[Federal Register Volume 81, Number 159 (Wednesday, August 17, 2016)]
[Rules and Regulations]
[Pages 54732-54737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19550]


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DEPARTMENT OF STATE

22 CFR Parts 120, 123, 124, 125, and 126

[Public Notice: 9606]
RIN 1400-AC88


Amendment to the International Traffic in Arms Regulations: 
Procedures for Obtaining State Department Authorization To Export Items 
Subject to the Export Administration Regulations; Revision to the 
Destination Control Statement; and Other Changes

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: As part of the President's Export Control Reform (ECR) 
initiative, the Department of State is amending the International 
Traffic in Arms Regulations (ITAR) to clarify rules pertaining to the 
export of items subject to the Export Administration Regulations (EAR), 
revise the destination control statement in ITAR Sec.  123.9 to 
harmonize the language with the EAR, make conforming changes to ITAR 
Sec. Sec.  124.9 and 124.14, and make several minor edits for clarity.

DATES: This rule is effective November 15, 2016.

FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director, 
Office of Defense Trade Controls Policy, Department of State, telephone 
(202) 663-2792; email [email protected]. ATTN: Regulatory 
Change, Destination Control Statement.

SUPPLEMENTARY INFORMATION: The Department published a proposed rule on 
May 22, 2015 (80 FR 29565) and received 17 public comments on the 
proposed changes to the ITAR. The Department makes the following 
revisions in this final rule:

Items Subject to the EAR

    This final rule adds clarifying language to various provisions of 
the ITAR pertaining to the use of exemptions to the license 
requirements and the export of items subject to the EAR, when the EAR 
items are shipped with items subject to the ITAR. These revisions 
include guidance on the use of license exemptions for the export of 
such items, as well as clarification that items subject to the EAR are 
not defense articles, even when exported under a license or other 
approval, such as an exemption, issued by the Department of State. The 
Department received the following comments on the proposed changes, 
which are summarized here, along with the Department's responses:
    One commenter raised a concern that the proposed revised language 
restricts industry's exemption options for items subject to the EAR to 
situations only when related USG authorization exists for the end item. 
The Department accepts the comment and has revised Sec.  120.5(b) to 
state that items subject to the EAR may be exported pursuant to an ITAR 
exemption if exported with defense articles. ITAR exemptions may not be 
used for the independent export of items subject to the EAR, i.e., a 
single physical shipment of EAR item(s) that does not include any USML 
item with which the EAR item may be used. If the items subject to the 
EAR will be transferred separately from a defense article, license 
exceptions available under the EAR may be used to authorize the 
transfer.
    One commenter noted that, the proposed Sec.  120.5(b) inadvertently 
excluded the exemptions at Part 123 of the ITAR from the parenthetical 
list of applicable ITAR parts. The Department concurs with this comment 
and adds a reference to part 123 into the parenthetical phrase.
    One commenter noted that the Department should provide 
clarification and guidance on the proper classification to be entered 
into the Automated Export System (AES) for items subject to the EAR 
shipped under an ITAR exemption. The commenter noted that proposed 
edits to Sec.  123.9(b)(2) did not address AES filings. The Department 
notes that the Department of Commerce (U.S. Census Bureau and Bureau of 
Industry and Security) has already clarified this. The EAR 
classification needs to be provided in the export control information 
on the Electronic Export Information (EEI) filing in AES for all items 
subject to the EAR, including EAR99 designated items that are 
authorized for export under a State Department authorization.
    One commenter noted that the changes in this rule require that if a 
shipment includes both ITAR and EAR controlled items then the Export 
Control Classification Number (ECCN) of items in the shipments must be 
listed, including any EAR99 designation (if the authorization for the 
export was through an approved State Department license), and requires 
the country of ultimate destination, end-user, licensee information to 
be provided on the export documents. The flexibility of exporting items 
subject to the EAR under a State Department authorization does warrant 
this additional level of identification for all of the items subject to 
the EAR that the Department authorizes for export. Therefore, although 
the Department understands the comment, given the hybrid nature of the 
ITAR authorization under the Sec.  120.5(b) process, the Department has 
determined the requirements are warranted.
    One commenter noted that the text under Sec.  120.5(b) does not 
specify that ``items subject to the EAR'' exported under an exemption 
must be exported with the specific defense article. They recommend 
clarifying that this is the intent of the modification or if not, to 
change the text, so it comports with the requirements for ``items 
subject to the EAR'' exported under a license or other approval. The 
Department concurs with this comment. This final rule adds

[[Page 54733]]

clarifying text to Sec.  120.5(b) to specify that in order to use a 
Department of State license exemption the item subject to the EAR must 
be exported with a defense article.

