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Defense Export Debarments Rescinded

Monday, January 20, 2020
Sandler, Travis & Rosenberg Trade Report

The State Department has rescinded the statutory debarments of two companies and three individuals but is not reinstating their defense export privileges.

The Arms Export Control Act prohibits the issuance of export licenses or other approvals for the export of defense articles or services where the applicant, or any party to the export, has been convicted of violating the AECA and certain other U.S. criminal statutes. Under the International Traffic in Arms Regulations, any person convicted of violating or conspiring to violate the AECA is statutorily debarred, or prohibited from participating directly or indirectly in any activities subject to the ITAR.

Each of the five entities at issue were statutorily debarred after pleading guilty to violating the AECA, but State has now determined that they have each taken appropriate steps to address the causes of the violations and rescinded their debarments. As a result, all otherwise eligible persons may engage in exports of defense articles manufactured by these entities, incorporate such items into defense articles for export, or otherwise engage in transactions subject to the ITAR without providing prior written notification of these entities’ involvement.

However, State is not reinstating the export privileges of these entities pursuant to a March 2019 change in policy under which such reinstatement is no longer required prior to the rescission of a statutory debarment because the circumstances warranting debarment may be different than those warranting the revocation of export privileges.

As a result, State may not issue an export license directly to any of these entities except as may be determined on a case-by-case basis after interagency consultations, a thorough review of the circumstances surrounding the entity’s conviction, and a finding that appropriate steps have been taken to mitigate any law enforcement concerns.

For more information on this and other export-related issues, please contact Kristine Pirnia.

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