of Materials when manufacturing commercial items to ensure that you don't trip over the ITAR See-Through Rule.

 

DDTC Announced Today A Temporary Suspension of the ITAR “See-Through Rule” For Certain High Energy Storage Capacitors Described on the USML Read More »

The U.S. Department Of State, Office Of Defense Trade Controls Issues Two Temporary Open General Licenses That Will Assist Foreign Parties With Retransfers of U.S. Origin ITAR Defense Articles

In an extraordinary announcement announced on July 19, 2022, the U.S. Department of State, Office of Defense Trade Controls Licensing (“ODTCL”) has taken a proactive step in assisting foreign companies in the United Kingdom, Australia, and Canada by issuing two Temporary Open General Licenses (“OGEL”) pursuant to the International Traffic in Arms Regulations (“ITAR”) and ITAR § 126.9(b) authority to authorize the retransfer and reexport of previously authorized and exported defense articles and technical data to and within Australia, Canada, and the UK.

These Temporary OGELs go into effect on August 1, 2022, and expire one year later on July 31, 2023. ODTCL is issuing these OGELs as part of a pilot program to assess the viability and appropriateness of the open general license concept.

OGEL 1 and OGEL 2 only relate to ITAR-controlled defense articles and technical data that were previously authorized for export from the U.S. pursuant to a valid license, agreement, or other authorization and cannot be used as authorization for any exports from the U.S.

 

 

OGEL 1 authorizes the retransfer[1] (as defined in § 120.51) of unclassified defense articles to:

  • The Government of Australia, the Government of Canada, or the Government of the United Kingdom;
  • Members of the Australian Community as defined in § 126.16(d)[2], at all locations in Australia;
  • Members of the United Kingdom Community as defined in § 126.l7(d)[3], at all locations in the United Kingdom; or
  • Canadian-registered persons as defined in § 126.5(b). [4]

 

OGEL 2 authorizes the reexport[5] (as defined in § 120.19) of unclassified defense articles and technical data between or among:

 

  • The Government of Australia, the Government of Canada, or the Government of the United Kingdom;
  • Members of the Australian Community as defined in § 126.16(d), at all locations in Australia;
  • Members of the United Kingdom Community as defined in § 126.l 7(d), at all locations in the United Kingdom; or
  • Canadian-registered persons as defined in § 126.5(b).

 

The retransfer pursuant to OGEL 1 and the reexport pursuant to OGEL 2 of any unclassified defense articles and technical data to any of the parties listed above for OGEL 1 and OGEL 2, is subject to all the following requirements, limitations, and provisos:

 

Requirements: The transferor shall:

  • Comply with the requirements of § 123.9(b)[6];
  • Maintain the following records for each retransfer/reexport: a description of the defense article, including technical data; the name and address of the recipient and the end-user, and other available contact information (e.g., telephone number and electronic mail address); the name of the natural person responsible for the transaction; the stated end use of the defense article; the date of the transaction; and the method of transfer;
  • Ensure that such records are available to ODTCL upon request; and
  • Utilize Open General License No. 1 or Open General License No. 2 as the license or other approval number or exemption citation on all records pertaining to transfer

 

Limitations and Provisos:

  • The defense articles and technical data to be retransferred/reexported were originally exported pursuant to a license or other approval issued by ODTCL pursuant to section 38 of the Arms Export Control Act (AECA), the Defense Trade Cooperation Treaty between the United States and Australia (§ 126.16), or the Defense Trade Cooperation Treaty between the United States and the United Kingdom, (§ 126.17);
  • A defense article or technical data originally exported pursuant to the ITAR’s Foreign Military Sales (“FMS”) exemption at § 126.6(c) may not be retransferred/reexported under OGEL 1 or OGEL 2;
  • Defense articles and technical data described in § 126.16(a)(5) or § 126. l 7(a)(5) may not be retransferred/reexported under OGEL 1 or OGEL 2;
  • Defense articles may not be retransferred under OGEL 1 or OGEL 2 if they are listed on the Missile Technology Control Regime (MTCR) Annex or identified as Missile Technology (MT) on the United States Munitions List (USML) in § 121;
  • Defense articles may not be retransferred/reexported under OGEL 1 or OGEL 2 if they will be used to support the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, or processing of a missile, UAV, space-launch vehicle, item listed on the MTCR Annex, or item listed as MT on the USML in § 121;
  • Technical data may only be retransferred/reexported under OGEL 1 or OGEL 2 for the purpose of organizational-level, intermediate-level, or depot-level maintenance, repair, or storage of a defense article;
  • Any major defense equipment (as defined in § 120.8)[7] valued (in terms of its original acquisition cost) at $25,000,000 or more and any defense article or related training or other defense service valued (in terms of its original acquisition cost) at $100,000,000 or more, may only be retransferred/reexported under OGEL 1 or OGEL 2 for the purpose of: maintenance, repair, or overhaul defense services, including the repair of defense articles used in furnishing such services, if the retransfer/reexport will not result in any increase in the military capability of the defense articles and services to be maintained, repaired, or overhauled; or a temporary retransfer/reexport of defense articles for the sole purpose of receiving maintenance, repair, or overhaul;
  • The retransfer/reexport must take place wholly within the physical territory of Australia, Canada, or the United Kingdom;
  • Any retransfer/reexport of a defense article other than technical data is for end use by, or operation on behalf of, the Government of Australia, the Government of Canada, or the Government of the United Kingdom; and
  • OGEL 1 or OGEL 2 may not be utilized by persons to whom a presumption of denial is applied by ODTCL pursuant to §§ 120.l(c) or 127.l l(a), including, among other reasons, for past convictions of certain U.S. criminal statutes or because they are otherwise ineligible to contract with or receive an export or import license from an agency of the U.S. Government.

