[Federal Register Volume 64, Number 69 (Monday, April 12, 1999)]
[Rules and Regulations]
[Pages 17531-17535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9033]


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DEPARTMENT OF STATE

22 CFR Parts 121, 123, 124 and 126

[Public Notice 3026]


Amendments to the International Traffic In Arms Regulations

AGENCY: Bureau of Political-Military Affairs, State.

ACTION: Final rule.

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SUMMARY: The President of the United States at the 1998 Summit of the 
Americas in Santiago, Chile, discussed with the Summit leaders the 
importance of strengthening protections against the new transnational 
threats facing the region, including the production, distribution, and 
abuse of narcotics,

[[Page 17532]]

illegal arms trafficking and terrorism. To combat these threats and to 
strengthen the hemisphere's common security, the President agreed to 
implement model regulations on commercial arms transfers. In 
furtherance of this objective, the Secretaries of State, Commerce and 
Treasury are directed to implement the Model Regulations for the 
Control of the International Movement of Firearms, Their Parts and 
Components, and Ammunition (``Model Regulations''). In responding to 
the President's directive, the ITAR was reviewed and it was determined 
that the predominant sections requiring change are the US Munitions 
List (USML), the Canadian exemption, and the personal use exemption for 
firearms and ammunition. Review of the Canadian exemption resulted in 
removal of the exemption for several USML items, including all Category 
I firearms and Category III ammunition for the firearms in Category I. 
It was also determined that the language should be revised to seek 
better understanding and compliance by US exporters of the current 
requirements of the ITAR and AECA when using the existing exemption: 
specifically, those of Part 123 dealing with reexport or retransfer, 
and congressional notifications, and of Part 124 that any production of 
a USML article in Canada requires prior written approval in accordance 
with Part 124 of the ITAR. In carrying out these initiatives, 
Secs. 121.1, 121.9, 123.17, 124.13 and 126.5 of the International 
Traffic in Arms Regulations (ITAR) are being amended.

EFFECTIVE DATE: April 12, 1999.

FOR FURTHER INFORMATION CONTACT: Rose Biancaniello, Deputy Director 
Licensing, Office of Defense Trade Controls, Department of State, Phone 
(703) 812-2568 or Fax (703) 875-6647.

SUPPLEMENTARY INFORMATION: This amendment, in addition to responding to 
the President's directive on implementing the ``Model Regulations,'' 
requires a license for additional critical military technologies 
identified on the USML and provides specific regulatory references to 
ensure proper compliance is exercised over the export of all items 
covered by the USML. The amendments also enhance State's ability to 
more efficiently, accurately and factually respond to inquiries from 
the Congress. In addition, compliance with the regulations will be 
enhanced, since the amendment benefits U.S. Customs in its efforts to 
carry out enforcement activities related to illegal exports. Recent 
escalation in defense companies' voluntary disclosures, discussions 
with the Canadian Government and the use of the Canadian exemption by 
unregistered companies provides evidence that unauthorized exports are 
taking place both from the US and by Canadian persons in possession of 
US defense articles and defense services. Therefore, revising the 
current ITAR language will assist in preventing future violations by 
companies participating in the export, directly or indirectly, of U.S. 
defense articles or defense services to unauthorized end-users and end-
uses. Also, the lack of a license for transactions currently authorized 
under Sec. 126.5 has eliminated documentation, made impossible USG 
review of significant transactions and increased the difficulty to 
track, interdict or verify the end-use and end-user violations. 
Therefore, Sec. 126.5 has been amended to assist U.S. industry by 
providing a better understanding of when a license is required, when 
the exemption can be utilized, and the criteria for use of the 
exemption. These changes are being made in consultation with the 
Government of Canada in order to reduce the risks of illegal 
trafficking. To ensure the efficacy of this amendment in enhancing 
compliance with the ITAR and the AECA, further review will be conducted 
during the next several months to determine whether additional steps 
are necessary to ensure that the USG is, in all instances, able to 
enforce the defense export control mandates established in the law.
    To carry out the President's Directive, ITAR Sec. 121.1, Category 
I, Firearms, is amended to move firearms spare parts and accessories 
from paragraph (a) to paragraph (d) and to move technical data and 
defense services currently in paragraph (d) to a new paragraph (e). In 
addition, incorrect cites in paragraph (a) are being corrected. Also, 
Sec. 121.9 is amended to exclude from the USML certain types of 
accessories and attachments for firearms. Sec. 123.17 (a) is amended to 
reduce the value of the parts and components that may be shipped 
subject to this exemption from $500 to $100. This change maintains the 
original intent behind the exemption, which was to provide an 
expeditious manner for exporters to replace minor parts (e.g. springs, 
nuts) damaged during the initial shipment, while maintaining controls 
necessary to implement the ``Model Regulations.'' In addition, ITAR 
Sec. 124.13 is amended to require a license for the export of all 
technical data exported for use in the manufacture of defense articles. 
Also being amended is Sec. 126.5 of the ITAR. The amendment expands the 
defense articles and related technical data that are not exempt from 
licensing to include all Category I firearms and Category III 
ammunition for such firearms and certain defense articles and related 
technical data defined in categories IV, XIII, XIV, and XV of the USML. 
Therefore, the exemption does not apply to the following defense 
articles, defense services and related technical data for the following 
items:

