[Federal Register Volume 89, Number 161 (Tuesday, August 20, 2024)]
[Rules and Regulations]
[Pages 67270-67292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18043]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Parts 123, 124, and 126
[Public Notice: 12468]
RIN 1400-AF84
International Traffic in Arms Regulations: Exemption for Defense
Trade and Cooperation Among Australia, the United Kingdom, and the
United States
AGENCY: Department of State.
ACTION: Interim final rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: The Department of State (the Department) is amending the
International Traffic in Arms Regulations (ITAR) to facilitate defense
trade and cooperation among Australia, the United Kingdom, and the
United States through a new exemption, pursuant to section 38(l) of the
Arms Export Control Act; adding an expedited licensing process for
certain defense article and defense service exports to Australia, the
United Kingdom, and Canada; adding a list of defense articles and
defense services excluded from eligibility for transfer under the new
exemption for Australia, the United Kingdom, and the United States; and
adding to the scope of the exemption for intra-company, intra-
organization, and intra-governmental transfers to allow for the
transfer of classified defense articles to certain dual nationals who
are authorized users within the United Kingdom and Australia. The
Department also seeks further public comment on these changes and
whether they support the stated goals of this rulemaking. This interim
final rule adopts the proposed rule published on May 1, 2024, with
additional changes described below and implemented herein.
DATES:
Effective date: The rule is effective on September 1, 2024.
Comments due date: Comments due on or before November 18, 2024.
ADDRESSES: Interested parties may submit comments by one of the
following methods:
Email: [email protected], with the subject line
``Australia, the United Kingdom, and the United States ITAR Exemption''
[[Page 67271]]
Internet: At www.regulations.gov, search for this notice
using Docket DOS-2024-0024.
Those submitting comments should not include any personally
identifiable information they do not desire to be made public or
information for which a claim of confidentiality is asserted. Comments
and/or transmittal emails will be made available for public inspection
and copying after the close of the comment period via the Directorate
of Defense Trade Controls (DDTC) website at www.pmddtc.state.gov.
Parties who wish to comment anonymously may submit comments via
www.regulations.gov, leaving identifying fields blank.
FOR FURTHER INFORMATION CONTACT: Ms. Engda Wubneh, Foreign Affairs
Officer, Office of Defense Trade Controls Policy, U.S. Department of
State, telephone (771) 205-9566; email [email protected],
ATTN: Regulatory Change, ITAR Section 126.7 Australia, the United
Kingdom, and the United States Exemption.
SUPPLEMENTARY INFORMATION: On May 1, 2024, the Department of State (the
Department) published a proposed rule with request for comments (89 FR
35028) to create an exemption designed to implement the provisions of
section 38(l) of the Arms Export Control Act (AECA) (22 U.S.C.
2778(l)), as added by section 1343 of the National Defense
Authorization Act (NDAA) for Fiscal Year 2024 (Pub. L. 118-31). The
proposed rule at Sec. 126.7 stated that no license or other approval
would be required for the export, reexport, retransfer, or temporary
import of defense articles; the performance of defense services; or
engagement in brokering activities between or among authorized users
within Australia, the United Kingdom, and the United States provided
certain requirements and limitations are met. The rule also proposed a
new supplement no. 2 to part 126, which is an Excluded Technology List
(ETL) designed to limit certain defense articles and defense services
from being eligible for the provisions of Sec. 126.7. Further, the
Department proposed Sec. 126.18(e) for transfers of classified defense
articles to dual nationals, who are citizens of Australia and the
United Kingdom and another country, provided all other criteria are met
in this exemption. Lastly, the proposed Sec. 126.15(c) and (d) aimed
to implement a separate provision, section 1344 of the NDAA for Fiscal
Year 2024, for expedited licensing for exports of defense articles and
defense services to Australia, the United Kingdom, and Canada.
The Department acknowledges and appreciates the comments submitted
in response to the proposed rule identified as 89 FR 35028 (herein
``proposed rule'') and is now publishing this interim final rule, which
contains revisions to certain provisions of the proposed rule and
additions to certain ITAR sections. The Department welcomes further
public comment on the regulatory text of this interim final rule.
