[Federal Register Volume 71, Number 77 (Friday, April 21, 2006)]
[Rules and Regulations]
[Pages 20534-20555]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3500]


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DEPARTMENT OF STATE

22 CFR Parts 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, and 
130

[Public Notice: 5345]


Amendments to the International Traffic in Arms Regulations: 
Office Names, Corrected Cross-Referencing, Reference to Wassenaar 
Arrangement, and Other Corrections/Administrative Changes

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State is amending the International Traffic 
in Arms Regulations (ITAR) to reflect current office names, correct 
cross-references, update the reference to the Wassenaar Arrangement, 
and make other corrections and administrative changes.

DATES: Effective Date: This rule is effective April 21, 2006.

ADDRESSES: Interested parties may submit comments at any time by any of 
the following methods:
     E-mail: [email protected] with an appropriate 
subject line.
     Mail: Department of State, Directorate of Defense Trade 
Controls, Office of Defense Trade Controls Management, ATTN: Regulatory 
Change, 12th Floor, SA-1, Washington, DC 20522-0112.
     Fax: 202-261-8199.
     Hand Delivery or Courier (regular work hours only): 
Department of State, Directorate of Defense Trade Controls, Office of 
Defense Trade Controls Management, ATTENTION: Regulatory Change, SA-1, 
12th Floor, 2401 E Street, NW., Washington, DC 20037.
    Persons with access to the Internet may also view this notice by 
going to the regulations.gov Web site at: http://www.regulations.gov/index.cfm.

FOR FURTHER INFORMATION CONTACT: Mary Sweeney, Office of Defense Trade 
Controls Management, Department of State, 12th Floor, SA-1, Washington, 
DC 20522-0112; Telephone 202-663-2865 or FAX 202-261-8199; e-mail: 
[email protected]. ATTN: Regulatory Change.

SUPPLEMENTARY INFORMATION: References to the ``Office of Defense Trade 
Controls'' have been amended to the ``Directorate of Defense Trade 
Controls'' (Sec. Sec.  120.1(c), 120.4(a), 120.4(b), 120.12, 120.20, 
120.28(a), 121.1 Category XXI(a), 121.16, 122.1(a), 122.4(a), 122.4(b), 
122.4(c), 122.4(c)(4). 122.4(d), 123.1(a), 123.1(c), 123.3(a), 
123.8(a), 123.8(b), 123.9(a), 123.9(d), 123.9(e), 123.9(e)(3), 
123.9(e)(4), 123.10(b), 123.10(c), 123.11(a), 123.14(b), 123.25(a), 
123.27(a), 123.27(a)(2), 123.27(a)(5), 123.27(a)(6), 123.27(b), 
123.27(c), 124.1(a), 124.1(b), 124.1(c), 124.1(d), 124.4(a), 124.4(b), 
124.5, 124.6, 124.10(a), 124.10(b)(1), 124.10 Note, 124.12(1), 
124.12(a)(1), 124.13(d), 124.13(e), 124.14(a), 124.14(b), 124.14(b)(4), 
124.14(c)(5), 124.14(e), 124.14(e)(1), 125.1(b), 125.2(a), 125.2(b), 
125.3(a), 125.3(b), 125.3(c), 125.4(a), 125.4(b)(10)(iii), 
125.4(b)(11), 125.5(a), 125.5(b), 125.7(a), 125.7(b), 125.9, 126.1(e), 
126.2, 126.7(b), 126.7(c), 126.8(a), 126.8(a)(1), 126.8(a)(2), 
126.8(a)(3), 126.8(c)(1)(i), 126.8(c)(2), 126.9(a), 126.9(b), 
126.10(a), 126.14(a), 126.14(a)(1), 126.14(a)(2), 126.14(a)(3)(i), 
126.14(b), 127.1(a)(1), 127.1(a)(2), 127.1(a)(3), 127.1(c), 
127.7(b)(2), 127.8(a), 127.9, 127.10, 127.11, 127.12(a), 127.12(b)(1), 
127.12(b)(2), 127.12(b)(3), 127.12(c), 127.12(d)(iii), 128.3(a), 
128.5(c), 128.6(a), 128.6(b), 128.6(d), 128.10, 128.11(a), 128.13(d), 
128.15(a), 128.15(b)(3), 129.3(a), 129.4(b), 129.5(b), 129.5(c), 
129.5(e), 129.6(a), 129.7(a), 129.7(b)(2), 129.7(c), 129.8(a), 
129.8(b), 129.9(a), 130.2, 130.8(a)(1), 130.9(a)(1), 130.9(a)(1)(ii), 
130.9(a)(2), 130.9(b), 130.9(b)(2), 130.9(d), 130.10(a), 130.11(a)(3), 
130.11(b), 130.11(b)(2), 130.12(c), 130.12(d)(1), and 130.12(d)(2)).
    ``COCOM'' has been amended to the ``Wassenaar Arrangement'' 
(Sec. Sec.  120.4(d)(3)(ii), 120.4(d)(3)(iii), and 126.10(d)(2)). 
``Center for Defense Trade'' has been amended to the ``Directorate of 
Defense Trade Controls'' (Sec. Sec.  120.4(g) and 121.1(a)). ``Center 
for Defense Trade'' has been amended to ``Office of Defense Trade 
Controls Policy'' (Sec.  120.4(e)). Also, references to the ``Bureau of 
Politico-Military Affairs'' have been amended to the ``Bureau of 
Political-Military Affairs'' (Sec. Sec.  120.4(g), 120.12, 120.28(a), 
127.7(a), 127.9 and 127.11(b)). Grammatical changes have been made to 
the definition of ``U.S. person'' at Sec.  120.15, to Sec.  124.1(a) by 
deleting ``either,'' and to ``Voluntary Disclosures'' at Sec.  
127.12(b)(4). The ``Defense Security Assistance Agency'' has been 
amended to the ``Defense Security Cooperation Agency'' (Sec.  
120.28(b)(3)).
    Certain references to the Treasury Department have been amended to 
the Attorney General, and other references to Treasury have been 
amended to the Department of Justice, as appropriate, because the 
Bureau of Alcohol, Tobacco and Firearms (ATF) was transferred to the 
Department of Justice and ATF's name was changed to Bureau of Alcohol, 
Tobacco, Firearms and Explosives (Sec. Sec.  120.5, 120.18, 123.2 and 
126.11). Also, the reference to 31 CFR part 505 has been changed to 27 
CFR part 447 and 15 CFR parts 768-799 have been changed to 15 CFR parts 
730-799 at Sec.  120.5. References to 27 CFR parts 47, 178 and 179 have 
been changed to 27 CFR parts 447, 478, 479, and 555 at Sec. Sec.  
120.18 and 123.2. Reference to 27 CFR 178.115(d) has been changed to 27 
CFR 478.115(d) at Sec.  123.17(d).
    Numerous typographical errors are being corrected in the United 
States Munitions List, Sec.  121.1, Categories V and XV.
    References to ``technical data'' and ``defense service'' have been 
corrected in Sec.  121.1, Categories IV, V, XI, XII, XIV, XVII, XX, and 
XXI. Cross references have been corrected (Sec. Sec.  120.1(c), 
120.10(a)(1), 120.16, 121.1(b), 121.1 Category V(g)(2), 121.1 Category 
V(g)(5), 121.1 Category V(g)(6), 121.1 Category V(g)(7), 121.1 Category 
V(g)(8), 124.2(c)(5)(ix), 126.7(a), 127.8(a), 127.9 and 127.11(c)). 
Typographical mistakes have been corrected in Sec.  121.1, Category 
V(a)(1); Sec.  121.1, Category V(a)(5); Sec.  121.1, Category V(a)(9); 
Sec.  121.1, Category V(a)(15)(i); Sec.  121.1, Category V(a)(20)(i); 
Sec.  121.1, Category V(a)(24)(ii); Sec.  121.1, Category V(a)(29); 
Sec.  121.1, Category V(a)(31)(i); Sec.  121.1, Category V(a)(31)(ii); 
Sec.  121.1, Category V(a)(31)(iv); Sec.  121.1, Category V(c)(8); 
Sec.  121.1, Category V(c)(9); Sec.  121.1, Category V(e)(2); Sec.  
121.1, Category V(e)(9); Sec.  121.1, Category V(e)(13); Sec.  121.1, 
Category V(e)(14); Sec.  121.1, Category V(f)(3)(iv); Sec.  121.1, 
Category V(f)(14); Sec.  121.1, Category V(f)(15); Sec.  121.1, 
Category V(f)(17); Sec.  121.1, Category XV(d)(1); Sec.  121.1, 
Category XV(d)(2); Sec.  121.1, Category XV(d)(3); Sec.  121.1, 
Category XV(d)(5); Sec.  121.16, Item 1-Category 1; Sec.  121.16, Item 
4-Category II; Sec.  121.16, Item 9-Category II; Sec.  121.16, Item 12-
Category II; Sec.  121.16, Note to Item 18(a); and in Sec. Sec.  
123.16(b)(2)(v), 126.5(c)(4)(v), 126.14(a)(3)(iv), 127.3(b), 
128.7(a)(1)(ii), and 130.5(b)(1). CAS numbers were added in Sec.  
121.1, Category V(a)(2); Sec.  121.1, Category V(a)(31)(vii); Sec.  
121.1, Category V(a)(34); Sec.  121.1, Category V(e)(11); Sec.  121.1, 
Category V(e)(13); and Sec.  121.1, Category V(e)(15). The ``Director 
of the Office of Defense Trade Controls'' has been changed to the 
``Director, Office of Defense Trade Controls Policy''

[[Page 20535]]

at Category XXI-Miscellaneous Articles in Sec.  121.1.
    ``Registration Statement'' has been amended to ``Statement of 
Registration'' (Sec. Sec.  122.2(b), 122.4(a)(2), 124.1(b), 125.3(a), 
126.13(c), and 129.4(a) and (b)).
    ``Defense Investigative Service'' has been amended to ``Defense 
Security Service'' (Sec. Sec.  123.6, 125.3(a), 125.9 and 127.5). The 
``Industrial Security Manual'' has been changed to the ``National 
Industrial Security Program Operating Manual'' (Sec. Sec.  124.3(b)(2), 
125.3(b), 125.4(b)(9)(iii), 125.5(a), 125.5(b), 125.7(b), 125.9 and 
127.5). Clarification has been made relating to the authority of the 
Secretary of State to impose different conditions on exports apart from 
those imposed by the Department of Defense. The ``Directorate for 
Freedom of Information and Security Review'' has been amended to 
``Office of Freedom of Information and Security Review'' (Sec.  
125.4(b)(13)).
    Reference to 49 U.S.C. 1508 has been updated to 49 U.S.C. 40103 
regarding overflight approval at Sec.  126.6(b). Reference to 15 CFR 
part 388 has been updated to 15 CFR part 720 at Sec.  126.7(a)(6).
    Additional language has been added to clarify Sec.  127.1(a): 
reexporting or retransferring or attempting to reexport or retransfer 
from one foreign destination to another foreign destination by a U.S. 
Person of any defense article or technical data or by anyone of any 
U.S. origin defense article or technical data, or to furnish a defense 
service for which a license or written approval is required by the 
ITAR; engaging in the business of either manufacturing or exporting 
defense articles or furnishing defense services without complying with 
the registration requirements of the ITAR; and, engaging in the 
business of brokering activities without complying with the 
registration requirements of the ITAR or obtaining a license or written 
approval as required by the ITAR.
    In addition, we have clarified that the ``business of manufacturing 
or exporting defense articles or furnishing defense services'' includes 
participating in one action and does not require more than one action 
(Sec. Sec.  122.1(a) and 127.1(a)). The potential harm to the security 
or foreign policy of the United States by even one unregulated action 
to facilitate the manufacture, export, or import of a defense article 
or defense service warrants the need to subject such actions to 
regulation under this subchapter.
    Also, Sec.  127.1(d) has been clarified by adding ``knowingly.''
    ``Under Secretary for International Security Affairs'' has been 
amended to the ``Under Secretary for Arms Control and International 
Security'' (Sec. Sec.  127.7(d) and 127.8(b)). ``Arms Control and 
International Security Affairs'' has been amended to ``Arms Control and 
International Security'' (Sec. Sec.  128.13(a), 128.13(c), 
128.13(e)(2), and 128.13(f)).
    In Sec.  128.2, reference to the Department of Commerce appointing 
the Administrative Law Judge has been deleted. Sec.  128.5(c) has been 
changed from sending the ``answer'' to the Office of Administrative Law 
Judge, United States Department of Commerce, to the designated 
Administrative Law Judge.
    In Sec.  129.2, the definition of brokering activities has been 
clarified to reflect that the ``business of brokering activities'' 
includes participating in one or more actions as described in the 
definition. The potential harm to the security or foreign policy of the 
United States by even one unregulated brokering action warrants the 
need to subject such action or actions to regulation under this 
subchapter.
    In Sec.  129.4, language has been added to make it clear that the 
registration requirements for brokers are not meant to exclude foreign 
persons from registering as brokers. Where foreign persons cannot 
provide the same information that a U.S. person would provide, they 
still are required to submit information that is substantially similar 
in content to that which would be provided by a U.S. person.
    References to Sec.  36(a)(8) of the Arms Export Control Act and 22 
U.S.C. 2776(a)(8) have been updated to Sec.  36(a)(7) and 22 U.S.C. 
2776(a)(7) pertaining to submitting Part 130 reports to Congress as 
contained in Sec.  130.17(a).
    In Sec.  120.27, the listed criminal statutes have been updated to 
reflect corresponding changes to Sec.  38(g)(1)(A) of the Arms Export 
Control Act.
    In addition, other minor changes have been made in various sections 
to clarify the authority of particular offices and officials or to 
clarify the underlying purpose of the specific section.

Regulatory Analysis and Notices

Administrative Procedure Act

    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.

Regulatory Flexibility Act

    This rule does not require analysis under the Regulatory 
Flexibility Act.

Unfunded Mandates Act of 1995

    This rule does not require analysis under the Unfunded Mandates 
Reform Act.

Small Business Regulatory Enforcement Fairness Act of 1996

    This amendment has been found not to be a major rule within the 
meaning of the Small Business Regulatory Enforcement Fairness Act of 
1996. It will not have substantial direct effects on the States, the 
relationship between the National Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Executive Orders 12372 and 13132

    It is determined that this rule does not have sufficient federalism 
implications to warrant application of the consultation provisions of 
Executive Orders 12372 and 13132.

Executive Order 12866

    This amendment 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.

Paperwork Reduction Act

    This rule 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 and 125

    Arms and munitions, Classified information, Exports.

22 CFR Part 121

    Arms and munitions, Exports, U.S. Munitions List.

22 CFR Part 122

    Arms and munitions, Exports, Reporting and recordkeeping 
requirements.

22 CFR Parts 123 and 126

    Arms and munitions, Exports.

22 CFR Parts 124 and 129

    Arms and munitions, Exports, Technical assistance.

22 CFR Part 127

    Arms and munitions, Crime, Exports, Penalties, Seizures and 
forfeitures.

22 CFR Part 128

    Administrative practice and procedures, Arms and munitions, 
Exports.

[[Page 20536]]

22 CFR Part 130

    Arms and munitions, Campaign funds, Confidential business 
information, Exports, Reporting and recordkeeping requirements.


0
Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, parts 120, 121, 122, 123, 124, 125, 126, 127, 128, 129 
and 130 are amended as follows:

PART 120--PURPOSE AND DEFINITIONS

0
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.


0
2. Section 120.1 is amended by revising paragraphs (b)(2) and (c) to 
read as follows:


Sec.  120.1  General authorities and eligibility.

