ITAR Free? ITAR light? Export Reform

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Export Reform Update,
Panel Remarks to the U.S. Department of Commerce Bureau of Industry and Security Update Conference, were given on July 24, 2013.

These remarks hi-lighted the export compliance communities concerns with present day policies.
In the remarks current polices were addressed as "onerous" and "confusing" reflecting consumer and customer expression and experience. To address the communities, a task force was convened to focus on four areas:
* Licensing policies and procedures
* Control lists
* Information technology
* Export enforcement


In an effort to clarify licensing policies and procedures and to work the 80k license requests per year, the task force focused on reform in three phases. The first phase is complete as the task force addressed the munitions lists, recalibrated and harmonized definitions and regulations, updated licensing procedures, created an Export Enforcement Coordination Center, and built a consolidated licensing database.

Now the task force is working on phase II which involves implementing work identified in Phase I. So far, the ITAR will reflect changes beginning in January 2014. The United States Munitions List (USML) will undoubtedly reflect new definitions and requirement to meet new technology advances. This will include moving items with less military application to the Department of Commerce's Commerce Control List (CCL). Both USML and the CCL will maintain equal export controls, but will be handled by different jurisdictions (Department of State for USML and Department of Commerce for CCL).

The intent in Phase II is to also neck down what qualifies as export controls. Instead of an across the board technology, the license application process with help the requester identify items that truly meet protection requirements by keeping certain technologies from foreign exploitation and releasing technologies that should remain in the public domain.

Phase III involves creating a single export control entity and consolidating enforcement.

While the federal government works on streamlining export requirements, the task of industry is to ensure compliance. While the legal representation works to understand new policy, the task of the workforce remains constant.

Regardless of USML or CCL jurisdiction, regardless of streamlined processes, the fundamentals must be addressed; to identify and protect proprietary information, intellectual property, government information, processes, services and anything else that meets the definition of a USML or CCL item.

Subject matter experts consisting of engineers, program employees, security and others should convene enterprise task forces to identify qualifying items. Once identified they should be documented in a program information guide for use to prevent export violations. The enterprise should also develop a specific policy to review sales, speeches, presentations, contractual language, web pages and any media that could possibly present export controlled items, information and services.

The government is working to provide the left and right limits of export in an increasingly global world. Though the limits may move, the fundamentals remain consistent; industry must identify and protect sensitive technologies and keep them out of the public domain.

Jeffrey W. Bennett, ISP is the owner of Red Bike Publishing Red Bike Publishing . He regularly consults, presents security training, and recommends export compliance and intellectual property protection countermeasures. He is an accomplished writer of non-fiction books, novels and periodicals. Jeff is an expert in security and has written many security books including: "Insider's Guide to Security Clearances" and "DoD Security Clearances and Contracts Guidebook", "ISP Certification-The Industrial Security Professional Exam Manual", and NISPOM/FSO Training".

Eliminate Export Violations

ITAR is here

Export compliance first and foremost helps companies and individuals successfully earn profits while playing by the rules. Our government encourages international business. The opportunities for expanding business and growing employee experience make international trade an attractive endeavor. The benefits are huge as long as enterprises know the rules and successfully transfer technology. The reality is that a license or technical assistance agreement may many times be possible and likely be granted when given the time and consideration required. 

Unfortunately, the routes professionals sometimes take to avoid licenses causes export violations and significant damage to our defense and economy. Successful export occurs where the whole team understands the mission and each business unit and employee role. The compliance officer trains the company and keeps the empowered official abreast on licensing and technical assistance issues. They also establish trigger mechanisms to ensure international travel, business, or employment opportunities come to their attention early in any endeavor involving technology transfer.

Some ideas for success international busines includes:

• Identifying qualifying technology for export control. 
• Marking export controlled documents and items
• Training employees to properly work with export controlled information
• Understanding that export occurs in briefings, writings, patents, instruction and not just through services or shipped products
• Establishing public release policy to prevent unauthorized export

For more practice questions, see our  ITAR @ www.redbikepublishing.com

Jeffrey W. Bennett, ISP is the owner of Red Bike Publishing Red Bike Publishing . Jeff is an accomplished writer of non-fiction books, novels and periodicals. He also owns Red bike Publishing. Published books include: "Get Rich in a Niche-Insider's Guide to Self Publishing in a Specialized Industry" and "Commitment-A Novel". Jeff is an expert in security and has written many security books including: "Insider's Guide to Security Clearances" and "DoD Security Clearances and Contracts Guidebook", "ISP Certification-The Industrial Security Professional Exam Manual", and NISPOM/FSO Training" See Red Bike Publishing for print copies of: Army Leadership, The Ranger Handbook, The Army Physical Readiness Manual, Drill and Ceremonies, The ITAR,and The NISPOM

Understanding Export Compliance by Technology, Not Intended Purpose

Several years ago I became aware of a situation where a defense contractor’s export compliance officer was approached by a business development manager about an opportunity. The business manager stated that the company was pursuing a contract with a foreign country to sell them an export regulated material. Though the material was clearly designed for military use, the business manager rationalized that the application was for civil and not military use. She rationalized that since the transaction would not be for defense application, the company should not need to seek an export license.