Items Exported To or On Behalf of an Agency of the U.S. Government

    This final rule does not revise the licensing exemption language in 
Sec.  126.4. This section will be addressed in a separate rulemaking 
and comments submitted in response to the proposed rule on that topic 
will be addressed in that rulemaking.

Revision to the Destination Control Statement

    This final rule revises the Destination Control Statement (DCS) in 
ITAR Sec.  123.9 to harmonize the text with the text of the DCS in EAR 
Sec.  758.6, which is the subject of a companion rule to be published 
by the Department of Commerce. The DCS revision is also reflected in 
Sec.  124.9 and 124.14. This change is being made to facilitate the 
President's Export Control Reform initiative, which has transferred 
thousands of formerly ITAR-controlled defense article parts and 
components, along with other items, to the Commerce Control List in the 
EAR, which is under the jurisdiction of the Department of Commerce. 
This change in jurisdiction for many parts and components of military 
systems has increased the incidence of exporters shipping articles 
subject to both the ITAR and the EAR in the same shipment. Both 
regulations have a mandatory Destination Control Statement that must be 
on the export control documents for shipments that include items 
subject to both sets of regulations. This had previously caused 
confusion to exporters as to which statement to include on mixed 
shipments, or whether to include both. Harmonizing these statements 
will ease the regulatory burden on exporters.

Summary of Public Comments on the Destination Control Statement

    Most of the public comments fell into one of four areas: (1) 
Harmonization of DCS language between the ITAR and the EAR; (2) 
harmonization of documentation between the ITAR and EAR; (3) providing 
exporters a sufficient implementation period to adjust to the new DCS 
requirements; and (4) consideration of the different documents required 
for shipping, with the commercial invoice being the clear favorite and 
most appropriate for the DCS to be included on.
    This final rule includes an effective date 90 days after 
publication in the Federal Register for the DCS provisions. It also 
specifies that the exporter is responsible for including the DCS on the 
commercial invoice. Additionally, the DCS text adopted in this final 
rule is identical to the DCS text adopted in a companion rule by 
Commerce.
    The Department received a small number of comments on the proposed 
rule which were specific to the Commerce proposed rule, and Commerce is 
addressing these comments in its final rule.