* * * * *
    (b) * * *
    (1) * * *
    (2) In the Bureau of Political-Military Affairs, there is a Deputy 
Assistant Secretary for Defense Trade Controls (DAS--Defense Trade 
Controls) and a Managing Director of Defense Trade Controls (MD--
Defense Trade Controls). The DAS--Defense Trade Controls and the MD--
Defense Trade Controls are responsible for exercising the authorities 
conferred under this subchapter. The DAS--Defense Trade Controls is 
responsible for oversight of the defense trade controls function. The 
MD--Defense Trade Controls is responsible for the Directorate of 
Defense Trade Controls, which oversees the subordinate offices 
described in paragraphs (b)(2)(i) through (b)(2)(iv) of this section.
    (i) The Office of Defense Trade Controls Management and the 
Director, Office of Defense Trade Controls Management, which have 
responsibilities related to management of defense trade controls 
operations, to include the exercise of general authorities in this part 
120, and the design, development, and refinement of processes, 
activities, and functional tools for the export licensing regime and to 
effect export compliance/enforcement activities;
    (ii) The Office of Defense Trade Controls Licensing and the 
Director, Office of Defense Trade Controls Licensing, which have 
responsibilities related to licensing or other authorization of defense 
trade, including references under parts 120, 123, 124, 125, 126, 129 
and 130 of this subchapter;
    (iii) The Office of Defense Trade Controls Compliance and the 
Director, Office of Defense Trade Controls Compliance, which have 
responsibilities related to violations of law or regulation and 
compliance therewith, including references contained in parts 122, 126, 
127, 128 and 130 of this subchapter, and that portion under part 129 of 
this subchapter pertaining to registration;
    (iv) The Office of Defense Trade Controls Policy and the Director, 
Office of Defense Trade Controls Policy, which have responsibilities 
related to the general policies of defense trade, including references 
under this part 120 and part 126 of this subchapter, and the commodity 
jurisdiction procedure under this subchapter, including under this part 
120.
    (c) Eligibility. Only U.S. persons (as defined in Sec.  120.15) and 
foreign governmental entities in the United States may be granted 
licenses or other approvals (other than retransfer approvals sought 
pursuant to this subchapter). Foreign persons (as defined in Sec.  
120.16) other than governments are not eligible. U.S. persons who have 
been convicted of violating the criminal statutes enumerated in Sec.  
120.27, who have been debarred pursuant to part 127 or 128 of this 
subchapter, who are the subject of an indictment involving the criminal 
statutes enumerated in Sec.  120.27, 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 export licenses (or other 
forms of authorization to export) from any agency of the U.S. 
Government, who are subject to Department of State Suspension/
Revocation under Sec.  126.7(a)(1) through (a)(7) of this subchapter, 
or who are ineligible under Sec.  127.7(c) of this subchapter are 
generally ineligible. Applications for licenses or other approvals will 
be considered only if the applicant has registered with the Directorate 
of Defense Trade Controls pursuant to part 122 of this subchapter. All 
applications and requests for approval must be signed by a U.S. person 
who has been empowered by the registrant to sign such documents.
* * * * *

0
3. Section 120.4 is amended by revising paragraphs (a), (b), 
(d)(3)(ii), (d)(3)(iii), (e), and (g), to read as follows:


Sec.  120.4  Commodity jurisdiction.

    (a) The commodity jurisdiction procedure is used with the U.S. 
Government if doubt exists as to whether an article or service is 
covered by the U.S. Munitions List. It may also be used for 
consideration of a redesignation of an article or service currently 
covered by the U.S. Munitions List. The Department must provide notice 
to Congress at least 30 days before any item is removed from the U.S. 
Munitions List. Upon written request, the Directorate of Defense Trade 
Controls shall provide a determination of whether a particular article 
or service is covered by the U.S. Munitions List. The determination, 
consistent with Sec. Sec.  120.2, 120.3, and 120.4, entails 
consultation among the Departments of State, Defense, Commerce and 
other U.S. Government agencies and industry in appropriate cases.
    (b) Registration with the Directorate of Defense Trade Controls as 
defined in part 122 of this subchapter is not required prior to 
submission of a commodity jurisdiction request. If it is determined 
that the commodity is a defense article or defense service covered by 
the U.S. Munitions List, registration is required for exporters, 
manufacturers, and furnishers of such defense articles and defense 
services (see part 122 of this subchapter), as well as for brokers who 
are engaged in brokering activities related to such articles or 
services.
* * * * *
    (d) * * *
    (3) * * *
    (ii) The nature of controls imposed by other nations on such items 
(including Wassenaar Arrangement and other multilateral controls), and
    (iii) That items described on the Wassenaar Arrangement List of 
Dual-Use Goods and Technologies shall not be designated defense 
articles or defense services unless the failure to control such items 
on the U.S. Munitions List would jeopardize significant national 
security or foreign policy interests.
    (e) The Directorate of Defense Trade Controls will provide a 
preliminary response within 10 working days of receipt of a complete 
request for commodity jurisdiction. If after 45 days the Directorate of 
Defense Trade Controls has not provided a final commodity jurisdiction 
determination, the applicant may request in writing to the Director, 
Office of Defense Trade Controls Policy that this determination be 
given expedited processing.
* * * * *
    (g) A person may appeal a commodity jurisdiction determination by

[[Page 20537]]

submitting a written request for reconsideration to the Managing 
Director of the Directorate of Defense Trade Controls. The Directorate 
of Defense Trade Controls will provide a written response of the 
Managing Director's determination within 30 days of receipt of the 
appeal. If desired, an appeal of the Managing Director's decision can 
then be made directly through the Deputy Assistant Secretary for 
Defense Trade Controls to the Assistant Secretary for Political-
Military Affairs.

0
4. Section 120.5 is revised to read as follows:


Sec.  120.5  Relation to regulations of other agencies.

    If an article or service is covered by the U.S. Munitions List, its 
export is regulated by the Department of State, except as indicated 
otherwise in this subchapter. For the relationship of this subchapter 
to regulations of the Department of Energy and the Nuclear Regulatory 
Commission, see Sec.  123.20 of this subchapter. The Attorney General 
controls permanent imports of articles and services covered by the U.S. 
Munitions Import List from foreign countries by persons subject to U.S. 
jurisdiction (27 CFR part 447). In carrying out such functions, the 
Attorney General shall be guided by the views of the Secretary of State 
on matters affecting world peace, and the external security and foreign 
policy of the United States. The Department of Commerce regulates the 
export of items on the Commerce Control List (CCL) under the Export 
Administration Regulations (15 CFR parts 730 through 799).

0
5. Section 120.10 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  120.10  Technical data.

    (a) * * *
    (1) Information, other than software as defined in Sec.  
120.10(a)(4), which is required for the design, development, 
production, manufacture, assembly, operation, repair, testing, 
maintenance or modification of defense articles. This includes 
information in the form of blueprints, drawings, photographs, plans, 
instructions or documentation.
* * * * *

0
6. Section 120.12 is revised to read as follows:


Sec.  120.12  Directorate of Defense Trade Controls.

    Directorate of Defense Trade Controls, Bureau of Political-Military 
Affairs, Department of State, Washington, DC 20522-0112.

0
7. Section 120.15 is revised to read as follows:


Sec.  120.15  U.S. person.

    U.S. person means a person (as defined in Sec.  120.14 of this 
part) who is a lawful permanent resident as defined by 8 U.S.C. 
1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 
1324b(a)(3). It also means any corporation, business association, 
partnership, society, trust, or any other entity, organization or group 
that is incorporated to do business in the United States. It also 
includes any governmental (federal, state or local) entity. It does not 
include any foreign person as defined in Sec.  120.16 of this part.

0
8. Section 120.16 is revised to read as follows:


Sec.  120.16  Foreign person.

    Foreign person means any natural person who is not a lawful 
permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a 
protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means 
any foreign corporation, business association, partnership, trust, 
society or any other entity or group that is not incorporated or 
organized to do business in the United States, as well as international 
organizations, foreign governments and any agency or subdivision of 
foreign governments (e.g., diplomatic missions).

0
9. Section 120.18 is revised to read as follows:


Sec.  120.18  Temporary import.

    Temporary import means bringing into the United States from a 
foreign country any defense article that is to be returned to the 
country from which it was shipped or taken, or any defense article that 
is in transit to another foreign destination. Temporary import includes 
withdrawal of a defense article from a customs bonded warehouse or 
foreign trade zone for the purpose of returning it to the country of 
origin or country from which it was shipped or for shipment to another 
foreign destination. Permanent imports are regulated by the Attorney 
General under the direction of the Department of Justice's Bureau of 
Alcohol, Tobacco, Firearms, and Explosives (see 27 CFR parts 447, 478, 
479, and 555).

0
10. Section 120.20 is revised to read as follows:


Sec.  120.20  License.

    License means a document bearing the word ``license'' issued by the 
Directorate of Defense Trade Controls or its authorized designee which 
permits the export or temporary import of a specific defense article or 
defense service controlled by this subchapter.

0
11. Section 120.27 is amended by revising paragraph (a)(3) and adding a 
new paragraph (a)(13) to read as follows:


Sec.  120.27  U.S. criminal statutes.

    (a) * * *
    (3) Sections 793, 794, or 798 of title 18, United States Code 
(relating to espionage involving defense or classified information) or 
Sec.  2339A of such title (relating to providing material support to 
terrorists);
* * * * *
    (13) Sections 3, 4, 5, and 6 of the Prevention of Terrorist Access 
to Destructive Weapons Act of 2004, relating to missile systems 
designed to destroy aircraft (18 U.S.C. 2332g), prohibitions governing 
atomic weapons (42 U.S.C. 2122), radiological dispersal services (18 
U.S.C. 2332h), and variola virus (18 U.S.C. 175b);
* * * * *

0
12. Section 120.28 is amended by revising paragraphs (a) introductory 
text and (b)(3) to read as follows:


Sec.  120.28  Listing of forms referred to in this subchapter.

* * * * *
    (a) Department of State, Bureau of Political-Military Affairs, 
Directorate of Defense Trade Controls, Washington, DC 20522-0112.
* * * * *
    (b) * * *
    (3) Department of Defense, Defense Security Cooperation Agency: 
Letter of Offer and Acceptance (DD Form 1513).

PART 121--THE UNITED STATES MUNITIONS LIST

0
13. The authority citation for part 121 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); E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp. 
p. 79; 22 U.S.C. 2651a; Pub. L. 105-261, 112 Stat. 1920.


0
14. Section 121.1 is revised to read as follows:
0
A. Revise paragraphs (a) and (b)
0
B. In paragraph (c) in Category IV revise paragraph (i)
0
C. In paragraph (c) in Category V revise paragraphs (a)(1), (a)(2), 
(a)(5), (a)(9), (a)(15)(i), (a)(20)(i), (a)(24)(ii), (a)(29), 
(a)(31)(i), (a)(31)(ii), (a)(31)(iv), (a)(31)(vii), (a)(34), (c)(8), 
(c)(9), (e)(2), (e)(9), (e)(11), (e)(13), (e)(14), (e)(15), (f)(3)(iv), 
(f)(14), (f)(15), (f)(17), (g)(2), (g)(5), (g)(6), (g)(7), (g)(8), and 
(h)
0
D. In paragraph (c) in Category XI revise paragraph (d)
0
E. In paragraph (c) in Category XII revise paragraph (f)

[[Page 20538]]

0
F. In paragraph (c) in Category XIV revise paragraph (m)
0
G. In paragraph (c) in Category XV revise paragraphs (d)(1), (d)(2), 
(d)(3), and (d)(5)
0
H. In paragraph (c) in Category XVII revise paragraph (a)
0
I. In paragraph (c) in Category XX revise paragraph (d)
0
J. In paragraph (c) in Category XXI revise paragraphs (a) and (b)


Sec.  121.1  General. The United States Munitions List.

    (a) The following articles, services and related technical data are 
designated as defense articles and defense services pursuant to 
Sec. Sec.  38 and 47(7) of the Arms Export Control Act (22 U.S.C. 2778 
and 2794(7)). Changes in designations will be published in the Federal 
Register. Information and clarifications on whether specific items are 
defense articles and services under this subchapter may appear 
periodically through the Internet Web site of the Directorate of 
Defense Trade Controls.
    (b) Significant Military Equipment: An asterisk precedes certain 
defense articles in the following list. The asterisk means that the 
article is deemed to be ``Significant Military Equipment'' to the 
extent specified in Sec.  120.7 of this subchapter. The asterisk is 
placed as a convenience to help identify such articles. Note that 
technical data directly related to the manufacture or production of any 
defense articles enumerated in any category that are designated as 
Significant Military Equipment (SME) shall itself be designed SME.
    (c) * * *
* * * * *

Category IV--Launch Vehicles, Guided Missiles, Ballistic Missiles, 
Rockets, Torpedoes, Bombs and Mines

* * * * *
    (i) 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 (h) 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.

Category V--Explosives and Energetic Materials, Propellants, Incendiary 
Agents and Their Constituents

    (a) * * *
    (1) ADNBF (aminodinitrobenzofuroxan or 7-Amino 4,6-
dinitrobenzofurazane-1-oxide) (CAS 97096-78-1);
    (2) BNCP (cis-bis (5-nitrotetrazolato) tetra amine-cobalt (III) 
perchlorate) (CAS 117412-28-9);
* * * * *
    (5) CP (2-(5-cyanotetrazolato) penta aminecobalt (III) 
perchlorate); (CAS 70247-32-4);
* * * * *
    (9) DIPAM (3,3'-Diamino-2,2',4,4',6,6'-hexanitrobiphenyl or 
dipicramide) (CAS 17215-44-0);
* * * * *
    (15) * * *
    (i) BNNII (Octohydro-2,5-bis(nitroimino) imidazo [4,5-
d]Imidazole);
* * * * *
    (20) * * *
    (i) RDX (cyclotrimethylenetrinitramine), cyclonite, T4, 
hexahydro-1,3,5-trinitro-1,3,5-triazine, 1,3,5-trinitro-1,3,5-
triaza-cyclohexane, hexogen, or hexogene) (CAS 121-82-4);
* * * * *
    (24) * * *
* * * * *
    (ii) NTNT (1-N-(2-nitrotriazolo)-4-nitrotetrazole);
* * * * *
    (29) TNP (1,4,5,8-tetranitro-pyridazino [4,5-d] pyridazine) (CAS 
229176-04-9);
* * * * *
    (31) * * *
    (i) 5-azido-2-nitrotriazole;
    (ii) ADHTDN (4-amino-3,5-dihydrazino-1,2,4-triazole 
dinitramide)(CAS 1614-08-0);
* * * * *
    (iv) BDNTA ([Bis-dinitrotriazole]amine);
* * * * *
    (vii) NTDNA (2-nitrotriazole 5-dinitramide) (CAS 75393-84-9);
* * * * *
    (34) Diaminotrinitrobenzene (DATB) (CAS 1630-08-6);
* * * * *
    (c) * * *
    (8) Titanium subhydride (TiHn) of stoichiometry equivalent to n 
= 0.65-1.68;
    (9) Military materials containing thickeners for hydrocarbon 
fuels specially formulated for use in flame throwers or incendiary 
munitions; metal stearates or palmates (also known as octol); and 
M1, M2 and M3 thickeners;
* * * * *
    (e) * * *
    (2) BAMO (bisazidomethyloxetane and its polymers) (CAS 17607-20-
4) (see paragraph (g)(1)of this category);
* * * * *
    (9) Poly-NIMMO (poly nitratomethylmethyoxetane, poly-NMMO, 
(poly[3-nitratomethyl-3-methyl oxetane]) (CAS 84051-81-0);
* * * * *
    (11) TVOPA 1,2,3-Tris [1,2-bis(difluoroamino) ethoxy]propane; 
tris vinoxy propane adduct; (CAS 53159-39-0);
* * * * *
    (13) FPF-1 (poly-2,2,3,3,4,4-hexafluoro pentane-1,5-diolformal) 
(CAS 376-90-9);
    (14) FPF-3 (poly-2,4,4,5,5,6,6-heptafluoro-2-trifluoromethyl-3-
oxaheptane-1,7-diolformal);
    (15) PGN (Polyglycidylnitrate or poly(nitratomethyl oxirane); 
poly-GLYN); (CAS 27814-48-8);
* * * * *
    (f) * * *
    (3) * * *
    (iv) n-butyl-ferrocene (CAS 31904-29-7);
* * * * *
    (14) Polyfunctional aziridine amides with isophthalic, trimesic 
(BITA or butylene imine trimesamide), isocyanuric, or 
trimethyladipic backbone structures and 2-methyl or 2-ethyl 
substitutions on the aziridine ring and its polymers;
    (15) Superfine iron oxide (Fe2O3 hematite) 
with a specific surface area more than 250 m\2\/g and an average 
particle size of 0.003 [micro]m or less (CAS 1309-37-1);
* * * * *
    (17) TEPANOL (Tetraethylenepentaamineacrylo- nitrileglycidol) 
(CAS 110445-33-5); cyanoethylated polyamines adducted with glycidol 
and their salts;
* * * * *
    (g) * * *
    (2) Dinitroazetidine-t-butyl salt (CAS 125735-38-8) (see 
paragraph (a)(27) of this category);
* * * * *
    (5) TAT (1, 3, 5, 7-tetraacetyl-1, 3, 5, 7-tetraaza-cyclooctane) 
(CAS 41378-98-7) (see paragraph (a)(12) of this category);
    (6) Tetraazadecalin (CAS 5409-42-7) (see paragraph (a)(26) of 
this category);
    (7) 1,3,5-trichorobenzene (CAS 108-70-3) (see paragraph (a)(22) 
of this category);
    (8) 1,2,4-trihydroxybutane (1,2,4-butanetriol) (CAS 3068-00-6) (see 
paragraph (e)(3) of this category);
    (h) 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 numerated in paragraphs (a) 
through (g) 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.
* * * * *

