[Federal Register Volume 76, Number 225 (Tuesday, November 22, 2011)]
[Proposed Rules]
[Pages 72246-72268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29328]
[[Page 72245]]
Vol. 76
Tuesday,
No. 225
November 22, 2011
Part II
Department of State
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22 CFR Parts 120, 123, 124, et al.
Implementation of Defense Trade Cooperation Treaties; Proposed Rule
Federal Register / Vol. 76, No. 225 / Tuesday, November 22, 2011 /
Proposed Rules
[[Page 72246]]
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DEPARTMENT OF STATE
22 CFR Parts 120, 123, 124, 126, 127, and 129
[Public Notice 7683]
RIN 1400-AC95
Implementation of Defense Trade Cooperation Treaties
AGENCY: Department of State.
ACTION: Proposed rule.
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SUMMARY: The Department of State is proposing to amend the
International Traffic in Arms Regulations (ITAR) to implement the
Defense Trade Cooperation Treaty between the United States and
Australia and the Defense Trade Cooperation Treaty between the United
States and the United Kingdom, and identify via a supplement the
defense articles and defense services that may not be exported pursuant
to the Treaties. Additionally, the Department of State proposes to
amend the section pertaining to the Canadian exemption to reference the
new supplement, and, with regard to Congressional certification, the
Department of State proposes to add Israel to the list of countries and
entities that have a shorter certification time period and a higher
dollar value reporting threshold.
DATES: The Department of State will accept comments on this proposed
rule until December 22, 2011.
ADDRESSES: Interested parties may submit comments within 30 days of the
date of the publication by any of the following methods:
Email: [email protected] with the subject line,
Regulatory Change--Treaties.
Persons with access to the Internet may also view and
comment on this notice by searching for its RIN on the U.S. Government
regulations Web site at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Office of Defense Trade
Controls Policy, Department of State, Telephone (202) 663-2809; Fax
(202) 261-8199; or Email [email protected]. ATTN: Regulatory
Change--Treaties.
SUPPLEMENTARY INFORMATION:
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ITAR Part Proposed change
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Part 120.......................... Section 120.19 revised to clarify
meaning of reexport or retransfer;
new Sec. Sec. 120.33 and 120.34
added to provide definitions of the
Defense Trade Cooperation Treaties
between the United States and
Australia and the U.K.,
respectively; new Sec. Sec.
120.35 and 120.36 added to define
the implementing arrangements
pursuant to the Treaties between
the United States and Australia and
the United States and the U.K.,
respectively.
Part 123.......................... Clarifying edits made throughout
section and references to new
proposed Sec. Sec. 126.16 and
126.17 added; Israel added to Sec.
123.9(e).
Part 124.......................... Sec. 124.11 revised to add Israel
to the list of countries and
entities subject to the 15-day time
period regarding Congressional
certification.
Part 126.......................... Clarifying edits made throughout
section; Sec. 126.5(b) revised to
reference the new supplement to
part 126, consequently, Sec. Sec.
126.5(b)(1)-(21) are removed; Sec.
126.16 added to describe the
exemption pursuant to the Defense
Trade Cooperation Treaty between
the United States and Australia;
Sec. 126.17 added to describe the
exemption pursuant to the Defense
Trade Cooperation Treaty between
the United States and the United
Kingdom; Supplement No. 1 to part
126 added.
Part 127.......................... Clarifying edits made throughout
section; revised to make reference
to new proposed Sec. Sec. 126.16
and 126.17.
Part 129.......................... Sections 129.6(b)(2),
129.7(a)(1)(vii), and 129.7(a)(2)
revised to include Israel in the
listing of countries and entities.
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These proposed amendments are pursuant to the Security Cooperation Act
of 2010 (Pub. L. 111-266), with the inclusion of other proposed
changes. Title I of the Security Cooperation Act, the Defense Trade
Cooperation Treaties Implementation Act of 2010, implements the Defense
Trade Cooperation Treaty between the United States and Australia, done
at Sydney, Australia, on September 5, 2007; and the Defense Trade
Cooperation Treaty between the United States and the United Kingdom,
done at Washington, DC and London on June 21 and 26, 2007, respectively
(collectively referred to herein as the ``Treaties''). We propose a
supplement to part 126 that will identify those defense articles and
defense services exempt from the scope of the Treaties. These proposed
amendments would affect parts 120, 123, 126, and 127, with new sections
in part 126 describing the licensing exemptions pursuant to the
Treaties.
Title III of the Security Cooperation Act creates for Israel a
status in law similar to the North Atlantic Treaty Organization (NATO),
the member countries of NATO, Australia, Japan, New Zealand, and the
Republic of Korea concerning certification to the Congress. Pursuant to
the proposed change, we would require certification for transfers to
Israel prior to granting any license or other approval for transactions
of major defense equipment sold under a contract in the amount of
$25,000,000 or more (currently required for amounts of $14,000,000 or
more), or for defense articles and defense services sold under a
contract in the amount of $100,000,000 or more (currently required for
amounts of $50,000,000 or more), and provided the transfer does not
include any other countries. The change would also shorten from thirty
(30) to fifteen (15) calendar days the certification time period during
which approval may not be granted. This proposed amendment would affect
parts 123, 124, and 129.
Additionally, we are revising Sec. 126.5, describing the Canadian
exemption, to reference the proposed supplement to part 126. This
proposed amendment would affect part 126. Section by section
identification of the proposed changes follows.
We are revising the authority citation for part 120 to include
Public Law 111-266; section 120.1 to reference the Treaties as
authorities; and section 120.19 to clarify the meaning of reexport or
retransfer. In Sec. 120.28, we are correcting an outdated reference
(Shipper's Export Declaration) to refer to the Electronic Export
Information. We are proposing new Sec. Sec. 120.33 and 120.34 to
provide definitions of the Defense Trade Cooperation Treaties between
the United States and Australia and the U.K., respectively. Also, we
are proposing new Sec. Sec. 120.35 and 120.36 to define the
implementing arrangements pursuant to the Treaties between the United
States and Australia and the United States and the U.K., respectively.
The proposed change in Sec. 123.4 replaces the word ``export''
with the word ``exporter.'' In the last sentence in
[[Page 72247]]
Sec. 123.9(a), ``a person'' will replace ``exporters,'' and we are
adding ``destination'' as an item that must be determined prior to the
submission of an application or the claiming of an exemption. We are
adding a note following this section. We are revising section 123.9(b)
to expand the reference to documents, and to reference the new proposed
Sec. Sec. 126.16 and 126.17. We are adding clarifying language to
Sec. Sec. 123.9(c), (c)(1), and (c)(2); and adding the language of the
current (c)(4) to (c)(3). New language pertaining to new Sec. Sec.
126.16 and 126.17 will comprise a new (c)(4). We are removing and
reserving section 123.9(d). We are adding Israel to the list of
countries and entities in Sec. 123.9(e); citing the new Sec. Sec.
126.16 and 126.17 in Sec. 123.9(e)(1); and adding clarifying language
to Sec. Sec. 123.9(e)(3) and (e)(4). We are adding Israel to the list
of countries and entities in Sec. Sec. 123.15(a)(1), (a)(2), and (b).
We are adding Australia and the United Kingdom to Sec. 123.16(a), and
reference to the Electronic Export Information replaces reference to
the Shipper's Export Declaration in this section and in Sec.
123.16(b)(1)(iii). We are clarifying documents in Sec.
123.16(b)(2)(vi), and adding new Sec. Sec. 123.16(c) and (d)
referencing the new Sec. Sec. 126.16 and 126.17. Section 123.22(b)(2)
replaces references to the Shipper's Export Declaration with the
Electronic Export Information. We are revising the title and text for
Sec. 123.26.
We are revising the authority citation for part 124 to include
Public Law 111-266. We are revising section 124.11 to add Israel to the
list of countries and entities subject to the 15-day time period
regarding Congressional certification.
We are revising the authority citation for part 126 to include
Public Law 111-266, and revising section 126.1(e) for clarification. We
are adding a section (e)(1), to contain the current requirement found
in (e) to notify the Directorate of Defense Trade Controls of any
transactions that contravene the prohibitions of Sec. 126.1(a). We are
reserving section (e)(2). We are revising section 126.3 to change
``Director'' to ``Managing Director'' and ``Office'' to
``Directorate.'' We are replacing references to Shipper's Export
Declaration with Electronic Export Information in Sec. 126.4(d). We
are revising section 126.5(a) to change ``Port Director'' to ``Port
Directors.'' We are revising section 126.5(b) to reference the new
supplement to part 126; consequently, we are removing Sec. Sec.
126.5(b)(1)-(21). We are removing and reserving section 126.5(c)
(defense services not subject to exemption will be covered by the new
supplement to part 126). We are revising Section 126.5(d) to change
``re-transfer'' to ``retransfer,'' and revising Sec. 126.5(d)(2) Note
2 to reference the proposed new supplement to part 126. We are adding
the terms ``criminal complaint'' and ``other criminal charge'' to Sec.
126.7(a)(3), and adding clarifying language to Sec. 126.7(a)(7). We
are revising section 126.13(a) to include reference to Sec. 123.9;
revising Sec. 126.13(a)(1) to add the terms ``criminal complaint'' and
``other criminal charge''; and revising Sec. 126.13(a)(4) to include
reference to Sec. 123.9. We are proposing section 126.16 to describe
the exemption pursuant to the Defense Trade Cooperation Treaty between
the United States and Australia, and proposing Sec. 126.17 to describe
the exemption pursuant to the Defense Trade Cooperation Treaty between
the United States and the United Kingdom. We are proposing the addition
of Supplement No. 1 to part 126, and this provision will delineate
those items of the U.S. Munitions List that are outside the scope of
the exemptions established by the Treaties and the Canadian exemptions
at Sec. 126.5.
We are revising the authority citation for part 127 to include
Public Law 111-266. We are revising section 127.1 to make reference,
where appropriate, to new proposed Sec. Sec. 126.16 and 126.17, and we
are providing clarifying language, leading to the inclusion of a new
proposed Sec. 127.1(e). We are adding the words ``or attempt to use''
in Sec. 127.2(a); ``subchapter'' will replace ``section'' in Sec.
127.2(b); we are adding ``reexport'' and ``retransfer to Sec.
127.2(b)(1); adding ``Electronic Export Information filing'' to Sec.
127.2(b)(2); and proposing a new Sec. 127.2(b)(14). We are adding
clarifying language to Sec. 127.3(a); adding the words ``or by
exemption'' to Sec. 127.4(a); adding the words ``or claim of an
exemption'' to Sec. 127.4(c); and proposing new Sec. 127.4(d). We are
revising section 127.7(a) to remove the words ``for which a license or
approval is required by this subchapter.'' In Sec. 127.10(a), we are
modifying the word ``approval'' with addition of the word ``written.''
We are proposing new Sec. 127.12(b)(5). We are revising the structure
of Sec. 127.12(d), removing an unnecessary level, and expanding the
example list for ``shipping documents''.
We are revising sections 129.6(b)(2), 129.7(a)(1)(vii), and
129.7(a)(2) to include Israel in the listing of countries and entities.
Regulatory Analysis and Notices
Administrative Procedure Act
The Department of State is of the opinion that controlling the
import and export of defense services is a foreign affairs function of
the United States Government and that rules implementing this function
are exempt from Sec. 553 (Rulemaking) and Sec. 554 (Adjudications) of
the Administrative Procedure Act. Although the Department is of the
opinion that this proposed rule is exempt from the rulemaking
provisions of the APA, the Department is publishing this proposed rule
with a 30-day provision for public comment and without prejudice to its
determination that controlling the import and export of defense
services is a foreign affairs function.
Regulatory Flexibility Act
Since this proposed amendment is not subject to the notice-and-
comment procedures of 5 U.S.C. 553, it does not require analysis under
the Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This proposed amendment does not involve a mandate that will result
in the expenditure by State, local, and tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any
year and it will not significantly or uniquely affect small
governments. Therefore, no actions were deemed necessary under the
provisions of the Unfunded Mandates Reform Act of 1995.
Executive Order 13175
The Department of State has determined that this proposed amendment
will not have tribal implications, will not impose substantial direct
compliance costs on Indian tribal governments, and will not pre-empt
tribal law. Accordingly, the requirement of Executive Order 13175 does
not apply to this proposed amendment.
Small Business Regulatory Enforcement Fairness Act of 1996
This proposed amendment has been found not to be a major rule
within the meaning of the Small Business Regulatory Enforcement
Fairness Act of 1996.
Executive Orders 12372 and 13132
This proposed amendment will not have substantial direct effects on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various
[[Page 72248]]
levels of government. Therefore, in accordance with Executive Order
13132, it is determined that this proposed amendment does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this proposed amendment.
Executive Order 12866
The Department is of the opinion that restricting defense articles
exports is a foreign affairs function of the United States Government
and that rules governing the conduct of this function are exempt from
the requirements of Executive order 12866. However, the Department has
nevertheless reviewed this regulation to ensure its consistency with
the regulatory philosophy and principles set forth in that Executive
Order.
Executive Order 12988
The Department of State has reviewed this proposed amendment in
light of sections 3(a) and 3(b)(2) of Executive Order 12988 to
eliminate ambiguity, minimize litigation, establish clear legal
standards, and reduce burden.
Executive Order 13563
The Department of State has considered this rule in light of
Executive Order 13563, dated January 18, 2011, and affirms that this
regulation is consistent with the guidance therein.
Paperwork Reduction Act
This proposed amendment does not impose any new reporting or
recordkeeping requirements subject to the Paperwork Reduction Act, 44
U.S.C. Chapter 35.
List of Subjects
22 CFR Parts 120, 123, 124, and 126
Arms and Munitions, Exports.
22 CFR Part 127
Arms and Munitions, Crime, Exports, Penalties, Seizures and
Forfeitures.
22 CFR Part 129
Arms and Munitions, Exports, Brokering.
Accordingly, for the reasons set forth above, Title 22, Chapter I,
Subchapter M, parts 120, 123, 124, 126, 127, and 129 are proposed to be
amended as follows:
PART 120--PURPOSE AND DEFINITIONS
1. The authority citation for Part 120 is revised to read as
follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; E.O. 11958, 42 FR 4311;
E.O. 13284, 68 FR 4075; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a;
Pub. L. 105-261, 112 Stat. 1920; Pub. L. 111-266.
2. Section 120.1 is amended by revising paragraphs (a), (c), and
(d) to read as follows:
Sec. 120.1 General authorities and eligibility.
(a) Section 38 of the Arms Export Control Act (22 U.S.C. 2778), as
amended, authorizes the President to control the export and import of
defense articles and defense services. The statutory authority of the
President to promulgate regulations with respect to exports of defense
articles and defense services was delegated to the Secretary of State
by Executive Order 11958, as amended. This subchapter implements that
authority. Portions of this subchapter also implement the Defense Trade
Cooperation Treaty between the United States and Australia and the
Defense Trade Cooperation Treaty between the United States and the
United Kingdom. (Note, however, that the Treaties are not the source of
authority for the prohibitions in part 127, but instead are the source
of one limitation on the scope of such prohibitions.) By virtue of
delegations of authority by the Secretary of State, these regulations
are primarily administered by the Deputy Assistant Secretary of State
for Defense Trade and Regional Security and the Managing Director of
Defense Trade Controls, Bureau of Political-Military Affairs.
* * * * *
(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) 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 Sec. 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 Sec. 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 Sec.
126.7(a) of this subchapter, or to interim suspension under Sec. 127.8
of this subchapter, are generally ineligible to be involved in
activities regulated under this subchapter.
(d) The exemptions provided in this subchapter do not apply to
transactions in which the exporter, any party to the export (as defined
in Sec. 126.7(e) of this subchapter), any source or manufacturer,
broker or other participant in the brokering activities, is generally
ineligible as set forth above in paragraph (c) of this section, unless
prior written authorization has been granted by the Directorate of
Defense Trade Controls.