Public Comments and the Department's Responses

    Several commenters noted that harmonization represents a step in 
the right direction and will minimize confusion as to which DCS must be 
used depending on the jurisdiction of the item. The Department concurs 
with this comment.
    Several commenters objected that the Department's requirements for 
placement of the DCS were out of step with Commerce and not harmonized 
in the proposed rule. The Department agrees, and the requirement for 
placement of the DCS is being harmonized by the Departments of State 
and Commerce.
    Several commenters stated that the government should not specify 
the documents that require the DCS, but rather should impose a high 
level requirement and leave it to parties to choose which document(s) 
to include. The Department disagrees. Specifying which documents the 
DCS will be placed on will create greater transparency, as well as make 
it easier for various United States government agencies, as well as 
exporters and other consignees, to identify whether the DCS has been 
properly included.
    One commenter noted that this appears to be a case of harmonization 
for the sake of harmonization, and would appear to have the potential 
to create substantial confusion among recipients, and impose 
significant burdens without a correspondingly significant benefit to 
the government. The Department disagrees. Ensuring the DCS reaches the 
parties that will receive items exported and/or reexported is key to 
the United States achieving its policy objectives.
    One commenter stated that it was confusing that Commerce uses the 
term ``commercial invoice'' whereas the Department uses ``invoice.'' 
For some exporters, the term ``invoice'' refers to the final billing 
document that moves electronically, whereas the commercial invoice 
moves with the freight. The Department agrees that the terms should be 
harmonized. Based on other comments received, the term ``commercial 
invoice'' is well understood by industry, so this final rule adopts the 
term ``commercial invoice'' to reference the document that moves with 
the freight.
    One commenter objected to the DCS, as it imposed additional burdens 
and costs on the public and trade. Further, the commenter noted that to 
add this information separately to the bill of lading, air waybill and 
other transportation documentation could have the unintended effect of 
signaling the package contents to third parties. The Department 
disagrees with the commenter's characterization as these statements are 
already required and the harmonization of the DCS will lower the 
administrative burden on exporters and re-exporters. In addition, and 
as noted elsewhere in this final rule, the Department is removing the 
requirement to include the DCS on transportation documents.
    One commenter stated that the air waybill imposed a severe space 
limitation with regard to including the DCS. According to the 
commenter, including information regarding a country of ultimate 
destination, end-user, and license or other approval number or 
exemption citation information could be unduly burdensome. The 
Department concurs, as noted elsewhere in this final rule, and the 
requirement to include the DCS on transportation documents has been 
removed.
    One commenter noted that the State Department should consider a 
shorter DCS, such as: ``This shipment contains goods under the 
jurisdiction of the ITAR.'' This statement could more easily be 
converted to an electronic format than the complete DCS. The Department 
disagrees, as an ITAR specific DCS would defeat the purpose of 
harmonization between the Departments of State and Commerce and would 
not address mixed shipments.
    One commenter suggested that the DCS and other export control 
related information (e.g., USML category) be placed on a separate 
document that serves multiple purposes, and can be sent with the items 
being shipped or separately in order to convey to the consignees that 
the items are U.S. export regulated and are intended only for the 
designated end user and the destination identified. The Department 
acknowledges there would be some benefits to such an approach, but it 
is preferable to require the DCS on an existing document (the 
commercial invoice) that is created in the normal course of business. 
Other public comments support this conclusion.

[[Page 54734]]

    Numerous commenters requested a delay in the implementation date of 
between 180-240 days after publication of the final rule to allow 
sufficient time for affected parties to make the required changes to 
system programming, document revision and related procedural tasks. 
Other commenters requested a 180 day delayed effective date, along with 
a delayed compliance date. The Department agrees that industry will 
need time to update their systems and has included a delayed effective 
date of 90 days after publication of this final rule.
    One commenter requested public meetings in order to comment on the 
proposed changes, and that State and Commerce also conduct outreach 
prior to new changes being implemented. The Department values public 
participation in the rulemaking process and has provided an opportunity 
for public review and comment on the proposed rules. For those 
commenters that raised concerns, the Department was generally able to 
refine what was proposed to address those comments and better achieve 
the stated objectives. Therefore, the Department does not see a need to 
conduct public meetings prior to publishing this final rule. In regards 
to outreach, the Department agrees that this is a good idea and intends 
to add updated DCS information to our already robust ECR related 
outreach activities.