    (1) Category I--Firearms;
    (2) Category III ammunition for the firearms in Category I; and
    (3) Category IV (a), (b), (c), (d), (f) and (g)--Launch 
Vehicles, Guided Missiles, Ballistic Missiles, and Rockets. (This 
does not include bombs, grenades, torpedoes, depth charges, land and 
naval mines in IV (a); components, parts, accessories and 
attachments in IV(h); and related technical data for these items 
covered by Part 125.); and
    (4) Nuclear weapons strategic delivery systems and all 
components, parts, accessories, attachments specifically designed 
for such systems and associated equipment;
    (5) Naval nuclear propulsion equipment listed in Category VI(e); 
and
    (6) Aircraft listed in Category VIII(a); and
    (7) Category XIII(b) and XIII(j) (e.g. stealth); and
    (8) Toxicological Agents and Equipment and Radiological 
Equipment listed in Category XIV(a) through (d); and
    (9) Spacecraft, Remote Sensing Satellites, and Military 
Communications Satellites listed in Category XV(a), (b), and (c); 
and
    (10) Nuclear Weapons Design and Test Equipment listed in 
Category XVI; and
    (11) All Classified Articles, Technical Data and Defense 
Services, including Category XVII; and
    (12) Submersible and oceanographic vessels and related articles 
listed in Category XX(a) through (d); and
    (13) All USML items and related technical data identified on the 
Missile Technology Control Regime (MTCR) Annex.

    The amendment also states the regulatory sections of the ITAR that 
must be complied with when using the exemption.
    In addition to amending the ITAR, to fully implement the ``Model 
Regulations,'' the Office of Defense Trade Controls has modified its 
firearms licensing practices. All requests for a license or other 
approval to export firearms and/or ammunition must be accompanied with 
a firm order. A letter of intent will no longer be accepted for any 
firearms and/or ammunition request. An import authorization or a 
certification that the importing country does not issue import 
authorizations must also accompany all requests. DTC will continue the 
policy to require a Form DSP-83 (Nontransfer and Use Certificate) for 
any application for a quantity of 50 or more firearms. Any request that 
does not have the required documentation will be subject to being 
Returned Without Action (RWA).

[[Page 17533]]