3. Section 120.19 is revised to read as follows:
Sec. 120.19 Reexport or retransfer.
Reexport or retransfer means the transfer of defense articles or
defense services to an end-use, end-user, or destination not previously
authorized by license, written approval, or exemption pursuant to this
subchapter.
4. Section 120.28 is amended by revising paragraph (b)(2) to read
as follows:
Sec. 120.28 Listing of forms referred to in this subchapter.
* * * * *
(b) * * *
(2) Electronic Export Information filed via the Automated Export
System.
* * * * *
5. Section 120.33 is added to read as follows:
Sec. 120.33 Defense Trade Cooperation Treaty between the United
States and Australia.
Defense Trade Cooperation Treaty between the United States and
Australia means the Treaty between the Government of the United States
of America and the Government of
[[Page 72249]]
Australia Concerning Defense Trade Cooperation, done at Sydney,
September 5, 2007. For additional information on making exports
pursuant to this treaty, see Sec. 126.16 of this subchapter.
6. Section 120.34 is added to read as follows:
Sec. 120.34 Defense Trade Cooperation Treaty between the United
States and the United Kingdom.
Defense Trade Cooperation Treaty between the United States and the
United Kingdom means the Treaty between the Government of the United
States of America and the Government of the United Kingdom of Great
Britain and Northern Ireland Concerning Defense Trade Cooperation, done
at Washington DC and London, June 21 and 26, 2007. For additional
information on making exports pursuant to this treaty, see Sec. 126.17
of this subchapter.
7. Section 120.35 is added to read as follows:
Sec. 120.35 Australia Implementing Arrangement.
Australia Implementing Arrangement means the Implementing
Arrangement Pursuant to the Treaty between the Government of the United
States of America and the Government of Australia Concerning Defense
Trade Cooperation, done at Washington, March 14, 2008, as it may be
amended.
8. Section 120.36 is added to read as follows:
Sec. 120.36 United Kingdom Implementing Arrangement.
United Kingdom Implementing Arrangement means the Implementing
Arrangement Pursuant to the Treaty between the Government of the United
States of America and the Government of the United Kingdom of Great
Britain and Northern Ireland Concerning Defense Trade Cooperation, done
at Washington DC, February 14, 2008, as it may be amended.
PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES
9. The authority citation for part 123 continues to read as
follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; E.O. 11958, 42 FR 4311; 3
CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-
261, 112 Stat. 1920; Sec 1205(a), Pub. L. 107-228.
10. Section 123.4 is amended by revising paragraph (d) introductory
text to read as follows:
Sec. 123.4 Temporary import license exemptions.
* * * * *
(d) Procedures. To the satisfaction of the Port Directors of U.S.
Customs and Border Protection, the importer and exporter must comply
with the following procedures:
* * * * *
11. Section 123.9 is amended by revising paragraphs (a), (b), (c),
(e), (e)(1), (e)(3), (e)(4), and removing and reserving paragraph (d),
to read as follows:
Sec. 123.9 Country of ultimate destination and approval of reexports
or retransfers.
(a) The country designated as the country of ultimate destination
on an application for an export license, or in an Electronic Export
Information filing where an exemption is claimed under this subchapter,
must be the country of ultimate end use. The written approval of the
Directorate of Defense Trade Controls must be obtained before
reselling, transferring, reexporting, retransferring, transshipping, or
disposing of a defense article to any end-user, end-use, or destination
other than as stated on the export license, or in the Electronic Export
Information filing in cases where an exemption is claimed under this
subchapter, except in accordance with the provisions of an exemption
under this subchapter that explicitly authorizes the resell, transfer,
reexport, retransfer, transshipment, or disposition of a defense
article without such approval. A person must determine the specific
end-user, end-use, and destination prior to submitting an application
to the Directorate of Defense Trade Controls or claiming an exemption
under this subchapter.
Note to paragraph (a): In making the aforementioned
determination, a person is expected to review all readily available
information, including information available to the public generally
as well as information available from other parties to the
transaction.
(b) The exporter shall incorporate the following statement as an
integral part of the bill of lading, airway bill, or other shipping
documents and the invoice whenever defense articles or defense services
are to be exported or transferred pursuant to a license, other written
approval, or an exemption under this subchapter, other than the
exemptions contained in Sec. 126.16 and Sec. 126.17 of this
subchapter (Note: for exports made pursuant to Sec. 126.16 or Sec.
126.17 of this subchapter, see Sec. 126.16(j)(5) or Sec.
126.17(j)(5)): ``These commodities are authorized by the U.S.
Government for export only to [country of ultimate destination] for use
by [end-user]. They may not be transferred, transshipped on a non-
continuous voyage, or otherwise be disposed of, to any other country or
end-user, either in their original form or after being incorporated
into other end-items, without the prior written approval of the U.S.
Department of State.''
(c) Any person requesting written approval from the Directorate of
Defense Trade Controls for the reexport, retransfer, other disposition,
or change in end use, end user, or destination of a defense article or
defense service initially exported or transferred pursuant to a license
or other written approval, or an exemption under this subchapter, must
submit all the documentation required for a permanent export license
(see Sec. 123.1 of this subchapter) and shall also submit the
following:
(1) The license number, written authorization, or exemption under
which the defense article or defense service was previously authorized
for export from the United States (Note: For exports under exemptions
at Sec. 126.16 or Sec. 126.17 of this subchapter, the original end-
use, program, project, or operation under which the item was exported
must be identified.);
(2) A precise description, quantity, and value of the defense
article or defense service;
(3) A description and identification of the new end-user, end-use,
and destination; and
(4) With regard to any request for such approval relating to a
defense article or defense service initially exported pursuant to an
exemption contained in Sec. 126.16 or Sec. 126.17 of this subchapter,
written request for the prior approval of the transaction from the
Directorate of Defense Trade Controls must be submitted:
(i) By the original U.S. exporter, provided a written request is
received from a member of the Australian Community, as identified in
Sec. 126.16 of this subchapter, or the United Kingdom Community, as
identified in Sec. 126.17 of this subchapter (where such a written
request includes a written certification from the member of the
Australian Community or the United Kingdom Community providing the
information set forth in this subsection); or
(ii) By a member of the Australian Community or the United Kingdom
Community, where such request provides the information set forth in
this section.
(d) [Reserved]
(e) Reexports or retransfers of U.S.-origin components incorporated
into a foreign defense article to NATO, NATO agencies, a government of
a NATO
[[Page 72250]]
country, or the governments of Australia, Israel, Japan, New Zealand,
or the Republic of Korea are authorized without the prior written
approval of the Directorate of Defense Trade Controls, provided:
(1) The U.S.-origin components were previously authorized for
export from the United States, either by a license, written
authorization, or an exemption other than those described in either
Sec. 126.16 or Sec. 126.17 of this subchapter;
* * * * *
(3) The person reexporting the defense article provides written
notification to the Directorate of Defense Trade Controls of the
retransfer not later than 30 days following the reexport. The
notification must state the articles being reexported and the recipient
government.
(4) The original license or other approval of the Directorate of
Defense Trade Controls did not include retransfer or reexport
restrictions prohibiting use of this exemption.
12. Section 123.15 is amended by revising paragraphs (a)(1),
(a)(2), and (b) to read as follows:
Sec. 123.15 Congressional certification pursuant to Section 36(c) of
the Arms Export Control Act.
(a) * * *
(1) A license for the export of major defense equipment sold under
a contract in the amount of $14,000,000 or more, or for defense
articles and defense services sold under a contract in the amount of
$50,000,000 or more, to any country that is not a member of the North
Atlantic Treaty Organization (NATO), or Australia, Israel, Japan, New
Zealand, or the Republic of Korea that does not authorize a new sales
territory; or
(2) A license for export to a country that is a member country of
the North Atlantic Treaty Organization (NATO), or Australia, Israel,
Japan, New Zealand, or the Republic of Korea, of major defense
equipment sold under a contract in the amount in the amount of
$25,000,000 or more, or for defense articles and defense services sold
under a contract in the amount of $100,000,000 or more, and provided
the transfer does not include any other countries; or
* * * * *
(b) Unless an emergency exists which requires the proposed export
in the national security interests of the United States, approval may
not be granted for any transaction until at least 15 calendar days have
elapsed after receipt by the Congress of the certification required by
22 U.S.C. 2776(c)(1) involving the North Atlantic Treaty Organization,
or Australia, Israel, Japan, New Zealand, or the Republic of Korea or
at least 30 calendar days have elapsed for any other country; in the
case of a license for an export of a commercial communications
satellite for launch from, and by nationals of, the Russian Federation,
Ukraine, or Kazakhstan, until at least 15 calendar days after the
Congress receives such certification.
* * * * *
13. Section 123.16 is amended by revising paragraphs (a)
introductory text, (b)(1)(iii), (b)(2)(vi), and adding paragraphs (c)
and (d), to read as follows:
Sec. 123.16 Exemptions of general applicability.
(a) The following exemptions apply to exports of unclassified
defense articles for which no approval is needed from the Directorate
of Defense Trade Controls. These exemptions do not apply to: Proscribed
destinations under Sec. 126.1 of this subchapter; exports for which
Congressional notification is required (see Sec. 123.15 of this
subchapter); MTCR articles; Significant Military Equipment (SME); and
may not be used by persons who are generally ineligible as described in
Sec. 120.1(c) of this subchapter. All shipments of defense articles,
including but not limited to those to and from Australia, Canada, and
the United Kingdom, require an Electronic Export Information (EEI)
filing or notification letter. If the export of a defense article is
exempt from licensing, the EEI filing must cite the exemption. Refer to
Sec. 123.22 of this subchapter for EEI filing and letter notification
requirements.
(b) * * *
(1) * * *
(iii) The exporter certifies in the EEI filing that the export is
exempt from the licensing requirements of this subchapter. This is done
by writing, ``22 CFR 123.16(b)(1) and the agreement or arrangement
(identify/state number) applicable''; and
* * * * *
(2) * * *
(vi) The exporter must certify on the invoice, the bill of lading,
air waybill, or shipping documents and in the EEI filing that the
export is exempt from the licensing requirements of this subchapter.
This is done by writing ``22 CFR 123.16(b)(2) applicable''.
* * * * *
(c) For exports to Australia pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia refer to
Sec. 126.16 of this subchapter.
(d) For exports to the United Kingdom pursuant to the Defense Trade
Cooperation Treaty between the United States and the United Kingdom
refer to Sec. 126.17 of this subchapter.
14. Section 123.22 is amended by revising paragraph (b)(2) to read
as follows:
Sec. 123.22 Filing, retention, and return of export licenses and
filing of export information.
* * * * *
(b) * * *
(2) Emergency shipments of hardware that cannot meet the pre-
departure filing requirements. U.S. Customs and Border Protection may
permit an emergency export of hardware by truck (e.g., departures to
Mexico or Canada) or air, by a U.S. registered person, when the
exporter is unable to comply with the Electronic Export Information
(EEI) filing timeline in paragraph (b)(1)(i) of this section. The
applicant, or an agent acting on the applicant's behalf, in addition to
providing the EEI using the AES, must provide documentation required by
the U.S. Customs and Border Protection and this subchapter. The
documentation provided to the U.S. Customs and Border Protection at the
port of exit must include the External Transaction Number (XTN) or
Internal Transaction Number (ITN) for the shipment and a copy of a
notification to the Directorate of Defense Trade Controls stating that
the shipment is urgent accompanied by an explanation for the urgency.
The original of the notification must be immediately provided to the
Directorate of Defense Trade Controls. The AES filing of the export
information when the export is by air must be at least two hours prior
to any departure from the United States; and, when a truck shipment, at
the time when the exporter provides the articles to the carrier or at
least one hour prior to departure from the United States, when the
permanent export of the hardware has been authorized for export:
* * * * *
15. Section 123.26 is revised to read as follows:
Sec. 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 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
[[Page 72251]]
responsible for the transaction; the stated end-use of the defense
article or defense service; the date and time 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.
* * * * *
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT AND OTHER DEFENSE
SERVICES
16. The authority citation for part 124 continues to read as
follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); E.O. 11958, 42 FR 4311; 3 CFR 1977 Comp.
p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-261.
17. Section 124.11 is amended by revising paragraph (b) to read as
follows:
Sec. 124.11 Congressional certification pursuant to Section 36(d) of
the Arms Export Control Act.
* * * * *
(b) Unless an emergency exists which requires the immediate
approval of the agreement in the national security interests of the
United States, approval may not be granted until at least 15 calendar
days have elapsed after receipt by the Congress of the certification
required by 22 U.S.C. 2776(d)(1) involving the North Atlantic Treaty
Organization, any member country of that Organization, or Australia,
Israel, Japan, New Zealand, or the Republic of Korea or at least 30
calendar days have elapsed for any other country. Approvals may not be
granted when the Congress has enacted a joint resolution prohibiting
the export.
* * * * *
PART 126--GENERAL POLICIES AND PROVISIONS
18. The authority citation for part 126 is revised to read as
follows:
Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 Stat.
744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); E.O. 11958, 42 FR
4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; 22 U.S.C. 287c; E.O.
12918, 59 FR 28205; 3 CFR, 1994 Comp. p. 899; Sec. 1225, Pub. L.
108-375; Sec. 7089, Pub. L. 111-117; Pub. L. 111-266.
19. Section 126.1 is amended by revising paragraph (e) to read as
follows:
Sec. 126.1 Prohibited exports, imports, and sales to or from certain
countries.
* * * * *
(e) Proposed sales. No sale, export, transfer, reexport, or
retransfer and no proposal to sell, export, transfer, reexport, or
retransfer any defense articles or defense services subject to this
subchapter may be made to any country referred to in this section
(including the embassies or consulates of such a country), or to any
person acting on its behalf, whether in the United States or abroad,
without first obtaining a license or written approval of the
Directorate of Defense Trade Controls. However, in accordance with
paragraph (a) of this section, it is the policy of the Department of
State to deny licenses and approvals in such cases.
(1) Duty to Notify: Any person who knows or has reason to know of
such a proposed or actual sale, export, transfer, reexport, or
retransfer of such articles, services, or data must immediately inform
the Directorate of Defense Trade Controls. Such notifications should be
submitted to the Office of Defense Trade Controls Compliance,
Directorate of Defense Trade Controls.
(2) [Reserved]
* * * * *
20. Section 126.3 is revised to read as follows:
Sec. 126.3 Exceptions.
In a case of exceptional or undue hardship, or when it is otherwise
in the interest of the United States Government, the Managing Director,
Directorate of Defense Trade Controls, may make an exception to the
provisions of this subchapter.
21. Section 126.4 is amended by revising paragraph (d) to read as
follows:
Sec. 126.4 Shipments by or for United States Government agencies.
* * * * *
(d) An Electronic Export Information (EEI) filing, required under
Sec. 123.22 of this subchapter, and a written statement by the
exporter certifying that these requirements have been met must be
presented at the time of export to the appropriate Port Directors of
U.S. Customs and Border Protection or Department of Defense transmittal
authority. A copy of the EEI filing and the written certification
statement shall be provided to the Directorate of Defense Trade
Controls immediately following the export.
22. Section 126.5 is amended by removing and reserving paragraph
(c) and revising paragraphs (a), (b), (d) introductory text, and Notes
1 and 2, to read as follows:
Sec. 126.5 Canadian exemptions.
(a) Temporary import of defense articles. Port Directors of U.S.
Customs and Border Protection and postmasters shall permit the
temporary import and return to Canada without a license of any
unclassified defense articles (see Sec. 120.6 of this subchapter) that
originate in Canada for temporary use in the United States and return
to Canada. All other temporary imports shall be in accordance with
Sec. Sec. 123.3 and 123.4 of this subchapter.
