1. PMT 313 Advanced Technology Security Control Workshop
SIA Back to Basics 2004
PMT 313 Advanced Technology Security Control Workshop
Terry L. Davis
Deputy Director of Licensing
Directorate of Defense Trade Controls
Intro. to ITAR & DDTC

2. Objectives Explain State Dept./DDTC Role in Defense Trade
Legal/Regulatory Requirements
Sensitize You to Interactions With Foreign Parties in Technology Transfer Situations
Explain Purpose of Controls and Country Policies
Who Are the Players? Roles?
President’s Export Control Reform Initiative

3. Directorate of Defense Trade Controls
Our Mission:
Advance National Security and Foreign Policy Through the Licensing of Direct Commercial Sales of Defense Articles and Enforcement of Defense Trade Export Control Laws, Regulations and Policies

4. Foreign Military Sales vs Direct Commercial Sales
State vs Commerce Control
Foreign Military Sales Program
Direct Commercial Sale
Hybrid Programs/“Pseudo FMS”
Exports Critical for Defense Industry
Greater Degree of Technology Transfer Than In the Past!

5. Key FMS Advantages
Total Package Approach
US Military Assistance In Developing Requirements
Standardization With US Forces
Use of DOD Acquisition Process
US Logistics/Product Improvements Access
USG Resolves Dispute With Company

6. Key DCS Advantages
Country Negotiates With US Company
Firm Fixed Pricing
Advantages for Nonstandard Items
May Be Faster/No FMS Surcharge
Advantages of Competition Improvements Access
Country Resolves Disputes With Company

7. DDTC Organization Ken Handleman Deputy Assistant Secretary
Defense Trade
Vacant
Managing Director
Directorate of Defense Trade
Office of Defense Trade
Controls Policy
(PM/DTCM)
Office of Defense Trade
Controls Licensing
(PM/DTCL)
Office of Defense Trade
Controls Compliance
(PM/DTCC)

8. Office of Defense Trade Controls Compliance (DTCC)
Office Director
Deputy Director
Compliance and Registration Division
Enforcement
Division
Research and Analysis Division
ICE Liaison

9. Office of Defense Trade Controls Licensing
Director, Office of Defense Trade
Controls Licensing
Aircraft and Toxicological
Agent Division
Military Vehicle and Naval
Vessel Division
Electronic Systems and
Helicopter Division
Space and Missile Division
Firearms/Lt Weapons Division
Emerging Technologies

10. Purpose of Controls
Foreign Policy: Bilateral/Multilateral Relationships/Objectives
National Security: Technological Sensitivity
Human Rights: Exports Impact on Human Rights Abuses
Regional Stability: Balance of Power In the Region
Proliferation: Sensitive Capabilities

11. Foreign Policy Objectives
Support Allies in Mutual Foreign Policy and National Security Goals
Increase Global Stability
Promote Interoperability With Allies
Keep Defense Technology Out of the Hands of Adversaries!

12. Agency Roles State Department Commerce Department
Homeland Security (Customs and Border Protection, Immigration Customs Enforcement)
Justice (ATF)
Department of Defense
DTSA, Armed Services, DSS

13. Elements of an Export Control System
Legal Foundation
Arms Export Control Act
Regulatory Guidelines
International Traffic In
Arms Regulations
Control List
U.S. Munitions List

14. Arms Export Control Act (AECA)
Controls Exports/Imports of Defense Articles & Services
Establishes Munitions List
Mandates Registration of Manufacturers and Exporters
Mandates Registration/Licensing of Brokers

15. Arms Export Control Act (AECA)
Broad Authority of the Directorate to Approve, Deny, Suspend, Revoke and Halt Shipments from U.S. Ports
Congressional Oversight – 36(c), 36(d) and 36(f)
End Use and Retransfer Assurances
Stringent Retransfer Provisions
38(f) Notification For Removal From USML

16. Arms Export Control Act (AECA)
Require Monitoring/Reporting Fees, Contributions, and Commissions
Confirm Bona Fides of End Use and Users
Establishes Fines and Penalties
Foundation of Regulatory Process

17. Registration – 122.1
Any Person Who Engages in the U.S. in the Business of Either Manufacturing or Exporting Defense Articles or Furnishing Defense Services is Required to Register With the Office of Defense Trade Controls
Manufacturers Who Do not Engage in Exporting Must Nevertheless Register

18. International Traffic In Arms Regulations
Implements AECA
Regulations for Export of USML Articles
Contains the U.S. Munitions List Under Part 121
Designates Defense Articles/Services Subject to Department of State Export Jurisdiction

19. ITAR Organization Definitions Registration Requirements
Licensing Requirements
Documentation, Support and Recordkeeping
Compliance Enforcement Provisions
Exemptions

20. U.S. Munitions List - 121
Designates Articles, Services, and Related Technical Data as Defense Articles and Defense Services Subject to Department of State Export Approval
Items preceded by an asterisk are designated as “Significant Military Equipment” (SME) and Warrant Special Export Controls
Categories Contain All Up End Items, Parts & Components & Technical Data and Services

21. Commodity Jurisdiction 120.4
Purpose
To Make a Determination As to Whether an Article/Technology is Considered to Be a Defense Article Covered By the USML
Otherwise Subject to Commerce Control
End Use/User Does Not Determine Jurisdiction!