Category XI--Military Electronics

* * * * *
    (d) Technical data (as defined in Sec.  120.10) and defense 
services (as defined in Sec.  120.9) directly related to the defense 
articles enumerated in paragraphs (a) through (c) of this category. 
(See Sec.  125.4 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 as SME.

Category XII--Fire Control, Range Finder, Optical and Guidance and 
Control Equipment

* * * * *

[[Page 20539]]

    (f) Technical data (as defined in Sec.  120.10) and defense 
services (as defined in Sec.  120.9) directly related to the defense 
articles enumerated in paragraphs (a) through (e) of this category. 
(See Sec.  125.4 for exemptions.) Technical data directly related to 
manufacture and production of any defense articles enumerated elsewhere 
in this category that are designated as Significant Military Equipment 
(SME) shall itself be designated as SME.
* * * * *

Category XIV--Toxicological Agents, Including Chemical Agents, 
Biological Agents, and Associated Equipment

* * * * *
    (m) Technical data (as defined in Sec.  120.10 of this subchapter) 
and defense services (as defined in Sec.  120.9 of this subchapter) 
related to the defense articles enumerated in paragraphs (a) through 
(l) 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 as SME.
* * * * *

Category XV--Spacecraft Systems and Associated Equipment

* * * * *
    (d) * * *
    (1) A total dose of 5 x 10\5\ Rads (SI);
    (2) A dose rate upset of 5 x 10\8\ Rads (SI)/sec;
    (3) A neutron dose of 1 x 10\14\ N/cm2;
* * * * *
    (5) Single event latch-up free and having a dose rate latch-up of 5 
x 10\8\ Rads (SI)/sec or greater.
* * * * *

Category XVII--Classified Articles, Technical Data and Defense Services 
Not Otherwise Enumerated

    (a) All articles, technical data (as defined in Sec.  120.10 of 
this subchapter) and defense services (as defined in Sec.  120.9 of 
this subchapter) relating thereto which are classified in the interests 
of national security and which are not otherwise enumerated in the U.S. 
Munitions List.
* * * * *

Category XX--Submersible Vessels, Oceanographic and Associated 
Equipment

* * * * *
    (d) 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 (c) 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 as SME.

Category XXI--Miscellaneous Articles

    (a) Any article not specifically enumerated in the other categories 
of the U.S. Munitions List which has substantial military applicability 
and which has been specifically designed, developed, configured, 
adapted, or modified for military purposes. The decision on whether any 
article may be included in this category shall be made by the Director, 
Office of Defense Trade Controls Policy.
    (b) 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 paragraph (a) of 
this category.


0
15. Section 121.16 is amended as follows:
0
A. Revise Item 1--Category I.
0
B. Revise Item 4--Category II.
0
C. In Item 9--Category II revise paragraph (b).
0
D. In Item 12--Category II revise paragraph (d)(2) introductory text.
0
E. In Item 18--Category II revise Note to Item 18(a).


Sec.  121.16  Missile Technology Control Regime Annex.

* * * * *

Item 1--Category I

    Complete rocket systems (including ballistic missile systems, 
space launch vehicles, and sounding rockets (see Sec.  121.1, Cat. 
IV(a) and (b))) and unmanned air vehicle systems (including cruise 
missile systems, see Sec.  121.1, Cat. VIII (a), target drones and 
reconnaissance drones (see Sec.  121.1, Cat. VIII (a))) capable of 
delivering at least a 500 kg payload to a range of at least 300 km.
* * * * *

Item 4--Category II

    Propellants and constituent chemicals for propellants as 
follows:
    (a) Propulsive substances:
    (1) Hydrazine with a concentration of more than 70 percent and 
its derivatives including monomethylhydrazine (MMH);
    (2) Unsymmetric dimethylhydrazine (UDHM);
    (3) Ammonium perchlorate;
    (4) Sphercical aluminum powder with particle of uniform diameter 
of less than 500 x 10-\6\M (500 microns) and an aluminum 
content of 97 percent or greater;
    (5) Metal fuels in particle sizes less than 500 x 
10-\6\M (500 microns), whether spherical, atomized, 
spheriodal, flaked or ground, consisting of 97 percent or more of 
any of the following: zirconium, beryllium, boron, magnesium, zinc, 
and alloys of these;
    (6) Nitroamines (cyclotetramethylenetetranitramene (HMX), 
cyclotrimethylenetrinitramine (RDX);
    (7) Percholrates, chlorates or chromates mixed with powdered 
metals or other high energy fuel components;
    (8) Carboranes, decaboranes, pentaboranes and derivatives 
thereof;
    (9) Liquid oxidizers, as follows:
    (i) Nitrogen dioxide/dinitrogen tetroxide;
    (ii) Inhibited Red Fuming Nitric Acid (IRFNA);
    (iii) Compounds composed of fluorine and one or more of other 
halogens, oxygen or nitrogen.
    (b) Polymeric substances:
    (1) Hydroxyterminated polybutadiene (HTPB);
    (2) Glycidylazide polymer (GAP).
    (c) Other high energy density propellants such a Boron Slurry 
having an energy density of 40 x 10 joules/kg or greater.
    (d) Other propellants additives and agents:
    (1) Bonding agents as follows:
    (i) Tris (1(2methyl)aziridinyl phosphine oxide (MAPO);
    (ii) Trimesol 1(2)ethyl)aziridine (HX868, BITA);
    (iii) ``Tepanol'' (HX878), reaction product of 
tetraethylenepentamine, acrylonitrile and glycidol;
    (iv) ``Tepan'' (HX879), reaction product of tet enepentamine and 
acrylonitrile;
    (v) Polyfunctional aziridene amides with isophthalic, trimesic, 
isocyanuric, or trimethyladipic backbone also having a 2methyl or 
2ethyl aziridine group (HX752, HX872 and HX877).
    (2) Curing agents and catalysts as follows:
    (i) Triphenyl bismuth (TPB);
    (ii) Burning rate modifiers as follows:
    (iii) Catocene;
    (iv) Nbutylferrocene;
    (v) Other ferrocene derivatives.
    (3) Nitrate esters and nitrato plasticizers as follows:
    (i) 1,2,4butanetriol trinitrate (BTTN).
    (4) Stabilizers as follows:
    (i) Nmethylpnitroaniline.
* * * * *

Item 9--Category II

* * * * *
    (b) Gyro-astro compasses and other devices which derive position 
or orientation by means of automatically tracking celestial bodies 
or satellites (see Sec.  121.1, Category XV(d));
* * * * *

Item 12--Category II

* * * * *
    (d) * * *
    (2) Range instrumentation radars including associated optical/
infrared trackers and the specially designed software therefor with 
all of the following capabilities (see Sec.  121.1, Category 
XI(a)(3)):
* * * * *

Item 18--Category II

* * * * *

Note to Item 18(a)

    A detector is defined as a mechanical, electrical, optical or 
chemical device that automatically identifies and records, or 
registers a stimulus such as an environmental change in pressure or 
temperature, an electrical or electromagnetic signal or radiation 
from a radioactive material. The following pages were removed from 
the final ITAR for replacement by DDTC's updated version Sec.  6(l) 
of the Export Administration Act of 1979 (50 U.S.C. App. 2405(l)), 
as amended. In accordance with this provision, the list of MTCR 
Annex items shall constitute all items on the U.S. Munitions List in 
Sec.  121.16.

[[Page 20540]]

PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS

0
16. The authority citation for part 122 continues to read as follows:

    Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311; 1977 Comp. p. 79; 22 
U.S.C. 2651a.


0
17. Section 122.1 is amended by revising paragraph (a) to read as 
follows:


Sec.  122.1  Registration requirements.

    (a) Any person who engages in the United States in the business of 
either manufacturing or exporting defense articles or furnishing 
defense services is required to register with the Directorate of 
Defense Trade Controls. For the purpose 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. 
Manufacturers who do not engage in exporting must nevertheless 
register.
* * * * *

0
18. Section 122.2 is amended by revising paragraph (b) introductory 
text to read as follows:


Sec.  122.2  Submission of registration statement.

    (a) * * *
    (b) Transmittal letter. A letter of transmittal, signed by an 
authorized senior officer of the intended registrant, shall accompany 
each Statement of Registration.
* * * * *

0
19. Section 122.4 is amended by revising paragraphs (a) introductory 
text, (a)(2), (b), (c) introductory text, (c)(4) and (d) to read as 
follows:


Sec.  122.4  Notification of changes in information furnished by 
registrants.

    (a) A registrant must, within five days of the event, notify the 
Directorate of Defense Trade Controls by registered mail if:
* * * * *
    (2) There is a material change in the information contained in the 
Statement of Registration, including a change in the senior officers; 
the establishment, acquisition or divestment of a subsidiary or foreign 
affiliate; a merger; a change of location; or the dealing in an 
additional category of defense articles or defense services.
    (b) A registrant must notify the Directorate of Defense Trade 
Controls by registered mail at least 60 days in advance of any intended 
sale or transfer to a foreign person of ownership or control of the 
registrant or any entity thereof. Such notice does not relieve the 
registrant from obtaining the approval required under this subchapter 
for the export of defense articles or defense services to a foreign 
person, including the approval required prior to disclosing technical 
data. Such notice provides the Directorate of Defense Trade Controls 
with the information necessary to determine whether the authority of 
Sec.  38(g)(6) of the Arms Export Control Act regarding licenses or 
other approvals for certain sales or transfers of defense articles or 
data on the U.S. Munitions List should be invoked (see Sec. Sec.  
120.10 and 126.1(e) of this subchapter).
    (c) The new entity formed when a registrant merges with another 
company or acquires, or is acquired by, another company or a subsidiary 
or division of another company shall advise the Directorate of Defense 
Trade Controls of the following:
* * * * *
    (4) Amendments to agreements approved by the Directorate of Defense 
Trade Controls to change the name of a party to those agreements. The 
registrant must, within 60 days of this notification, provide to the 
Directorate of Defense Trade Controls a signed copy of an amendment to 
each agreement signed by the new U.S. entity, the former U.S. licensor 
and the foreign licensee. Any agreements not so amended will be 
considered invalid.
    (d) Prior approval by the Directorate of Defense Trade Controls is 
required for any amendment making a substantive change.

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

0
20. 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.

0
21. Section 123.1 is amended by revising paragraphs (a) introductory 
text and (c) introductory text to read as follows:


Sec.  123.1  Requirement for export or temporary import licenses.

    (a) Any person who intends to export or to import temporarily a 
defense article must obtain the approval of the Directorate of Defense 
Trade Controls prior to the export or temporary import, unless the 
export or temporary import qualifies for an exemption under the 
provisions of this subchapter. Applications for export or temporary 
import must be made as follows:
* * * * *
    (c) As a condition to the issuance of a license or other approval, 
the Directorate of Defense Trade Controls may require all pertinent 
documentary information regarding the proposed transaction and proper 
completion of the application form as follows:
* * * * *
0
22. Section 123.2 is revised to read as follows:


Sec.  123.2  Import jurisdiction.

    The Department of State regulates the temporary import of defense 
articles. Permanent imports of defense articles into the United States 
are regulated by the Department of the Justice's Bureau of Alcohol, 
Tobacco, Firearms and Explosives under the direction of the Attorney 
General (see 27 CFR parts 447, 478, 479, and 555).

0
23. Section 123.3 is amended by revising paragraph (a) introductory 
text to read as follows:


Sec.  123.3  Temporary import licenses.

    (a) A license (DSP-61) issued by the Directorate of Defense Trade 
Controls is required for the temporary import and subsequent export of 
unclassified defense articles, unless exempted from this requirement 
pursuant to Sec.  123.4. This requirement applies to:
* * * * *

0
24. Section 123.6 is revised to read as follows:


Sec.  123.6  Foreign trade zones and U.S. Customs and Border Protection 
bonded warehouses.

    Foreign trade zones in the United States and U.S. Customs and 
Border Protection bonded warehouses are considered integral parts of 
the United States for the purpose of this subchapter. An export license 
is therefore not required for shipment between the United States and a 
foreign trade zone or a U.S. Customs and Border Protection bonded 
warehouse. In the case of classified defense articles, the provisions 
of the Department of Defense National Industrial Security Program 
Operating Manual will apply. An export license is required for all 
shipments of articles on the U.S. Munitions List from foreign trade 
zones and U.S. Customs and Border Protection bonded warehouses to 
foreign countries, regardless of how the articles reached the zone or 
warehouse.

0
25. Section 123.8 is revised to read as follows:

[[Page 20541]]

Sec.  123.8  Special controls on vessels, aircraft and satellites 
covered by the U.S. Munitions List.

    (a) Transferring registration or control to a foreign person of any 
aircraft, vessel, or satellite on the U.S. Munitions List is an export 
for purposes of this subchapter and requires a license or written 
approval from the Directorate of Defense Trade Controls. This 
requirement applies whether the aircraft, vessel, or satellite is 
physically located in the United States or abroad.
    (b) The registration in a foreign country of any aircraft, vessel 
or satellite covered by the U.S. Munitions List which is not registered 
in the United States but which is located in the United States 
constitutes an export. A license or written approval from the 
Directorate of Defense Trade Controls is therefore required. Such 
transactions may also require the prior approval of the U.S. Department 
of Transportation's Maritime Administration, the Federal Aviation 
Administration or other agencies of the U.S. Government.