(b) Permanent and temporary export of defense articles. Except as
provided in Supplement No. 1 to part 126 of this subchapter and for
exports that transit third countries, Port Directors of U.S. Customs
and Border Protection and postmasters shall permit, when for end-use in
Canada by Canadian Federal or Provincial governmental authorities
acting in an official capacity or by a Canadian-registered person for
return to the United States, the permanent and temporary export to
Canada without a license of unclassified defense articles and defense
services identified on the U.S. Munitions List (22 CFR 121.1). The
exceptions noted above are subject to meeting the requirements of this
subchapter, to include 22 CFR 120.1(c) and (d), parts 122 and 123
(except insofar as exemption from licensing requirements is herein
authorized) and Sec. 126.1, and the requirement to obtain non-transfer
and use assurances for all significant military equipment. For purposes
of this section, ``Canadian-registered person'' is any Canadian
national (including Canadian business entities organized under the laws
of Canada), dual citizen of Canada and a third country other than a
country listed in Sec. 126.1, and permanent resident registered in
Canada in accordance with the Canadian Defense Production Act, and such
other Canadian Crown Corporations identified by the Department of State
in a list of such persons publicly available through the Internet Web
site of the Directorate of Defense Trade Controls and by other means.
(c) [Reserved]
(d) Reexports/retransfer. Reexport/retransfer in Canada to another
end user or end use or from Canada to another destination, except the
United States, must in all instances have the prior approval of the
Directorate of Defense Trade Controls. Unless otherwise exempt in this
subchapter, the original exporter is responsible, upon request from a
Canadian-registered person, for obtaining or providing reexport/
retransfer approval. In any instance when the U.S. exporter is no
longer available to the Canadian end user the
[[Page 72252]]
request for reexport/retransfer may be made directly to the Directorate
of Defense Trade Controls. All requests must include the information in
Sec. 123.9(c) of this subchapter. Reexport/retransfer approval is
acquired by:
* * * * *
Notes to Sec. 126.5: 1. In any instance when the exporter has
knowledge that the defense article exempt from licensing is being
exported for use other than by a qualified Canadian-registered
person or for export to another foreign destination, other than the
United States, in its original form or incorporated into another
item, an export license must be obtained prior to the transfer to
Canada.
2. Additional exemptions exist in other sections of this
subchapter that are applicable to Canada, for example Sec. Sec.
123.9, 125.4, and 124.2, that allow for the performance of defense
services related to training in basic operations and maintenance,
without a license, for certain defense articles lawfully exported,
including those identified in Supplement No. 1 to part 126 of this
subchapter.
23. Section 126.7 is amended by revising the section heading and
paragraphs (a)(3), (a)(7) and (e) introductory text to read as follows:
Sec. 126.7 Denial, revocation, suspension, or amendment of licenses
and other approvals.
(a) * * *
(3) An applicant is the subject of a criminal complaint, other
criminal charge (e.g., an information), or indictment for a violation
of any of the U.S. criminal statutes enumerated in Sec. 120.27 of this
subchapter; or
* * * * *
(7) An applicant has failed to include any of the information or
documentation expressly required to support a license application,
exemption, or other request for approval under this subchapter, or as
required in the instructions in the applicable Department of State form
or has failed to provide notice or information as required under this
subchapter; or
* * * * *
(e) Special definition. For purposes of this subchapter, the term
``Party to the Export'' means:
* * * * *
24. Section 126.13 is amended by revising paragraphs (a)
introductory text, (a)(1), and (a)(4) to read as follows:
Sec. 126.13 Required information.
(a) All applications for licenses (DSP-5, DSP-61, DSP-73, and DSP-
85), all requests for approval of agreements and amendments thereto
under part 124 of this subchapter, and all requests for other written
authorizations (including requests for retransfer or reexport pursuant
to Sec. 123.9 of this subchapter) must include a letter signed by a
responsible official empowered by the applicant and addressed to the
Directorate of Defense Trade Controls, stating whether:
(1) The applicant or the chief executive officer, president, vice-
presidents, other senior officers or officials (e.g., comptroller,
treasurer, general counsel) or any member of the board of directors is
the subject of a criminal complaint, other criminal charge (e.g., an
information), or indictment for or has been convicted of violating any
of the U.S. criminal statutes enumerated in Sec. 120.27 of this
subchapter since the effective date of the Arms Export Control Act,
Public Law 94-329, 90 Stat. 729 (June 30, 1976);
* * * * *
(4) The natural person signing the application, notification or
other request for approval (including the statement required by this
subsection) is a citizen or national of the United States, has been
lawfully admitted to the United States for permanent residence (and
maintains such lawful permanent residence status under the Immigration
and Nationality Act, as amended (8 U.S.C. 1101(a), section 101(a)20, 60
Stat. 163), or is an official of a foreign government entity in the
United States, or is a foreign person making a request pursuant to
Sec. 123.9 of this subchapter.
* * * * *
25. Section 126.16 is added to read as follows:
Sec. 126.16 Exemption pursuant to the Defense Trade Cooperation
Treaty between the United States and Australia.
(a) Scope of exemption and required conditions.
(1) Definitions.
(i) An export means, for purposes of this section only, the initial
movement of defense articles or defense services from the United States
Community to the Australian Community.
(ii) A transfer means, for purposes of this section only, the
movement of a defense article or defense service, previously exported,
by a member of the Australian Community within the Australian
Community, or between a member of the United States Community and a
member of the Australian Community.
(iii) Retransfer and reexport have the meaning provided in Sec.
120.19 of this subchapter.
(iv) Intermediate consignee means, for purposes of this section, an
entity or person who receives defense articles, including technical
data, but who does not have access to such defense articles, for the
sole purpose of effecting onward movement to members of the Approved
Community.
(2) Persons or entities exporting or transferring defense articles
or defense services are exempt from the otherwise applicable licensing
requirements if such persons or entities comply with the regulations
set forth in this section. Except as provided in Supplement No. 1 to
part 126 of this subchapter, Port Directors of U.S. Customs and Border
Protection and postmasters shall permit the permanent and temporary
export without a license to members of the Australian Community (see
paragraph (d) of this section regarding the identification of members
of the Australian Community) of defense articles and defense services
not listed in Supplement No. 1 to part 126, for the end-uses
specifically identified pursuant to paragraphs (e) and (f) of this
section. The purpose of this section is to specify the requirements to
export, transfer, reexport, retransfer, or otherwise dispose of a
defense article or defense service pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia.
(3) Export. In order for an exporter to export a defense article or
defense service pursuant to the Defense Trade Cooperation Treaty
between the United States and Australia, all of the following
conditions must be met:
(i) The exporter must be registered with the Directorate of Defense
Trade Controls and must be eligible, according to the requirements and
prohibitions of the Arms Export Control Act, this subchapter, and other
provisions of United States law, to obtain an export license (or other
forms of authorization to export) from any agency of the U.S.
Government without restriction (see paragraphs (b) and (c) of this
section for specific requirements);
(ii) The recipient of the export must be a member of the Australian
Community (see paragraph (d) of this section regarding the
identification of members of the Australian Community). Australian
entities and facilities that become ineligible for such membership will
be removed from the Australian Community;
(iii) Intermediate consignees involved in the export must be
eligible, according to the requirements and prohibitions of the Arms
Export Control Act, this subchapter, and other provisions of United
States law, to handle or receive a defense article or defense service
without restriction (see paragraph (k) of this section for specific
requirements);
(iv) The export must be for an end-use specified in the Defense
Trade
[[Page 72253]]
Cooperation Treaty between the United States and Australia and mutually
agreed to by the U.S. Government and the Government of Australia
pursuant to the Defense Trade Cooperation Treaty between the United
States and Australia and the Implementing Arrangement thereto (the
Australia Implementing Arrangement) (see paragraphs (e) and (f) of this
section regarding authorized end-uses);
(v) The defense article or defense service is not excluded from the
scope of the Defense Trade Cooperation Treaty between the United States
and Australia (see paragraph (g) of this section and Supplement No. 1
to part 126 of this subchapter for specific information on the scope of
items excluded from export under this exemption) and is marked or
identified, at a minimum, as ``Restricted USML'' (see paragraph (j) of
this section for specific requirements on marking exports);
(vi) All required documentation of such export is maintained by the
exporter and recipient and is available upon the request of the U.S.
Government (see paragraph (l) of this section for specific
requirements); and
(vii) The Department of State has provided advance notification to
the Congress, as required, in accordance with this section (see
paragraph (o) of this section for specific requirements).
(4) Transfers. In order for a member of the Australian Community to
transfer a defense article or defense service under the Defense Trade
Cooperation Treaty between the United States and Australia, all of the
following conditions must be met:
(i) The defense article or defense service must have been
previously exported in accordance with paragraph (a)(3) of this section
or transitioned from a license or other approval in accordance with
paragraph (i) Transitions of this section;
(ii) The transferor and transferee of the defense article or
defense service are members of the Australian Community (see paragraph
(d) of this section regarding the identification of members of the
Australian Community) or the United States Community (see paragraph (b)
for information on the United States Community/approved exporters);
(iii) The transfer is required for an end-use specified in the
Defense Trade Cooperation Treaty between the United States and
Australia and mutually agreed to by the United States and the
Government of Australia pursuant to the terms of the Defense Trade
Cooperation Treaty between the United States and Australia and the
Australia Implementing Arrangement (see paragraphs (e) and (f) of this
section regarding authorized end-uses);
(iv) The defense article or defense service is not identified in
paragraph (g) of this section and Supplement No. 1 to part 126 of this
subchapter as ineligible for export under this exemption, and is marked
or otherwise identified, at a minimum, as ``Restricted USML'' (see
paragraph (j) of this section for specific requirements on marking
exports);
(v) All required documentation of such transfer is maintained by
the transferor and transferee and is available upon the request of the
U.S. Government (see paragraph (l) of this section for specific
requirements); and
(vi) The Department of State has provided advance notification to
the Congress in accordance with this section (see paragraph (o) of this
section for specific requirements).
(5) This section does not apply to the export of defense articles
or defense services from the United States pursuant to the Foreign
Military Sales program.
(b) Authorized exporters. The following persons compose the United
States Community and may export defense articles and defense services
pursuant to the Defense Trade Cooperation Treaty between the United
States and Australia:
(1) Departments and agencies of the U.S. Government, including
their personnel, with, as appropriate, a security clearance and a need-
to-know; and
(2) Nongovernmental U.S. persons registered with the Directorate of
Defense Trade Controls and eligible, according to the requirements and
prohibitions of the Arms Export Control Act, this subchapter, and other
provisions of United States law, to obtain an export license (or other
forms of authorization to export) from any agency of the U.S.
Government without restriction, including their employees acting in
their official capacity with, as appropriate, a security clearance and
a need-to-know.
(c) An exporter that is otherwise an authorized exporter pursuant
to subsection (b) above may not export pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia if the
exporter's president, chief executive officer, any vice-president, any
other senior officer or official (e.g., comptroller, treasurer, general
counsel); any member of the board of directors of the exporter; any
party to the export; or any source or manufacturer is ineligible to
receive export licenses (or other forms of authorization to export)
from any agency of the U.S. Government.
(d) Australian Community. For purposes of the exemption provided by
this section, the Australian Community consists of the Australian
entities and facilities identified as members of the Approved Community
through the Directorate of Defense Trade Controls Web site at the time
of a transaction under this section; Australian entities and facilities
that become ineligible for such membership will be removed from the
Australian Community.
(e) Authorized End-uses. The following end-uses, subject to
subsection (f), are specified in the Defense Trade Cooperation Treaty
between the United States and Australia:
(1) United States and Australian combined military or counter-
terrorism operations;
(2) United States and Australian cooperative security and defense
research, development, production, and support programs;
(3) Mutually determined specific security and defense projects
where the Government of Australia is the end-user; or
(4) U.S. Government end-use.
(f) Procedures for identifying authorized end-uses pursuant to
paragraph (e) of this section:
(1) Operations, programs, and projects that can be publicly
identified will be posted on the Directorate of Defense Trade Controls'
Web site;
(2) Operations, programs, and projects that cannot be publicly
identified will be confirmed in written correspondence from the
Directorate of Defense Trade Controls; or
(3) U.S. Government end-use will be identified specifically in a
U.S. Government contract or solicitation as being eligible under the
Treaty.
(4) No other operations, programs, projects, or end-uses qualify
for this exemption.
(g) Items eligible under this section. With the exception of items
listed in Supplement No. 1 to part 126 of this subchapter, defense
articles and defense services may be exported under this section
subject to the following:
(1) An exporter authorized pursuant to paragraph (b)(2) of this
section may market a defense article to the Government of Australia if
that exporter has been licensed by the Directorate of Defense Trade
Controls to export (as defined by Sec. 120.17 of this subchapter) the
identical type of defense article to any foreign person.
(2) The export of any defense article specific to the existence of
(e.g., reveals the existence of or details of) anti-tamper measures
made at U.S. Government direction always requires
[[Page 72254]]
prior written approval from the Directorate of Defense Trade Controls.
(3) U.S.-origin classified defense articles or defense services may
be exported only pursuant to a written request, directive, or contract
from the U.S. Department of Defense that provides for the export of the
classified defense article(s) or defense service(s).
(4) Defense articles specific to developmental systems that have
not obtained written Milestone B approval from the Department of
Defense milestone approval authority are not eligible for export unless
such export is pursuant to a written solicitation or contract issued or
awarded by the Department of Defense for an end-use identified pursuant
to paragraphs (e)(1), (2), or (4) of this section.
(5) Defense articles excluded by paragraph (g) of this section or
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category
XI(a)(3) electronically scanned array radar) that are embedded in a
larger system that is eligible to ship under this section (e.g., a ship
or aircraft) must separately comply with any restrictions placed on
that embedded defense article under this subsection. The exporter must
obtain a license or other authorization from the Directorate of Defense
Trade Controls for the export of such embedded defense articles (for
example, USML Category XI(a)(3) electronically scanned array radar
systems that are exempt from this section that are incorporated in an
aircraft that is eligible to ship under the this section continue to
require separate authorization from the Directorate of Defense Trade
Controls for their export, transfer, reexport, or retransfer).
(6) No liability shall be incurred by or attributed to the U.S.
Government in connection with any possible infringement of privately
owned patent or proprietary rights, either domestic or foreign, by
reason of an export conducted pursuant to this section.
(7) Sales by exporters made through the U.S. Government shall not
include either charges for patent rights in which the U.S. Government
holds a royalty-free license, or charges for information which the U.S.
Government has a right to use and disclose to others, which is in the
public domain, or which the U.S. Government has acquired or is entitled
to acquire without restrictions upon its use and disclosure to others.
(h) Transfers, Retransfers, and Reexports.
(1) Any transfer of a defense article or defense service not
exempted in Supplement No. 1 to part 126 of this subchapter by a member
of the Australian Community (see paragraph (d) of this section for
specific information on the identification of the Community) to another
member of the Australian Community or the United States Community for
an end-use that is authorized by this exemption (see paragraphs (e) and
(f) of this section regarding authorized end-uses) is authorized under
this exemption.
(2) Any transfer or other provision of a defense article or defense
service for an end-use that is not authorized by the exemption provided
by this section is prohibited without a license or the prior written
approval of the Directorate of Defense Trade Controls (see paragraphs
(e) and (f) of this section regarding authorized end-uses).
(3) Any retransfer or reexport, or other provision of a defense
article or defense service by a member of the Australian Community to a
foreign person that is not a member of the Australian Community, or to
a U.S. person that is not a member of the United States Community, is
prohibited without a license or the prior written approval of the
Directorate of Defense Trade Controls (see paragraph (d) of this
section for specific information on the identification of the
Australian Community).
(4) Any change in the use of a defense article or defense service
previously exported, transferred, or obtained under this exemption by
any foreign person, including a member of the Australian Community, to
an end-use that is not authorized by this exemption is prohibited
without a license or other written approval of the Directorate of
Defense Trade Controls (see paragraphs (e) and (f) of this section
regarding authorized end-uses).
(5) Any retransfer, reexport, or change in end-use requiring such
approval of the U.S. Government shall be made in accordance with Sec.
123.9 of this subchapter.
