[Federal Register Volume 65, Number 141 (Friday, July 21, 2000)]
[Rules and Regulations]
[Pages 45286-45287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18531]


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DEPARTMENT OF STATE

Bureau of Political-Military Affairs

22 CFR Part 126

[Public Notice 3366]


Amendment to the International Traffic in Arms Regulation: FMS 
LOA Authorized Defense Services

AGENCY: Bureau of Political-Military Affairs, Department of State.

ACTION: Final rule.

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SUMMARY: The International Traffic In Arms Regulations (ITAR), 
Sec. 126.6, Foreign-owned military aircraft and naval vessels, and the 
Foreign Military Sales program is being amended to clarify the use of 
the exemption when providing defense services authorized by the Foreign 
Military Sales (FMS) Program.

EFFECTIVE DATE: September 1, 2000.

FOR FURTHER INFORMATION CONTACT: Rose Biancaniello, Deputy Director, 
Licensing, Office of Defense Trade Controls, Bureau of Political-
Military Affairs, Department of State ATTN: Regulatory Change, Section 
126.6 FMS Defense Service at (202) 663-2862 or FAX (202) 261-8264.

SUPPLEMENTARY INFORMATION: Section 126.6 currently provides for the 
export of defense services when authorized by the Foreign Military 
Sales (FMS) Program without a license or other approval. However, 
companies, lacking clear guidance often sought approval of the Office 
of Defense Trade Controls which delayed the provision of the service or 
frequently also entailed seeking assurances that the foreign government 
believed it had already provided to the USG. Thus, this amendment to 
Sec. 126.6 which clarifies the exemption on the basis of specific 
criteria will assist registered defense firms by making it clear when 
to use the exemption to provide defense services authorized by the 
Department of Defense in an LOA.
    This amendment involves a foreign affairs function of the United 
States and therefore, is not subject to the procedures required by 5 
U.S.C. 553 and 554. It is exempt from review under Executive Order 
12866 but has been reviewed internally by the Department of State to 
ensure consistency with the purposes thereof. This rule does not 
require analysis under the Regulatory Flexibility Act or the Unfunded 
Mandates Reform Act. It has been found not to be a major rule within 
the meaning of the Small Business Regulatory Enforcement Act of 1966. 
It will not have substantial direct effects on the Nation, USG or any 
State, the relationship between the National Government and the States, 
or on the distribution of power and responsibilities among the various 
levels of government. Therefore, in accordance with section 6 of 
Executive Order 13132, it is determined that this rule does not have 
sufficient federalism implications to warrant application of Executive 
Order Nos. 12372 and 13123. However, interested parties are invited to 
submit written comments to the Department of State, Office of Defense 
Trade Controls, ATTN: Regulatory Change, FMS LOA Authorized Defense 
Services, 13th Floor, Room H1304, 2401 E Street, N.W., Washington, D.C. 
20037. Such persons must be so registered with the Department of 
State's Office of Defense Trade Controls (ODTC) pursuant to the 
registration requirements of section 38 of the Arms Export Control Act.

[[Page 45287]]

List of Subjects in 22 CFR Part 126

    Arms and munitions, Exports.

    Accordingly, for the reasons set forth above, title 22, chapter 1, 
subchapter M, part 126 is amended as follows:

PART 126--GENERAL POLICIES AND PROVISIONS

    1. 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. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2778; 
E.O. 11958, 42 FR 4311; 3 CFR, 1977 Com., p. 79; 22 U.S.C. 2658; 22 
U.S.C. 287c; E.E. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899.


    2. Section 126.6 is revised to read as follows:


Sec. 126.6  Foreign-owned military aircraft and naval vessels, and the 
Foreign Military Sales program.