0
26. Section 123.9 is amended by revising paragraphs (a), (d), (e) 
introductory text, (e)(3) and (e)(4) 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 on a Shipper's Export 
Declaration 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, transshipping, or disposing of a defense 
article to any end user, end use or destination other than as stated on 
the export license, or on the Shipper's Export Declaration in cases 
where an exemption is claimed under this subchapter. Exporters must 
ascertain the specific end-user and end-use prior to submitting an 
application to the Directorate of Defense Trade Controls or claiming an 
exemption under this subchapter.
* * * * *
    (d) The written approval of the Directorate of Defense Trade 
Controls must be obtained before reselling, transferring, transshipping 
on a non-continuous voyage, or disposing of a defense article in any 
country other than the country of ultimate destination, or anyone other 
than the authorized end-user, as stated on the Shipper's Export 
Declaration in cases where an exemption is claimed under this 
subchapter.
    (e) Reexports or retransfers of U.S.-origin components incorporated 
into a foreign defense article to a government of a NATO country, or 
the governments of Australia or Japan, are authorized without the prior 
written approval of the Directorate of Defense Trade Controls, 
provided:
* * * * *
    (3) The person reexporting the defense article must provide 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) In certain cases, the Managing Director, Directorate of Defense 
Trade Controls or the Director, Office of Defense Trade Controls 
Licensing, may place retransfer restrictions on a license prohibiting 
use of this exemption.

0
27. Section 123.10 is revised to read as follows:


Sec.  123.10  Non-transfer and use assurances.

    (a) A nontransfer and use certificate (Form DSP-83) is required for 
the export of significant military equipment and classified articles, 
including classified technical data. A license will not be issued until 
a completed Form DSP-83 has been received by the Directorate of Defense 
Trade Controls. This form is to be executed by the foreign consignee, 
foreign end-user, and the applicant. The certificate stipulates that, 
except as specifically authorized by prior written approval of the 
Department of State, the foreign consignee and foreign end-user will 
not reexport, resell or otherwise dispose of the significant military 
equipment enumerated in the application outside the country named as 
the location of the foreign end-use or to any other person.
    (b) The Directorate of Defense Trade Controls may also require a 
DSP-83 for the export of any other defense articles, including 
technical data, or defense services.
    (c) When a DSP-83 is required for an export of any defense article 
or defense service to a non-governmental foreign end-user, the 
Directorate of Defense Trade Controls may require as a condition of 
issuing the license that the appropriate authority of the government of 
the country of ultimate destination also execute the certificate.

0
28. Section 123.11 is amended by revising paragraph (a) to read as 
follows:


Sec.  123.11  Movements of vessels and aircraft covered by the U.S. 
Munitions List outside the United States.

    (a) A license issued by the Directorate of Defense Trade Controls 
is required whenever a privately-owned aircraft or vessel on the U.S. 
Munitions List makes a voyage outside the United States.
* * * * *

0
29. Section 123.14 is amended by revising paragraph (b) to read as 
follows:


Sec.  123.14  Import certificate/delivery verification procedure.

    (a) * * *
    (b) Exports. The Directorate of Defense Trade Controls may require 
the IC/DV procedure on proposed exports of defense articles to non-
government entities in those countries participating in IC/DV 
procedures. In such cases, U.S. exporters must submit both an export 
license application (the completed Form DSP-5) and the original Import 
Certificate, which must be provided and authenticated by the government 
of the importing country. This document verifies that the foreign 
importer complied with the import regulations of the government of the 
importing country and that the importer declared the intention not to 
divert, transship or reexport the material described therein without 
the prior approval of that government. After delivery of the 
commodities to the foreign consignee, the Directorate of Defense Trade 
Controls may also require U.S. exporters to furnish Delivery 
Verification documentation from the government of the importing 
country. This documentation verifies that the delivery was in 
accordance with the terms of the approved export license. Both the 
Import Certificate and the Delivery Verification must be furnished to 
the U.S. exporter by the foreign importer.
* * * * *

0
30. Section 123.16 is amended by revising paragraph (b)(2)(v) to read 
as follows:


Sec.  123.16  Exemptions of general applicability.

    (a) * * *
    (b) * * *
    (2) * * *
    (v) the exporter may not make more than 24 shipments per calendar 
year to the previously authorized end user;
* * * * *

0
31. Section 123.17 is amended by revising paragraph (d) to read as 
follows:


Sec.  123.17  Exports of firearms and ammunition.

* * * * *
    (d) Port Directors of U.S. Customs and Border Protection shall 
permit a foreign person to export without a license such firearms in 
Category I(a) of Sec.  121.1 of this subchapter and ammunition

[[Page 20542]]

therefor as the foreign person brought into the United States under the 
provisions of 27 CFR 478.115(d). (The latter provision specifically 
excludes from the definition of importation the bringing into the 
United States of firearms and ammunition by certain foreign persons for 
specified purposes.)
* * * * *

0
32. Section 123.25 is amended by revising paragraph (a) to read as 
follows:


Sec.  123.25  Amendments to licenses.

    (a) The Directorate of Defense Trade Controls may approve an 
amendment to a license for permanent export, temporary export and 
temporary import of unclassified defense articles. A suggested format 
is available from the Directorate of Defense Trade Controls.
* * * * *

0
33. Section 123.27 is amended by revising paragraphs (a) introductory 
text, (a)(2), (a)(5), (a)(6), (b), and (c) to read as follows:


Sec.  123.27  Special licensing regime for export to U.S. allies of 
commercial communications satellite components, systems, parts, 
accessories, attachments and associated technical data.

    (a) U.S. persons engaged in the business of exporting specifically 
designed or modified components, systems, parts, accessories, 
attachments, associated equipment and certain associated technical data 
for commercial communications satellites, and who are so registered 
with the Directorate of Defense Trade Controls pursuant to part 122 of 
this subchapter, may submit license applications for multiple permanent 
and temporary exports and temporary imports of such articles for 
expeditious consideration without meeting the documentary requirements 
of Sec.  123.1(c)(4) and (5) concerning purchase orders, letters of 
intent, contracts and non-transfer and end use certificates, or the 
documentary requirements of Sec.  123.9, concerning approval of re-
exports or re-transfers, when all of the following requirements are 
met:
* * * * *
    (2) The proposed exports concern exclusively one or more foreign 
persons (e.g., companies or governments) located within the territories 
of the countries identified in paragraph (a)(1) of this section, and 
one or more commercial communications satellite programs included 
within a list of such persons and programs approved by the U.S. 
Government for purposes of this section, as signified in a list of such 
persons and programs that will be publicly available through the 
Internet Web site of the Directorate of Defense Trade Controls and by 
other means.
* * * * *
    (5) The U.S. exporter provides complete shipment information to the 
Directorate of Defense Trade Controls within 15 days of shipment by 
submitting a report containing a description of the item and the 
quantity, value, port of exit, and end-user and country of destination 
of the item, and at that time meets the documentary requirements of 
Sec.  123.1(c)(4) and (5), the documentary requirements of Sec.  123.9 
in the case of re-exports or re-transfers, and, other documentary 
requirements that may be imposed as a condition of a license (e.g., 
parts control plans for MTCR-controlled items). The shipment 
information reported must include a description of the item and 
quantity, value, port of exit and end user and country of destination 
of the item.
    (6) At any time in which an item exported pursuant to this section 
is proposed for re-transfer outside of the approved territory, programs 
or persons (e.g., such as in the case of an item included in a 
satellite for launch beyond the approved territory), the detailed 
requirements of Sec.  123.9 apply with regard to obtaining the prior 
written consent of the Directorate of Defense Trade Controls.
    (b) The re-export or re-transfer of the articles authorized for 
export (including to specified re-export destinations) in accordance 
with this section do not require the separate prior written approval of 
the Directorate of Defense Trade Controls provided all of the 
requirements in paragraph (a) of this section are met.
    (c) The Directorate of Defense Trade Controls will consider, on a 
case-by-case basis, requests to include additional foreign companies 
and satellite programs within the geographic coverage of a license 
application submitted pursuant to this section from countries not 
otherwise covered, who are members of the European Space Agency or the 
European Union. In no case, however, can the provisions of this section 
apply or be relied upon by U.S. exporters in the case of countries who 
are subject to the mandatory requirements of Section 1514 of the Strom 
Thurmond National Defense Authorization Act for Fiscal Year 1999 (Pub. 
L. 105-261), concerning national security controls on satellite export 
licensing.
* * * * * *

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

0
34. 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.


0
35. Section 124.1 is revised to read as follows:


Sec.  124.1  Manufacturing license agreements and technical assistance 
agreements.

    (a) Approval. The approval of the Directorate of Defense Trade 
Controls must be obtained before the defense services described in 
Sec.  120.9(a) of this subchapter may be furnished. In order to obtain 
such approval, the U.S. person must submit a proposed agreement to the 
Directorate of Defense Trade Controls. Such agreements are generally 
characterized as manufacturing license agreements, technical assistance 
agreements, distribution agreements, or off-shore procurement 
agreements, and may not enter into force without the prior written 
approval of the Directorate of Defense Trade Controls. Once approved, 
the defense services described in the agreements may generally be 
provided without further licensing in accordance with Sec. Sec.  124.3 
and 125.4(b)(2) of this subchapter. The requirements of this section 
apply whether or not technical data is to be disclosed or used in the 
performance of the defense services described in Sec.  120.9(a) of this 
subchapter (e.g., all the information relied upon by the U.S. person in 
performing the defense service is in the public domain or is otherwise 
exempt from the licensing requirements of this subchapter pursuant to 
Sec.  125.4 of this subchapter). This requirement also applies to the 
training of any foreign military forces, regular and irregular, in the 
use of defense articles. Technical assistance agreements must be 
submitted in such cases. In exceptional cases, the Directorate of 
Defense Trade Controls, upon written request, will consider approving 
the provision of defense services described in Sec.  120.9(a) of this 
subchapter by granting a license under part 125 of this subchapter. 
Also, see Sec.  126.8 of this subchapter for the requirements for prior 
approval of proposals relating to significant military equipment.
    (b) Classified articles. Copies of approved agreements involving 
the release of classified defense articles will be forwarded by the 
Directorate of Defense Trade Controls to the Defense

[[Page 20543]]

Security Service of the Department of Defense.
    (c) Amendments. Changes to the scope of approved agreements, 
including modifications, upgrades, or extensions must be submitted for 
approval. The amendments may not enter into force until approved by the 
Directorate of Defense Trade Controls.
    (d) Minor amendments. Amendments which only alter delivery or 
performance schedules, or other minor administrative amendments which 
do not affect in any manner the duration of the agreement or the 
clauses or information which must be included in such agreements 
because of the requirements of this part, do not have to be submitted 
for approval. One copy of all such minor amendments must be submitted 
to the Directorate of Defense Trade Controls within thirty days after 
they are concluded.

0
36. Section 124.2 is amended by revising paragraph (c)(5)(ix) to read 
as follows:


Sec.  124.2  Exemptions for training and military service.

* * * * *
    (c) * * *
    (5) * * *
    (ix) Nuclear radiation measuring devices manufactured to military 
specifications listed in Category XVI(c);
* * * * *

0
37. Section 124.3 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  124.3  Exports of technical data in furtherance of an agreement.

* * * * *
    (b) * * *
    (2) The U.S. party complies with the requirements of the Department 
of Defense National Industrial Security Program Operating Manual 
concerning the transmission of classified information (unless such 
requirements are in direct conflict with guidance provided by the 
Directorate of Defense Trade Controls, in which case the latter 
guidance must be followed) and any other requirements of cognizant U.S. 
departments or agencies.

0
38. Section 124.4 is amended by revising the heading, paragraphs (a) 
and (b) introductory text to read as follows:


Sec.  124.4  Deposit of signed agreements with the Directorate of 
Defense Trade Controls.

    (a) The United States party to a manufacturing license or a 
technical assistance agreement must file one copy of the concluded 
agreement with the Directorate of Defense Trade Controls not later than 
30 days after it enters into force. If the agreement is not concluded 
within one year of the date of approval, the Directorate of Defense 
Trade Controls must be notified in writing and be kept informed of the 
status of the agreement until the requirements of this paragraph or the 
requirements of Sec.  124.5 are satisfied.
    (b) In the case of concluded agreements involving coproduction or 
licensed production outside of the United States of defense articles of 
United States origin, a written statement must accompany filing of the 
concluded agreement with the Directorate of Defense Trade Controls, 
which shall include:
* * * * *

0
39. Section 124.5 is revised to read as follows:


Sec.  124.5  Proposed agreements that are not concluded.

    The United States party to any proposed manufacturing license 
agreement or technical assistance agreement must inform the Directorate 
of Defense Trade Controls if a decision is made not to conclude the 
agreement. The information must be provided within 60 days of the date 
of the decision. These requirements apply only if the approval of the 
Directorate of Defense Trade Controls was obtained for the agreement to 
be concluded (with or without any provisos).

0
40. Section 124.6 is revised to read as follows:


Sec.  124.6  Termination of manufacturing license agreements and 
technical assistance agreements.

    The U.S. party to a manufacturing license or a technical assistance 
agreement must inform the Directorate of Defense Trade Controls in 
writing of the impending termination of the agreement not less than 30 
days prior to the expiration date of such agreement.

0
41. Section 124.10 is amended by revising paragraphs (a), (b)(1) and 
Note to read as follows:


Sec.  124.10  Nontransfer and use assurances.

    (a) Types of agreements requiring assurances. With respect to any 
manufacturing license agreement or technical assistance agreement which 
relates to significant military equipment or classified defense 
articles, including classified technical data, a Nontransfer and Use 
Certificate (Form DSP-83) (see Sec.  123.10 of this subchapter) signed 
by the applicant and the foreign party must be submitted to the 
Directorate of Defense Trade Controls. With respect to all agreements 
involving classified articles, including classified technical data, an 
authorized representative of the foreign government must sign the DSP-
83 (or provide the same assurances in the form of a diplomatic note), 
unless the Directorate of Defense Trade Controls has granted an 
exception to this requirement. The Directorate of Defense Trade 
Controls may require that a DSP-83 be provided in conjunction with an 
agreement that does not relate to significant military equipment or 
classified defense articles. The Directorate of Defense Trade Controls 
may also require with respect to any agreement that an appropriate 
authority of the foreign party's government also sign the DSP-83 (or 
provide the same assurances in the form of a diplomatic note).
    (b) * * *
    (1) Agreements which have been signed by all parties before being 
submitted to the Directorate of Defense Trade Controls may only be 
submitted along with any required DSP-83 and/or diplomatic note.
    (2) * * *

    Note to paragraph (b): In no case may a transfer occur before a 
required DSP-83 and/or diplomatic note has been submitted to the 
Directorate of Defense Trade Controls.


0
42. Section 124.12 is amended by revising paragraphs (a) introductory 
text and (a)(1) to read as follows:


Sec.  124.12  Required information in letters of transmittal.

    (a) An application for the approval of a manufacturing license or 
technical assistance agreement with a foreign person must be 
accompanied by an explanatory letter. The original letter and seven 
copies of the letter and eight copies of the proposed agreement shall 
be submitted to the Directorate of Defense Trade Controls. The 
explanatory letter shall contain:
    (1) A statement giving the applicant's Directorate of Defense Trade 
Controls registration number.
* * * * *

0
43. Section 124.13 is amended by revising introductory text and 
paragraphs (d) introductory text and (e) to read as follows:


Sec.  124.13  Procurement by United States persons in foreign countries 
(off-shore procurement).