(6) Defense articles excluded by paragraph (g) of this section or
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category
XI(a)(3) electronically scanned array radar) that are embedded in a
larger system that is eligible to ship under this section (e.g., a ship
or aircraft) must separately comply with any restrictions placed on
that embedded defense article unless otherwise specified. A license or
other authorization must be obtained from the Directorate of Defense
Trade Controls for the retransfer, reexport or change in end-use of any
such embedded defense article (for example, USML Category XI(a)(3)
electronically scanned radar systems that are exempt from this section
that are incorporated in an aircraft that is eligible to ship under the
this section continue to require separate authorization from the
Directorate of Defense Trade Controls for their export, transfer,
reexport, or retransfer).
(7) A license or prior approval from the Directorate of Defense
Trade Controls is not required for a transfer, retransfer, or reexport
of an exported defense article or defense service under this section,
if:
(i) The transfer of defense articles or defense services is made by
a member of the United States Community to Australian Department of
Defense (ADOD) elements deployed outside the Territory of Australia and
engaged in an authorized end-use (see paragraphs (e) and (f) of this
section regarding authorized end-uses) using ADOD transmission channels
or the provisions of this section (Note: For purposes of paragraph
(h)(7)(i)-(iv), per Section 9(9) of the Australia Implementing
Arrangement, ``ADOD Transmission channels'' includes electronic
transmission of a defense article and transmission of a defense article
by an ADOD contracted carrier or freight forwarder that merely
transports or arranges transport for the defense article in this
instance.);
(ii) The transfer of defense articles or defense services is made
by a member of the United States Community to an Approved Community
member (either U.S. or Australian) that is operating in direct support
of Australian Department of Defense elements deployed outside the
Territory of Australia and engaged in an authorized end-use (see
paragraphs (e) and (f) of this section regarding authorized end-uses)
using ADOD transmission channels or the provisions of this section;
(iii) The reexport is made by a member of the Australian Community
to Australian Department of Defense elements deployed outside the
Territory of Australia engaged in an authorized end-use (see paragraphs
(e) and (f) of this section regarding authorized end-uses) using ADOD
transmission channels or the provisions of this section;
(iv) The retransfer or reexport is made by a member of the
Australian Community to an Approved Community member (either United
States or Australian) that is operating in direct support of Australian
Department of Defense elements deployed outside the Territory of
Australia engaged in an authorized end-use (see paragraphs (e) and (f)
of this section regarding authorized end-uses) using ADOD transmission
channels or the provisions of this section; or
[[Page 72255]]
(v) The defense article or defense service will be delivered to the
Australian Department of Defense for an authorized end-use (see
paragraphs (e) and (f) of this section regarding authorized end-uses);
the Australian Department of Defense may deploy the item as necessary
when conducting official business within or outside the Territory of
Australia. The item must remain under the effective control of the
Australian Department of Defense while deployed and access may not be
provided to unauthorized third parties.
(8) U.S. persons registered, or required to be registered, pursuant
to part 122 of this subchapter and Members of the Australian Community
must immediately notify the Directorate of Defense Trade Controls of
any actual or proposed sale, retransfer, or reexport of a defense
article or defense service on the U.S. Munitions List originally
exported under this exemption to any of the countries listed in Sec.
126.1 of this subchapter, any citizen of such countries, or any person
acting on behalf of such countries, whether within or outside the
United States. Any person knowing or having reason to know of such a
proposed or actual sale, reexport, or retransfer shall submit such
information in writing to the Office of Defense Trade Controls
Compliance, Directorate of Defense Trade Controls.
(i) Transitions.
(1) Any previous export of a defense article under a license or
other approval of the U.S. Department of State remains subject to the
conditions and limitations of the original license or authorization
unless the Directorate of Defense Trade Controls has approved in
writing a transition to this section.
(2) If a U.S. exporter desires to transition from an existing
license or other approval to the use of the provisions of this section,
the following is required:
(i) The U.S. exporter must submit a written request to the
Directorate of Defense Trade Controls, which identifies the defense
articles or defense services to be transitioned, the existing
license(s) or other authorizations under which the defense articles or
defense services were originally exported; and the Treaty-eligible end-
use for which the defense articles or defense services will be used.
Any license(s) filed with U.S. Customs and Border Protection should
remain on file until the exporter has received approval from the
Directorate of Defense Trade Controls to retire the license(s) and
transition to this section. When this approval is conveyed to U.S.
Customs and Border Protection by the Directorate of Defense Trade
Controls, the license(s) will be returned to the Directorate of Defense
Trade Controls by U.S. Customs and Border Protection in accordance with
existing procedures for the return of expired licenses in Sec.
123.22(c) of this subchapter.
(ii) Any license(s) not filed with U.S. Customs and Border
Protection must be returned to the Directorate of Defense Trade
Controls with a letter citing the Directorate of Defense Trade
Controls' approval to transition to this section as the reason for
returning the license(s).
(3) If a member of the Australian Community desires to transition
defense articles received under an existing license or other approval
to the processes established under the Treaty, the Australian Community
member must submit a written request to the Directorate of Defense
Trade Controls, either directly or through the original U.S. exporter,
which identifies the defense articles or defense services to be
transitioned, the existing license(s) or other authorizations under
which the defense articles or defense services were received, and the
Treaty-eligible end-use (see paragraphs (e) and (f) of this section
regarding authorized end-uses) for which the defense articles or
defense services will be used. The defense article or defense service
shall remain subject to the conditions and limitations of the existing
license or other approval until the Australian Community member has
received approval from the Directorate of Defense Trade Controls to
transition to this section.
(4) Authorized exporters identified in paragraph (b)(2) of this
section who have exported a defense article or defense service that has
subsequently been placed on the list of exempted items in Supplement
No. 1 to part 126 of this subchapter must review and adhere to the
requirements in the relevant Federal Register notice announcing such
removal. Once removed, the defense article or defense service will no
longer be subject to this section, such defense article or defense
service previously exported shall remain on the U.S. Munitions List and
be subject to the International Traffic in Arms Regulations unless the
applicable Federal Register notice states otherwise. Subsequent
reexport or retransfer must be made pursuant to Sec. 123.9 of this
subchapter.
(5) Any defense article or defense service transitioned from a
license or other approval to treatment under this section must be
marked in accordance with the requirements of paragraph (j) of this
section.
(j) Marking of Exports.
(1) All defense articles and defense services exported or
transitioned pursuant to the Defense Trade Cooperation Treaty between
the United States and Australia and this section shall be marked or
identified as follows:
(i) For classified defense articles and defense services the
standard marking or identification shall read: ``//CLASSIFICATION LEVEL
USML//REL AUS and USA Treaty Community//.'' For example, for defense
articles classified SECRET, the marking or identification shall be ``//
SECRET USML//REL AUS and USA Treaty Community//.''
(ii) Unclassified defense articles and defense services exported
under or transitioned pursuant to this section shall be AUS classified
as ``Restricted USML'' and, the standard marking or identification
shall read ``//RESTRICTED USML//REL AUS and USA Treaty Community//.''
(2) Where defense articles are returned to a member of the United
States Community identified in paragraph (b) of this section, any
defense articles AUS classified and marked or identified pursuant to
paragraph j(1)(ii) of this section as ``//RESTRICTED USML//REL AUS and
USA Treaty Community//'' shall no longer be AUS classified and such
marking or identification shall be removed; and
(3) The standard marking and identification requirements are as
follows:
(i) Defense articles (other than technical data) shall be
individually labeled with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section; or, where such labeling
is impracticable (e.g., propellants, chemicals), shall be accompanied
by documentation (such as contracts or invoices) clearly associating
the defense articles with the appropriate markings as detailed above;
(ii) Technical data (including data packages, technical papers,
manuals, presentations, specifications, guides and reports), regardless
of media or means of transmission (physical or electronic), shall be
individually labeled with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section; or, where such labeling
is impracticable (oral presentations), shall have a verbal notification
clearly associating the technical data with the appropriate markings as
detailed above; and
(4) Contracts and agreements for the provision of defense services
shall be identified with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section.
(5) The exporter shall incorporate the following statement as an
integral part
[[Page 72256]]
of all shipping documentation (airway bill, bill of lading, manifest,
packing documents, delivery verification, invoice, etc.) whenever
defense articles are to be exported:
``These commodities are authorized by the U.S. Government for
export only to Australia for use in approved projects, programs or
operations by members of the Australian Community. They may not be
retransferred or reexported or used outside of an approved project,
program or operation, either in their original form or after being
incorporated into other end-items, without the prior written approval
of the U.S. Department of State.''
(k) Intermediate Consignees.
(1) Unclassified exports under this section may only be handled by:
(i) U.S. intermediate consignees who are:
(A) Exporters registered with the Directorate of Defense Trade
Controls and eligible;
(B) Licensed customs brokers who are subject to background
investigation and have passed a comprehensive examination administered
by U.S. Customs and Border Protection; or
(C) Commercial air freight and surface shipment carriers, freight
forwarders, or other parties not exempt from registration under Sec.
129.3(b)(3) of this subchapter that are identified at the time of
export as being on the list of Authorized U.S. Intermediate Consignees,
which is available on the Directorate of Defense Trade Controls' Web
site.
(ii) Australian intermediate consignees who are:
(A) Members of the Australian Community; or
(B) Freight forwarders, customs brokers, commercial air freight and
surface shipment carriers, or other Australian parties that are
identified at the time of export as being on the list of Authorized
Australian Intermediate Consignees, which is available on the
Directorate of Defense Trade Controls' Web site.
(2) Classified exports must comply with the security requirements
of the National Industrial Security Program Operating Manual (DoD
5220.22-M and supplements or successors).
(l) Records.
(1) All exporters authorized pursuant to paragraph (b)(2) of this
section who export pursuant to the Defense Trade Cooperation Treaty
between the United States and Australia and this section shall maintain
detailed records of all exports, imports, and transfers made by that
exporter of defense articles or defense services subject to the Defense
Trade Cooperation Treaty between the United States and Australia and
the requirements of this section. Exporters shall also maintain
detailed records of any reexports and retransfers approved or otherwise
authorized by the Directorate of Defense Trade Controls of defense
articles or defense services subject to the Defense Trade Cooperation
Treaty between the United States and Australia and the requirements of
this section. These records shall be maintained for a minimum of five
years from the date of export, import, transfer, reexport, or
retransfer and shall be made available upon request to the Directorate
of Defense Trade Controls, U.S. Immigration and Customs Enforcement, or
U.S. Customs and Border Protection, or any other authorized U.S. law
enforcement officer. Records in an electronic format must be maintained
using a process or system capable of reproducing all records on paper.
Such records when displayed on a viewer, monitor, or reproduced on
paper, must exhibit a high degree of legibility and readability. (For
the purpose of this section, ``legible'' and ``legibility'' mean the
quality of a letter or numeral that enables the observer to identify it
positively and quickly to the exclusion of all other letters or
numerals. ``Readable'' and ``readability'' means the quality of a group
of letters or numerals being recognized as complete words or numbers.)
These records shall consist of the following:
(i) Port of entry/exit;
(ii) Date/time of export/import;
(iii) Method of export/import;
(iv) Commodity code and description of the commodity, including
technical data;
(v) Value of export;
(vi) Reference to this section and justification for export under
the Treaty;
(vii) End-user/end-use;
(viii) Identification of all U.S. and foreign parties to the
transaction;
(ix) How the export was marked;
(x) Classification of the export;
(xi) All written correspondence with the U.S. Government on the
export;
(xii) All information relating to political contributions, fees, or
commissions furnished or obtained, offered, solicited, or agreed upon
as outlined in paragraph (m) of this section;
(xiii) Purchase order or contract;
(xiv) Technical data actually exported;
(xv) The Internal Transaction Number for the Electronic Export
Information filing in the Automated Export System;
(xvi) All shipping documentation (airway bill, bill of lading,
manifest, packing documents, delivery verification, invoice, etc.); and
(xvii) Statement of Registration (Form DS-2032).
(2) Filing of export information. All exporters of defense articles
and defense services under the Defense Trade Cooperation Treaty between
the United States and Australia and the requirements of this section
must electronically file Electronic Export Information (EEI) using the
Automated Export System citing one of the four below referenced codes
in the appropriate field in the EEI for each shipment:
(i) 126.16(e)(1): used for exports in support of United States and
Australian combined military or counter-terrorism operations (the name
or an appropriate description of the operation shall be placed in the
appropriate field in the EEI, as well);
(ii) 126.16(e)(2): used for exports in support of United States and
Australian cooperative security and defense research, development,
production, and support programs (the name or an appropriate
description of the program shall be placed in the appropriate field in
the EEI, as well);
(iii) 126.16(e)(3): used for exports in support of mutually
determined specific security and defense projects where the Government
of Australia is the end-user (the name or an appropriate description of
the project shall be placed in the appropriate field in the EEI, as
well); or
(iv) 126.16(e)(4): used for exports that will have a U.S.
Government end-use (the U.S. Government contract number or solicitation
number (e.g., ``U.S. Government contract number XXXXX'') shall be
placed in the appropriate field in the EEI, as well).
Such exports must meet the required export documentation and filing
guidelines, including for defense services, of Sec. 123.22(a), (b)(1),
and (b)(2) of this subchapter.
(m) Fees and Commissions. All exporters authorized pursuant to
paragraph (b)(2) of this section shall, with respect to each export,
transfer, reexport, or retransfer, pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia and this
section, submit a statement to the Directorate of Defense Trade
Controls containing the information identified in Sec. 130.10 of this
subchapter relating to fees, commissions, and political contributions
on contracts or other instruments valued in an amount of $500,000 or
more.
(n) Violations and Enforcement.
(1) Exports, transfers, reexports, and retransfers that do not
comply with the conditions prescribed in this section will constitute
violations of the Arms Export Control Act and this subchapter,
[[Page 72257]]
and are subject to all relevant criminal, civil, and administrative
penalties (see Sec. 127.1 of this subchapter), and may also be subject
to other statutes or regulations.
(2) U.S. Immigration and Customs Enforcement and U.S. Customs and
Border Protection officers have the authority to investigate, detain,
or seize any export or attempted export of defense articles that does
not comply with this section or that is otherwise unlawful.
(3) The Directorate of Defense Trade Controls, U.S. Immigration and
Customs Enforcement, U.S. Customs and Border Protection, and other
authorized U.S. law enforcement officers may require the production of
documents and information relating to any actual or attempted export,
transfer, reexport, or retransfer pursuant to this section. Any foreign
person refusing to provide such records within a reasonable period of
time shall be suspended from the Australian Community and ineligible to
receive defense articles or defense services pursuant to the exemption
under this section or otherwise.
(o) Procedures for Legislative Notification.
(1) Exports pursuant to the Defense Trade Cooperation Treaty
between the United States and Australia and this section by any person
identified in paragraph (b)(2) of this section shall not take place
until 30 days after the Directorate of Defense Trade Controls has
acknowledged receipt of a Form DS-4048 (entitled, ``Projected Sales of
Major Weapons in Support of Section 25(a)(1) of the Arms Export Control
Act'') from the exporter notifying the Department of State if the
export involves one or more of the following:
(i) A contract or other instrument for the export of major defense
equipment in the amount of $25,000,000 or more, or for defense articles
and defense services in the amount of $100,000,000 or more;
(ii) A contract or other instrument for the export of firearms
controlled under Category I of the U.S. Munitions List of the
International Traffic in Arms Regulations in an amount of $1,000,000 or
more;
(iii) A contract or other instrument, regardless of value, for the
manufacturing abroad of any item of significant military equipment; or
(iv) An amended contract or other instrument that meets the
requirements of paragraphs (o)(1)(i)-(o)(1)(iii) of this section.