Though there is guidance for what and how to export, many export issues are unique and may not be fully understood, until the export compliance officer asks the right questions and gets the full story. It’s not the intent of the transaction, but the technology, product or item being transferred.

Recently a company was fined for violating an export law by shipping a controlled chemical. In another case, a company was charged with providing technical drawings to a foreign country. A few years ago a US citizen brought his laptop containing export controlled information to a foreign country. Though he had no intention of sharing the information, he still had no license to export it.

While on travel Chinese officials accessed his computer and downloaded technical information. The employee faced charges even though he did not willingly provide the data. He had brought the computer and technical information to China without approval.

Lack of understanding in the above cases did not provide a good defense. The lesson is that though the US Government values international business, US companies must understand export laws and operate within them.

In the above cases, the individuals involved could have prevented violations had they understood how to identify technical data under export controls. Such information is available in the International Traffic in Arms Regulation (ITAR). The ITAR contains the United States Munitions List (USML). The USML is a listing and explanation of export controlled defense items and services.

Also, those involved in the above offenses may not have understood the definition of export. A familiar export example is providing a product or service to a foreign entity for a fee. Usually the exporter understands that a license and other permissions are necessary.

However, export examples are more expansive. Just like in the example of the employee inadvertently providing information while on travel, exports do not have to involve a formal sale. Exports can be performed by shipping items, oral and written communications, messenger service and etc. It also includes bringing a technical item or service to another country, providing information on a paper, through multi-media presentations or an interview. Something as mundane as a non US person viewing controlled information on an unattended computer screen constitutes an export. In all situations, US Persons should protect and control the defense products and services according to the ITAR.

The ITAR states, “Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register...”. This wording does not leave much room for any other interpretation. All US persons or organizations involved with making Defense articles or providing defense services must register with the State Department’s Directorate of Defense Trade Controls (DDTC).

Additionally, the Defense Federal Acquisitions Regulation (DFAR) states, “It is the contractor’s responsibility to comply with all applicable laws and regulations regarding export-controlled items.” It is in the company’s best interest to understand export laws and how it applies to the organization’s mission. The responsibility to identify export controlled information and provide proper protection falls exclusively on the organization. The company should provide due diligence and know when and how to seek export approval.

Some defense contractors may not immediately understand these responsibilities. The primary resource for guidance concerning the export of defense goods and services is the ITAR. The ITAR walks a defense contractor through their responsibilities including:

Which defense contractors should register with the DDTC?

Which defense commodities require export licenses?

Which defense services require export licenses?

What are corporate and government export responsibilities?

What constitutes an export?

How does one apply for a license or technical assistance agreement?

Remember the earlier example of my business manager? Fortunately I was able to reference the controlled item in the ITAR while consulting our business development manager. I was able to demonstrate that the item had a dual use application. One use was civil and the other was military. In such situations, the State Department has jurisdiction. We were able to request and receive proper authorization to export the item.

Each export situations is unique. Always refer to the source (ITAR) and consider employing knowledgeable export compliance officers, attorney’s or consultants experienced in export of defense articles and services.

Jeffrey W. Bennett, ISP is the owner of Red Bike Publishing Red Bike Publishing . Jeff is an accomplished writer of non-fiction books, novels and periodicals. He also owns Red bike Publishing. Published books include: "Get Rich in a Niche-Insider's Guide to Self Publishing in a Specialized Industry" and "Commitment-A Novel". Jeff is an expert in security and has written many security books including: "Insider's Guide to Security Clearances" and "DoD Security Clearances and Contracts Guidebook", "ISP Certification-The Industrial Security Professional Exam Manual", and NISPOM/FSO Training" See Red Bike Publishing for print copies of: Army Leadership, The Ranger Handbook, The Army Physical Readiness Manual, Drill and Ceremonies, The ITAR,and The NISPOM

Do You Have the New ITAR?

Recently the DDTC published new unofficial ITAR with amendments. Over the years, changes have been minor. However, recent changes (July 2012, but posted in Oct) have added about 10 pages to the document. The minor changes include adding countries and new treaty considerations. However the most significant change is the 10 page supplement to part 126.

Here are some of the more major changes.