    Notwithstanding the other provisions in part 124 of this 
subchapter, the Directorate of Defense Trade Controls may authorize by 
means of a license (DSP-5) the export of unclassified technical data to 
foreign persons for offshore procurement of defense articles, provided 
that:
* * * * *
    (d) The person in the United States provides the Directorate of 
Defense

[[Page 20544]]

Trade Controls with a copy of each contract, purchase order or 
subcontract for offshore procurement at the time it is accepted. Each 
such contract, purchase order or subcontract must clearly identify the 
article to be produced and must identify the license number or 
exemption under which the technical data was exported; and
    (e) Licenses issued pursuant to this section must be renewed prior 
to 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 Directorate 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.

0
44. Section 124.14 is amended by revising paragraphs (a), (b) 
introductory text, (b)(4), (c)(5), (e) introductory text and (e)(1) to 
read as follows:


Sec.  124.14  Exports to warehouses or distribution points outside the 
United States.

    (a) Agreements. Agreements (e.g., contracts) between U.S. persons 
and foreign persons for the warehousing and distribution of defense 
articles must be approved by the Directorate of Defense Trade Controls 
before they enter into force. Such agreements will be limited to 
unclassified defense articles and must contain conditions for special 
distribution, end-use and reporting. Licenses for exports pursuant to 
such agreements must be obtained prior to exports of the defense 
articles unless an exemption under Sec.  123.16(b)(1) of this 
subchapter is applicable.
    (b) Required information. Proposed warehousing and distribution 
agreements (and amendments thereto) shall be submitted to the 
Directorate of Defense Trade Controls for approval. The following 
information must be included in all such agreements:
* * * * *
    (4) Specific identification of the country or countries that 
comprise the distribution territory. Distribution must be specifically 
limited to the governments of such countries or to private entities 
seeking to procure defense articles pursuant to a contract with a 
government within the distribution territory or to other eligible 
entities as specified by the Directorate of Defense Trade Controls. 
Consequently, any deviation from this condition must be fully explained 
and justified. A nontransfer and use certificate (DSP-83) will be 
required to the same extent required in licensing agreements under 
Sec.  124.9(b).
* * * * *
    (c) * * *
    (5) ``No export, sale, transfer, or other disposition of the 
defense articles covered by this agreement is authorized to any country 
outside the distribution territory without the prior written approval 
of the Directorate of Defense Trade Controls of the U.S. Department of 
State.''
* * * * *
    (e) Transmittal letters. Requests for approval of warehousing and 
distribution agreements with foreign persons must be made by letter. 
The original letter and seven copies of the letter and seven copies of 
the proposed agreement shall be submitted to the Directorate of Defense 
Trade Controls. The letter shall contain:
    (1) A statement giving the applicant's Directorate of Defense Trade 
Controls registration number.
* * * * *

PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED 
DEFENSE ARTICLES

0
45. The authority citation for part 125 is revised to read as follows:

    Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp. p. 79; 
22 U.S.C. 2651a.


0
46. Section 125.1 is amended by revising paragraphs (b), (c), and (d) 
to read as follows:


Sec.  125.1  Exports subject to this part.

* * * * *
    (b) A license for the export of technical data and the exemptions 
in Sec.  125.4 may not be used for foreign production purposes or for 
technical assistance unless the approval of the Directorate of Defense 
Trade Controls has been obtained. Such approval is generally provided 
only pursuant to the procedures specified in part 124 of this 
subchapter.
    (c) Technical data authorized for export may not be reexported, 
transferred or diverted from the country of ultimate end-use or from 
the authorized foreign end-user (as designated in the license or 
approval for export) or disclosed to a national of another country 
without the prior written approval of the Directorate of Defense Trade 
Controls.
    (d) The controls of this part apply to the exports referred to in 
paragraph (a) of this section regardless of whether the person who 
intends to export the technical data produces or manufactures defense 
articles if the technical data is determined by the Directorate of 
Defense Trade Controls to be subject to the controls of this 
subchapter.
* * * * *

0
47. Section 125.2 is amended by revising paragraphs (a) and (b) to read 
as follows:


Sec.  125.2  Exports of unclassified technical data.

    (a) License. A license (DSP-5) is required for the export of 
unclassified technical data unless the export is exempt from the 
licensing requirements of this subchapter. In the case of a plant 
visit, details of the proposed discussions must be transmitted to the 
Directorate of Defense Trade Controls for an appraisal of the technical 
data. Seven copies of the technical data or the details of the 
discussion must be provided.
    (b) Patents. A license issued by the Directorate of Defense Trade 
Controls is required for the export of technical data whenever the data 
exceeds that which is used to support a domestic filing of a patent 
application or to support a foreign filing of a patent application 
whenever no domestic application has been filed. Requests for the 
filing of patent applications in a foreign country, and requests for 
the filing of amendments, modifications or supplements to such patents, 
should follow the regulations of the U.S. Patent and Trademark Office 
in accordance with 37 CFR part 5. The export of technical data to 
support the filing and processing of patent applications in foreign 
countries is subject to regulations issued by the U.S. Patent and 
Trademark Office pursuant to 35 U.S.C. 184.
* * * * *

0
48. Section 125.3 is amended by revising paragraphs (a), (b), and (c) 
to read as follows:


Sec.  125.3  Exports of classified technical data and classified 
defense articles.

    (a) A request for authority to export defense articles, including 
technical

[[Page 20545]]

data, classified by a foreign government or pursuant to Executive Order 
12356, successor orders, or other legal authority must be submitted to 
the Directorate of Defense Trade Controls for approval. The application 
must contain full details of the proposed transaction. It should also 
list the facility security clearance code of all U.S. parties on the 
license and include the Defense Security Service cognizant security 
office of the party responsible for packaging the commodity for 
shipment. A nontransfer and use certificate (Form DSP-83) executed by 
the applicant, foreign consignee, end-user and an authorized 
representative of the foreign government involved will be required.
    (b) Classified technical data which is approved by the Directorate 
of Defense Trade Controls either for export or reexport after a 
temporary import will be transferred or disclosed only in accordance 
with the requirements in the Department of Defense National Industrial 
Security Program Operating Manual (unless such requirements are in 
direct conflict with guidance provided by the Directorate of Defense 
Trade Controls, in which case the latter guidance must be followed). 
Any other requirements imposed by cognizant U.S. departments and 
agencies must also be satisfied.
    (c) The approval of the Directorate of Defense Trade Controls must 
be obtained for the export of technical data by a U.S. person to a 
foreign person in the U.S. or in a foreign country unless the proposed 
export is exempt under the provisions of this subchapter.
* * * * *

0
49. Section 125.4 is amended by revising paragraphs (a), (b)(9)(iii), 
(b)(10)(iii), (b)(11), and (b)(13) to read as follows:


Sec.  125.4  Exemptions of general applicability.

    (a) The following exemptions apply to exports of technical data for 
which approval is not needed from the Directorate of Defense Trade 
Controls. These exemptions, except for paragraph (b)(13) of this 
section, do not apply to exports to proscribed destinations under Sec.  
126.1 of this subchapter or for persons considered generally ineligible 
under Sec.  120.1(c) of this subchapter. The exemptions are also not 
applicable for purposes of establishing offshore procurement 
arrangements or producing defense articles offshore (see Sec.  124.13), 
except as authorized under Sec.  125.4 (c). If Sec.  126.8 of this 
subchapter requirements are applicable, they must be met before an 
exemption under this section may be used. Transmission of classified 
information must comply with the requirements of the Department of 
Defense National Industrial Security Program Operating Manual (unless 
such requirements are in direct conflict with guidance provided by the 
Directorate of Defense Trade Controls, in which case the latter 
guidance must be followed) and the exporter must certify to the 
transmittal authority that the technical data does not exceed the 
technical limitation of the authorized export.
    (b) * * *
    (9) * * *
    (iii) The classified information is sent overseas in accordance 
with the requirements of the Department of Defense National Industrial 
Security Program Operating Manual (unless such requirements are in 
direct conflict with guidance provided by the Directorate of Defense 
Trade Controls, in which case the latter guidance must be followed).
    (10) * * *
    (iii) The institution informs the individual in writing that the 
technical data may not be transferred to other foreign persons without 
the prior written approval of the Directorate of Defense Trade 
Controls;
    (11) Technical data, including classified information, for which 
the exporter, pursuant to an arrangement with the Department of 
Defense, Department of Energy or NASA which requires such exports, has 
been granted an exemption in writing from the licensing provisions of 
this part by the Directorate of Defense Trade Controls. Such an 
exemption will normally be granted only if the arrangement directly 
implements an international agreement to which the United States is a 
party and if multiple exports are contemplated. The Directorate of 
Defense Trade Controls, in consultation with the relevant U.S. 
Government agencies, will determine whether the interests of the United 
States Government are best served by expediting exports under an 
arrangement through an exemption (see also paragraph (b)(3) of this 
section for a related exemption);
* * * * *
    (13) Technical data approved for public release (i.e., unlimited 
distribution) by the cognizant U.S. Government department or agency or 
Office of Freedom of Information and Security Review. This exemption is 
applicable to information approved by the cognizant U.S. Government 
department or agency for public release in any form. It does not 
require that the information be published in order to qualify for the 
exemption.
* * * * *

0
50. Section 125.5 is revised to read as follows:


Sec.  125.5  Exemptions for plant visits.

    (a) A license is not required for the oral and visual disclosure of 
unclassified technical data during the course of a classified plant 
visit by a foreign person, provided: The classified visit has itself 
been authorized pursuant to a license issued by the Directorate of 
Defense Trade Controls; or the classified visit was approved in 
connection with an actual or potential government-to-government program 
or project by a U.S. Government agency having classification 
jurisdiction over the classified defense article or classified 
technical data involved under Executive Order 12356 or other applicable 
Executive Order; and the unclassified information to be released is 
directly related to the classified defense article or technical data 
for which approval was obtained and does not disclose the details of 
the design, development, production or manufacture of any other defense 
articles. In the case of visits involving classified information, the 
requirements of the Department of Defense National Industrial Security 
Program Operating Manual must be met (unless such requirements are in 
direct conflict with guidance provided by the Directorate of Defense 
Trade Controls, in which case the latter guidance must be followed).
    (b) The approval of the Directorate of Defense Trade Controls is 
not required for the disclosure of oral and visual classified 
information to a foreign person during the course of a plant visit 
approved by the appropriate U.S. Government agency if: The requirements 
of the Department of Defense National Industrial Security Program 
Operating Manual have been met (unless such requirements are in direct 
conflict with guidance provided by the Directorate of Defense Trade 
Controls, in which case the latter guidance must be followed); the 
classified information is directly related to that which was approved 
by the U.S. Government agency; it does not exceed that for which 
approval was obtained; and it does not disclose the details of the 
design, development, production or manufacture of any defense articles.
    (c) A license is not required for the disclosure to a foreign 
person of unclassified technical data during the course of a plant 
visit (either classified or unclassified) approved by the Directorate 
of Defense Trade Controls or a cognizant U.S. Government agency 
provided the technical data does not contain information in excess of 
that approved for disclosure. This exemption

[[Page 20546]]

does not apply to technical data which could be used for design, 
development, production or manufacture of a defense article.

0
51. Section 125.7 is revised to read as follows:


Sec.  125.7  Procedures for the export of classified technical data and 
other classified defense articles.

    (a) All applications for the export or temporary import of 
classified technical data or other classified defense articles must be 
submitted to the Directorate of Defense Trade Controls on Form DSP-85.
    (b) An application for the export of classified technical data or 
other classified defense articles must be accompanied by seven copies 
of the data and a completed Form DSP-83 (see Sec.  123.10 of this 
subchapter). Only one copy of the data or descriptive literature must 
be provided if a renewal of the license is requested. All classified 
materials accompanying an application must be transmitted to the 
Directorate of Defense Trade Controls in accordance with the procedures 
contained in the Department of Defense National Industrial Security 
Program Operating Manual (unless such requirements are in direct 
conflict with guidance provided by the Directorate of Defense Trade 
Controls, in which case the latter guidance must be followed).

0
52. Section 125.9 is revised to read as follows:


Sec.  125.9  Filing of licenses and other authorizations for exports of 
classified technical data and classified defense articles.

    Licenses and other authorizations for the export of classified 
technical data or classified defense articles will be forwarded by the 
Directorate of Defense Trade Controls to the Defense Security Service 
of the Department of Defense in accordance with the provisions of the 
Department of Defense National Industrial Security Program Operating 
Manual (unless such requirements are in direct conflict with guidance 
provided by the Directorate of Defense Trade Controls, in which case 
the latter guidance must be followed). The Directorate of Defense Trade 
Controls will forward a copy of the license to the applicant for the 
applicant's information. The Defense Security Service will return the 
endorsed license to the Directorate of Defense Trade Controls upon 
completion of the authorized export or expiration of the license, 
whichever occurs first.

PART 126--GENERAL POLICIES AND PROVISIONS

0
53. 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); 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.

0
54. Section 126.1 is amended by revising paragraph (e) to read as 
follows:

Sec.  126.1  Prohibited exports and sales to certain countries.

* * * * *
    (e) Proposed sales. No sale or transfer and no proposal to sell or 
transfer any defense articles, defense services or technical data 
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. Any person who 
knows or has reason to know of such a proposed or actual sale, or 
transfer, of such articles, services or data must immediately inform 
the Directorate of Defense Trade Controls.
* * * * *

0
55. Section 126.2 is revised to read as follows:


Sec.  126.2  Temporary suspension or modification of this subchapter.

    The Deputy Assistant Secretary for Defense Trade Controls or the 
Managing Director, Directorate of Defense Trade Controls, may order the 
temporary suspension or modification of any or all of the regulations 
of this subchapter in the interest of the security and foreign policy 
of the United States.

0
56. Section 126.5 is amended by revising paragraph (c)(4)(v) to read as 
follows:


Sec.  126.5  Canadian exemptions.

* * * * *
    (c) * * *
    (4) * * *
    (v) Include a clause requiring that all documentation created from 
U.S. technical data contain the statement, ``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''; and
* * * * *

0
57. Section 126.6 is amended by revising paragraph (b) to read as 
follows:


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

* * * * *
    (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. 40103) and naval visits must be obtained from the Bureau of 
Political-Military Affairs, Office of International Security 
Operations.
* * * * *

0
58. Section 126.7 is amended by revising paragraphs (a) introductory 
text, (a)(6), (b), and (c) to read as follows:


Sec.  126.7  Denial, revocation, suspension or amendment of licenses 
and other approvals.

    (a) Policy. Licenses or approvals shall be denied or revoked 
whenever required by any statute of the United States (see Sec. Sec.  
127.7 and 127.11 of this subchapter). Any application for an export 
license or other approval under this subchapter may be disapproved, and 
any license or other approval or exemption granted under this 
subchapter may be revoked, suspended, or amended without prior notice 
whenever:
* * * * *
    (6) An applicant, any party to the export or agreement, any source 
or manufacturer of the defense article or defense service or any person 
who has a significant interest in the transaction has been debarred, 
suspended, or otherwise is ineligible to receive an export license or 
other authorization from any agency of the U.S. government (e.g., 
pursuant to debarment by the Department of Commerce under 15 CFR part 
760 or by the Department of State under part 127 or 128 of this 
subchapter); or
* * * * *
    (b) Notification. The Directorate of Defense Trade Controls will 
notify applicants or licensees or other appropriate United States 
persons of actions taken pursuant to paragraph (a) of this section. The 
reasons for the

[[Page 20547]]

action will be stated as specifically as security and foreign policy 
considerations permit.
    (c) Reconsideration. If a written request for reconsideration of an 
adverse decision is made within 30 days after a person has been 
informed of the decision, the U.S. person will be accorded an 
opportunity to present additional information. The case will then be 
reviewed by the Directorate of Defense Trade Controls.
* * * * *

0
59. Section 126.8 is amended by revising paragraphs (a), (a)(1) 
introductory text, (a)(2), (a)(3) introductory text, (c)(1)(i), (c)(2) 
and (d) to read as follows:


Sec.  126.8  Proposals to foreign persons relating to significant 
military equipment.

