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Regulatory Environment

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Presentation on theme: "Regulatory Environment"— Presentation transcript:

1 Regulatory Environment
U.S. Department of State – Defense Article International Traffic in Arms Regulations (ITAR) United States Munitions List (USML) U.S. Department of Commerce – Dual Use Commercial Items Export Administration Regulations (EAR) Commerce Control List (CCL)

2 What is an Export According to the ITAR, an Export is…
Sending or taking a defense article out of the U.S Transferring ownership of USML items Disclosing or transferring tech data Performing a defense service Sale, transfer, or proposal to sell or transfer articles or services in certain countries

3 What is an Export According to the ITAR, an Export is…
Export occur in multiple ways Faxes/ s Collaborative environments Casual conversation Travel / trade shows Meetings / site tours Translation services

4 U.S. Person vs. Foreign Person Foreign Persons also include Overseas Locations
A U.S. citizen Lawful permanent resident alien Form I-551 (green card) U.S. Government entity Any corporation, business association, partnership, society or any other entity, organization or group that is incorporated to do business in the U.S. Foreign national Foreign corporation / business not organized in the U.S. International government / agencies Representative of a Foreign Interest (RFI) U.S. Person Foreign Person

5 U.S. Controlled Technical Data
Information that is required for design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles…engineering “know-how” Blueprints • technical drawings • photographs Plans • instructions • proposals Specifications • statements of work Test procedures / results “How-to” information ITAR requires a record of ALL exports

6 U.S. Controlled Technical Data
Software directly related to defense articles Classified information relating to defense articles and defense services ITAR requires a record of ALL exports

7 Public Domain What is Not Technical Data
Publicly available information Newsstands • unrestricted subscriptions 2nd class mail • libraries Publicly released by USG DOD Statement A Basic marketing information on function or purpose General scientific, mathematic, and engineering principles, or fundamental research Schedules • parts lists • top-level drawings

8 Defense Article / Service & SME
Any item or technical data listed on the USML See 22 CFR 121 (ITAR) Defense Service Furnishing assistance (incl. training) to a foreign person, whether in the U.S. or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, processing, or demilitarization, destruction, processing, or use of defense articles Furnishing technical data to a foreign person

9 Defense Article / Service & SME
Significant Military Equipment (SME) Special export controls Capacity for substantial military use and / or capability

10 Commercial items are CONTROLLED
Commercial items are subject to the Export Administration Regulations (EAR) from the Department of Commerce (DoC) According to the EAR A commercial export is the actual shipment or transmission of items subject to the EAR out of the U.S. The release of technology or software subject to the EAR to a foreign nation in the U.S. Commercial items are CONTROLLED

11 Commercial Items The Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the EAR BIS maintains the Commerce Control List (CCL) within the EAR and includes items subject to the export licensing authority of BIS E.g. commodities, software, technology

12 Commercial Items Dual use items are those which have both commercial and military or proliferation application May require a commodity jurisdiction from the DoC to determine which agency ultimately controls them Exporting a commercial item may require a DoC export license or exception

13 Cycle Time Varies (2-4 Months)
Application Process SSEALS Request Initiated Export Prepares Package Corporate Export Office Reviews Staffed to DoS & Agencies Approval from DOS Cycle Time Varies (2-4 Months) Be Smart; Apply Early!

14 Authorizations All Authorizations are Subject to Limitations and Provisos
Technical Assistance Agreement (TAA) Similar to a contract; authorizes the performance of defense services or the disclosure of technical data to a foreign person Manufacturing License Agreement (MLA) Similar to a contract; grants a foreign person the authorization to manufacture defense articles abroad Licenses Permit the export or temporary import of a specific defense article or technical data

15 Authorizations All Authorizations are Subject to Limitations and Provisos
ITAR exemptions Certain pre-defined conditions which allow relief from obtaining an export license or other written approval from the DDTC to export defense articles or defense services Applicable on a case-by-case basis Each use requires meeting a unique set of specific criteria

16 Authorization Considerations
All exports to foreign persons must be authorized Third-country • dual nationals Subcontractors • sub-licensees All authorizations are country, product, and purpose specific There is no blank check Limitations and provisos are cumulative They do not go away without an official request for relief

17 Authorization Considerations
Prior approval / notification depends on many variables All classified authorization is always transferred government to government and is limited to specific information There is no overall classification for authorization Subcontractor vs. sub-licensee – See next slide

18 Authorization Considerations In-Country Sub-Contractors vs
Authorization Considerations In-Country Sub-Contractors vs. In-Country Sub-Licensees Sub-Licensee Sub-licensing arrangements occur when the foreign party of an MLA or TAA provides technical data to another foreign party in order to fulfill the requirements of the agreement

19 Authorization Considerations In-Country Sub-Contractors vs
Authorization Considerations In-Country Sub-Contractors vs. In-Country Sub-Licensees All sub-licensees Must be approved by the DoS Must execute a Non-Disclosure Agreement (NDA) which incorporates all the provisions of the basic agreement which refer to the USG and DoS Sub-licensing authorizes a foreign-to-foreign transfer LMC cannot provide information to a sub- licensee

20 Authorization Considerations In-Country Sub-Contractors vs
Authorization Considerations In-Country Sub-Contractors vs. In-Country Sub-Licensees Sub-Contractors ( Contracting by a prime contractor of specific support to a third party to aid in the execution of a program or project ITAR data is not transferred to an in-country subcontractor Do not need to be approved by the DoS

21 Violations It is Unlawful to…
Export, attempt to export, re-export, or provide Defense article / service, or tech data without prior authorization from DOS Transmit tech data electronically or hand- carry Commercial or dual-use item with an appropriate license or authorization from the DOC

22 Violations It is Unlawful to…
Violate any terms or conditions of licenses or approvals Make a false statement, misrepresent, omit material facts

23 Cost of Ignoring Regulations
Individuals may be Fined up to $1M Imprisoned up to 10 years Company may be Denied export privileges Fined $1M for EACH occurrence Denied the privilege of doing business with the USG Incur substantial negative publicity

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