However, in implementing the ``Model Regulations,'' any request for 
authorization to export to an OAS member country will be immediately 
RWA'd if the request does not include an import authorization. Any 
request for relief from this requirement will be denied. The current 
OAS member states that have agreed to the ``Model Regulations'' are: 
Antigua and Barbuda, Argentina, The Bahamas, Barbados, Belize, Bolivia, 
Brazil, Canada, Chile, Colombia, Costa Rica, Dominica, Dominican 
Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, 
Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint 
Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, 
Suriname, Trinidad and Tobago, United States of America, Uruguay, and 
Venezuela.
    This change in licensing practices does not affect any change in 
any country's status as an ITAR Sec. 126.1 proscribed destination. 
Also, the validity period of any license for the export of firearms and 
ammunition will be adjusted from the four-year period stated in 
Sec. 123.21 of the ITAR to reflect a time period consistent with the 
validity period of the import authorization. Applicants may continue to 
use valid licenses or other approvals until all the authorized material 
has been exported or until the license has expired, unless otherwise 
advised by the Office of Defense Trade Controls. Any exporter that has 
used an exemption that no longer exists in the ITAR, for an activity 
that will continue following this publication, has 30 days from 
publication of this notice to apply for a license or other approval. 
Any previously exempted activity for which a license or other approval 
has not been submitted within 30 days and assigned a DTC case number 
must cease or the U.S. person will be considered to be in violation of 
the AECA and the ITAR.
    This amendment involves a foreign affairs function of the United 
States and, thus, is excluded from the procedures of Executive Order 
12866 (68 FR 51735) and 5 U.S.C. 533 and 554, but has been reviewed 
internally by the Department to ensure consistency with the purposes 
thereof. This amendment has been found to be a minor rule within the 
meaning of the Small Business Regulatory Enforcement Fairness Act of 
1996, Public Law 104-121 ( the ``Act''). Interested parties are invited 
to submit written comments to the Department of State, Office of 
Defense Trade Controls, ATTN: Regulatory Change, Room 200, SA-6, 
Washington, D.C. 20520-0602.

List of Subjects in 22 CFR Part 121

    Arms and munitions, Exports.

    Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, Parts 121, 123, 124 and 126 are being amended as follows:

PART 121--THE UNITED STATES MUNITIONS LIST

    1. The authority citation for part 121 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 1077 Comp., 
p. 79; 22 U.S.C. 2658.

    2. In Sec. 121.1 Category I--Firearms is revised to read as 
follows:


Sec. 121.1  General. The United States Munitions List.

* * * * *

Category I--Firearms

    *(a) Nonautomatic, semi-automatic and fully automatic firearms 
to caliber .50 inclusive. (See Sec. 121.9 and Secs. 123.17 and 
123.18 of this subchapter.)
    (b) Riflescopes manufactured to military specifications; firearm 
silencers and suppressers, including flash suppressors. (See 
Category XII(c) for night sighting devices.)
    *(c) Insurgency-counterinsurgency type firearms or other weapons 
having a special military application (e.g. close assault weapons 
systems) regardless of caliber.
    *(d) Components, parts, accessories and attachments for the 
articles in paragraphs (a) through (c) of this category. All the 
components, parts, accessories and attachments covered by this 
paragraph, except barrels, cylinders, receivers (frames) or complete 
breach mechanisms, are non-SME (see Sec. 120.7).
    (e) Technical data (as defined in Sec. 120.10 of this 
subchapter) and defense services (as defined in Sec. 120.9 of this 
subchapter) directly related to the defense articles enumerated in 
paragraphs (a) through (d) of this category. (See Sec. 125.4 of this 
subchapter for exemptions.) Technical data directly related to the 
manufacture or production of any defense articles enumerated 
elsewhere in this category that are designated as Significant 
Military Equipment (SME) shall itself be designated SME.
* * * * *
    3. Section 121.9 is amended by revising paragraph (a) to read as 
follows:


Sec. 121.9  Firearms.

    (a) Category I includes revolvers, pistols, rifles, carbines, fully 
automatic rifles, submachine guns, machine pistols and machine guns to 
.50 inclusive. It includes combat shotguns. It excludes other shotguns 
with barrels 18'' or longer, BB, pellet, and muzzle loading (black 
powder) firearms. It also excludes accessories and attachments for 
firearms that do not enhance the usefulness, effectiveness, or 
capabilities of the firearm, its components and parts (e.g. belts, 
slings, after market rubber grips, cleaning kits).
* * * * *

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

    4. The authority citation for part 123 continues to read as 
follows:

    Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); 22 U.S.C. 2753; E.O. 11958, 42 FR 4311; 3 CFR 
1977 Comp., p. 79; 22 U.S.C. 2658.

    4a. Section 123.4 is amended by revising paragraph (a) to read as 
follows:


Sec. 123.4  Temporary import license exemptions.