(2) The Form DS-4048 required in paragraph (o)(1) of this section
shall be accompanied by the following additional information:
(i) The information identified in Sec. 130.10 and Sec. 130.11 of
this subchapter;
(ii) A statement regarding whether any offset agreement is proposed
to be entered into in connection with the export and a description of
any such offset agreement;
(iii) A copy of the signed contract or other instrument; and
(iv) If the notification is for paragraph (o)(1)(ii) of this
section, a statement of what will happen to the weapons in their
inventory (for example, whether the current inventory will be sold,
reassigned to another service branch, destroyed, etc.).
(3) The Department of State will notify the Congress of exports
that meet the requirements of paragraph (o)(1) of this section.
26. Section 126.17 is added to read as follows:
Sec. 126.17 Exemption pursuant to the Defense Trade Cooperation
Treaty between the United States and the United Kingdom.
(a) Scope of exemption and required conditions.
(1) Definitions.
(i) An export means, for purposes of this section only, the initial
movement of defense articles or defense services from the United States
to the United Kingdom Community.
(ii) A transfer means, for purposes of this section only, the
movement of a defense article or defense service, previously exported,
by a member of the United Kingdom Community within the United Kingdom
Community, or between a member of the United States Community and a
member of the United Kingdom Community.
(iii) Retransfer and reexport have the meaning provided in Sec.
120.19 of this subchapter.
(iv) Intermediate consignee means, for purposes of this section, an
entity or person who receives defense articles, including technical
data, but who does not have access to such defense articles, for the
sole purpose of effecting onward movement to members of the Approved
Community.
(2) Persons or entities exporting or transferring defense articles
or defense services are exempt from the otherwise applicable licensing
requirements if such persons or entities comply with the regulations
set forth in this section. Except as provided in Supplement No. 1 to
part 126 of this subchapter, Port Directors of U.S. Customs and Border
Protection and postmasters shall permit the permanent and temporary
export without a license to members of the United Kingdom Community
(see paragraph (d) of this section regarding the identification of
members of the United Kingdom Community) of defense articles and
defense services not listed in Supplement No. 1 to part 126, for the
end-uses specifically identified pursuant to paragraphs (e) and (f)
below. The purpose of this section is to specify the requirements to
export, transfer, reexport, retransfer, or otherwise dispose of a
defense article or defense service pursuant to the Defense Trade
Cooperation Treaty between the United States and the United Kingdom.
(3) Export. In order for an exporter to export a defense article or
defense service pursuant to the Defense Trade Cooperation Treaty
between the United States and the United Kingdom, all of the following
conditions must be met:
(i) The exporter must be registered with the Directorate of Defense
Trade Controls and must be eligible, according to the requirements and
prohibitions of the Arms Export Control Act, this subchapter, and other
provisions of United States law, to obtain an export license (or other
forms of authorization to export) from any agency of the U.S.
Government without restriction (see paragraphs (b) and (c) of this
section for specific requirements);
(ii) The recipient of the export must be a member of the United
Kingdom Community (see paragraph (d) of this section regarding the
identification of members of the United Kingdom Community). United
Kingdom entities and facilities that become ineligible for such
membership will be removed from the United Kingdom Community;
(iii) Intermediate consignees involved in the export must be
eligible, according to the requirements and prohibitions of the Arms
Export Control Act, this subchapter, and other provisions of United
States law, to handle or receive a defense article or defense service
without restriction (see paragraph (k) of this section for specific
requirements);
(iv) The export must be for an end-use specified in the Defense
Trade Cooperation Treaty between the United States and the United
Kingdom and mutually agreed to by the U.S. Government and the
Government of the United Kingdom pursuant to the Defense Trade
Cooperation Treaty between the United States and the United Kingdom and
the Implementing Arrangement thereto (United Kingdom Implementing
Arrangement) (see paragraphs (e) and (f) of this section regarding
authorized end-uses);
(v) The defense article or defense service is not excluded from the
scope of the Defense Trade Cooperation Treaty between the United States
and the United Kingdom (see paragraph (g) of this section and
Supplement No. 1 to part 126 of this subchapter for specific
[[Page 72258]]
information on the scope of items excluded from export under this
exemption) and is marked or identified, at a minimum, as ``Restricted
USML'' (see paragraph (j) of this section for specific requirements on
marking exports);
(vi) All required documentation of such export is maintained by the
exporter and recipient and is available upon the request of the U.S.
Government (see paragraph (l) of this section for specific
requirements); and
(vii) The Department of State has provided advance notification to
the Congress, as required, in accordance with this section (see
paragraph (o) of this section for specific requirements).
(4) Transfers. In order for a member of the United Kingdom
Community to transfer a defense article or defense service under the
Defense Trade Cooperation Treaty between the United States and the
United Kingdom, all of the following conditions must be met:
(i) The defense article or defense service must have been
previously exported in accordance with paragraph (a)(3) of this section
or transitioned from a license or other approval in accordance with
paragraph (i) Transfers of this section;
(ii) The transferor and transferee of the defense article or
defense service are members of the United Kingdom Community (see
paragraph (d) of this section regarding the identification of members
of the United Kingdom Community) or the United States Community (see
paragraph (b) of this section for information on the United States
Community/approved exporters);
(iii) The transfer is required for an end-use specified in the
Defense Trade
Cooperation Treaty between the United States and the United Kingdom
and mutually agreed to by the United States and the Government of
United Kingdom pursuant to the terms of the Defense Trade Cooperation
Treaty between the United States and the United Kingdom and the United
Kingdom Implementing Arrangement (see paragraphs (e) and (f) of this
section regarding authorized end-uses);
(iv) The defense article or defense service is not identified in
paragraph (g) of this section and Supplement No. 1 to part 126 of this
subchapter as ineligible for export under this exemption, and is marked
or otherwise identified, at a minimum, as ``Restricted USML'' (see
paragraph (j) of this section for specific requirements on marking
exports);
(v) All required documentation of such transfer is maintained by
the transferor and transferee and is available upon the request of the
U.S. Government (see paragraph (l) of this section for specific
requirements); and
(vi) The Department of State has provided advance notification to
the Congress in accordance with this section (see paragraph (o) of this
section for specific requirements).
(5) This section does not apply to the export of defense articles
or defense services from the United States pursuant to the Foreign
Military Sales program.
(b) Authorized exporters. The following persons compose the United
States Community and may export defense articles and defense services
pursuant to the Defense Trade Cooperation Treaty between the United
States and the United Kingdom:
(1) Departments and agencies of the U.S. Government, including
their personnel, with, as appropriate, a security clearance and a need-
to-know; and
(2) Nongovernmental U.S. persons registered with the Directorate of
Defense Trade Controls and eligible, according to the requirements and
prohibitions of the Arms Export Control Act, this subchapter, and other
provisions of United States law, to obtain an export license (or other
forms of authorization to export) from any agency of the U.S.
Government without restriction, including their employees acting in
their official capacity with, as appropriate, a security clearance and
a need-to-know.
(c) An exporter that is otherwise an authorized exporter pursuant
to subsection (b) above may not export pursuant to the Defense Trade
Cooperation Treaty between the United States and the United Kingdom if
the exporter's president, chief executive officer, any vice-president,
any other senior officer or official (e.g., comptroller, treasurer,
general counsel); any member of the board of directors of the exporter;
any party to the export; or any source or manufacturer is ineligible to
receive export licenses (or other forms of authorization to export)
from any agency of the U.S. Government.
(d) United Kingdom Community. For purposes of the exemption
provided by this section, the United Kingdom Community consists of the
United Kingdom entities and facilities identified as members of the
Approved Community through the Directorate of Defense Trade Controls'
Web site at the time of a transaction under this section; non-
governmental United Kingdom entities and facilities that become
ineligible for such membership will be removed from the United Kingdom
Community.
(e) Authorized End-uses. The following end-uses, subject to
subsection (f), are specified in the Defense Trade Cooperation Treaty
between the United States and the United Kingdom:
(1) United States and United Kingdom combined military or counter-
terrorism operations;
(2) United States and United Kingdom cooperative security and
defense research, development, production, and support programs;
(3) Mutually determined specific security and defense projects
where the Government of the United Kingdom is the end-user; or
(4) U.S. Government end-use.
(f) Procedures for identifying authorized end-uses pursuant to
paragraph (e) of this section:
(1) Operations, programs, and projects that can be publicly
identified will be posted on the Directorate of Defense Trade Controls'
Web site;
(2) Operations, programs, and projects that cannot be publicly
identified will be confirmed in written correspondence from the
Directorate of Defense Trade Controls; or
(3) U.S. Government end-use will be identified specifically in a
U.S. Government contract or solicitation as being eligible under the
Treaty.
(4) No other operations, programs, projects, or end-uses qualify
for this exemption.
(g) Items eligible under this section. With the exception of items
listed in Supplement No. 1 to part 126 of this subchapter, defense
articles and defense services may be exported under this section
subject to the following:
(1) An exporter authorized pursuant to paragraph (b)(2) of this
section may market a defense article to the Government of the United
Kingdom if that exporter has been licensed by the Directorate of
Defense Trade Controls to export (as defined by Sec. 120.17 of this
subchapter) the identical type of defense article to any foreign
person.
(2) The export of any defense article specific to the existence of
(e.g., reveals the existence of or details of) anti-tamper measures
made at U.S. Government direction always requires prior written
approval from the Directorate of Defense Trade Controls.
(3) U.S.-origin classified defense articles or defense services may
be exported only pursuant to a written request, directive, or contract
from the U.S. Department of Defense that provides for the export of the
classified defense article(s) or defense service(s).
(4) Defense articles specific to developmental systems that have
not obtained written Milestone B approval from the Department of
Defense milestone approval authority are not
[[Page 72259]]
eligible for export unless such export is pursuant to a written
solicitation or contract issued or awarded by the Department of Defense
for an end-use identified pursuant to paragraphs (e)(1), (2), or (4) of
this section.
(5) Defense articles excluded by paragraph (g) of this section or
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI
(a)(3) electronically scanned array radar) that are embedded in a
larger system that is eligible to ship under this section (e.g., a ship
or aircraft) must separately comply with any restrictions placed on
that embedded defense article under this subsection. The exporter must
obtain a license or other authorization from the Directorate of Defense
Trade Controls for the export of such embedded defense articles (for
example, USML Category XI (a)(3) electronically scanned array radar
systems that are exempt from this section that are incorporated in an
aircraft that is eligible to ship under the this section continue to
require separate authorization from the Directorate of Defense Trade
Controls for their export, transfer, reexport, or retransfer).
(6) No liability shall be incurred by or attributed to the U.S.
Government in connection with any possible infringement of privately
owned patent or proprietary rights, either domestic or foreign, by
reason of an export conducted pursuant to this section.
(7) Sales by exporters made through the U.S. Government shall not
include either charges for patent rights in which the U.S. Government
holds a royalty-free license, or charges for information which the U.S.
Government has a right to use and disclose to others, which is in the
public domain, or which the U.S. Government has acquired or is entitled
to acquire without restrictions upon its use and disclosure to others.
(8) Defense articles and services specific to items that appear on
the European Union Dual Use List (as described in Annex 1 to EC Council
Regulation No. 428/2009) are not eligible for export under the Defense
Trade Cooperation Treaty between the United States and the United
Kingdom.
(h) Transfers, Retransfers, and Reexports.
(1) Any transfer of a defense article or defense service not
exempted in Supplement No.1 to part 126 of this subchapter by a member
of the United Kingdom Community (see paragraph (d) of this section for
specific information on the identification of the Community) to another
member of the United Kingdom Community or the United States Community
for an end-use that is authorized by this exemption (see paragraphs (e)
and (f) of this section regarding authorized end-uses) is authorized
under this exemption.
(2) Any transfer or other provision of a defense article or defense
service for an end-use that is not authorized by the exemption provided
by this section is prohibited without a license or the prior written
approval of the Directorate of Defense Trade Controls (see paragraphs
(e) and (f) of this section regarding authorized end-uses).
(3) Any retransfer or reexport, or other provision of a defense
article or defense service by a member of the United Kingdom Community
to a foreign person that is not a member of the United Kingdom
Community, or to a U.S. person that is not a member of the United
States Community, is prohibited without a license or the prior written
approval of the Directorate of Defense Trade Controls (see paragraph
(d) of this section for specific information on the identification of
the United Kingdom Community).
(4) Any change in the use of a defense article or defense service
previously exported, transferred, or obtained under this exemption by
any foreign person, including a member of the United Kingdom Community,
to an end-use that is not authorized by this exemption is prohibited
without a license or other written approval of the Directorate of
Defense Trade Controls (see paragraphs (e) and (f) of this section
regarding authorized end-uses).
(5) Any retransfer, reexport, or change in end-use requiring such
approval of the U.S. Government shall be made in accordance with Sec.
123.9 of this subchapter.
(6) Defense articles excluded by paragraph (g) of this section or
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI
(a)(3) electronically scanned array radar systems) that are embedded in
a larger system that is eligible to ship under this section (e.g., a
ship or aircraft) must separately comply with any restrictions placed
on that embedded defense article unless otherwise specified. A license
or other authorization must be obtained from the Directorate of Defense
Trade Controls for the retransfer, reexport or change in end-use of any
such embedded defense article (for example, USML Category XI(a)(3)
electronically scanned array radar systems that are exempt from this
section that are incorporated in an aircraft that is eligible to ship
under the this section continue to require separate authorization from
the Directorate of Defense Trade Controls for their export, transfer,
reexport, or retransfer).
(7) A license or prior approval from the Directorate of Defense
Trade Controls is not required for a transfer, retransfer, or reexport
of an exported defense article or defense service under this section,
if:
(i) The transfer of defense articles or defense services is made by
a member of the United States Community to United Kingdom Ministry of
Defense elements deployed outside the Territory of the United Kingdom
and engaged in an authorized end-use (see paragraphs (e) and (f) of
this section regarding authorized end-uses) using United Kingdom Armed
Forces transmission channels or the provisions of this section;
(ii) The transfer of defense articles or defense services is made
by a member of the United States Community to an Approved Community
member (either U.S. or U.K.) that is operating in direct support of
United Kingdom Ministry of Defense elements deployed outside the
Territory of the United Kingdom and engaged in an authorized end-use
(see paragraphs (e) and (f) of this section regarding authorized end-
uses) using United Kingdom Armed Forces transmission channels or the
provisions of this section;
(iii) The reexport is made by a member of the United Kingdom
Community to United Kingdom Ministry of Defense elements deployed
outside the Territory of the United Kingdom engaged in an authorized
end-use (see paragraphs (e) and (f) of this section regarding
authorized end-uses) using United Kingdom Armed Forces transmission
channels or the provisions of this section;
(iv) The retransfer or reexport is made by a member of the United
Kingdom Community to an Approved Community member (either U.S. or U.K.)
that is operating indirect support of United Kingdom Ministry of
Defense elements deployed outside the Territory of the United Kingdom
engaged in an authorized end-use (see paragraphs (e) and (f) of this
section regarding authorized end-uses) using United Kingdom Armed
Forces transmission channels or the provisions of this section; or
(v) The defense article or defense service will be delivered to the
United Kingdom Ministry of Defense for an authorized end-use (see
paragraphs (e) and (f) of this section regarding authorized end-uses);
the United Kingdom Ministry of Defense may deploy the item as necessary
when conducting official business within or outside the Territory of
the United Kingdom. The item must remain under the effective control of
the United
[[Page 72260]]
Kingdom Ministry of Defense while deployed and access may not be
provided to unauthorized third parties.
(8) U.S. persons registered, or required to be registered, pursuant
to part 122 of this subchapter and Members of the United Kingdom
Community must immediately notify the Directorate of Defense Trade
Controls of any actual or proposed sale, retransfer, or reexport of a
defense article or defense service on the U.S. Munitions List
originally exported under this exemption to any of the countries listed
in Sec. 126.1 of this subchapter, any citizen of such countries, or
any person acting on behalf of such countries, whether within or
outside the United States. Any person knowing or having reason to know
of such a proposed or actual sale, reexport, or retransfer shall submit
such information in writing to the Office of Defense Trade Controls
Compliance, Directorate of Defense Trade Controls.
(i) Transitions.