    (a) A license from the Office of Defense Trade Controls is not 
required if:
    (1) The article or technical data to be exported was sold, leased, 
or loaned by the Department of Defense to a foreign country or 
international organization pursuant to the Arms Export Control Act or 
the Foreign Assistance Act of 1961, as amended, and
    (2) The article or technical data is delivered to representatives 
of such a country or organization in the United States; and
    (3) The article or technical data is to be exported from the United 
States on a military aircraft or naval vessel of that government or 
organization or via the Defense Transportation Service (DTS).
    (b) Foreign military aircraft and naval vessels. A license is not 
required for the entry into the United States of military aircraft or 
naval vessels of any foreign state if no overhaul, repair, or 
modification of the aircraft or naval vessel is to be performed. 
However, Department of State approval for overflight (pursuant to the 
49 U.S.C. 1508) and naval visits must be obtained from the Bureau of 
Political-Military Affairs, Office of International Security 
Operations.
    (c) Foreign Military Sales Program. A license from the Office of 
Defense Trade Controls is not required if the defense article or 
technical data or a defense service to be transferred was sold, leased 
or loaned by the Department of Defense to a foreign country or 
international organization under the Foreign Military Sales (FMS) 
Program of the Arms Export Control Act pursuant to an Letter of Offer 
and Acceptance (LOA) authorizing such transfer which meets the criteria 
stated below:
    (1) Transfers of the defense articles, technical data or defense 
services using this exemption may take place only during the period 
which the FMS Letter of Offer and Acceptance (LOA) and implementing USG 
FMS contracts and subcontracts are in effect and serve as authorization 
for the transfers hereunder in lieu of a license. After the USG FMS 
contracts and subcontracts have expired and the LOA no longer serves as 
such authorization, any further provision of defense articles, 
technical data or defense services shall not be covered by this section 
and shall instead be subject to other authorization requirements of 
this subchapter; and
    (2) The defense article, technical data or defense service to be 
transferred are specifically identified in an executed LOA, in 
furtherance of the Foreign Military Sales Program signed by an 
authorized Department of Defense Representative and an authorized 
representative of the foreign government, and
    (3) The transfer of the defense article and related technical data 
is effected during the duration of the relevant Letter of Offer and 
Acceptance (LOA), similarly a defense service is to be provided only 
during the duration of the USG FMS contract or subcontract and not to 
exceed the specified duration of the LOA, and
    (4) The transfer is not to a country identified in Sec. 126.1 of 
this subchapter, and
    (5) The U.S. person responsible for the transfer maintains records 
of all transfers in accordance with Part 122 of this subchapter, and
    (6) For transfers of defense articles and technical data,
    (i) The transfer is made by the relevant foreign diplomatic mission 
of the purchasing country or its authorized freight forwarder, provided 
that the freight forwarder is registered with the Office of Defense 
Trade Controls pursuant to Part 122 of this subchapter, and
    (ii) At the time of shipment, the District Director of Customs is 
provided an original and properly executed DSP-94 accompanied by a copy 
of the LOA and any other documents required by U.S. Customs in carrying 
out their responsibilities. The Shippers Export Declaration or, if 
authorized, the outbound manifest, must be annotated ``This shipment is 
being exported under the authority of Department of State Form DSP-94. 
It covers FMS Case [insert case identification], expiration [insert 
date]. 22 CFR 126.6 applicable. The U.S. Government point of contact is 
______, telephone number ______,'' and
    (iii) If, classified hardware and related technical data are 
involved the transfer must have the requisite USG security clearance 
and transportation plan and be shipped in accordance with the 
Department of Defense National Industrial Security Program Operating 
Manual, or
    (7) For transfers of defense services:
    (i) A contract or subcontract between the U.S. person(s) 
responsible for providing the defense service and the USG exists that:
    (A) Specifically defines the scope of the defense service to be 
transferred;
    (B) Identifies the FMS case identifier,
    (C) Identifies the foreign recipients of the defense service
    (D) Identifies any other U.S. or foreign parties that may be 
involved and their roles/responsibilities, to the extent known when the 
contract is executed,
    (E) Provides a specified period of duration in which the defense 
service may be performed, and
    (ii) The U.S. person(s) identified in the contract maintain a 
registration with the Office of Defense Trade Controls for the entire 
time that the defense service is being provided. In any instance when 
the U.S. registered person(s) identified in the contract employs a 
subcontractor, the subcontractor may only use this exemption when 
registered with DTC, and when such subcontract meets the above stated 
requirements, and
    (iii) In instances when the defense service involves the transfer 
of classified technical data, the U.S. person transferring the defense 
service must have the appropriate USG security clearance and a 
transportation plan, if appropriate, in compliance with the Department 
of Defense National Industrial Security Program Operating Manual, and
    (iv) The U.S. person responsible for the transfer reports the 
initial transfer, citing this section of the ITAR, the FMS case 
identifier, contract and subcontract number, the foreign country, and 
the duration of the service being provided to the Office of Defense 
Trade Controls using DTC's Direct Shipment Verification Program.

    Dated: July 14, 2000.
Pamela L. Frazier,
Assistant Secretary (Acting), Bureau of Political-Military Affairs, 
U.S. Department of State.
[FR Doc. 00-18531 Filed 7-20-00; 8:45 am]
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