    (a) Proposals. Certain proposals to foreign persons for the sale or 
manufacture abroad of significant military equipment require either the 
prior approval of, or prior notification to, the Directorate of Defense 
Trade Controls.
    (1) Sale of significant military equipment: The prior approval of 
the Directorate of Defense Trade Controls is required before a U.S. 
person may make a proposal or presentation designed to constitute a 
basis for a decision on the part of any foreign person to purchase 
significant military equipment on the U.S. Munitions List whenever all 
the following conditions are met:
* * * * *
    (2) Sale of significant military equipment: The Directorate of 
Defense Trade Controls must be notified in writing at least thirty days 
in advance of any proposal or presentation concerning the sale of 
significant military equipment whenever the conditions specified in 
paragraphs (a)(1)(i) through (iii) of this section are met and the 
identical equipment has been previously licensed for permanent export 
or approved for sale under the FMS Program to any foreign country.
    (3) Manufacture abroad of significant military equipment: The prior 
approval of the Directorate of Defense Trade Controls is required 
before a U.S. person may make a proposal or presentation designed to 
constitute a basis for a decision on the part of any foreign person to 
enter into any manufacturing license agreement or technical assistance 
agreement for the production or assembly of significant military 
equipment, regardless of dollar value, in any foreign country, 
whenever:
* * * * *
    (c) * * *
    (1) * * *
    (i) A written statement from the Directorate of Defense Trade 
Controls approving the proposed sale or agreement or approving the 
making of a proposal or presentation.
* * * * *
    (2) The requirement of this section for prior notification is met 
by informing the Directorate of Defense Trade Controls by letter at 
least 30 days before making the proposal or presentation. The letter 
must comply with the procedures set forth in paragraph (d) of this 
section and must identify the relevant license, approval, or FMS case 
by which the identical equipment had previously been authorized for 
permanent export or sale. The Directorate of Defense Trade Controls 
will provide written acknowledgement of such prior notification to 
confirm compliance with this requirement and the commencement of the 
30-day notification period.
    (d) Procedures. Unless a license has been obtained pursuant to 
Sec.  126.8(c)(1)(ii) or (iii), a request for prior approval to make a 
proposal or presentation with respect to significant military 
equipment, or a 30-day prior notification regarding the sale of such 
equipment, must be made by letter to the Directorate of Defense Trade 
Controls. The letter must outline in detail the intended transaction, 
including usage of the equipment involved and the country (or 
countries) involved. Seven copies of the letter should be provided as 
well as seven copies of suitable descriptive information concerning the 
equipment.
* * * * *

0
60. Section 126.9 is revised to read as follows:


Sec.  126.9  Advisory opinions and related authorizations.

    (a) Advisory opinion. Any person desiring information as to whether 
the Directorate of Defense Trade Controls would be likely to grant a 
license or other approval for the export or approval of a particular 
defense article or defense service to a particular country may request 
an advisory opinion from the Directorate of Defense Trade Controls. 
Advisory opinions are issued on a case-by-case basis and apply only to 
the particular matters presented to the Directorate of Defense Trade 
Controls. These opinions are not binding on the Department of State, 
and may not be used in future matters before the Department. A request 
for an advisory opinion must be made in writing and must outline in 
detail the equipment, its usage, the security classification (if any) 
of the articles or related technical data, and the country or countries 
involved. An original and seven copies of the letter must be provided 
along with seven copies of suitable descriptive information concerning 
the defense article or defense service.
    (b) Related authorizations. The Directorate of Defense Trade 
Controls may, as appropriate, in accordance with the procedures set 
forth in paragraph (a) of this section, provide export authorization, 
subject to all other relevant requirements of this subchapter, both for 
transactions that have been the subject of advisory opinions requested 
by prospective U.S. exporters, or for the Directorate's own 
initiatives. Such initiatives may cover pilot programs, or specifically 
anticipated circumstances for which the Directorate considers special 
authorizations appropriate.

0
61. Section 126.10 is amended by revising paragraphs (a) and (d)(2) to 
read as follows:


Sec.  126.10  Disclosure of information.

    (a) Freedom of information. Subchapter R of this title contains 
regulations on the availability to the public of information and 
records of the Department of State. The provisions of subchapter R 
apply to such disclosures by the Directorate of Defense Trade Controls.
* * * * *
    (d) * * *
    (2) Furnishing information to foreign governments and other 
agencies of the U.S. Government in the context of multilateral or 
bilateral export regimes (e.g., the Missile Technology Control Regime, 
the Australia Group, and Wassenaar Arrangement).

0
62. Section 126.11 is revised to read as follows:


Sec.  126.11  Relations to other provisions of law.

    The provisions in this subchapter are in addition to, and are not 
in lieu of, any other provisions of law or regulations. The sale of 
firearms in the United States, for example, remains subject to the 
provisions of the Gun Control Act of 1968 and regulations administered 
by the Department of Justice. The performance of defense services on 
behalf of foreign governments by retired military personnel continues 
to require consent pursuant to Part 3a of this title. Persons who 
intend to export defense articles or furnish defense services should 
not assume that satisfying the requirements of this subchapter relieves 
one of other requirements of law.

0
63. Section 126.13 is amended by revising paragraph (c) to read as 
follows:

[[Page 20548]]

Sec.  126.13  Required information.

* * * * *
    (c) In cases when foreign nationals are employed at or assigned to 
security-cleared facilities, provision by the applicant of a Technology 
Control Plan (available from the Defense Security Service) will 
facilitate processing.

0
64. Section 126.14 is amended by revising paragraphs (a), (a)(1), 
(a)(2), (a)(3)(i), (a)(3)(iv), (a)(4), and (b) to read as follows:


Sec.  126.14  Special comprehensive export authorizations for NATO, 
Australia, Japan, and Sweden.

    (a) Comprehensive authorizations. With respect to NATO members, 
Australia, Japan, and Sweden, the Directorate of Defense Trade Controls 
may provide the comprehensive authorizations described in paragraphs 
(a) and (b) of this section for circumstances where the full parameters 
of a commercial export endeavor including the needed defense exports 
can be well anticipated and described in advance, thereby making use of 
such comprehensive authorizations appropriate.
    (1) Major project authorization. With respect to NATO members, 
Australia, Japan, and Sweden, the Directorate of Defense Trade Controls 
may provide comprehensive authorizations for well circumscribed 
commercially developed ``major projects'', where a principal registered 
U.S. exporter/prime contractor identifies in advance the broad 
parameters of a commercial project including defense exports needed, 
other participants (e.g., exporters with whom they have ``teamed up,'' 
or subcontractors), and foreign government end users. Projects eligible 
for such authorization may include a commercial export of a major 
weapons system for a foreign government involving, for example, 
multiple U.S. suppliers under a commercial teaming agreement to design, 
develop and manufacture defense articles to meet a foreign government's 
requirements. U.S. exporters seeking such authorization must provide 
detailed information concerning the scope of the project, including 
other exporters, U.S. subcontractors, and planned exports (including 
re-exports) of defense articles, defense services, and technical data, 
and meet the other requirements set forth in paragraph (b) of this 
section.
    (2) Major program authorization. With respect to NATO members, 
Australia, Japan, and Sweden, the Directorate of Defense Trade Controls 
may provide comprehensive authorizations for well circumscribed 
commercially developed ``major program''. This variant would be 
available where a single registered U.S. exporter defines in advance 
the parameters of a broad commercial program for which the registrant 
will be providing all phases of the necessary support (including the 
needed hardware, technical data, defense services, development, 
manufacturing, and logistic support). U.S. exporters seeking such 
authorization must provide detailed information concerning the scope of 
the program, including planned exports (including re-exports) of 
defense articles, defense services, and technical data, and meet the 
other requirements set forth in paragraph (b) of this section.
    (3)(i) Global project authorization. With respect to NATO members, 
Australia, Japan, and Sweden, the Directorate of Defense Trade Controls 
may provide a comprehensive ``Global Project Authorization'' to 
registered U.S. exporters for exports of defense articles, technical 
data or defense services in support of government to government 
cooperative projects (covering research and development or production) 
with one of these countries undertaken pursuant to an agreement between 
the U.S. Government and the government of such country, or a memorandum 
of understanding/agreement between the Department of Defense and the 
country's Ministry of Defense.
* * * * *
    (iv) Any requirement for non-transfer and use assurances from a 
foreign government may be deemed satisfied by the signature by such 
government of a cooperative agreement or by its ministry of defense of 
a cooperative MOU/MOA where the agreement or MOU contains assurances 
that are comparable to that required by a DSP-83 with respect to 
foreign governments and that clarifies that the government is 
undertaking responsibility for all its participating companies. The 
authorized non-government participants or end users (e.g., the 
participating government's contractors) will still be required to 
execute DSP-83s.
    (4) Technical data supporting an acquisition, teaming arrangement, 
merger, joint venture authorization. With respect to NATO member 
countries, Australia, Japan, and Sweden, the Directorate of Defense 
Trade Controls may provide a registered U.S. defense company a 
comprehensive authorization to export technical data in support of the 
U.S. exporter's consideration of entering into a teaming arrangement, 
joint venture, merger, acquisition, or similar arrangement with 
prospective foreign partners. Specifically, the authorization is 
designed to permit the export of a broadly defined set of technical 
data to qualifying well established foreign defense firms in NATO 
countries, Australia, Japan, or Sweden in order to better facilitate a 
sufficiently in depth assessment of the benefits, opportunities and 
other relevant considerations presented by such prospective 
arrangements. U.S. exporters seeking such authorization must provide 
detailed information concerning the arrangement, joint venture, merger 
or acquisition, including any planned exports of defense articles, 
defense services, and technical data, and meet the other requirements 
set forth in paragraph (b) of this section.
    (b) Provisions and requirements for comprehensive authorizations. 
Requests for the special comprehensive authorizations set forth in 
paragraph (a) of this section should be by letter addressed to the 
Directorate of Defense Trade Controls. With regard to a commercial 
major program or project authorization, or technical data supporting a 
teaming arrangement, merger, joint venture or acquisition, registered 
U.S. exporters may consult the Managing Director of the Directorate of 
Defense Trade Controls about eligibility for and obtaining available 
comprehensive authorizations set forth in paragraph (a) of this section 
or pursuant to Sec.  126.9(b).
* * * * *

PART 127--VIOLATIONS AND PENALTIES

0
65. The authority citation for part 127 continues to read as follows:

    Authority: Secs. 2, 38, and 42, Pub. L. 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.


0
66. Section 127.1 is amended by revising paragraphs (a)(1), (a)(2), 
(a)(3), (c) introductory text, and (d) and by adding paragraphs (a)(5) 
and (a)(6) to read as follows:


Sec.  127.1  Violations.

    (a) * * *
    (1) To export or attempt to export from the United States, or to 
reexport or retransfer or attempt to reexport or retransfer from one 
foreign destination to another foreign destination by a U.S. person of 
any defense article or technical data or by anyone of any U.S. origin 
defense article or technical data or to furnish any defense service for 
which a license or written approval is required by this subchapter 
without first obtaining the required license or written

[[Page 20549]]

approval from the Directorate of Defense Trade Controls;
    (2) To import or attempt to import any defense article whenever a 
license is required by this subchapter without first obtaining the 
required license or written approval from the Directorate of Defense 
Trade Controls;
    (3) To conspire to export, import, reexport or cause to be 
exported, imported or reexported, any defense article or to furnish any 
defense service for which a license or written approval is required by 
this subchapter without first obtaining the required license or written 
approval from the Directorate of Defense Trade Controls;
* * * * *
    (5) To engage in the United States in the business of either 
manufacturing or exporting defense article 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; or
    (6) To engage in the business of brokering activities for which 
registration, 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).
* * * * *
    (c) A person with knowledge that another person is then ineligible 
pursuant to Sec. Sec.  120.1(c) or 126.7 of this subchapter or subject 
to an order of debarment or interim suspension, 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:
* * * * *
    (d) 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 prohibited by, or the 
omission of any act required by 22 U.S.C. 2778, 22 U.S.C. 2779, or any 
regulation, license, approval, or order issued thereunder.

0
67. Section 127.3 is amended by revising paragraph (b) to read as 
follows:


Sec.  127.3  Penalties for violations.

* * * * *
    (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).

0
68. Section 127.5 is revised to read as follows:


Sec.  127.5  Authority of the Defense Security Service.

    In the case of exports involving classified technical data or 
defense articles, the Defense Security Service may take appropriate 
action to ensure compliance with the Department of Defense National 
Industrial Security Program Operating Manual (unless such requirements 
are in direct conflict with guidance provided by the Directorate of 
Defense Trade Controls, in which case the latter guidance must be 
followed). Upon a request to the Defense Security Service regarding the 
export of any classified defense article or technical data, the Defense 
Security Service official or a designated government transmittal 
authority may require the production of other relevant documents and 
information relating to the proposed export.

0
69. Section 127.7 is amended by revising paragraphs (a), (b)(2), and 
(d) 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 of defense articles, including technical data, or in the 
furnishing of defense services for which a license or approval is 
required by this subchapter for any of the reasons listed below. 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.
    (b) * * *
    (2) The basis for administrative debarment, described in part 128 
of this subchapter, is any violation of 22 U.S.C. 2778 or any rule or 
regulation issued thereunder when such a violation is of such a 
character as to provide a reasonable basis for the Directorate of 
Defense Trade Controls to believe that the violator cannot be relied 
upon to comply with the statute or these rules or regulations in the 
future, and when such violation is established in accordance with part 
128 of this subchapter.
* * * * *
    (d) Appeals. Any person who is ineligible pursuant to paragraph (c) 
of this section may appeal to the Under Secretary of State for Arms 
Control and International Security for reconsideration of the 
ineligibility determination. The procedures specified in Sec.  128.13 
of this subchapter will be used in submitting a reconsideration appeal.

0
70. Section 127.8 is revised to read as follows:


Sec.  127.8  Interim suspension.

    (a) The Managing Director of the Directorate of Defense Trade 
Controls or the Director of the Office of Defense Trade Controls 
Compliance is authorized to order the interim suspension of any person 
when the Managing Director or Director of Compliance believes that 
grounds for debarment (as defined in Sec.  127.7 of this part) exist 
and where and to the extent the Managing Director or Director of 
Compliance, as applicable, finds that interim suspension is reasonably 
necessary to protect world peace or the security or foreign policy of 
the United States. The interim suspension orders prohibit that person 
from participating directly or indirectly in the export of any defense 
article or defense service for which a license or approval is required 
by this subchapter. The suspended person shall be notified in writing 
as provided in Sec.  127.7(c) of this part (statutory debarment) or 
Sec.  128.3 of this subchapter (administrative debarment), whichever is 
appropriate. In both cases, a copy of the interim suspension order will 
be served upon that person in the same manner as provided in Sec.  
128.3 of this subchapter. The interim suspension order may be made 
immediately effective, without prior notice. The order will state the 
relevant facts, the grounds for issuance of the order, and describe the 
nature and duration of the interim suspension. No person may be 
suspended for a period exceeding 60 days, absent extraordinary 
circumstances, (e.g., unless proceedings

[[Page 20550]]

under Sec.  127.7(c) of this part or under part 128 of this subchapter, 
or criminal proceedings, are initiated).
    (b) A motion or petition to vacate or modify an interim suspension 
order may be filed at any time with the Under Secretary of State for 
Arms Control and International Security. After a final decision is 
reached, the Managing Director of the Directorate of Defense Trade 
Controls will issue an appropriate order disposing of the motion or 
petition and will promptly inform the respondent accordingly.