(1) Any previous export of a defense article under a license or
other approval of the U.S. Department of State remains subject to the
conditions and limitations of the original license or authorization
unless the Directorate of Defense Trade Controls has approved in
writing a transition to this section.
(2) If a U.S. exporter desires to transition from an existing
license or other approval to the use of the provisions of this section,
the following is required:
(i) The U.S. exporter must submit a written request to the
Directorate of Defense Trade Controls, which identifies the defense
articles or defense services to be transitioned, the existing
license(s) or other authorizations under which the defense articles or
defense services were originally exported; and the Treaty-eligible end-
use for which the defense articles or defense services will be used.
Any license(s) filed with U.S. Customs and Border Protection should
remain on file until the exporter has received approval from the
Directorate of Defense Trade Controls to retire the license(s) and
transition to this section. When this approval is conveyed to U.S.
Customs and Border Protection by the Directorate of Defense Trade
Controls, the license(s) will be returned to the Directorate of Defense
Trade Controls by U.S. Customs and Border Protection in accord with
existing procedures for the return of expired licenses in Sec.
123.22(c) of this subchapter.
(ii) Any license(s) not filed with U.S. Customs and Border
Protection must be returned to the Directorate of Defense Trade
Controls with a letter citing the Directorate of Defense Trade
Controls' approval to transition to this section as the reason for
returning the license(s).
(3) If a member of the United Kingdom Community desires to
transition defense articles received under an existing license or other
approval to the processes established under the Treaty, the United
Kingdom Community member must submit a written request to the
Directorate of Defense Trade Controls, either directly or through the
original U.S. exporter, which identifies the defense articles or
defense services to be transitioned, the existing license(s) or other
authorizations under which the defense articles or defense services
were received, and the Treaty-eligible end-use (see paragraphs (e) and
(f) of this section regarding authorized end-uses) for which the
defense articles or defense services will be used. The defense article
or defense service shall remain subject to the conditions and
limitations of the existing license or other approval until the United
Kingdom Community member has received approval from the Directorate of
Defense Trade Controls to transition to this section.
(4) Authorized exporters identified in paragraph (b)(2) of this
section who have exported a defense article or defense service that has
subsequently been placed on the list of exempted items in Supplement
No. 1 to part 126 of this subchapter must review and adhere to the
requirements in the relevant Federal Register notice announcing such
removal. Once removed, the defense article or defense service will no
longer be subject to this section, such defense article or defense
service previously exported shall remain on the U.S. Munitions List and
be subject to the International Traffic in Arms Regulations unless the
applicable Federal Register notice states otherwise. Subsequent
reexport or retransfer must be made pursuant to Sec. 123.9 of this
subchapter.
(5) Any defense article or defense service transitioned from a
license or other approval to treatment under this section must be
marked in accordance with the requirements of paragraph (j) of this
section.
(j) Marking of Exports.
(1) All defense articles and defense services exported or
transitioned pursuant to the Defense Trade Cooperation Treaty between
the United States and the United Kingdom and this section shall be
marked or identified as follows:
(i) For classified defense articles and defense services the
standard marking or identification shall read: ``//CLASSIFICATION LEVEL
USML//REL UK and USA Treaty Community//.'' For example, for defense
articles classified SECRET, the marking or identification shall be ``//
SECRET USML//REL UK and USA Treaty Community//.''
(ii) Unclassified defense articles and defense services exported
under or transitioned pursuant to this section shall be UK classified
as ``Restricted USML'' and, the standard marking or identification
shall read ``//RESTRICTED USML//REL UK and USA Treaty Community//.''
(2) Where defense articles are returned to a member of the United
States Community identified in paragraph (b) of this section, any
defense articles UK classified and marked or identified pursuant to
paragraph j(1)(ii) as ``//RESTRICTED USML//REL UK and USA Treaty
Community//'' no longer be UK classified and such marking or
identification shall be removed; and
(3) The standard marking and identification requirements are as
follows:
(i) Defense articles (other than technical data) shall be
individually labeled with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section; or, where such labeling
is impracticable (e.g., propellants, chemicals), shall be accompanied
by documentation (such as contracts or invoices) clearly associating
the defense articles with the appropriate markings as detailed above;
(ii) Technical data (including data packages, technical papers,
manuals, presentations, specifications, guides and reports), regardless
of media or means of transmission (physical or electronic), shall be
individually labeled with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section; or, where such labeling
is impracticable (oral presentations), shall have a verbal notification
clearly associating the technical data with the appropriate markings as
detailed above; and
(4) Contracts and agreements for the provision of defense services
shall be identified with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section.
(5) The exporter shall incorporate the following statement as an
integral part of all shipping documentation (airway bill, bill of
lading, manifest, packing documents, delivery verification, invoice,
etc.) whenever defense articles are to be exported:
``These commodities are authorized by the U.S. Government for
export only to United Kingdom for use in approved projects, programs or
operations by members of the United Kingdom
[[Page 72261]]
Community. They may not be retransferred or reexported or used outside
of an approved project, program, or operation, either in their original
form or after being incorporated into other end-items, without the
prior written approval of the U.S. Department of State.''
(k) Intermediate Consignees.
(1) Unclassified exports under this section may only be handled by:
(i) U.S. intermediate consignees who are:
(A) Exporters registered with the Directorate of Defense Trade
Controls and eligible;
(B) Licensed customs brokers who are subject to background
investigation and have passed a comprehensive examination administered
by U.S. Customs and Border Protection; or
(C) Commercial air freight and surface shipment carriers, freight
forwarders, or other parties not exempt from registration under Sec.
129.3(b)(3) of this subchapter that are identified at the time of
export as being on the list of Authorized U.S. Intermediate Consignees,
which is available on the Directorate of Defense Trade Controls' Web
site.
(ii) United Kingdom intermediate consignees who are:
(A) Members of the United Kingdom Community; or
(B) Freight forwarders, customs brokers, commercial air freight and
surface shipment carriers, or other United Kingdom parties that are
identified at the time of export as being on the list of Authorized
United Kingdom Intermediate Consignees, which is available on the
Directorate of Defense Trade Controls' Web site.
(2) Classified exports must comply with the security requirements
of the National Industrial Security Program Operating Manual (DoD
5220.22-M and supplements or successors).
(l) Records.
(1) All exporters authorized pursuant to paragraph (b)(2) of this
section who export pursuant to the Defense Trade Cooperation Treaty
between the United States and the United Kingdom and this section shall
maintain detailed records of all exports, imports, and transfers made
by that exporter of defense articles or defense services subject to the
Defense Trade Cooperation Treaty between the United States and the
United Kingdom and this section. Exporters shall also maintain detailed
records of any reexports and retransfers approved or otherwise
authorized by the Directorate of Defense Trade Controls of defense
articles or defense services subject to the Defense Trade Cooperation
Treaty between the United States and the United Kingdom and this
section. These records shall be maintained for a minimum of five years
from the date of export, import, transfer, reexport, or retransfer and
shall be made available upon request to the Directorate of Defense
Trade Controls, U.S. Immigration and Customs Enforcement, or U.S.
Customs and Border Protection, or any other authorized U.S. law
enforcement officer. Records in an electronic format must be maintained
using a process or system capable of reproducing all records on paper.
Such records when displayed on a viewer, monitor, or reproduced on
paper, must exhibit a high degree of legibility and readability. (For
the purpose of this section, ``legible'' and ``legibility'' mean the
quality of a letter or numeral that enables the observer to identify it
positively and quickly to the exclusion of all other letters or
numerals. ``Readable'' and ``readability'' means the quality of a group
of letters or numerals being recognized as complete words or numbers.)
These records shall consist of the following:
(i) Port of entry/exit;
(ii) Date/time of export/import;
(iii) Method of export/import;
(iv) Commodity code and description of the commodity, including
technical data;
(v) Value of export;
(vi) Reference to this section and justification for export under
the Treaty;
(vii) End-user/end-use;
(viii) Identification of all U.S. and foreign parties to the
transaction;
(ix) How the export was marked;
(x) Classification of the export;
(xi) All written correspondence with the U.S. Government on the
export;
(xii) All information relating to political contributions, fees, or
commissions furnished or obtained, offered, solicited, or agreed upon
as outlined in subsection (m) below;
(xiii) Purchase order or contract;
(xiv) Technical data actually exported;
(xv) The Internal Transaction Number for the Electronic Export
Information filing in the Automated Export System;
(xvi) All shipping documentation (airway bill, bill of lading,
manifest, packing documents, delivery verification, invoice, etc.); and
(xvii) Statement of Registration (Form DS-2032).
(2) Filing of export information. All exporters of defense articles
and defense services under the Defense Trade Cooperation Treaty between
the United States and the United Kingdom and this section must
electronically file Electronic Export Information (EEI) using the
Automated Export System citing one of the four below referenced codes
in the appropriate field in the EEI for each shipment:
(i) 126.16(e)(1): Used for exports in support of United States and
United Kingdom combined military or counter-terrorism operations (the
name or an appropriate description of the operation shall be placed in
the appropriate field in the EEI, as well);
(ii) 126.16(e)(2): Used for exports in support of United States and
United Kingdom cooperative security and defense research, development,
production, and support programs (the name or an appropriate
description of the program shall be placed in the appropriate field in
the EEI, as well);
(iii) 126.16(e)(3): Used for exports in support of mutually
determined specific security and defense projects where the Government
of the United Kingdom is the end-user (the name or an appropriate
description of the project shall be placed in the appropriate field in
the EEI, as well); or
(iv) 126.16(e)(4): Used for exports that will have a U.S.
Government end-use (the U.S. Government contract number or solicitation
number (e.g., ``U.S. Government contract number XXXXX'') shall be
placed in the appropriate field in the EEI, as well).
Such exports must meet the required export documentation and filing
guidelines, including for defense services, of Sec. 123.22(a), (b)(1),
and (b)(2) of this subchapter.
(m) Fees and Commissions. All exporters authorized pursuant to
paragraph (b)(2) of this section shall, with respect to each export,
transfer, reexport, or retransfer, pursuant to the Defense Trade
Cooperation Treaty between the United States and the United Kingdom and
this section, submit a statement to the Directorate of Defense Trade
Controls containing the information identified in Sec. 130.10 of this
subchapter relating to fees, commissions, and political contributions
on contracts or other instruments valued in an amount of $500,000 or
more.
(n) Violations and Enforcement.
(1) Exports, transfers, reexports, and retransfers that do not
comply with the conditions prescribed in this section will constitute
violations of the Arms Export Control Act and this subchapter, and are
subject to all relevant criminal, civil, and administrative penalties
(see Sec. 127.1 of this subchapter), and may also be subject to other
statutes or regulations.
(2) U.S. Immigration and Customs Enforcement and U.S. Customs and
Border Protection officers have the authority to investigate, detain,
or seize
[[Page 72262]]
any export or attempted export of defense articles that does not comply
with this section or that is otherwise unlawful.
(3) The Directorate of Defense Trade Controls, U.S. Immigration and
Customs Enforcement, U.S. Customs and Border Protection, and other
authorized U.S. law enforcement officers may require the production of
documents and information relating to any actual or attempted export,
transfer, reexport, or retransfer pursuant to this section. Any foreign
person refusing to provide such records within a reasonable period of
time shall be suspended from the United Kingdom Community and
ineligible to receive defense articles or defense services pursuant to
the exemption under this section or otherwise.
(o) Procedures for Legislative Notification.
(1) Exports pursuant to the Defense Trade Cooperation Treaty
between the United States and the United Kingdom and this section by
any person identified in paragraph (b)(2) of this section shall not
take place until 30 days after the Directorate of Defense Trade
Controls has acknowledged receipt of a Form DS-4048 (entitled,
``Projected Sales of Major Weapons in Support of Section 25(a)(1) of
the Arms Export Control Act'') from the exporter notifying the
Department of State if the export involves one or more of the
following:
(i) A contract or other instrument for the export of major defense
equipment in the amount of $25,000,000 or more, or for defense articles
and defense services in the amount of $100,000,000 or more;
(ii) A contract or other instrument for the export of firearms
controlled under Category I of the U.S. Munitions List of the
International Traffic in Arms Regulations in an amount of $1,000,000 or
more;
(iii) A contract or other instrument, regardless of value, for the
manufacturing abroad of any item of significant military equipment; or
(iv) An amended contract or other instrument that meets the
requirements of paragraphs (o)(1)(i)-(o)(1)(iii) of this section.
(2) The Form DS-4048 required in paragraph (o)(1) of this section
shall be accompanied by the following additional information:
(i) The information identified in Sec. 130.10 and Sec. 130.11 of
this subchapter;
(ii) A statement regarding whether any offset agreement is proposed
to be entered into in connection with the export and a description of
any such offset agreement;
(iii) A copy of the signed contract or other instrument; and
(iv) If the notification is for paragraph (o)(1)(ii) of this
section, a statement of what will happen to the weapons in their
inventory (for example, whether the current inventory will be sold,
reassigned to another service branch, destroyed, etc.).
(3) The Department of State will notify the Congress of exports
that meet the requirements of paragraph (o)(1) of this section.
27. Supplement No. 1 is added to Part 126 read as follows:
Supplement No. 1 *
----------------------------------------------------------------------------------------------------------------
(CA) Sec. (AS) Sec. (UK) Sec.
USML category Exclusion 126.5 126.16 126.17
----------------------------------------------------------------------------------------------------------------
I-XXI...................................... Classified defense articles and X X X
services. See Note 1.
I-XXI...................................... Defense articles listed in the X X X
Missile Technology Control
Regime (MTCR) Annex.
I-XXI...................................... U.S. origin defense articles .......... X X
and services used for
marketing purposes and not
previously licensed for export
in accordance with this
subchapter.
I-XXI...................................... Defense services for or X .......... ..........
technical data related to
defense articles identified in
this supplement as excluded
from the Canadian exemption.
I-XXI...................................... Any transaction involving the X .......... ..........
export of defense articles and
services for which
congressional notification is
required in accordance with
Sec. 123.15 and Sec.
124.11 of this subchapter.
I-XXI...................................... U.S. origin defense articles .......... X X
and services specific to
developmental systems that
have not obtained written
Milestone B approval from the
U.S. Department of Defense
milestone approval authority,
unless such export is pursuant
to a written solicitation or
contract issued or awarded by
the U.S. Department of Defense
for an end use identified in
subsections (e)(1), (2), or
(4) of Sec. 126.16 or Sec.
126.17 of this subchapter and
is consistent with other
exclusions of this supplement.
I-XXI...................................... Nuclear weapons strategic X .......... ..........
delivery systems and all
components, parts,
accessories, and attachments
specifically designed for such
systems and associated
equipment.
I-XXI...................................... Defense articles and services .......... X X
specific to the existence or
method of compliance with anti-
tamper measures made at U.S.
Government direction.
I-XXI...................................... Defense articles and services .......... X X
specific to reduced
observables or counter low
observables in any part of the
spectrum. See Note 2.
I-XXI...................................... Defense articles and services .......... X X
specific to sensor fusion
beyond that required for
display or identification
correlation. See Note 3.
I-XXI...................................... Defense articles and services .......... X X
specific to the automatic
target acquisition or
recognition and cueing of
multiple autonomous unmanned
systems.
I-XXI...................................... Nuclear power generating .......... .......... X
equipment or propulsion
equipment (e.g. nuclear
reactors), specifically
designed for military use and
components therefore,
specifically designed for
military use. See also Sec.
123.20 of this subchapter.
I-XXI...................................... Libraries (parametric technical .......... .......... X
databases) specially designed
for military use with
equipment controlled on the
USML.
I-XXI...................................... Defense services or technical X .......... ..........
data specific to applied
research as defined in Sec.
125.4(c)(3) of this
subchapter, design methodology
as defined in Sec.
125.4(c)(4) of this
subchapter, engineering
analysis as defined in Sec.
125.4(c)(5) of this
subchapter, or manufacturing
know-how as defined in Sec.