Overview of Regulatory Changes To Address Public Comments

    The Department of State has revised the proposed changes to Sec.  
123.9 to address the public comments and to better achieve its stated 
objectives in this final rule. The public comment process was helpful 
in identifying areas where changes needed to be made to fully achieve 
the intended objectives for the DCS for use under the ITAR and the EAR.
    Placement of Destination Control Statement. This final rule removes 
the requirement to place the Destination Control State on the bill of 
lading, air waybill, or other shipping documents and retains the 
requirement for the invoice, which will now be more clearly described 
as the commercial invoice. As stated elsewhere in this final rule, the 
commercial invoice is the document that is most likely to achieve the 
purpose of this section and therefore the Department is limiting the 
requirement to this one document, which also will reduce the burden on 
exporters.
    Clarifying the scope of paragraph 123.9(a) applies to items shipped 
(exported in tangible form), retransferred (in tangible form), or 
reexported (in tangible form). This final rule clarifies that the 
requirement applies to tangible defense articles when exported, 
reexported, or retransferred.
    Addition of Note to paragraph 123.9(b)(1)(iv). This final rule also 
adds a Note to proposed paragraph (b)(1)(iv) to clarify what is meant 
in the DCS by the phrase ``or as otherwise authorized by U.S. law and 
regulations.'' The note clarifies that the phrase ``or as otherwise 
authorized by U.S. law and regulations'' is included to advise that 
U.S. regulations contain specific license exemptions, provisions that 
allow shipments to be made ``no license required,'' as well as 
reexports of foreign made items containing less than de minimis U.S. 
origin controlled content (see 15 CFR 734). This note reflects that an 
individual license is not required in all cases.
Procedures for Obtaining State Department Authorization To Export Items 
Subject to the EAR
    This final rule adds a new paragraph (d) to Sec.  123.9 to clarify 
the requirements for retransferring items subject to the EAR pursuant 
to a request for written approval from DDTC.
    Other changes in this rule. The Department makes a number of minor 
edits to the ITAR that address reporting requirements. This final rule 
removes the requirement to provide seven paper copies for various 
requests in Sec. Sec.  124.7, 124.12, 124.14, 125.2, 125.7 and 126.9. 
The Department did not receive any comments on the proposed changes, 
except for one commenter that expressed support for the removal of 
unnecessary submission requirements (e.g., seven paper copies). 
Therefore, this final rule revises Sec. Sec.  124.7, 124.12, 124.14, 
125.2, 125.7 and 126.9 as proposed.
    This final rule imposes the Code of Federal Regulations paragraph 
structure on Sec.  124.8. The Department received no comments on Sec.  
124.8, and the provision is adopted as proposed.
    This final rule replaces the previous Destination Control Statement 
in Sec.  124.9(a)(6) with the new language found at Sec.  
123.9(b)(1)(iv). The Department received only one comment on this 
issue, which did not propose substantive changes, but advised that 
Sec.  124.9(a)(6) needed to reflect the new Destination Control 
Statement language. The Department notes that the proposed rule did not 
revise the Destination Control Statement language of Sec.  
124.14(c)(7). Therefore, this final rule revises Sec. Sec.  124.9 and 
124.14 accordingly.
    This final rule also changes the identification of the agency 
responsible for permanent import authorizations in Sec.  123.4 from the 
Department of the Treasury to Department of Justice. The Department did 
not receive any comments on the proposed changes. Therefore, this final 
rule revises Sec.  123.4 as proposed.
    This final rule removes the pilot filing requirement found in Sec.  
123.13, given that, as noted in the proposed rule, it did not take into 
account the practices of modern airport operations and is no longer 
necessary. The Department did not receive any comments on the proposed 
change. Therefore, this final rule revises Sec.  123.13 as proposed.
    This final rule revises Sec.  124.12(b) to correct the citations 
contained in the parenthetical from Sec. Sec.  124.9 and 124.10 to 
Sec. Sec.  124.8 and 124.9. This revision was not included in the 
proposed rule.
    Additionally, the Department amends Sec.  126.9, Advisory Opinions 
and Related Authorizations, to add a new paragraph (c) for requests to 
interpret ITAR requirements. This revision was not included in the 
proposed rule but is added to clarify the Department's practice. The 
Department is undertaking a review of the advisory opinion process 
which will be addressed in a future rule.
    Finally, the Department notes that this final rule does not revise 
the NATO special retransfer authorizations language in Sec.  124.16, 
which was contained in the proposed rule. By separate Federal Register 
notice (81 FR 35611, June 3, 2016) effective September 1, 2016, the 
provisions of Sec.  124.16 will be incorporated into Sec.  126.18 and 
the section will be removed and reserved.

Regulatory Analysis and Notices

Administrative Procedure Act

    The Department of State is of the opinion that controlling the 
import and export of defense articles and services is a foreign affairs 
function of the United States government and that rules implementing 
this function are exempt from Sec. Sec.  553 (rulemaking) and 554 
(adjudications) of the Administrative Procedure Act (APA). Although the 
Department is of the opinion that this rule is exempt from the 
rulemaking provisions of the APA, the Department published this rule 
with a 45-day provision for public comment and without prejudice to its 
determination that controlling the import and export of defense 
services is a foreign affairs function. The Department has made 
additional refinements to what was proposed based on the public 
comments received, which helps to further the objectives described in 
the proposed rule that is published as a final rule today. The 
Department is also adopting a delayed effective date of 90 days.