    (a) District Directors of Customs shall permit the temporary import 
(and subsequent export) without a license, for a period of up to 4 
years, of unclassified U.S.-origin defense items (including any items 
manufactured abroad pursuant to U.S. Government approval) if the item 
temporarily imported:
    (1) Is serviced (e.g., inspection, testing, calibration or repair, 
including overhaul, reconditioning and one-to-one replacement of any 
defective items, parts or components, but excluding any modifications, 
enhancement, upgrade or other form of alteration or improvement that 
changes the basic performance of the item), and is subsequently 
returned to the country from which it was imported. Shipment may be 
made by the U.S. importer or a foreign government representative of the 
country from which the goods were imported; or
    (2) Is to be enhanced, upgraded or incorporated into another item 
which has already been authorized by the Office of Defense Trade 
Controls for permanent export; or
    (3) Is imported for the purpose of exhibition, demonstration or 
marketing in the United States and is subsequently returned to the 
country from which it was imported; or
    (4) Has been rejected for permanent import by the Department of the 
Treasury and is being returned to the country from which it was 
shipped; or
    (5) Is approved for such import under the U.S. Foreign Military 
Sales (FMS) program pursuant to an executed U.S. Department of Defense 
Letter of Offer and Acceptance (LOA).
* * * * *
    5. Section 123.15 is amended by revising paragraph (b) to read as 
follows:


Sec. 123.15  Congressional notification for licenses.

    (a) * * *
    (b) Persons who intend to export defense articles and defense 
services

[[Page 17534]]

pursuant to any exemption in this subchapter under the circumstances 
described in the first sentence of paragraph (a) of this section must 
notify the Office of Defense Trade Controls by letter of the intended 
export and, prior to transmittal to Congress, provide a signed contract 
and a DSP-83 signed by the applicant, the foreign consignee and end-
user.
    6. Section 123.17 is amended by revising paragraph (a) to read as 
follows:


Sec. 123.17  Exports of firearms and ammunition.

    (a) Except as provided in Sec. 126.1 of this subchapter, District 
Directors of Customs shall permit the export without a license of 
components and parts for Category I(a) firearms, except barrels, 
cylinders, receivers (frames) or complete breech mechanisms when the 
total value does not exceed $100 wholesale in any transaction.
* * * * *

PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT AND OTHER DEFENSE 
SERVICES

    7. 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. 2658.

    9. Section 124.13 is amended by revising paragraph (e) to read as 
follows:


Sec. 124.13  Procurement by United States persons in foreign countries 
(offshore procurement).

* * * * *
    (e) Licenses issued pursuant to this section must be renewed upon 
their expiration if offshore procurement is to be extended beyond the 
period of validity of the original approved license. In all instances a 
license for offshore procurement must state as the purpose ``Offshore 
procurement in accordance with the conditions established in the ITAR, 
including Sec. 124.13. No other use will be made of the technical 
data.'' If the technical data involved in an offshore procurement 
arrangement is otherwise exempt from the licensing requirements of this 
subchapter (e.g. Sec. 126.4), the DSP-5 referred to in the first 
sentence of this section is not required. However, the exporter must 
comply with the other requirements of this section and provide a 
written certification to the Office of Defense Trade Controls annually 
of the offshore procurement activity and cite the exemption under which 
the technical data was exported. The exemptions under Sec. 125.4 of 
this subchapter may not be used to establish offshore procurement 
arrangements.

PART 126--GENERAL POLICIES AND PROVISIONS

    10. The authority citation for part 126 continues to read as 
follows:

    Authority: Secs. 2, 38, 40, 42, and 71, Pub L. 90-629, 90 Stat. 
744 (22 U.S.C. 22752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2778; 
E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658; 22 
U.S.C. 287c; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899.

    11. Section 126.5 is revised to read as follows:


Sec. 126.5  Canadian exemptions.