0
71. Section 127.9 is revised to read as follows:


Sec.  127.9  Applicability of orders.

    For the purpose of preventing evasion, orders of the Assistant 
Secretary of State for Political-Military Affairs debarring a person 
under Sec.  127.7, and orders of the Managing Director, Directorate of 
Defense Trade Controls or Director of the Office of Defense Trade 
Controls Compliance suspending a person under Sec.  127.8, may be made 
applicable to any other person who may then or thereafter (during the 
term of the order) be related to the debarred person by affiliation, 
ownership, control, position of responsibility, or other commercial 
connection. Appropriate notice and opportunity to respond to the basis 
for the suspension will be given.

0
72. Section 127.10 is amended by revising paragraphs (a) and (b) 
introductory text 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 
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.
    (b) The Directorate of Defense Trade Controls may make:
* * * * *

0
73. Section 127.11 is revised to read as follows:


Sec.  127.11  Past violations.

    (a) Presumption of denial. Pursuant to section 38 of the Arms 
Export Control Act, licenses or other approvals may not be granted to 
persons who have been convicted of violating any of the U.S. criminal 
statutes enumerated in Sec.  120.27 of this subchapter or who are 
ineligible to receive any export licenses from any agency of the U.S. 
Government, subject to a narrowly defined statutory exception. This 
provision establishes a presumption of denial for licenses or other 
approvals involving such persons. This presumption is applied by the 
Directorate of Defense Trade Controls to all persons convicted or 
deemed ineligible in this manner since the effective date of the Arms 
Export Control Act (Public Law 94-329; 90 Stat. 729) (June 30, 1976).
    (b) Policy. An exception to the policy of the Department of State 
to deny applications for licenses or other approvals that involve 
persons described in paragraph (a) of this section shall not be 
considered unless there are extraordinary circumstances surrounding the 
conviction or ineligibility to export, and only if the applicant 
demonstrates, to the satisfaction of the Assistant Secretary of State 
for Political-Military Affairs, that the applicant has taken 
appropriate steps to mitigate any law enforcement and other legitimate 
concerns, and to deal with the causes that resulted in the conviction, 
ineligibility, or debarment. Any person described in paragraph (a) of 
this section who wishes to request consideration of any application 
must explain, in a letter to the Managing Director, Directorate of 
Defense Trade Controls, the reasons why the application should be 
considered. If the Assistant Secretary of State for Political-Military 
Affairs concludes that the application and written explanation have 
sufficient merit, the Assistant Secretary shall consult with the Office 
of the Legal Adviser and the Department of the Treasury regarding law 
enforcement concerns, and may also request the views of other 
departments, including the Department of Justice. If the Directorate of 
Defense Trade Controls does grant the license or other approval, 
subsequent applications from the same person need not repeat the 
information previously provided but should instead refer to the 
favorable decision.
    (c) Debarred persons. Persons debarred pursuant to Sec.  127.7(c) 
(statutory debarment) may not utilize the procedures provided by this 
section while the debarment is in force. Such persons may utilize only 
the procedures provided by Sec.  127.7(d) of this part.

0
74. Section 127.12 is amended by revising paragraphs (a), (b)(1), 
(b)(2), (b)(3) introductory text, (b)(4), (c)(1), and (d)(1)(iii) to 
read as follows:


Sec.  127.12  Voluntary disclosures.

    (a) General policy. The Department strongly encourages the 
disclosure of information to the Directorate of Defense Trade Controls 
by persons, firms or any organization that believe they may have 
violated any export control provision of the Arms Export Control Act, 
or any regulation, order, license, or other authorization issued under 
the authority of the Arms Export Control Act. Voluntary self-disclosure 
may be considered a mitigating factor in determining the administrative 
penalties, if any, that should be imposed by the Department. Failure to 
report such violation(s) may result in circumstances detrimental to 
U.S. national security and foreign policy interests and will be an 
adverse factor in determining the appropriate disposition of such 
violations.
    (b) Limitations. (1) The provisions of this section apply only when 
information is provided to the Directorate of Defense Trade Controls 
for its review in determining whether to take administrative action 
under part 128 of this subchapter concerning violation(s) of the export 
control provisions of the Arms Export Control Act and these 
regulations.
    (2) The provisions of this section apply only when information is 
received by the Directorate of Defense Trade Controls for review prior 
to such time that either the Department of State or any other agency, 
bureau or department of the United States Government obtains knowledge 
of either the same or substantially similar information from another 
source and commenced an investigation or inquiry that involves that 
information, and that is intended to determine whether the Arms Export 
Control Act or these regulations, or any other license, order or other 
authorization issued under the Arms Export Control Act has been 
violated.
    (3) It is possible that the activity in question--despite voluntary 
disclosure--might merit penalties, administrative actions, sanctions, 
or referrals to the Department of Justice for consideration as to 
whether criminal prosecution is warranted. In the latter case, the 
Directorate of Defense Trade Controls will notify the Department of 
Justice of the voluntary nature of the disclosure, although the 
Department of Justice is not required to give that fact any weight. The 
Directorate of Defense Trade Controls has the sole discretion to 
consider whether ``voluntary disclosure,'' in context with other 
relevant information in a particular case, should be a mitigating 
factor in determining what, if any, administrative action will be 
imposed. Some of the mitigating factors the Directorate of

[[Page 20551]]

Defense Trade Controls may consider are:
* * * * *
    (4) The provisions of this section do not, nor should they be 
relied on to, create, confer, or grant any rights, benefits, 
privileges, or protection enforceable at law or in equity by any 
person, business, or entity in any civil, criminal, administrative, or 
other matter.
    (c) Notification. (1) Any person or firm wanting to disclose 
information that constitutes a voluntary self-disclosure should, in the 
manner outlined below, initially notify the Directorate of Defense 
Trade Controls immediately after violation(s) are discovered and then 
conduct a thorough review of all export-related transactions where 
violation(s) are suspected.
* * * * *
    (d) * * *
    (1) * * *
    (iii) 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 128--ADMINISTRATIVE PROCEDURES

0
75. The authority citation for part 128 is revised to read as follows:

    Authority: Secs. 2, 38, 40, 42, and 71, Arms Export Control Act. 
90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); E.O. 
11958, 42 FR 4311; 22 U.S.C. 2651a; E.O. 12291, 46 FR 1981.


0
76. Section 128.2 is revised to read as follows:


Sec.  128.2  Administrative Law Judge.

    The Administrative Law Judge referred to in this part is an 
Administrative Law Judge appointed by the Department of State. The 
Administrative Law Judge is authorized to exercise the powers and 
perform the duties provided for in Sec. Sec.  127.7, 127.8, and 128.3 
through 128.16 of this subchapter.

0
77. Section 128.3 is amended by revising paragraph (a) to read as 
follows:


Sec.  128.3  Institution of Administrative Proceedings.

    (a) Charging letters. The Managing Director, Directorate of Defense 
Trade Controls, with the concurrence of the Office of the Legal 
Adviser, Department of State, may initiate proceedings to impose 
debarment or civil penalties in accordance with Sec.  127.7 or Sec.  
127.10 of this subchapter, respectively. Administrative proceedings 
shall be initiated by means of a charging letter. The charging letter 
will state the essential facts constituting the alleged violation and 
refer to the regulatory or other provisions involved. It will give 
notice to the respondent to answer the charges within 30 days, as 
provided in Sec.  128.5(a), and indicate that a failure to answer will 
be taken as an admission of the truth of the charges. It will inform 
the respondent that he or she is entitled to an oral hearing if a 
written demand for one is filed with the answer or within seven (7) 
days after service of the answer. The respondent will also be informed 
that he or she may, if so desired, be represented by counsel of his or 
her choosing. Charging letters may be amended from time to time, upon 
reasonable notice.
* * * * *

0
78. Section 128.5 is amended by revising paragraph (c) to read as 
follows:


Sec.  128.5  Answer and demand for oral hearing.

* * * * *
    (c) Submission of answer. The answer, written demand for oral 
hearing (if any) and supporting evidence required by Sec.  128.5(b) 
shall be in duplicate and mailed or delivered to the designated 
Administrative Law Judge. A copy shall be simultaneously mailed to the 
Managing Director, Directorate of Defense Trade Controls, SA-1, Room 
1200, Department of State, Washington, DC 20522-0112, or delivered to 
2401 Street, NW., Washington, DC addressed to Managing Director, 
Directorate of Defense Trade Controls, SA-1, Room 1200, Department of 
State, Washington, DC 20037.

0
79. Section 128.6 is amended by revising paragraphs (a), (b), and (d) 
to read as follows:


Sec.  128.6  Discovery.

    (a) Discovery by the respondent. The respondent, through the 
Administrative Law Judge, may request from the Directorate of Defense 
Trade Controls any relevant information, not privileged or otherwise 
not authorized for release, that may be necessary or helpful in 
preparing a defense. The Directorate of Defense Trade Controls may 
provide any relevant information, not privileged or otherwise not 
authorized for release, that may be necessary or helpful in preparing a 
defense. The Directorate of Defense Trade Controls may supply summaries 
in place of original documents and may withhold information from 
discovery if the interests of national security or foreign policy so 
require, or if necessary to comply with any statute, executive order or 
regulation requiring that the information not be disclosed. The 
respondent may request the Administrative Law Judge to request any 
relevant information, books, records, or other evidence, from any other 
person or government agency so long as the request is reasonable in 
scope and not unduly burdensome.
    (b) Discovery by the Directorate of Defense Trade Controls. The 
Directorate of Defense Trade Controls or the Administrative Law Judge 
may make reasonable requests from the respondent of admissions of 
facts, answers to interrogatories, the production of books, records, or 
other relevant evidence, so long as the request is relevant and 
material.
* * * * *
    (d) Enforcement of discovery rights. If the Directorate of Defense 
Trade Controls fails to provide the respondent with information in its 
possession which is not otherwise available and which is necessary to 
the respondent's defense, the Administrative Law Judge may dismiss the 
charges on her or his own motion or on a motion of the respondent. If 
the respondent fails to respond with reasonable diligence to the 
requests for discovery by the Directorate of Defense Trade Controls or 
the Administrative Law Judge, on her or his own motion or motion of the 
Directorate of Defense Trade Controls, and upon such notice to the 
respondent as the Administrative Law Judge may direct, may strike 
respondent's answer and declare the respondent in default, or make any 
other ruling which the Administrative Law Judge deems necessary and 
just under the circumstances. If a third party fails to respond to the 
request for information, the Administrative Law Judge shall consider 
whether the evidence sought is necessary to a fair hearing, and if it 
is so necessary that a fair hearing may not be held without it, the 
Administrative Law Judge shall determine whether substitute information 
is adequate to protect the rights of the respondent. If the 
Administrative Law Judge decides that a fair hearing may be held with 
the substitute information, then the proceedings may continue. If not, 
then the Administrative Law Judge may dismiss the charges.

0
80. Section 128.7 is amended by revising paragraph (a)(1)(ii) to read 
as follows:


Sec.  128.7  Prehearing conference.

    (a) * * *
    (1) * * *

[[Page 20552]]

    (ii) The necessity or desirability of amendments to pleadings;
* * * * *

0
81. Section 128.10 is revised to read as follows:


Sec.  128.10  Disposition of proceedings.

    Where the evidence is not sufficient to support the charges, the 
Managing Director, Directorate of Defense Trade Controls or the 
Administrative Law Judge will dismiss the charges. Where the 
Administrative Law Judge finds that a violation has been committed, the 
Administrative Law Judge's recommendation shall be advisory only. The 
Assistant Secretary of State for Political-Military Affairs will review 
the record, consider the report of the Administrative Law Judge, and 
make an appropriate disposition of the case. The Managing Director may 
issue an order debarring the respondent from participating in the 
export of defense articles or technical data or the furnishing of 
defense services as provided in Sec.  127.7 of this subchapter, impose 
a civil penalty as provided in Sec.  127.10 of this subchapter, or take 
such action as the Administrative Law Judge may recommend. Any 
debarment order will be effective for the period of time specified 
therein and may contain such additional terms and conditions as are 
deemed appropriate. A copy of the order together with a copy of the 
Administrative Law Judge's report will be served upon the respondent.

0
82. Section 128.11 is amended by revising paragraph (a) to read as 
follows:


Sec.  128.11  Consent agreements.

    (a) The Directorate of Defense Trade Controls and the respondent 
may, by agreement, submit to the Administrative Law Judge a proposal 
for the issuance of a consent order. The Administrative Law Judge will 
review the facts of the case and the proposal and may conduct 
conferences with the parties and may require the presentation of 
evidence in the case. If the Administrative Law Judge does not approve 
the proposal, the Administrative Law Judge will notify the parties and 
the case will proceed as though no consent proposal had been made. If 
the proposal is approved, the Administrative Law Judge will report the 
facts of the case along with recommendations to the Assistant Secretary 
of State for Political-Military Affairs. If the Assistant Secretary of 
State for Political-Military Affairs does not approve the proposal, the 
case will proceed as though no consent proposal had been made. If the 
Assistant Secretary of State for Political-Military Affairs approves 
the proposal, an appropriate order may be issued.
* * * * *

0
83. Section 128.13 is amended by revising paragraphs (a), (c), (e)(1), 
(e)(2), and (f) to read as follows:


Sec.  128.13  Appeals.

    (a) Filing of appeals. An appeal must be in writing, and be 
addressed to and filed with the Under Secretary of State for Arms 
Control and International Security, Department of State, Washington, DC 
20520. An appeal from a final order denying export privileges or 
imposing civil penalties must be filed within 30 days after receipt of 
a copy of the order. If the Under Secretary cannot for any reason act 
on the appeal, he or she may designate another Department of State 
official to receive and act on the appeal.
* * * * *
    (c) Matters considered on appeal. An appeal will be considered upon 
the basis of the assembled record. This record consists of (but is not 
limited to) the charging letter, the respondent's answer, the 
transcript or magnetic recording of the hearing before the 
Administrative Law Judge, the report of the Administrative Law Judge, 
the order of the Assistant Secretary of State for Political-Military 
Affairs, and any other relevant documents involved in the proceedings 
before the Administrative Law Judge. The Under Secretary of State for 
Arms Control and International Security may direct a rehearing and 
reopening of the proceedings before the Administrative Law Judge if he 
or she finds that the record is insufficient or that new evidence is 
relevant and material to the issues and was not known and was not 
reasonably available to the respondent at the time of the original 
hearings.
* * * * *
    (e) Preparation of appeals--(1) General requirements. An appeal 
shall be in letter form. The appeal and accompanying material should be 
filed in duplicate, unless otherwise indicated, and a copy 
simultaneously mailed to the Managing Director, Directorate of Defense 
Trade Controls, SA-1, Room 1200, Department of State, Washington, DC 
20522-0112 or delivered to 2401 E Street, NW., Washington, DC addressed 
to Managing Director, Directorate of Defense Trade Controls, SA-1, Room 
1200, Department of State, Washington, DC 20037.
    (2) Oral presentation. The Under Secretary of State for Arms 
Control and International Security may grant the appellant an 
opportunity for oral argument and will set the time and place for oral 
argument and will notify the parties, ordinarily at least 10 days 
before the date set.
    (f) Decisions. All appeals will be considered and decided within a 
reasonable time after they are filed. An appeal may be granted or 
denied in whole or in part, or dismissed at the request of the 
appellant. The decision of the Under Secretary of State for Arms 
Control and International Security will be final.

0
84. Section 128.15 is amended by revising paragraphs (a) and (b)(3) to 
read as follows:


Sec.  128.15  Orders containing probationary periods.