[[Page 54735]]

Regulatory Flexibility Act

    Since this final rule is exempt from the provisions of 5 U.S.C. 
553, there is no requirement for an analysis under the Regulatory 
Flexibility Act.

Unfunded Mandates Reform Act of 1995

    This rulemaking does not involve a mandate that will result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any year and it 
will not significantly or uniquely affect small governments. Therefore, 
no actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Small Business Regulatory Enforcement Fairness Act of 1996

    The Department does not believe this rulemaking is a major rule as 
defined in 5 U.S.C. 804.

Executive Orders 12372 and 13132

    This rulemaking will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this rulemaking does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement. The 
regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on Federal programs and activities do 
not apply to this proposed rulemaking.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributed impacts, and equity). These executive orders 
stress the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated a ``significant regulatory action'' under 
Executive Order 12866. Accordingly, this final rule has been reviewed 
by the Office of Management and Budget (OMB).

Executive Order 12988

    The Department of State has reviewed this rulemaking in light of 
Executive Order 12988 to eliminate ambiguity, minimize litigation, 
establish clear legal standards, and reduce burden.

Executive Order 13175

    The Department of State has determined that this rulemaking will 
not have tribal implications, will not impose substantial direct 
compliance costs on Indian tribal governments, and will not preempt 
tribal law. Accordingly, the provisions of Executive Order 13175 do not 
apply to this rulemaking.

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. This rule removes provisions that previously required the applicant 
to provide seven additional copies for various export license requests. 
As noted in the proposed rule, the Department believes that there would 
be little or no practical burden reduction since the use of electronic 
methods of filing has made the requirement for ``seven copies'' 
obsolete. The Department requested public comment on its estimate that 
there will be little or no change in the burdens associated with 
effected information collections as a result of this rulemaking. The 
Department received no public comments with respect to the information 
collections.

List of Subjects

22 CFR Parts 120 and 125

    Arms and munitions, Classified information, Exports.

22 CFR Part 123

    Arms and munitions, Exports, Reporting and recordkeeping 
requirements.

22 CFR Part 124

    Arms and munitions, Exports, Technical assistance.

22 CFR Part 126

    Arms and munitions, Exports.

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

PART 120--PURPOSE AND DEFINITIONS

0
1. The authority citation for part 120 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. 2794; 22 U.S.C. 2651a; Pub. 
L. 105-261, 112 Stat. 1920; Pub. L. 111-266; Section 1261, Pub. L. 
112-239; E.O. 13637, 78 FR 16129.


0
2. Section 120.5 is amended by revising the section heading and 
paragraph (b) to read as follows:


120.5  Relation to regulations of other agencies; export of items 
subject to the EAR.

* * * * *
    (b) A license or other approval (see Sec.  120.20) from the 
Department of State granted in accordance with this subchapter may also 
authorize the export of items subject to the EAR (see Sec.  120.42). An 
exemption (see parts 123, 124, 125, and 126 of this subchapter) may 
only be used to export an item subject to the EAR that is for use in or 
with a defense article and is included in the same shipment as any 
defense article. No exemption under this subchapter may be utilized to 
export an item subject to the EAR if not accompanied by a defense 
article. Separate approval from the Department of Commerce is not 
required for these items. Those items subject to the EAR exported 
pursuant to a Department of State license or other approval would 
remain under the jurisdiction of the Department of Commerce for any 
subsequent transactions. The inclusion of items subject to the EAR on a 
Department of State license or other approval does not change the 
licensing jurisdiction of the items. (See Sec.  123.1(b) of this 
subchapter for guidance on identifying items subject to the EAR in a 
license application to the Department of State.)

