by Steven Pelak, Jason Prince and Gwen Green
Reflecting the thaw in United States–Sudan diplomatic relations, the U.S. Government announced on October 6, 2017 that it would permanently revoke certain economic sanctions against Sudan, effective October 12, 2017. Following the lifting of those sanctions imposed by the Office of Foreign Assets Control (“OFAC”) which were imposed by the President’s November 1997 Executive Order 13067, U.S. persons are no longer prohibited generally from engaging in transactions that were previously prohibited without an OFAC license under the Sudanese Sanctions Regulations (“SSR”). Sudan remains, however, designated on the U.S. Department of State’s State Sponsors of Terrorism List, along with Iran and Syria. The Trump Administration has not indicated whether the terrorism designation of Sudan will change in the near future.
That being the case, now is a good time to ask: How and why does the Department of State/Directorate of Defense Trade Controls (“DDTC”) (a) treat Sudan differently under the International Traffic in Arms Regulations (“ITAR”) than the other designated state sponsors of international terrorism, and (b) apparently ignore the statutory prohibition on the export of defense articles and defense services to state sponsors of international terrorism as required by Congress under the Arms Export Control Act (“AECA”)?
Unlike the treatment of Iran and Syria for which the ITAR notes a blanket policy of denial (22 C.F.R. 126.1(d)(1)), the ITAR specifies with regard to Sudan that “[i]t is the policy of the United States to deny licenses or other approvals for exports or imports of defense articles and defense services . . . except a license or other approval may be issued, on a case-by-case basis, for” certain broadly defined categories of defense articles and defense services. 22 C.F.R. § 126.1(v). On what authority has DDTC allowed for a case-by-case evaluation of license applications for the export of defense articles and defense services destined for Sudan, given that Congress has expressly prohibited such exports under the AECA, 22 U.S.C. § 2780? The answer to this question is unclear, and it appears that DDTC may have overstepped its statutory and constitutional authority in suggesting that it maintains the authority on a case-by-case basis to license the export of arms and defense services to Sudan. Continue reading
by Steven Pelak, Jason Prince and Gwen Green
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
by Steven Pelak and Gwen Green
On January 20, 2016, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) announced the elevation of Lisa Aguirre to the position of Managing Director. Although DDTC has used the title of Managing Director in the past, this new role has different responsibilities from those held by previous Managing Directors.
As Managing Director, Ms. Aguirre will serve as deputy to the Deputy Assistant Secretary (“DAS”), acting when the DAS is unavailable, and dividing the DDTC front office responsibilities with the DAS. Prior to this appointment, Ms. Aguirre most recently served as Director of the Office of Defense Trade Controls Management. DAS Brian Nilsson has made an excellent and outstanding choice in his selection of Ms. Aguirre.
In light of emerging threats to U.S. national security, it is particularly important to have a judicious decision maker with a strong background in arms export controls such as Ms. Aguirre in such a critical position at DDTC. Ms. Aguirre has deep experience and knowledge in the AECA, the ITAR, and the role various law enforcement agencies and the intelligence community play in export controls. She understands well the important role of DDTC’s enforcement function in safeguarding the superiority of U.S. military technology, particularly with regard to constant efforts by the Chinese, Russian, and Iranian governments to obtain U.S. military technology. With the promotion of Ms. Aguirre and the October 2015 appointment of a new Deputy Assistant Secretary, DDTC has turned a corner. Under such professional and informed leadership, DDTC undoubtedly will serve the People effectively, independently, and wisely.
by Gwen Green and Steven Pelak
On July 2, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) published a final rule temporarily modifying Category XI of the United States Munitions List
(“USML”). This final rule revises paragraph (b) of Category XI to clarify the extent of control over “certain intelligence analytics software”. Specifically, DDTC has attempted to prevent exporters from “read[ing] the revised control language [of Category XI(b)] to exclude” such software from the USML. DDTC maintains in its public notice that “intelligence analytics software . . . has been and remains controlled on the USML.”