22. Designating/Determining Defense Articles - 120.3
Policy criteria
Specifically Designed, Developed, Configured, Adapted, or Modified for Military Application
Has Significant Military or Intelligence Applicability Such That ITAR Control is Necessary
ECR Will Have Significant Impact

23. What Is an Export? Defense Article - 120.6 Defense Service - 120.9
Technical Data
Export –

24. Defense Article (120.6)
Any Item or Technical Data Designated Under Part 121 of the ITAR
Typically Considered As Hardware, e.g. All Up End Item or Parts and Components
Most Visible, Easily Recognized and Controlled

25. Technical Data (120.10)
Information Required for Design/Development/Manufacture/ Assembly/Repair/Operation of Defense Articles
Blueprints, Drawings, Photographs, Software
Classified/Subject to Secrecy Order
Not In Public Domain (120.11)

26. Defense Service (120.9)
Furnishing of Assistance To Foreign Persons In Design, Development, Engineering, Manufacture, Production, Testing, Assembly, etc of Defense Articles
Whether In US or Abroad
Most Significant Technology Transfer

27. Foreign vs U.S. Persons
&
Not Just a Citizen But Someone Who has Been Granted Permanent Resident Status In the US
Countries, Organizations and Individuals Outside the Territory of the Country In Question

28. Brokering Part 129
Any Person Who Acts as An Agent for Others Negotiating Arranging Sales of Defense Articles/Services In Exchange for Fee/Commission
Registration/Prior Approval/Notification
US Persons and Foreign Persons Subject to US Jurisdiction
ECR Revision

29. Licensing Venues Permanent Export (DSP-5)
Temporary Export/Import (DSP 73/61)
Technical Assistance/Manufacturing License Agreements: Instruments of Technology Transfer
Exemptions: Personal Use, Country, Hardware, Technical Data, Defense Services
Licensing Foreign Nationals

30. Compliance & Enforcement
License Support Documentation: From Foreign End User
All Parties to License Screened
Non Transfer and Use Assurances
Blue Lantern End Use Checks

31. Government Exemptions
No Catch All Exemption In Terms of “The Government Told Me to Do It”
Memorandum of Understanding/ Agreements Do NOT Constitute Transfer Authority Under the AECA for Companies
Contractual Clauses/Direction Should Not Mandate Exemption Use
Beware DOD Exemption Certification Which is Not Based on AECA/ITAR

32. Government Exemptions
126.4 By or For USG Agencies
Temporary Import and Export Under (a)
For Official Use or Pursuant to Foreign Assistance Cooperative Sales Project Authorized By Law
Export Affected By USG Agency or Bill Of Lading
126.4(c) For Exports To USG Overseas, e.g. Not Foreign. APO Not Exempt!

33. Other Government Exemptions
125.4(b)(1): Technical Data Pursuant to Official Written Direction of DOD
125.4(b)(3) Technical Data Pursuant to a Contract Between USG Agency and Exporter If It Provides For the Export of Technical Data
Not for Hardware or Services

34. Prohibited Destinations
Part 126.1
Policy of Denial for Specified Countries
UN Arms Embargoes
Specifies Countries Providing Support for International Terrorism

35. NSPD 56 Defense Trade Reform
National Security Presidential Directive (NSPD) 56 Defense Trade Reform January, 2008
60 Day Limit on Adjudication of Export License Applications
Carve Outs for Congressional, DOD Review, Sanctions, Compliance Issues
Fully Electronic Licensing

36. Defense Trade Treaties
Ratified and Implemented Under Exemption in the ITAR
Limited to UK/Australia
Extremely Detailed Compared to Existing Exemption for Canada Under 126.5

37. President’s Export Control Reform Initiative
Responds to Demands to Overhaul Cold War Era Export Control Process
Most Comprehensive Effort In Terms of a Bottom to Top Approach
Complaints From Allies/Companies Regarding the Timelines of US Export Controls and Competitiveness of US industry

38. Four Pillars of ECR One Single Comprehensive New Agency
Single Control List vs CCL and USML
One Computer System
One Export Enforcement Agency
Legal Changes and Congressional Approval Requiried

39. US Munitions List Rewrite
All Categories Being Rewritten Pending Completion of Single List
“Bright Lines” To Better Distinguish Sensitive Technologies
Significant Reduction in State Licenses as Items Moved to Commerce
Congressional Notification of Removal Required Under Section 38(f)
Congressional Notification Reform

40. US Munitions List Rewrite
All Categories Specifically Enumerated and Called Out - No “Catch All” Sections
Definition of Specifically Designed Revised Under
“Catch and Release” Rule
Order of Review Tool On Web Site
Category X/Transition Rules

41. ECR Trends High Return Without Action Rate
Elimination of “Catch All” Sections on USML, e.g. Components, Parts, Accessories
No Bulk Licenses/Distribution Agreements
Mass Movement of Items from USML to CCL
Aircraft In Particular
Decrease In DDTC Licenses Exceeds
DOC Increase (???)

42. USML vs CCL Fewer Exemptions No Strategic Trade Authorizations
Retransfer Provisions/”See Through Rule” More Stringent
Denial Authority Broader
License Support Documentation Extensive
Proscribed Destinations

43. ECR Implications
DOC Increased Role In National Security/Foreign Policy
More DOD Foreign Sales Program Involve Commerce Exports
Increase Degree of Confidence For Industry To Determine Item Is Not USML
Most of Diversion Risk Is With Items That
Have Transitioned to the CCL

44. SUMMARY
Export Control System a Fundamental Element in Protecting National Security and Ensuring Sensitive Technologies Are Not Compromised
Export Control System Subject to a Myriad of Contrasting Issues and Organizations
Challenge To Find the Appropriate Balance and Control