PART 123--LICENSES FOR THE EXPORT AND TEMPORARY IMPORT OF DEFENSE 
ARTICLES

0
3. 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; 22 U.S.C. 2651a; 22 
U.S.C. 2776; Pub. L. 105-261, 112 Stat. 1920; Sec. 1205(a), Pub. L. 
107-228; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.


0
4. Section 123.4 is amended by revising paragraph (a)(4) to read as 
follows:


Sec.  123.4  Temporary import license exemptions.

    (a) * * *
    (4) Has been rejected for permanent import by the Department of 
Justice and is being returned to the country from which it was shipped; 
or
* * * * *

0
5. Section 123.9 is amended by revising paragraphs (b)(1) and (2) and 
adding paragraph (d) to read as follows:

[[Page 54736]]

Sec.  123.9  Country of ultimate destination and approval of reexports 
or retransfers.

* * * * *
    (b) * * *
    (1) The exporter must incorporate the following information as an 
integral part of the commercial invoice, whenever defense articles are 
to be shipped (exported in tangible form), retransferred (in tangible 
form), or reexported (in tangible form) pursuant to a license or other 
approval under this subchapter:
    (i) The country of ultimate destination;
    (ii) The end-user;
    (iii) The license or other approval number or exemption citation; 
and
    (iv) The following statement: ``These items are controlled by the 
U.S. government and authorized for export only to the country of 
ultimate destination for use by the ultimate consignee or end-user(s) 
herein identified. They may not be resold, transferred, or otherwise 
disposed of, to any other country or to any person other than the 
authorized ultimate consignee or end-user(s), either in their original 
form or after being incorporated into other items, without first 
obtaining approval from the U.S. government or as otherwise authorized 
by U.S. law and regulations.''

    Note to paragraph (b)(1)(iv):  The phrase ``or as otherwise 
authorized by U.S. law and regulations'' is included because U.S. 
regulations contain specific exemptions from licensing requirements 
(e.g., ITAR exemptions, and EAR license exceptions and No License 
Required designations) and allow for certain amounts of U.S. origin 
content in foreign made items (see 15 CFR 734).

    (2) When exporting items subject to the EAR (see Sec. Sec.  120.5, 
120.42 and 123.1(b) of this subchapter) pursuant to a Department of 
State license or other approval, the U.S. exporter must also provide 
the end-user and consignees with the appropriate EAR classification 
information for each item. This includes the Export Control 
Classification Number (ECCN) or EAR99 designation.
* * * * *
    (d) The Directorate of Defense Trade Controls may authorize 
reexport or retransfer of an item subject to the EAR provided that:
    (1) The item was initially exported, reexported or transferred 
pursuant to a Department of State license or other approval;
    (2) The item is for end-use in or with a defense article; and
    (3) All requirements of paragraph (c) of this section are satisfied 
for the item subject to the EAR, as well as for the associated defense 
article.
* * * * *

0
6. Revise Sec.  123.13 to read as follows:


Sec.  123.13  Domestic aircraft shipments via a foreign country.

    A license is not required for the shipment by air of a defense 
article from one location in the United States to another location in 
the United States via a foreign country.

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

0
7. The authority citation for part 124 continues to read as follows:

    Authority:  Sec. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778, 2797); 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 
105-261; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.


0
8. Section 124.7 is amended by redesignating the introductory text as 
paragraph (a) introductory text, revising newly designated paragraph 
(a)(1), and adding reserved paragraph (b).
    The revision reads as follows:


Sec.  124.7  Information required in all manufacturing license 
agreements and technical assistance agreements.

    (a) * * *
    (1) The agreement must describe the defense article to be 
manufactured and all defense articles to be exported, including any 
test and support equipment or advanced materials. They should be 
described by military nomenclature, contract number, National Stock 
Number, nameplate data, or other specific information. Only defense 
articles listed in the agreement will be eligible for export under the 
exemption in Sec.  123.16(b)(1) of this subchapter.
* * * * *


Sec.  124.8  [Amended]

0
9. Section 124.8 is amended by redesignating the introductory text as 
paragraph (a) introductory text and adding reserved paragraph (b).

0
10. Section 124.9 is amended by revising paragraph (a)(6) to read as 
follows:


Sec.  124.9  Additional clauses required only in manufacturing license 
agreements.