125.4(c)(6) of this subchapter.
[[Page 72263]]
I-XXI...................................... Defense services that are not X .......... ..........
based on a written arrangement
(between the U.S. exporter and
the Canadian recipient) that
includes a clause requiring
that all documentation created
from U.S. origin technical
data contain the statement
that ``This document contains
technical data, the use of
which is restricted by the
U.S. Arms Export Control Act.
This data has been provided in
accordance with, and is
subject to, the limitations
specified in Sec. 126.5 of
the International Traffic In
Arms Regulations (ITAR). By
accepting this data, the
consignee agrees to honor the
requirements of the ITAR''.
I.......................................... Defense articles and services X .......... ..........
related to firearms, close
assault weapons, and combat
shotguns.
II(k)...................................... Software source code related to .......... X X
Categories II(c), II(d), or
II(i). See Note 4.
II(k)...................................... Manufacturing know-how related X X X
to Category II(d). See Note 5.
III........................................ Defense articles and services X .......... ..........
related to ammunition for
firearms, close assault
weapons, and combat shotguns
listed in Category I.
III........................................ Defense articles and services .......... .......... X
specific to ammunition and
fuse setting devices for guns
and armament controlled in
Category II.
III(e)..................................... Manufacturing know-how related X X X
to Categories III(d)(1) or
III(d)(2) and their specially
designed components. See Note
5.
III(e)..................................... Software source code related to .......... X X
Categories III(d)(1) or
III(d)(2). See Note 4.
IV......................................... Defense articles and services X X X
specific to man-portable air
defense systems (MANPADS). See
Note 6.
IV......................................... Defense articles and services .......... .......... X
specific to rockets, designed
or modified for non-military
applications that do not have
a range of 300 km (i.e., not
controlled on the MTCR Annex).
IV......................................... Defense articles and services .......... X X
specific to torpedoes.
IV......................................... Defense articles and services .......... .......... X
specific to anti-personnel
landmines.
IV(i)...................................... Software source code related to .......... X X
Categories IV(a), IV(b),
IV(c), or IV(g). See Note 4.
IV(i)...................................... Manufacturing know-how related X X X
to Categories IV(a), IV(b),
IV(d), or IV(g) and their
specially designed components.
See Note 5.
V.......................................... The following energetic .......... .......... X
materials and related
substances:.
a. TATB
(triaminotrinitrobenzene) (CAS
3058-38-6)
b. Explosives controlled in
USML Category V(a)(32) or
V(a)(33)
c. Iron powder (CAS 7439-89-6)
with particle size of 3
micrometers or less produced
by reduction of iron oxide
with hydrogen
d. BOBBA-8 (bis(2-
methylaziridinyl)2-(2-
hydroxypropanoxy) propylamino
phosphine oxide), and other
MAPO derivatives
e. N-methyl-p-nitroaniline (CAS
100-15-2)
f. Trinitrophenylmethyl- .......... .......... ..........
nitramine (tetryl) (CAS 479-45-
8)
V(c)(7).................................... Pyrotechnics and pyrophorics .......... .......... X
specifically formulated for
military purposes to enhance
or control radiated energy in
any part of the IR spectrum.
V(d)(3).................................... Bis-2, 2-dinitropropylnitrate .......... .......... X
(BDNPN).
VI......................................... Defense Articles specific to .......... .......... X
equipment specially designed
or configured to be installed
in a vehicle for military
ground, marine, airborne or
space applications, capable of
operating while in motion and
of producing or maintaining
temperatures below 103 K (-170
[deg]C).
VI......................................... Defense Articles specific to .......... .......... X
superconductive electrical
equipment (rotating machinery
and transformers) specially
designed or configured to be
installed in a vehicle for
military ground, marine,
airborne, or space
applications and capable of
operating while in motion.
This, however, does not
include direct current hybrid
homopolar generators that have
single-pole normal metal
armatures which rotate in a
magnetic field produced by
superconducting windings,
provided those windings are
the only superconducting
component in the generator.
VI......................................... Defense articles and services .......... X X
specific to naval technology
and systems relating to
acoustic spectrum control and
awareness. See Note 10.
VI(a)...................................... Nuclear powered vessels........ X X X
VI(c)...................................... Defense articles and services .......... X X
specific to submarine combat
control systems.
VI(d)...................................... Harbor entrance detection .......... .......... X
devices.
VI(e)...................................... Defense articles and services X X X
specific to naval nuclear
propulsion equipment. See Note
7.
VI(g)...................................... Technical data and defense X X X
services for gas turbine
engine hot sections related to
Category VI(f). See Note 8.
VI(g)...................................... Software source code related to .......... X X
Categories VI(a) or VI(c). See
Note 4.
VII........................................ Defense articles specific to .......... .......... X
equipment specially designed
or configured to be installed
in a vehicle for military
ground, marine, airborne, or
space applications, capable of
operating while in motion and
of producing or maintaining
temperatures below 103 K (-170
[deg]C).
[[Page 72264]]
VII........................................ Defense articles specific to .......... .......... X
superconductive electrical
equipment (rotating machinery
and transformers) specially
designed or configured to be
installed in a vehicle for
military ground, marine,
airborne, or space
applications and capable of
operating while in motion.
This, however, does not
include direct current hybrid
homopolar generators that have
single-pole normal metal
armatures which rotate in a
magnetic field produced by
superconducting windings,
provided those windings are
the only superconducting
component in the generator.
VII........................................ Armored all wheel drive .......... .......... X
vehicles, other than vehicles
specifically designed or
modified for military use,
fitted with, or designed or
modified to be fitted with, a
plough or flail for the
purpose of land mine clearance.
VII(e)..................................... Amphibious vehicles............ .......... .......... X
VII(f)..................................... Technical data and defense X X X
services for gas turbine
engine hot sections. See Note
8.
VIII....................................... Defense articles specific to .......... .......... X
equipment specially designed
or configured to be installed
in a vehicle for military
ground, marine, airborne, or
space applications, capable of
operating while in motion and
of producing or maintaining
temperatures below 103 K (-170
[deg]C).
VIII....................................... Defense articles specific to .......... .......... X
superconductive electrical
equipment (rotating machinery
and transformers) specially
designed or configured to be
installed in a vehicle for
military ground, marine,
airborne, or space
applications and capable of
operating while in motion.
This, however, does not
include direct current hybrid
homopolar generators that have
single-pole normal metal
armatures which rotate in a
magnetic field produced by
superconducting windings,
provided those windings are
the only superconducting
component in the generator.
VIII(a).................................... All Category VIII(a) items..... X .......... ..........
VIII(b).................................... Defense articles and services .......... X X
specific to gas turbine engine
hot section components and
digital engine controls. See
Note 8.
VIII(f).................................... Developmental aircraft, engines X .......... ..........
and components identified in
Category VIII(f).
VIII(g).................................... Ground Effect Machines (GEMS).. .......... .......... X
VIII(i).................................... Technical data and defense X X X
services for gas turbine
engine hot sections related to
Category VIII(b). See Note 8.
VIII(i).................................... Manufacturing know-how related X X X
to Categories VIII(a),
VIII(b), or VIII(e) and their
specially designed components.
See Note 5.
VIII(i).................................... Software source code related to .......... X X
Categories VIII(a) or VIII(e).
See Note 4.
IX......................................... Training or simulation .......... .......... X
equipment for MANPADS. See
Note 6.
IX(e)...................................... Software source code related to .......... X X
Categories IX(a) or IX(b). See
Note 4.
IX(e)...................................... Software that is both .......... .......... X
specifically designed or
modified for military use and
specifically designed or
modified for modeling or
simulating military
operational scenarios.
X(e)....................................... Manufacturing know-how related X X X
to Categories X(a)(1) or
X(a)(2) and their specially
designed components. See Note
5.
XI(a)...................................... Defense articles and services .......... X X
specific to countermeasures
and counter-countermeasures
See Note 9.
XI......................................... Defense articles and services .......... X X
specific to naval technology
and systems relating to
acoustic spectrum control and
awareness. See Note 10.
XI(b) XI(c) XI(d).......................... Defense articles and services .......... X X
specific to communications
security (e.g., COMSEC and
TEMPEST).
XI(d)...................................... Software source code related to .......... X X
Category XI(a). See Note 4.
XI(d)...................................... Manufacturing know-how related X X X
to Categories XI(a)(3) or
XI(a)(4) and their specially
designed components. See Note
5.
XII........................................ Defense articles and services .......... X X
specific to countermeasures
and counter-countermeasures.
See Note 9.
XII(c)..................................... Defense articles and services X .......... ..........
specific to XII(c) articles,
except any 1st- and 2nd-
generation image
intensification tubes and 1st-
and 2nd-generation image
intensification night sighting
equipment. End items in XII(c)
and related technical data
limited to basic operations,
maintenance, and training
information as authorized
under the exemption in Sec.
125.4(b)(5) of this subchapter
may be exported directly to a
Canadian Government entity.
XII(c)..................................... Technical data or defense X X X
services for night vision
equipment beyond basic
operations, maintenance, and
training data. However, the AS
and UK Treaty exemptions apply
when such export is pursuant
to a written solicitation or
contract issued or awarded by
the U.S. Department of Defense
for an end use identified in
subsections (e)(1), (2), or
(4) of Sec. 126.16 or Sec.
126.17 of this subchapter and
is consistent with other
exclusions of this supplement.
XII(f)..................................... Manufacturing know-how related X X X
to Category XII(d) and their
specially designed components.
See Note 5.
XII(f)..................................... Software source code related to .......... X X
Categories XII(a), XII(b),
XII(c), or XII(d). See Note 4.
XIII(b).................................... Defense articles and services .......... X X
specific to Military
Information Security Assurance
Systems.
[[Page 72265]]
XIII(c).................................... Defense articles and services .......... .......... X
specific to armored plate
manufactured to comply with a
military standard or
specification or suitable for
military use. See Note 11.
XIII(d).................................... Carbon/carbon billets and .......... .......... X
performs which are reinforced
in three or more dimensional
planes, specifically designed,
developed, modified,
configured or adapted for
defense articles.
XIII(f).................................... Structural materials........... .......... .......... X
XIII(g).................................... Defense articles and services .......... .......... X
related to concealment and
deception equipment and
materials.
XIII(h).................................... Energy conversion devices other .......... .......... X
than fuel cells.
XIII(i).................................... Metal embrittling agents....... .......... .......... X
XIII(j).................................... Defense articles and services .......... X X
related to hardware associated
with the measurement or
modification of system
signatures for detection of
defense articles as described
in Note 2.
XIII(k).................................... Defense articles and services .......... X X
related to tooling and
equipment specifically
designed or modified for the
production of defense articles
identified in Category XIII(b).
XIII(l).................................... Software source code related to .......... X X
Category XIII(a). See Note 4.
XIV........................................ Defense articles and services .......... X X
related to toxicological
agents, including chemical
agents, biological agents, and
associated equipment.
XIV(a) XIV(b) XIV(d) XIV(e) XIV(f)......... Chemical agents listed in X .......... ..........
Category XIV(a), (d) and (e),
biological agents and
biologically derived
substances in Category XIV(b),
and equipment listed in
Category XIV(f) for
dissemination of the chemical
agents and biological agents
listed in Category XIV(a),
(b), (d), and (e).
XV(a)...................................... Defense articles and services X X X
specific to spacecraft/
satellites. However, the
Canadian exemption may be used
for commercial communications
satellites that have no other
type of payload.
XV(b)...................................... Defense articles and services .......... X X
specific to ground control
stations for spacecraft
telemetry, tracking, and
control.
XV(c)...................................... Defense articles and services .......... X X
specific to GPS/PPS security
modules.
XV(c)...................................... Defense articles controlled in X .......... ..........
XV(c) except end items for end
use by the Federal Government
of Canada exported directly or
indirectly through a Canadian-
registered person.
XV(d)...................................... Defense articles and services X X X
specific to radiation-hardened
microelectronic circuits.
XV(e)...................................... Anti-jam systems with the X .......... ..........
ability to respond to incoming
interference by adaptively
reducing antenna gain
(nulling) in the direction of
the interference.
XV(e)...................................... Antennas having any of the
following:
(a) Aperture (overall dimension
of the radiating portions of
the antenna) greater than 30
feet;
(b) All sidelobes less than or
equal to -35 dB relative to
the peak of the main beam; or
(c) Designed, modified, or X .......... ..........
configured to provide coverage
area on the surface of the
earth less than 200 nautical
miles in diameter, where
``coverage area'' is defined
as that area on the surface of
the earth that is illuminated
by the main beam width of the
antenna (which is the angular
distance between half power
points of the beam).
XV(e)...................................... Optical intersatellite data X .......... ..........
links (cross links) and
optical ground satellite
terminals.
XV(e)...................................... Spaceborne regenerative X .......... ..........
baseband processing (direct up
and down conversion to and
from baseband) equipment.
XV(e)...................................... Propulsion systems which permit X .......... ..........
acceleration of the satellite
on-orbit (i.e., after mission
orbit injection) at rates
greater than 0.1 g.
XV(e)...................................... Attitude control and X .......... ..........
determination systems designed
to provide spacecraft pointing
determination and control or
payload pointing system
control better than 0.02
degrees per axis.
XV(e)...................................... All specifically designed or X .......... ..........
modified systems, components,
parts, accessories,
attachments, and associated
equipment for all Category
XV(a) items, except when
specifically designed or
modified for use in commercial
communications satellites.
XV(e)...................................... Defense articles and services .......... X X
specific to spacecraft and
ground control station systems
(only for telemetry, tracking
and control as controlled in
XV(b)), subsystems,
components, parts,
accessories, attachments, and
associated equipment.
XV(f)...................................... Technical data and defense X X X
services directly related to
the other defense articles
excluded from the exemptions
for Category XV.
XVI........................................ Defense articles and services X X X
specific to design and testing
of nuclear weapons.
XVI(c)..................................... Nuclear radiation measuring X .......... ..........
devices manufactured to
military specifications.
XVI(e)..................................... Software source code related to .......... X X
Category XVI(c). See Note 4.
XVII....................................... Classified articles and defense X X X
services not elsewhere
enumerated. See Note 1.
XVIII...................................... Defense articles and services .......... X X
specific to directed energy
weapon systems.
XX......................................... Defense articles and services X X X
related to submersible
vessels, oceanographic, and
associated equipment.
XXI........................................ Miscellaneous defense articles X X X
and services.
----------------------------------------------------------------------------------------------------------------
[[Page 72266]]
Note 1: Classified defense articles and services are not eligible for export under the Canadian exemptions. U.S.
origin defense articles and services controlled in Category XVII are not eligible for export under the UK
Treaty exemption. U.S. origin classified defense articles and services are not eligible for export under either
the UK or AS Treaty exemptions except when being released pursuant to a U.S. Department of Defense written
request, directive or contract that provides for the export of the defense article or service.
Note 2: The phrase ``any part of the spectrum'' includes radio frequency (RF), infrared (IR), electro-optical,
visual, ultraviolet (UV), acoustic, and magnetic. Defense articles related to reduced observables or counter
reduced observables are defined as:
a. Signature reduction (radio frequency (RF), infrared (IR), Electro-Optical, visual, ultraviolet (UV),
acoustic, magnetic, RF emissions) of defense platforms, including systems, subsystems, components,
materials, (including dual-purpose materials used for Electromagnetic Interference (EM) reduction)
technologies, and signature prediction, test and measurement equipment and software and material
transmissivity/reflectivity prediction codes and optimization software.
b. Electronically scanned array radar, high power radars, radar processing algorithms, periscope-mounted
radar systems (PATRIOT), LADAR, multistatic and IR focal plane array-based sensors, to include systems,
subsystems, components, materials, and technologies.
Note 3: Defense Articles related to sensor fusion beyond that required for display or identification correlation
is defined as techniques designed to automatically combine information from two or more sensors/sources for the
purpose of target identification, tracking, designation, or passing of data in support of surveillance or
weapons engagement. Sensor fusion involves sensors such as acoustic, infrared, electro optical, frequency, etc.