    (a) Revocation of probationary periods. A debarment or interim 
suspension order may set a probationary period during which the order 
may be held in abeyance for all or part of the debarment or suspension 
period, subject to the conditions stated therein. The Managing 
Director, Directorate of Defense Trade Controls, may apply, without 
notice to any person to be affected thereby, to the Administrative Law 
Judge for a recommendation on the appropriateness of revoking probation 
when it appears that the conditions of the probation have been 
breached. The facts in support of the application will be presented to 
the Administrative Law Judge, who will report thereon and make a 
recommendation to the Assistant Secretary of State for Political-
Military Affairs. The latter will make a determination whether to 
revoke probation and will issue an appropriate order. The party 
affected by this action may request the Assistant Secretary of State 
for Political-Military Affairs to reconsider the decision by submitting 
a request within 10 days of the date of the order.
* * * * *
    (b) * * *
    (3) Requirements for filing objections. Objections filed with the 
Administrative Law Judge must be submitted in writing and in duplicate. 
A copy must be simultaneously submitted to the Directorate of Defense 
Trade Controls. Denials and admissions, as well as any mitigating 
circumstances, which the person affected intends to present must be set 
forth in or accompany the letter of objection and must be supported by 
evidence. A request for an oral hearing may be made at the time of 
filing objections.
* * * * *

[[Page 20553]]

PART 129--REGISTRATION AND LICENSING OF BROKERS

0
85. 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).


0
86. Section 129.2 is amended by revising paragraph (b) to read as 
follows:


Sec.  129.2  Definitions.

* * * * *
    (b) Brokering activities means acting as a broker as defined in 
Sec.  129.2(a), and includes the financing, transportation, freight 
forwarding, or taking of any other action that facilitates the 
manufacture, export, or import or a defense article or defense service, 
irrespective of its origin. For example, this includes, but is not 
limited to, activities by U.S. persons who are located inside or 
outside of the United States or foreign persons subject to U.S. 
jurisdiction involving defense articles or defense services of U.S. or 
foreign origin which are located inside or outside of the United 
States. But, this does not include activities by U.S. persons that are 
limited exclusively to U.S. domestic sales or transfers (e.g., not for 
export or re-transfer in the United States or to a foreign person). For 
the purposes of this subchapter, engaging in the business of brokering 
activities requires only one action as described above.
* * * * *

0
87. Section 129.3 is amended by revising paragraph (a) to read as 
follows:


Sec.  129.3  Requirement to Register.

    (a) Any U.S. person, wherever located, and any foreign person 
located in the United States or otherwise subject to the jurisdiction 
of the United States (notwithstanding Sec.  120.1(c)), who engages in 
the business of brokering activities (as defined in this part) with 
respect to the manufacture, export, import, or transfer of any defense 
article or defense service subject to the controls of this subchapter 
(see part 121) or any ``foreign defense article or defense service'' 
(as defined in Sec.  129.2) is required to register with the 
Directorate of Defense Trade Controls.
* * * * *

0
88. Section 129.4 is amended by revising paragraphs (a) and (b) to read 
as follows:


Sec.  129.4  Registration statement and fees.

    (a) General. The Department of State Form DS-2032 (Statement of 
Registration) and a transmittal letter meeting the requirements of 
Sec.  122.2(b) of this subchapter must be submitted by an intended 
registrant with a payment by check or money order payable to the 
Department of State of one of the fees prescribed in Sec.  122.3(a) of 
this subchapter. The Statement of Registration and transmittal letter 
must be signed by a senior officer who has been empowered by the 
intended registrant to sign such documents. The intended registrant 
shall also submit documentation that demonstrates that it is 
incorporated or otherwise authorized to do business in the United 
States. The requirement to submit a Department of State Form DS-2032 
and to submit documentation demonstrating incorporation or 
authorization to do business in the United States is not meant to 
exclude foreign persons from the requirement to register. Foreign 
persons who are required to register shall provide information that is 
substantially similar in content as that which a U.S. person would 
provide under this provision (e.g., foreign business license or similar 
authorization to do business).
    (b) A person required to register under this part who is already 
registered as a manufacturer or exporter in accordance with part 122 of 
this subchapter must also provide notification of this additional 
activity by submitting to the Directorate of Defense Trade Controls by 
registered mail a transmittal letter meeting the requirements of Sec.  
122.2(b) and citing the existing registration, and must pay an 
additional fee according to the schedule prescribed in Sec.  122.3(a). 
Any person who registers coincidentally as a broker as defined in Sec.  
129.2 of this subchapter and as a manufacturer or exporter must submit 
a Statement of Registration that reflects the brokering activities, the 
Sec.  122.2(b) transmittal letter, as well as the additional fee for 
registration as a broker.
* * * * *

0
89. Section 129.5 is amended by revising paragraphs (b), (c), and (e) 
to read as follows:


Sec.  129.5  Policy on embargoes and other proscriptions.

* * * * *
    (b) No brokering activities or brokering proposals involving any 
country referred to in Sec.  126.1 of this subchapter may be carried 
out by any person without first obtaining the written approval of the 
Directorate of Defense Trade Controls.
    (c) No brokering activities or proposal to engage in brokering 
activities may be carried out or pursued by any person without the 
prior written approval of the Directorate of Defense Trade Controls in 
the case of other countries or persons identified from time to time by 
the Department of State through notice in the Federal Register, with 
respect to which certain limitations on defense articles or defense 
services are imposed for reasons of U.S. national security or foreign 
policy or law enforcement interests (e.g., an individual subject to 
debarment pursuant to Sec.  127.7 of this subchapter).
* * * * *
    (e) In cases involving countries or persons subject to paragraph 
(b), (c), or (d), above, it is the policy of the Department of State to 
deny requests for approval, and exceptions may be granted only rarely, 
if ever. Any person who knows or has reason to know of brokering 
activities involving such countries or persons must immediately inform 
the Directorate of Defense Trade Controls.

0
90. Section 129.6 is amended by revising paragraph (a) to read as 
follows:


Sec.  129.6  Requirement for License/Approval.

    (a) No person may engage in the business of brokering activities 
without the prior written approval (license) of, or prior notification 
to, the Directorate of Defense Trade Controls, except as follows:
* * * * *

0
91. Section 129.7 is amended by revising paragraphs (a) introductory 
text, (b)(2), and (c) to read as follows:


Sec.  129.7  Prior Approval (License).

    (a) The following brokering activities require the prior written 
approval of the Directorate of Defense Trade Controls:
* * * * *
    (b) * * *
    (2) A written statement from the Directorate of Defense Trade 
Controls approving the proposed activity or the making of a proposal or 
presentation.
    (c) Requests for approval of brokering activities shall be 
submitted in writing to the Directorate of Defense Trade Controls by an 
empowered official of the registered broker; the letter shall also meet 
the requirements of Sec.  126.13 of this subchapter.
* * * * *

0
92. Section 129.8 is amended by revising paragraphs (a) and (b) to read 
as follows:


Sec.  129.8  Prior Notification.

    (a) Prior notification to the Directorate of Defense Trade Controls 
is required for brokering activities with respect to significant 
military equipment valued at less than $1,000,000, except for sharing 
of basic marketing information (e.g., information that does not include 
performance characteristics, price and probable availability for 
delivery) by

[[Page 20554]]

U.S. persons registered as exporters under Part 122.
    (b) The requirement of this section for prior notification is met 
by informing the Directorate of Defense Trade Controls by letter at 
least 30 days before making a brokering proposal or presentation. The 
Directorate of Defense Trade Controls will provide written 
acknowledgment of such prior notification to confirm compliance with 
this requirement and the commencement of the 30-day notification 
period.
* * * * *

0
93. Section 129.9 is revised to read as follows:


Sec.  129.9  Reports.

    Any person required to register under this part shall provide 
annually a report to the Directorate of Defense Trade Controls 
enumerating and describing its brokering activities by quantity, type, 
U.S. dollar value, and purchaser(s) and recipient(s), license(s) 
numbers for approved activities and any exemptions utilized for other 
covered activities.

0
94. Section 129.10 is revised to read as follows:


Sec.  129.10  Guidance.

    Any person desiring guidance on issues related to this part, such 
as whether an activity is a brokering activity within the scope of this 
Part, or whether a prior approval or notification requirement applies, 
may seek guidance in writing from the Directorate of Defense Trade 
Controls. The procedures and conditions stated in Sec.  126.9 apply 
equally to requests under this section.

PART 130--POLITICAL CONTRIBUTIONS, FEES AND COMMISSIONS

0
95. The authority citation for part 130 is revised to read as follows:

    Authority: Sec. 39, Arms Export Control Act, 90 Stat. 767 (22 
U.S.C. 2779); E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp. p. 79; 22 
U.S.C. 2651a.

0
96. Section 130.2 is revised to read as follows:


Sec.  130.2  Applicant.

    Applicant means any person who applies to the Directorate of 
Defense Trade Controls for any license or approval required under this 
subchapter for the export of defense articles or defense services 
valued in an amount of $500,000 or more which are being sold 
commercially to or for the use of the armed forces of a foreign country 
or international organization. This term also includes a person to whom 
the required license or approval has been given.

0
97. Section 130.5 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  130.5  Fee or commission.

* * * * *
    (b) * * *
    (1) A political contribution or a payment excluded by Sec.  130.6 
from the definition of political contribution;
* * * * *

0
98. Section 130.8 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  130.8  Vendor.

    (a) * * *
    (1) A sale requiring a license or approval from the Directorate of 
Defense Trade Controls under this subchapter; or
* * * * *

0
99. Section 130.9 is amended by revising the title, paragraphs (a)(1) 
introductory text, (a)(1)(ii), (b) introductory text, (b)(2), and (d) 
to read as follows:


Sec.  130.9  Obligation to furnish information to the Directorate of 
Defense Trade Controls.

    (a)(1) Each applicant must inform the Directorate of Defense Trade 
Controls as to whether the applicant or its vendors have paid, or 
offered or agreed to pay, in respect of any sale for which a license or 
approval is requested:
* * * * *
    (ii) Fees or commissions in an aggregate amount of $100,000 or 
more. If so, applicant must furnish to the Directorate of Defense Trade 
Controls the information specified in Sec.  130.10. The furnishing of 
such information or an explanation satisfactory to the Managing 
Director of the Directorate of Defense Trade Controls as to why all the 
information cannot be furnished at that time is a condition precedent 
to the granting of the relevant license or approval.
* * * * *
    (b) Each supplier must inform the Directorate of Defense Trade 
Controls as to whether the supplier or its vendors have paid, or 
offered or agreed to pay, in respect of any sale:
* * * * *
    (2) Fees or commissions in an aggregate amount of $100,000 or more. 
If so, the supplier must furnish to the Directorate of Defense Trade 
Controls the information specified in Sec.  130.10. The information 
required to be furnished pursuant to this paragraph must be so 
furnished no later than 30 days after the contract award to such 
supplier, or such earlier date as may be specified by the Department of 
Defense. For purposes of this paragraph, a contract award includes a 
purchase order, exercise of an option, or other procurement action 
requiring a supplier to furnish defense articles or defense services to 
the Department of Defense for the purposes of Sec.  22 of the Arms 
Export Control Act (22 U.S.C. 2762).
* * * * *
    (d) Any applicant or supplier which has informed the Directorate of 
Defense Trade Controls under this section that neither it nor its 
vendors have paid, or offered or agreed to pay, political contributions 
or fees or commissions in an aggregate amount requiring the information 
specified in Sec.  130.10 to be furnished, must subsequently furnish 
such information within 30 days after learning that it or its vendors 
had paid, or offered or agreed to pay, political contributions or fees 
or commissions in respect of a sale in an aggregate amount which, if 
known to applicant or supplier at the time of its previous 
communication with the Directorate of Defense Trade Controls, would 
have required the furnishing of information under Sec.  130.10 at that 
time. Any report furnished under this paragraph must, in addition to 
the information specified in Sec.  130.10, include a detailed statement 
of the reasons why applicant or supplier did not furnish the 
information at the time specified in paragraph (a) or paragraph (b) of 
this section, as applicable.

0
100. Section 130.10 is amended by revising the heading and paragraphs 
(a) introductory text and (d) to read as follows:


Sec.  130.10  Information to be furnished by applicant or supplier to 
the Directorate of Defense Trade Controls.

    (a) Every person required under Sec.  130.9 to furnish information 
specified in this section in respect to any sale must furnish to the 
Directorate of Defense Trade Controls:
* * * * *
    (d) Every person required to furnish the information specified in 
paragraphs (a) and (b) of this section must respond fully to each 
subdivision of those paragraphs and, where the correct response is 
``none'' or ``not applicable,'' must so state.

0
101. Section 130.11 is amended by revising paragraphs (a)(3), (b) 
introductory text, and (b)(2) to read as follows:


Sec.  130.11  Supplementary reports.

    (a) * * *
    (3) Additional details are requested by the Directorate of Defense 
Trade

[[Page 20555]]

Controls with respect to any miscellaneous payments reported under 
Sec.  130.10(c).
    (b) Supplementary reports must be sent to the Directorate of 
Defense Trade Controls within 30 days after the payment, offer or 
agreement reported therein or, when requested by the Directorate of 
Defense Trade Controls, within 30 days after such request, and must 
include:
* * * * *
    (2) The Directorate of Defense Trade Controls license number, if 
any, and the Department of Defense contract number, if any, related to 
the sale.

0
102. Section 130.12 is amended by revising paragraphs (c), (d)(1) 
introductory text, and (d)(2) to read as follows:


Sec.  130.12  Information to be furnished by vendor to applicant or 
supplier.

* * * * *
    (c) If the vendor believes that furnishing information to an 
applicant or supplier in a requested statement would unreasonably risk 
injury to the vendor's commercial interests, the vendor may furnish in 
lieu of the statement an abbreviated statement disclosing only the 
aggregate amount of all political contributions and the aggregate 
amount of all fees or commissions which have been paid, or offered or 
agreed to be paid, or offered or agreed to be paid, by the vendor with 
respect to the sale. Any abbreviated statement furnished to an 
applicant or supplier under this paragraph must be accompanied by a 
certification that the requested information has been reported by the 
vendor directly to the Directorate of Defense Trade Controls. The 
vendor must simultaneously report fully to the Directorate of Defense 
Trade Controls all information which the vendor would otherwise have 
been required to report to the applicant or supplier under this 
section. Each such report must clearly identify the sale with respect 
to which the reported information pertains.
    (d)(1) If upon the 25th day after the date of its request to 
vendor, an applicant or supplier has not received from the vendor the 
initial statement required by paragraph (a) of this section, the 
applicant or supplier must submit to the Directorate of Defense Trade 
Controls a signed statement attesting to:
* * * * *
    (2) The failure of a vendor to comply with this section does not 
relieve any applicant or supplier otherwise required by Sec.  130.9 to 
submit a report to the Directorate of Defense Trade Controls from 
submitting such a report.

0
103. Section 130.17 is amended by revising paragraph (a) to read as 
follows:


Sec.  130.17  Utilization of and access to reports and records.

    (a) All information reported and records maintained under this part 
will be made available, upon request for utilization by standing 
committees of the Congress and subcommittees thereof, and by United 
States Government agencies, in accordance with Sec.  39(d) of the Arms 
Export Control Act (22 U.S.C. 2779(d)), and reports based upon such 
information will be submitted to Congress in accordance with sections 
36(a)(7) and 36(b)(1) of that Act (22 U.S.C. 2776(a)(7) and (b)(1)) or 
any other applicable law.
* * * * *

    Dated: March 1, 2006.
Robert G. Joseph,
Under Secretary for Arms Control and International Security, Department 
of State.
[FR Doc. 06-3500 Filed 4-20-06; 8:45 am]
BILLING CODE 4710-25-P