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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)

Regulatory Environment

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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

What is an ExportAccording to the ITAR, an Export is…

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Export occur in multiple ways◦Faxes/emails◦Collaborative environments◦Casual conversation◦Travel / trade shows◦Meetings / site tours◦Translation services

What is an ExportAccording to the ITAR, an Export is…

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U.S. Person vs. Foreign PersonForeign Persons also include Overseas Locations

U.S. Person Foreign Person

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)

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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

U.S. Controlled Technical Data

ITAR requires a record of ALL exports

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Software directly related to defense articles Classified information relating to defense

articles and defense services

ITAR requires a record of ALL exports

U.S. Controlled Technical Data

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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

Public DomainWhat is Not Technical Data

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Defense Article◦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

Defense Article / Service & SME

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Significant Military Equipment (SME)◦Special export controls◦Capacity for substantial military use and / or

capability

Defense Article / Service & SME

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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

Commercial items are CONTROLLED

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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

Commercial Items

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◦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

Commercial Items

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SSEALS Request Initiated

Export Prepares Package

Corporate Export Office Reviews

Staffed to DoS & Agencies

Approval from DOS

Application Process

Cycle Time Varies (2-4 Months)Be Smart; Apply Early!

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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

AuthorizationsAll Authorizations are Subject to Limitations and Provisos

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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

AuthorizationsAll Authorizations are Subject to Limitations and Provisos

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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

Authorization Considerations

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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

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Authorization Considerations

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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

Authorization ConsiderationsIn-Country Sub-Contractors vs. In-Country Sub-Licensees

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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

Authorization ConsiderationsIn-Country Sub-Contractors vs. In-Country Sub-Licensees

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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

Authorization ConsiderationsIn-Country Sub-Contractors vs. In-Country Sub-Licensees

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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

ViolationsIt is Unlawful to…

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◦Violate any terms or conditions of licenses or approvals

◦Make a false statement, misrepresent, omit material facts

ViolationsIt is Unlawful to…

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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

Cost of Ignoring Regulations