1.  Section 120.1 (c)

is completely rewritten from:

(c) Eligibility. Only U.S. persons (as defined in §120.15) and foreign governmental entities in the United States may be granted licenses or other approvals (other than retransfer approvals sought pursuant to this subchapter). Foreign persons (as defined in §120.16) other than governments are not eligible. U.S. persons who have been convicted of violating the criminal statutes enumerated in §120.27, who have been debarred pursuant to part 127 or 128 of this subchapter, who are the subject of an indictment involving the criminal statutes enumerated in §120.27, who are ineligible to contract with, or to receive a license or other form of authorization to import defense articles or defense services from any agency of the U.S. Government, who are ineligible to receive export licenses (or other forms of authorization to export) from any agency of the U.S. Government, who are subject to Department of State Suspension/Revocation under §126.7(a)(1) through (a)(7) of this subchapter, or who are ineligible under §127.7(c) of this subchapter are generally ineligible. Applications for licenses or other approvals will be considered only if the applicant has registered with the Directorate of Defense Trade Controls pursuant to part 122 of this subchapter. All applications and requests for approval must be signed by a U.S. person who has been empowered by the registrant to sign such documents.

to:

(c) Receipt of licenses and eligibility. (1) A U.S. person may receive a license or other approval pursuant to this subchapter. A foreign person may not receive such a license or other approval, except as follows:

(i) A foreign governmental entity in the United States may receive an export license or other export approval;

(ii) A foreign person may receive a reexport or retransfer approval; and

(iii) A foreign person may receive a prior approval for brokering activities.

Requests for a license or other approval, other than by a person referred to in paragraphs (c)(1)(i) and (c)(1)(ii) of this section, will be considered only if the applicant has registered with the Directorate of Defense Trade Controls pursuant to part 122 or 129 of this subchapter, as appropriate.

(2) Persons who have been convicted of violating the criminal statutes enumerated in §120.27 of this subchapter, who have been debarred pursuant to part 127 or 128 of this subchapter, who are subject to indictment or are otherwise charged (e.g., by information) for violating the criminal statutes enumerated in §120.27 of this subchapter, who are ineligible to contract with, or to receive a license or other form of authorization to import defense articles or defense services from any agency of the U.S. Government, who are ineligible to receive an export license or other approval from any other agency of the U.S. Government, or who are subject to a Department of State policy of denial, suspension or revocation under §126.7(a) of this subchapter, or to interim suspension under §127.8 of this subchapter, are generally ineligible to be involved in activities regulated under this subchapter.

2.  Part 120

Changes to Part 120 include new sections. Where the older version goes to 120.32, the new ITAR continues to 120.39 and identifies changes to NATO countries and new treaties.

3.  Section 123.26

Completely rewritten from:

§ 123.26 Recordkeeping requirement for exemptions.

When an exemption is claimed for the export of unclassified technical data, the exporter must maintain a record of each such export. The business record should include the following information: A description of the unclassified technical data, the name of the recipient end-user, the date and time of the export, and the method of transmission.

To:

§ 123.26 Recordkeeping for exemptions.

Any person engaging in any export, reexport, transfer, or retransfer of a defense article or defense service pursuant to an exemption must maintain records of each such export, reexport, transfer, or retransfer. The records shall, to the extent applicable to the transaction and consistent with the requirements of §123.22 of this subchapter, include the following information: A description of the defense article, including technical data, or defense service; the name and address of the end-user and other available contact information (e.g., telephone number and electronic mail address); the name of the natural person responsible for the transaction; the stated end-use of the defense article or defense service; the date of the transaction; the Electronic Export Information (EEI) Internal Transaction Number (ITN); and the method of transmission. The person using or acting in reliance upon the exemption shall also comply with any additional recordkeeping requirements enumerated in the text of the regulations concerning such exemption (e.g., requirements specific to the Defense Trade Cooperation Treaties in §126.16 and §126.17 of this subchapter).

[77 FR 16599, Mar. 21, 2012]

4.  Part 126

The most significant change is in Part 126. There is a 10 page table of Exclusions by USML Category and Country (Canada, Australia and United Kingdom. The table header follows:

Supplement No. 1 to Part 126*
USML Category	Exclusion	(CA) §126.5	[Reserved for (AS) §126.16]	(UK) §126.17

Since many changes from year to year are not too dramatic, there is usually no need to get a new ITAR. However, the 2012 changes that occurred prior to fall are significant. If your copy of ITAR is not updated to reflect changes of July 12, you might need to update. Red Bike Publishing published a new ITAR updated in October 2012 available on Amazon.com. Do you have the latest ITAR?

Jeffrey W. Bennett, ISP is the owner of Red Bike Publishing Red Bike Publishing . Jeff is an accomplished writer of non-fiction books, novels and periodicals. He also owns Red bike Publishing. Published books include: "Get Rich in a Niche-Insider's Guide to Self Publishing in a Specialized Industry" and "Commitment-A Novel". Jeff is an expert in security and has written many security books including: "Insider's Guide to Security Clearances" and "DoD Security Clearances and Contracts Guidebook", "ISP Certification-The Industrial Security Professional Exam Manual", and NISPOM/FSO Training" See Red Bike Publishing for print copies of: Army Leadership, The Ranger Handbook, The Army Physical Readiness Manual, Drill and Ceremonies, The ITAR,and The NISPOM