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.