    (a) * * *
    (6) (Licensee) agrees to incorporate the following statement as an 
integral provision of a contract, commercial invoice or other 
appropriate document whenever the licensed articles are sold or 
otherwise transferred:
    These items are controlled by the U.S. government and authorized 
for export only to the country of ultimate destination for use by the 
ultimate consignee or end-user(s) herein identified. They may not be 
resold, transferred, or otherwise disposed of, to any other country or 
to any person other than the authorized ultimate consignee or end-
user(s), either in their original form or after being incorporated into 
other items, without first obtaining approval from the U.S. government 
or as otherwise authorized by U.S. law and regulations.

0
11. Section 124.12 is amended by revising paragraph (a) introductory 
text and paragraph (b)(4) 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 explanatory letter shall 
contain:
* * * * *
    (b) * * *
    (4) ``If this agreement grants any rights to sub-license, it will 
be amended to require that all sub-licensing arrangements incorporate 
all the provisions of the basic agreement that refer to the U.S. 
Government and the Department of State (i.e., 22 CFR 124.8 and 
124.9).''

0
12. Section 124.14 is amended by revising paragraphs (c)(7) and (e) 
introductory text to read as follows:


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

* * * * *
    (c) * * *
    (7) ``(Licensee) agrees to incorporate the following statement as 
an integral provision of a contract, invoice or other appropriate 
document whenever the articles covered by this agreement are sold or 
otherwise transferred: `These items are controlled by the U.S. 
government and authorized for export only to the country of ultimate 
destination for use by the ultimate consignee or end-user(s) herein 
identified. They may not be resold, transferred, or otherwise disposed 
of, to any other country or to any person other than the authorized 
ultimate consignee or end-user(s), either in their original form or 
after being incorporated into other items, without first obtaining 
approval from the U.S. government or as otherwise authorized by U.S. 
law and regulations.' ''
* * * * *
    (e) Transmittal letters. Requests for approval of warehousing and 
distribution agreements with foreign

[[Page 54737]]

persons must be made by letter. The letter shall contain:
* * * * *

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

0
13. The authority citation for part 125 continues to read as follows:

    Authority:  Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.


0
14. Section 125.2 is amended by revising paragraph (a) 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.
* * * * *

0
15. Section 125.7 is amended by revising paragraph (b) to read as 
follows:


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

* * * * *
    (b) An application for the export of classified technical data or 
other classified defense articles must be accompanied by a completed 
form DSP-83 (see Sec.  123.10 of this subchapter). 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 inconsistent 
with guidance provided by the Directorate of Defense Trade Controls, in 
which case the latter guidance must be followed).

PART 126--GENERAL POLICIES AND PROVISIONS

0
16. The authority citation for part 126 continues to read as follows:

    Authority:  Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 
Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 
2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp., 
p. 899; Sec. 1225, Pub. L. 108-375; Sec. 7089, Pub. L. 111-117; Pub. 
L. 111-266; Section 7045, Pub. L. 112-74; Section 7046, Pub. L. 112-
74; E.O. 13637, 78 FR 16129.

0
17. Section 126.9 is amended by revising the heading and the first 
sentence of paragraph (a) and adding paragraph (c) to read as follows:


Sec.  126.9  Advisory opinions and related authorizations.

    (a) Preliminary authorization determinations. A person may request 
information from the Directorate of Defense Trade Controls on whether 
it would likely grant a license or other approval for a particular 
defense article or defense service to a particular country. * * *
* * * * *
    (c) Interpretations of the ITAR. Any person may request an 
interpretation of the requirements set forth in this subchapter in the 
form of an advisory opinion. A request for an advisory opinion must be 
made in writing. Any response to an advisory opinion provided by the 
Directorate of Defense Trade Controls pursuant to this paragraph shall 
not be an authorization to export and shall not bind the Department to 
grant or deny any such authorization.

Rose E. Gottemoeller,
Under Secretary, Arms Control and International Security, Department of 
State.
[FR Doc. 2016-19550 Filed 8-16-16; 8:45 am]
 BILLING CODE 4710-25-P