Display or identification correlation refers to the combination of target detections from multiple sources for
assignment of common target track designation.
Note 4: Software source code beyond that source code required for basic operation, maintenance, and training for
programs, systems, and/or subsystems is not eligible for use of the UK or AS Treaty Exemptions, unless such
export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense
for an end use identified in subsections (e)(1), (2), or (4) of Sec. 126.16 or Sec. 126.17 of this
subchapter and is consistent with other exclusions of this supplement.
Note 5: Manufacturing know-how, as defined in Sec. 125.4(c)(6) of this subchapter, is not eligible for use of
the UK or AS Treaty Exemptions, unless such export is pursuant to a written solicitation or contract issued or
awarded by the U.S. Department of Defense for an end use identified in subsections (e)(1), (2), or (4) of Sec.
126.16 or Sec. 126.17 of this subchapter and is consistent with other exclusions of this supplement.
Note 6: Defense Articles specific to Man Portable Air Defense Systems (MANPADS) includes missiles which can be
used without modification in other applications. It also includes production equipment specifically designed or
modified for MANPAD systems, as well as training equipment specifically designed or modified for MANPAD
systems.
Note 7: Naval nuclear propulsion plants includes all of USML Category VI(e). Naval nuclear propulsion
information is technical data that concerns the design, arrangement, development, manufacture, testing,
operation, administration, training, maintenance, and repair of the propulsion plants of naval nuclear-powered
ships and prototypes, including the associated shipboard and shore-based nuclear support facilities. Examples
of defense articles covered by this exclusion include nuclear propulsion plants and nuclear submarine
technologies or systems; nuclear powered vessels (see USML Categories VI and XX).
Note 8: Examples of gas turbine engine hot section exempted defense article components and technology are
combustion chambers/liners; high pressure turbine blades, vanes, disks and related cooled structure; cooled low
pressure turbine blades, vanes, disks and related cooled structure; advanced cooled augmenters; and advanced
cooled nozzles. Examples of gas turbine engine hot section developmental technologies are Integrated High
Performance Turbine Engine Technology (IHPTET), Versatile, Affordable Advanced Turbine Engine (VAATE), Ultra-
Efficient Engine Technology (UEET).
Note 9: Examples of countermeasures and counter-countermeasures related to defense articles not exportable under
the AS or UK Treaty exemptions are:
a. IR countermeasures;
b. Classified techniques and capabilities;
c. Exports for precision radio frequency location that directly or indirectly supports fire control and is
used for situation awareness, target identification, target acquisition, and weapons targeting and Radio
Direction Finding (RDF) capabilities. Precision RF location is defined as angle of arrival accuracy of less
than five degrees (RMS) and RF emitter location of less than ten percent range error;
d. Providing the capability to reprogram; and
e. Acoustics (including underwater), active and passive countermeasures, and counter-countermeasures
Note 10: Examples of defense articles covered by this exclusion include underwater acoustic vector sensors;
acoustic reduction; off-board, underwater, active and passive sensing, propeller/propulsor technologies; fixed
mobile/floating/powered detection systems which include in-buoy signal processing for target detection and
classification; autonomous underwater vehicles capable of long endurance in ocean environments (manned
submarines excluded); automated control algorithms embedded in on-board autonomous platforms which enable (a)
group behaviors for target detection and classification, (b) adaptation to the environment or tactical
situation for enhancing target detection and classification; ``intelligent autonomy'' algorithms which define
the status, group (greater than 2) behaviors, and responses to detection stimuli by autonomous, underwater
vehicles; and low frequency, broad-band ``acoustic color,'' active acoustic ``fingerprint'' sensing for the
purpose of long range, single pass identification of ocean bottom objects, buried or otherwise. (Controlled
under Category XI(a), (1) and (2) and in (b), (c), and (d)).
Note 11: The defense articles include constructions of metallic or non-metallic materials or combinations
thereof specially designed to provide protection for military systems. The phrase ``suitable for military use''
applies to any articles or materials which have been tested to level IIIA or above IAW NIJ standard 0108.01 or
comparable national standard. This exclusion does not include military helmets, body armor, or other protective
garments which may be exported IAW the terms of the AS or UK Treaties.
----------------------------------------------------------------------------------------------------------------
* An ``X'' in the chart indicates that the item is excluded from use under the exemption referenced in the top
of the column. An item excluded in any one row is excluded regardless of whether other rows may contain a
description that would include the item.
PART 127--VIOLATIONS AND PENALTIES
28. The authority citation for part 127 is revised to read to as
follows:
Authority: Secs. 2, 38, and 42, Public Law 90-629, 90 Stat. 744
(22 U.S.C. 2752, 2778, 2791); E.O. 11958, 42 FR 4311; 3 CFR, 1977
Comp., p. 79; 22 U.S.C. 401; 22 U.S.C. 2651a; 22 U.S.C. 2779a; 22
U.S.C. 2780; Pub. L. 111-266.
29. Section 127.1 is revised to read as follows:
Sec. 127.1 Violations.
(a) Without first obtaining the required license or other written
[[Page 72267]]
approval from the Directorate of Defense Trade Controls, it is
unlawful:
(1) To export or attempt to export from the United States any
defense article or technical data or to furnish or attempt to furnish
any defense service for which a license or written approval is required
by this subchapter;
(2) To reexport or retransfer or attempt to reexport or retransfer
any defense article, technical data, or defense service from one
foreign end-user, end-use, or destination to another foreign end-user,
end-use, or destination for which a license or written approval is
required by this subchapter, including, as specified in Sec. 126.16(h)
and Sec. 126.17(h) of this subchapter, any defense article, technical
data, or defense service that was exported from the United States
without a license pursuant to any exemption under this subchapter;
(3) To import or attempt to import any defense article whenever a
license is required by this subchapter;
(4) To conspire to export, import, reexport, retransfer, furnish or
cause to be exported, imported, reexported, retransferred or furnished,
any defense article, technical data, or defense service for which a
license or written approval is required by this subchapter.
(b) It is unlawful:
(1) To violate any of the terms or conditions of a license or
approval granted pursuant to this subchapter, any exemption contained
in this subchapter, or any rule or regulation contained in this
subchapter.
(2) To engage in the business of brokering activities for which
registration and a license or written approval is required by this
subchapter without first registering or obtaining the required license
or written approval from the Directorate of Defense Trade Controls. For
the purposes of this subchapter, engaging in the business of brokering
activities requires only one occasion of engaging in an activity as
reflected in Sec. 129.2(b) of this subchapter.
(3) To engage in the United States in the business of either
manufacturing or exporting defense articles or furnishing defense
services without complying with the registration requirements. For the
purposes of this subchapter, engaging in the business of manufacturing
or exporting defense articles or furnishing defense services requires
only one occasion of manufacturing or exporting a defense article or
furnishing a defense service.
(c) Any person who is granted a license or other approval or who
acts pursuant to an exemption under this subchapter is responsible for
the acts of employees, agents, and all authorized persons to whom
possession of the defense article or technical data has been entrusted
regarding the operation, use, possession, transportation, and handling
of such defense article or technical data abroad. All persons abroad
subject to U.S. jurisdiction who obtain temporary or permanent custody
of a defense article exported from the United States or produced under
an agreement described in part 124 of this subchapter, and irrespective
of the number of intermediate transfers, are bound by the regulations
of this subchapter in the same manner and to the same extent as the
original owner or transferor.
(d) A person with knowledge that another person is then ineligible
pursuant to Sec. Sec. 120.1(c) or 126.7 of this subchapter may not,
directly or indirectly, in any manner or capacity, without prior
disclosure of the facts to, and written authorization from, the
Directorate of Defense Trade Controls:
(1) Apply for, obtain, or use any export control document as
defined in Sec. 127.2(b) of this subchapter for such ineligible
person; or
(2) Order, buy, receive, use, sell, deliver, store, dispose of,
forward, transport, finance, or otherwise service or participate in any
transaction which may involve any defense article or the furnishing of
any defense service for which a license or approval is required by this
subchapter or an exemption is available under this subchapter for
export, where such ineligible person may obtain any benefit therefrom
or have any direct or indirect interest therein.
(e) No person may knowingly or willfully cause, or aid, abet,
counsel, demand, induce, procure, or permit the commission of, any act
prohibited by, or the omission of any act required by, 22 U.S.C. 2778
and 2779, or any regulation, license, approval, or order issued
thereunder.
30. Section 127.2 is amended by revising paragraphs (a), (b)
introductory text, (b)(1), (b)(2), and adding (b)(14), to read as
follows:
Sec. 127.2 Misrepresentation and omission of facts.
(a) It is unlawful to use or attempt to use any export or temporary
import control document containing a false statement or misrepresenting
or omitting a material fact for the purpose of exporting, transferring,
reexporting, retransferring, obtaining, or furnishing any defense
article, technical data, or defense service. Any false statement,
misrepresentation, or omission of material fact in an export or
temporary import control document will be considered as made in a
matter within the jurisdiction of a department or agency of the United
States for the purposes of 18 U.S.C. 1001, 22 U.S.C. 2778, and 22
U.S.C. 2779.
(b) For the purpose of this subchapter, export or temporary import
control documents include the following:
(1) An application for a permanent export, reexport, retransfer, or
a temporary import license and supporting documents.
(2) Shipper's Export Declaration or an Electronic Export
Information filing.
* * * * *
(14) Any other shipping document that has information related to
the export of the defense article or defense service.
31. Section 127.3 is revised to read as follows:
Sec. 127.3 Penalties for violations.
Any person who willfully:
(a) Violates any provision of Sec. 38 or Sec. 39 of the Arms
Export Control Act (22 U.S.C. 2778 and 2779) or any rule or regulation
issued under either Sec. 38 or Sec. 39 of the Act, or any undertaking
specifically required by part 124 of this subchapter; or
(b) In a registration, license application, or report required by
Sec. 38 or Sec. 39 of the Arms Export Control Act (22 U.S.C. 2778 and
2779) or by any rule or regulation issued under either section, makes
any untrue statement of a material fact or omits a material fact
required to be stated therein or necessary to make the statements
therein not misleading, shall upon conviction be subject to a fine or
imprisonment, or both, as prescribed by 22 U.S.C. 2778(c).
32. Section 127.4 is amended by revising paragraphs (a) and (c),
and adding paragraph (d), to read as follows:
Sec. 127.4 Authority of U.S. Immigration and Customs Enforcement and
U.S. Customs and Border Protection officers.
(a) U.S. Immigration and Customs Enforcement and U.S. Customs and
Border Protection officers may take appropriate action to ensure
observance of this subchapter as to the export or the attempted export
of any defense article or technical data, including the inspection of
loading or unloading of any vessel, vehicle, or aircraft. This applies
whether the export is authorized by license or by written approval
issued under this subchapter or by exemption.
* * * * *
(c) Upon the presentation to a U.S. Customs and Border Protection
Officer of a license or written approval, or claim of an exemption,
authorizing the export
[[Page 72268]]
of any defense article, the customs officer may require the production
of other relevant documents and information relating to the proposed
export. This includes an invoice, order, packing list, shipping
document, correspondence, instructions, and the documents otherwise
required by the U.S. Customs and Border Protection or U.S. Immigration
and Customs Enforcement.
(d) If an exemption under this subchapter is used or claimed to
export, transfer, reexport or retransfer, furnish, or obtain a defense
article, technical data, or defense service, law enforcement officers
may rely upon the authorities noted above, additional authority
identified in the language of the exemption, and any other lawful means
to investigate such a matter.
33. Section 127.7 is amended by revising paragraph (a) to read as
follows:
Sec. 127.7 Debarment.
(a) Debarment. In implementing Sec. 38 of the Arms Export Control
Act, the Assistant Secretary of State for Political-Military Affairs
may prohibit any person from participating directly or indirectly in
the export, reexport and retransfer of defense articles, including
technical data, or in the furnishing of defense services for any of the
reasons listed below and publish notice of such action in the Federal
Register. Any such prohibition is referred to as a debarment for
purposes of this subchapter. The Assistant Secretary of State for
Political-Military Affairs shall determine the appropriate period of
time for debarment, which shall generally be for a period of three
years. However, reinstatement is not automatic and in all cases the
debarred person must submit a request for reinstatement and be approved
for reinstatement before engaging in any export or brokering activities
subject to the Arms Export Control Act or this subchapter.
* * * * *
34. Section 127.10 is amended by revising paragraph (a) to read as
follows:
Sec. 127.10 Civil penalty.
(a) The Assistant Secretary of State for Political-Military Affairs
is authorized to impose a civil penalty in an amount not to exceed that
authorized by 22 U.S.C. 2778, 2779a, and 2780 for each violation of 22
U.S.C. 2778, 2779a, and 2780, or any regulation, order, license, or
written approval issued thereunder. This civil penalty may be either in
addition to, or in lieu of, any other liability or penalty which may be
imposed.
* * * * *
35. Section 127.12 is amended by adding paragraph (b)(5), and
revising paragraph (d), to read as follows:
Sec. 127.12 Voluntary disclosures.
* * * * *
(b) * * *
(5) Nothing in this section shall be interpreted to negate or
lessen the affirmative duty pursuant to Sec. Sec. 126.1(e),
126.16(h)(5), and 126.17(h)(5) of this subchapter upon persons to
inform the Directorate of Defense Trade Controls of the actual or
proposed sale, export, transfer, reexport, or retransfer of a defense
article, technical data, or defense service to any country referred to
in Sec. 126.1 of this subchapter, any citizen of such country, or any
person acting on its behalf.
* * * * *
(d) Documentation. The written disclosure should be accompanied by
copies of substantiating documents. Where appropriate, the
documentation should include, but not be limited to:
(1) Licensing documents (e.g., license applications, export
licenses, and end-user statements), exemption citation, or other
authorization description, if any;
(2) Shipping documents (e.g., Shipper's Export Declarations;
Electronic Export Information filing, including the Internal
Transaction Number), air waybills, and bills of laden, invoices, and
any other associated documents);
(3) Any other relevant documents must be retained by the person
making the disclosure until the Directorate of Defense Trade Controls
requests them or until a final decision on the disclosed information
has been made.
* * * * *
PART 129--REGISTRATION AND LICENSING OF BROKERS
36. The authority citation for part 129 continues to read as
follows:
Authority: Sec. 38, Pub. L. 104-164, 110 Stat. 1437, (22 U.S.C.
2778).
37. Section 129.6 is amended by revising paragraph (b)(2) to read
as follows:
Sec. 129.6 Requirements for License/Approval.
* * * * *
(b) * * *
(2) Brokering activities that are arranged wholly within and
destined exclusively for the North Atlantic Treaty Organization, any
member country of that Organization, Australia, Israel, Japan, New
Zealand, or the Republic of Korea, except in the case of the defense
articles or defense services specified in Sec. 129.7(a) of this
subchapter, for which prior approval is always required.
38. Section 129.7 is amended by revising paragraphs (a)(1)(vii) and
(a)(2) to read as follows:
Sec. 129.7 Prior Approval (License).
(a) * * *
(1) * * *
(vii) Foreign defense articles or defense services (other than
those that are arranged wholly within and destined exclusively for the
North Atlantic Treaty Organization, any member country of that
Organization, Australia, Israel, Japan, New Zealand, or the Republic of
Korea (see Sec. Sec. 129.6(b)(2) and 129.7(a)).
(2) Brokering activities involving defense articles or defense
services covered by, or of a nature described by part 121, of this
subchapter, in addition to those specified in Sec. 129.7(a), that are
designated as significant military equipment under this subchapter, for
or from any country not a member of the North Atlantic Treaty
Organization, Australia, Israel, Japan, New Zealand, or the Republic of
Korea whenever any of the following factors are present:
* * * * *
Dated: November 7, 2011.
Ellen O. Tauscher,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2011-29328 Filed 11-21-11; 8:45 am]
BILLING CODE 4710-25-P