In July 2015, we published a blog post regarding the U.S. Department of State, Directorate of Defense Trade Controls’ (“DDTC”) temporary modification of Category XI of the United States Munitions List (“USML”). At the time, DDTC had recently modified paragraph (b) of Category XI on a temporary basis to clarify the extent of International Traffic in Arms Regulations (“ITAR”) control over “certain intelligence analytics software.” In December 2015, DDTC published a final rule that continued the July 2015 temporary modification to August 30, 2017. On August 30, 2017, DDTC published another final rule announcing its determination to continue the matter for yet another year to August 30, 2018.
Although some may wish otherwise, this issue and other related complications will not ease with time. Various aspects of export control reform and deregulation instituted initially in 2013 have inserted subjective engineering intent as a controlling principle in determining whether certain parts, components, and software constitute a defense article, in particular, ITAR Section 120.41(b)(4). In short, the U.S. Government, by that provision and associated provisions in Section 120.41’s definition of “specially designed,” no longer always controls under the current version of the ITAR which parts, components, and software constitute “defense articles.” Continue reading