Were YOU talking to ME?

YES! If you provide (or your company provides) defense services (ITAR §120.9) to foreign persons (ITAR §120.16) or foreign countries or you manufacture (or your company manufactures) defense articles (ITAR §120.6) that are sold or shared with foreign persons or foreign countries or if you create and disclose technical data (ITAR §120.10) to foreign persons or foreign countries…then I was talking to you. 

Let us break down the definition of an export as defined by § 120.17 of the International Traffic in Arms Regulations:

(1)   Sending or taking a defense article out of the United States in any manner, except by mere travel outside of the United States by a person whose personal knowledge includes technical data; or…

What is a defense article (ITAR §120.6)? Any item or technical data designated in the United States Munitions List (USML) (ITAR §121.1). The policy described in § 120.3 is applicable to designations of additional items. This term includes technical data recorded or stored in any physical form, models, mockups or other items that reveal technical data directly relating to items designated in the USML. Please note that basic marketing information, on function or purpose or general system descriptions, is not included.

For example, if you are an engineer, who supports a DoD program, and go on vacation to Mexico, that does not constitute an export UNLESS you go around sharing technical data with every foreign person you meet. In other words – keep technical data to yourself OR get an export license!

What is technical data (ITAR §120.10)? Information, other than software as defined in § 120.10(a)(4), which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation. Also included is Classified information relating to defense articles and defense services; Information covered by an invention secrecy order; and Software as defined in § 121.8(f) directly related to defense articles.

 

What is NOT technical data? Information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities or information in the public domain as defined in § 120.11. As stated above, basic marketing information relating to function, purpose, or general system descriptions, of defense articles, is excluded.

(2)   Transferring registration, control or ownership to a foreign person of any aircraft, vessel, or satellite covered by the U.S. Munitions List, whether in the United States or abroad; or…

Who is a foreign person (ITAR §120.16)? Any natural person who is not a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the U.S., as well as international organizations, foreign governments and any agency or subdivision of foreign governments (e.g., diplomatic missions).

Knowing your product, technology, and/or technical data is so important. Understand how the USML works and whether your products are covered under the USML…before you transfer control or ownership to a foreign person.

(3)   Disclosing (including oral or visual disclosure) or transferring in the United States any defense article to an embassy, any agency or subdivision of a foreign government (e.g., diplomatic missions); or

(4)   Disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad; or…

Exports can also occur in the U.S. For example, a foreign person visits a U. S. owned and operated company, receives a technical data briefing, a tour of the U.S. facility, and a ride in a simulator. Unless these items and events were previously approved for public release through the proper authority, these actions are an export.  

(5)   Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad.

What is a defense service (ITAR §120.9)? The furnishing of assistance (including training) to foreign persons, whether in the United States or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles; The furnishing to foreign persons of any technical data controlled under § 120.10, whether in the United States or abroad; or Military training of foreign units and forces, regular and irregular, including formal or informal instruction of foreign persons in the United States or abroad or by correspondence courses, technical, educational, or information publications and media of all kinds, training aid, orientation, training exercise, and military advice.

(6)   A launch vehicle or payload shall not, by reason of the launching of such vehicle, be considered an export for purposes of this subchapter. However, for certain limited purposes (see § 126.1 of this subchapter), the controls of this subchapter may apply to any sale, transfer or proposal to sell or transfer defense articles or defense services.

As you can see specific definitions and guidance for key ITAR terms exist and provide valuable information to ensure understanding. A valuable reference can be found at: http://pmddtc.state.gov/regulations_laws/itar_official.html

TSA, Inc. is here to help! Call us if you need assistance navigating through export controls!

Heidi France is a Lead International Trade Specialist at Technology Security Associates, Inc.  Email: heidi_france@theTSAteam.com
Contributor: Jackie Sudore-Flood, International Trade Specialist, Email: jackie_sudore-flood@theTSAteam.com

Export Control Reform is here - Now What?

When the Export Control Reform (ECR) initiative was first announced in 2009, the initial reaction was, “That’s never going to happen and we won’t have to learn about it”.  Well, flash forward four years and it has really happened and we do have to learn about it.   If you are in the business of exporting your product or technology, you should learn about it too.  In an effort to eliminate redundancy, streamline processes and update outdated Cold-War regulations for both Department of State and Commerce there are four goals of ECR which are known commonly as the “four singulars”: single License Authority (SLA), single list of controlled technologies, single export control IT system, and a single enforcement authority.  The singulars are being tackled in a three-Phased approach.  Phases I and II are aligning the regulations, definitions and policies before moving into Phase III which will finalize the singulars.  Each singular is at its own stage of implementation but all are in motion.  Status can be tracked at http://export.gov/ecr

New rules: The latest and by far the biggest change to date are the Final Rules that were published in a Federal Register notice on 16 April 2013 with an effective date of 15 October 2013.  These rules introduce policies and procedures for the licensing of items moving from the International Traffic in Arms Regulations (ITAR) U.S. Munitions List (USML) to the Export Administration Regulations (EAR) Commerce Control List (CCL) and provide much-needed beefed-up definitions for things such as “aircraft” and “specially designed”.  Specifically, the new rule re-writes USML Category VIII (Aircraft and Related Articles) and added a Category XIX (Gas Turbine Engines and Associated Equipment).  For those who have spent their careers studying and enforcing the ITAR; this is a game-changer.  The new regulations require a very detailed understanding of the new ITAR regulations as well as the EAR and the CCL and how to apply it to your product.  Of course there are seminars, webinars, publications and trade groups who have focused on providing training and transition assistance. 

Buyer beware: The key in applying the new regulations is to have a strong understanding of your product, its intended uses and a list of potential or confirmed foreign partners.  The biggest misconception is that if a product is moved to the CCL that it no longer will require a license.  The EAR has its own complex licensing requirements.  An item must be properly classified with an Export Control Classification Number (ECCN) and there are many License Exceptions to navigate before making the determination of a license requirement.  The most commonly-used Exception for the new CCL items will be the Strategic Trade Authorization (STA) exception which will allow a “no license required (NLR)” to 36 countries with other stipulations.    

The new rules do not get us to Phase III of the four singulars, there are still two licensing authorities and two lists of controlled technologies.  This means that for now there are still two Departments with two separate systems for submitting a license request.  Fortunately Department of Commerce does not require a registration fee to submit a license unlike the Department of State.  If assistance is needed in making a classification determination a Commodity Jurisdiction request can still also be filed. 

The biggest take-away is that going forward exporters must have a strong knowledge of both ITAR and EAR and how they apply to their products and in-house compliance programs in order to avoid unnecessary violations.  If you are a small exporter you know how hard it was just to keep up with the ITAR.  If a violation is discovered, exporters are strongly encouraged to file a voluntary disclosure either to Department of State or Commerce as appropriate. 

If you have any questions or need assistance navigating export compliance, contact us – TSA, Inc. can help!       

Heidi France is a Lead International Trade Specialist with Technology Security Associates, Inc.   Email Heidi at heidi_france@theTSAteam.com