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Defense Export Regulations Amended to Reflect Revised Definitions

Monday, September 12, 2016
Sandler, Travis & Rosenberg Trade Report

The State Department has issued a final rule making further amendments to the International Traffic in Arms Regulations based on comments on a June 3 interim final rule that revised definitions and made other changes as part of the Export Control Reform Initiative. Effective Sept. 9, this final rule makes the following changes.

- revises the definition of “retransfer” in 22 CFR 120.51 to clarify that temporary transfers to third parties and releases to same-country foreign persons are within the scope of the definitions

- revises §126.16(a)(1)(iii) and §126.17(a)(1)(iii) to reflect the definitions of “reexport” and “retransfer” in the defense trade cooperation treaties with Australia and the United Kingdom, respectively, and to make appropriate revisions to the definitions of “reexport” in §120.19 and “retransfer” in §120.51 to reflect that these definitions do not apply in the treaty context

- revises §126.18(d)(1) to clarify that the provisions include all foreign persons who meet the definition of “regular employee” in §120.39

- revises §130.2 to ensure that the scope of the Part 130 requirements does not change due to the revised and new definitions

In addition, in response to public comments on the interim final rule, State has confirmed the following.

- Simply allowing a foreign person in the U.S. to possess a defense article does not require authorization under the ITAR unless technical data is revealed to that person through the possession, including subsequent inspection, of the defense article, or that person is taking the defense article into an embassy.

- The transfer of technical data to a foreign person is always a controlled activity that requires State Department authorization.

- Theoretical or potential access to technical data is not a release.

- Any release to a foreign person is a controlled event that requires authorization to all countries where that foreign person holds or has held citizenship or is a permanent resident and such authorization(s) must authorize all applicable destinations.

- In circumstances where birth does not confer citizenship in the country of birth it does not confer citizenship of permanent residency in that country for purposes of the ITAR.

- State will consider all circumstances surrounding any unauthorized release and will assess responsibility pursuant to its civil enforcement authority based on the relative culpability of all the parties to the transaction.

- To the extent that a dual or third-country national employee of an authorized end-user, foreign signatory, or consignee acts as an authorized representative of that company, the provision of technical data by an authorized U.S. party to the foreign company through the DN/TCN employee is a reexport from the foreign company to the DN/TCN employee that may be authorized under §126.18.

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