A year ago on July 1, 2014, DDTC revised USML Category XI (effective December 30, 2014). DDTC or others in the U.S. Government apparently have found that exporters may read the revised Category XI(b) language to exclude certain intelligence analytics software which, in DDTC’s view, should be controlled on the USML. DDTC stated last week that it wished “in the interest of the security of the United States to temporarily revise” USML Category XI(b) pursuant to its emergency powers under Section 126.2 of the ITAR. DDTC asserted that its “clarification is achieved by reinserting the words ‘analyze and produce information from’ and by adding software to the description of items controlled” under Category XI(b). In full, Category XI(b) now reads:
“*(b) Electronic systems, equipment or software, not elsewhere enumerated in this sub-chapter, specially designed for intelligence purposes that collect, survey, monitor, or exploit, or analyze and produce information from, the electromagnetic spectrum (regardless of transmission medium), or for counteracting such activities.”
DDTC has put the revised rule into effect until December 29, 2015 “while a long term solution is developed.”
by Gwen Green
On June 17, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) and the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published proposed rules to transfer certain items from U.S. Munitions List (“USML”) Category XIV (toxicological agents, including chemical agents, biological agents, and associated equipment) and Category XVIII (directed energy weapons) to the less restrictive Commerce Control List (“CCL”). BIS and DDTC have stated the proposed revisions are intended to create a “bright line” regarding control of these items between the USML and CCL. The proposed rules are only a small part of the President’s broader Export Control Reform (“ECR”) effort to streamline the U.S. export control system.
The DDTC proposed rule would amend the International Traffic in Arms Regulations (“ITAR”) to revise USML Categories XIV and XVIII to more precisely describe the items still warranting control on the USML. Items no longer controlled in the revised USML Categories would be transferred to new “600 Series” Export Control Classification Numbers (“ECCNs”) on the CCL. Affected Category XIV items consist primarily of dissemination, detection and protection “equipment” and related items. Affected Category XVIII items consist primarily of tooling, production “equipment,” test and evaluation “equipment,” test models and related items. The DDTC proposed revisions are part of the Department of State’s retrospective plan under Executive Order 13563 completed on August 17, 2011. Continue reading
by Gwen Green
On May 26, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) published a proposed rule to amend the International Traffic in Arms Regulations (“ITAR”) to clarify requirements for the registration and licensing of U.S. persons providing defense services while employed by non-U.S. employers.
The proposed rule would require U.S. “natural persons”, who furnish defense services to and/or on behalf of their non-U.S. employer, whether in the United States or abroad, to register with the Directorate of Defense Trade Controls (“DDTC”), unless their non-U.S. employer is an ITAR-registered entity or is listed on the ITAR registration statement of a U.S. parent or other U.S.-affiliate entity. In the proposed rule, the term “natural person” is defined as an individual human being, as distinguished from a corporation, business association, partnership, society, trust, or any other entity, organization or group.
by Gwen Green
On May 5, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) and the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) concurrently published proposed rules to transfer certain less-sensitive items from Category XII of the U.S. Munitions List (“USML”), which currently controls fire control, range finder, optical and guidance and control equipment, to the Export Administration Regulations (“EAR”) Commerce Control List (“CCL”). The proposed rules are intended to create a “bright line” regarding control of these items between the USML and CCL.
The revised Category XII, with a few exceptions for “specially designed” parts, components, accessories, and attachments, would describe in more precise detail the specific parts, components, accessories, and attachments that still warrant control on the USML. Items formerly controlled under Category XII would largely be transferred to new and pre-existing “600 Series” Export Control Classification Numbers (“ECCNs”) on the CCL. New ECCNs 6A615, 6B615 and 6D615 would control military fire control, ranger finder, and optical equipment, and revised ECCN 7A611 and new ECCNs 7B611, 7D611 and 7E611 would include military optical and guidance equipment. The proposed rules would revise several existing ECCNs outside of the 600 Series, including 0A987, 2A984, and several 6Axxx and 7Axxx ECCNs, to add notes to the Related Controls paragraph or Items subparagraphs to reference corresponding Category XII control(s).