    (a) District Directors of Customs and postmasters shall permit the 
permanent or temporary export without a license of any unclassified 
equipment or unclassified technical data to Canada for end-use in 
Canada by Canadian citizens or return to the United States, or 
temporary import of Canadian-origin items from Canada for end-use in 
the United States or return to Canada for a Canadian citizen, with the 
exception of the defense articles, defense services and related 
technical data listed in paragraphs (b), (c), and (d) of this section.
    (b) The exemption provided in paragraph (a) of this section does 
not apply to the following ITAR part 121, Sec. 121.1 defense articles, 
defense services, or related technical data:
    (1) Category I--Firearms;
    (2) Category III ammunition for the firearms in Category I;
    (3) Category IV (a), (b), (c), (d), (f) and (g)--Launch Vehicles, 
Guided Missiles, Ballistic Missiles and Rockets. (This does not include 
bombs, grenades, torpedoes, depth charges, land and naval mines in IV 
(a); components, parts, accessories and attachments in IV(h); and 
related technical data for these items covered by part 125 of this 
subchapter.)
    (4) Nuclear weapons strategic delivery systems and all components, 
parts, accessories, attachments specifically designed for such systems 
and associated equipment;
    (5) Naval nuclear propulsion equipment listed in Category VI(e);
    (6) Aircraft Listed in Category VIII(a));
    (7) Category XIII (b) (e.g. military information security systems, 
cyptrographic devices, software, and components) and XIII (j) (e.g. 
stealth);
    (8) Toxicological Agents and Equipment and Radiological Equipment 
listed in Category XIV(a) through (d);
    (9) Spacecraft, Remote Sensing Satellites, and Military 
Communications Satellites listed in Category XV(a), (b), and (c);
    (10) Nuclear Weapons Design and Test Equipment listed in Category 
XVI;
    (11) All Classified Articles, Technical Data and Defense Services, 
including Category XVII;
    (12) Submersible and oceanographic vessels and related articles 
listed in Category XX(a) through (d);
    (13) All USML items and related technical data on the Missile 
Technology Control Regime (MTCR) Annex.
    (c) Defense articles, defense services, or related technical data 
for use by a foreign national other than a Canadian citizen.
    (d) Any defense service covered by part 124 of this subchapter.
    (e) Any export involving defenses articles and defense services for 
which congressional notification is required in accordance with 
Sec. 123.15 and 124.11 of this subchapter.
    (f) Related requirements. The exemption provided in this section 
from requiring a license for export does not exempt the exporter from 
the following:
    (1) Registration as an exporter as required by the Arms Export 
Control Act and part 122 of this subchapter;
    (2) The exporter, or any party to the transaction must be eligible 
as described in Sec. 120.1 (c) and (d) of this subchapter;
    (3) The requirement for filing a Shippers' Export Declaration or 
notification letter required by Sec. 123.22 of this subchapter;
    (4) Written documentation that the defense article is:
    (i) For end-use in Canada by a Canadian citizen, and
    (ii) For use by non-Canadians, in Canada, or export from Canada to 
another foreign destination, requires prior written approval of the US 
Government;
    (5) Obtaining a completed DSP-83 for all significant military 
equipment;
    (6) Maintenance of records as required by Sec. 122.5 of this 
subchapter.

    Note: It is the responsibility of the exporter of record to 
determine in writing the Canadian end-use and end-user. In any 
instance when such written documentation is not available, this 
exemption may not be used. Further, in any instance when the 
exporter has knowledge that the defense article exempt from 
licensing is being exported for use by a non-Canadian citizen or for 
export to another foreign destination, other than the United States, 
an export license must be obtained prior to the transfer to Canada. 
The request should state the ultimate foreign end-user and end-use 
with Canada as an intermediate destination. The role of the Canadian 
parties should be defined. Should an instance exist when a defense 
article or related technical data was

[[Page 17535]]

properly exported, either using a license or an exemption, and there 
is a reason to change either the end-use or the end-user, the 
requirements of Sec. 123.9 of this subchapter apply.

    Dated: March 25, 1999.
John D. Holum,
Acting Under Secretary of State for Arms Control and International 
Security Affairs and Director, U.S. Arms Control and Disarmament 
Agency.
[FR Doc. 99-9033 Filed 4-9-99; 8:45 am]
BILLING CODE 4710-25-U