 

Information regarding OGEL 1 and OGEL 2 can be found on the Department of State’s website at:

 

https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events

[1] (a) Retransfer, except as set forth in § 120.54, § 126.16 or § 126.17, means:

(1) A change in end use or end user, or a temporary transfer to a third party, of a defense article within the same foreign country; or

(2) A release of technical data to a foreign person who is a citizen or permanent resident of the country where the release or transfer takes place.

 

[2] (d) Australian Community.  For purposes of the exemption provided by this section, the Australian Community consists of:

(1) Government of Australia authorities with entities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; and

(2) The non-governmental Australian entities and facilities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; non-governmental Australian entities and facilities that become ineligible for such membership will be removed from the Australian Community.

 

[3] (d)[3] United Kingdom Community.  For purposes of the exemption provided by this section, the United Kingdom Community consists of:

(1) Her Majesty's Government entities and facilities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; and

(2) The non-governmental United Kingdom entities and facilities identified as members of the Approved Community through the DDTC Web site (www.pmddtc.state.gov) at the time of a transaction under this section; non-governmental United Kingdom entities and facilities that become ineligible for such membership will be removed from the United Kingdom Community.

 

[4] For purposes of this section, “Canadian-registered person” is any Canadian national (including Canadian business entities organized under the laws of Canada), a dual citizen of Canada and a third country other than a country listed in § 126.1 of this subchapter, and permanent resident registered in Canada in accordance with the Canadian Defense Production Act, and such other Canadian Crown Corporations identified by the Department of State in a list of such persons publicly available through the Internet website[4] of the Directorate of Defense Trade Controls and by other means.

 

[5] (a) Reexport, except as set forth in § 120.54, § 126.16, or § 126.17, means:

(1) An actual shipment or transmission of a defense article from one foreign country to another foreign country, including the sending or taking of a defense article to or from such countries in any manner;

(2) Releasing or otherwise transferring technical data to a foreign person who is a citizen or permanent resident of a country other than the foreign country where the release or transfer takes place (a “deemed reexport”); or

(3) Transferring registration, control, or ownership of any aircraft, vessel, or satellite subject to the ITAR between foreign persons.

(b)  Any release outside the United States of technical data to a foreign person is deemed to be a reexport to all countries in which the foreign person has held or holds citizenship or holds permanent residency.

 

[6] (b) The exporter, U.S. or foreign, must inform the end-user and all consignees that the defense articles being exported are subject to U.S. export laws and regulations as follows:

(1) The exporter must incorporate the following information as an integral part of the commercial invoice, whenever defense articles are to be shipped (exported in tangible form), retransferred (in tangible form), or reexported (in tangible form) pursuant to a license or other approval under this subchapter:

(i) The country of ultimate destination;

(ii) The end-user;

(iii) The license or other approval number or exemption citation; and

(iv) The following statement: “These items are controlled by the U.S. government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.”

 

[7] Pursuant to section 47(6) of the Arms Export Control Act (22 U.S.C. 2794(6)), major defense equipment means any item of significant military equipment (as defined in § 120.7) on the U.S. Munitions List having a nonrecurring research and development cost of more than $50,000,000 or a total production cost of more than $200,000,000.

 

The U.S. Department Of State, Office Of Defense Trade Controls Issues Two Temporary Open General Licenses That Will Assist Foreign Parties With Retransfers of U.S. Origin ITAR Defense Articles Read More »