The main changes to regulatory text in this rule, compared to the
proposed rule, are as follows:
In Sec. 123.10(a), the phrase ``pursuant to a license or
other authorization, except for the exemptions in Sec. Sec. 126.5 and
126.7'' is added to the statement that a nontransfer and use
certificate (i.e., Form DSP-83) generally is required for the export of
significant military equipment and classified articles regardless of
the form of the applicable export authorization while simultaneously
clarifying that no nontransfer and use certificate is required for
exports pursuant to the specified exemptions.
In Sec. 124.8(a)(5), Sec. 126.7 was added to clarify
that the exemption may be used to retransfer and reexport defense
articles pursuant to this exemption that were originally exported via
an agreement.
In Sec. 126.1(a), Sec. 126.18(e) was added to the list
of excepted exemptions from the section's country-based prohibitions.
In Sec. 126.7(b)(1), the term ``activity'' replaced the
term ``transfer'' in order to more clearly express the inclusion of
defense services and brokering activities under this exemption.
In Sec. 126.7(b)(2), the term ``broker'' was added to
clarify that depending on the activity, the transferor, recipient, or
broker all would need to register with DDTC, as appropriate. Further,
language was added to clarify that a U.S. Government department or
agency are authorized users of this exemption.
For Sec. 126.7(b)(4), the recordkeeping requirements in
proposed Sec. 126.7(b)(4) are removed in this interim final rule. The
Departments notes recordkeeping requirements in Sec. 120.15(e) apply
to this exemption as they do for all other ITAR exemptions.
For Sec. 126.7(b)(6), this proposed provision was removed
in this interim final rule. The proposed text was redundant and simply
listed a number of ITAR requirements to which users are already
subject. Further the proposed text to obtain nontransfer and use
assurances was removed from the Sec. 126.7 exemption, as these
assurances are incorporated into the authorized user process.
In Sec. 126.7(b)(8), the reference to Restricted Data and
the Atomic Energy Act of 1954, as amended, was removed as it is
duplicative and is already referenced in Sec. 120.5(c).
In Sec. 126.7(b)(8), the requirements for handling
classified were changed to a note to Sec. 126.7(b), and the industrial
security requirement reference was updated for Australia.
In Sec. 126.15(c), the ITAR defined term ``person''
replaced the phrase ``corporate entities'' to clarify that individuals
and entities are included in this provision.
In Sec. 126.15(d), the phrase ``To the extent practicable
. . .'' was added to align with the NDAA for Fiscal Year 2024.
In, Sec. 126.18(e), the phrase ``retransfer or reexport''
replaces the term ``transfer'' in this provision to clarify more
explicitly the types of transfers that are allowed.
In supplement no. 2 to part 126, the Excluded Technologies
List (ETL), is clarified and adjusted to better address the necessary
and intended scope of exclusions:
[cir] The Missile Technology Control Regime (MTCR) exclusion no
longer applies to unmanned aerial vehicle (UAV) flight control systems
and vehicle management systems described in United States Munitions
List (USML) Category VIII(h)(12).
[cir] The anti-tamper exclusion is clarified.
[cir] The exclusion specific to source code is removed in its
entirety.
[cir] The exclusion of classified manufacturing know-how for
certain articles described in USML Categories XI and XII is removed in
its entirety.
[cir] The entry for articles in USML Categories IV(a)(3), (9),
(10), and (11), (b)(2), (h)(5), and (i) was refined to exclude
launchers for man-portable air defense systems (MANPADS), but not other
articles described in paragraph (b)(2).
[cir] Excluded articles described in USML Categories XI and XIII
are now described across multiple entries to better implement the
intent of that entry, as follows:
[ssquf] All articles described in USML Category XI(a)(1)(i) and
(ii) are excluded, as are articles described in paragraph (c) or (d) of
USML Category XI that are specially designed for the excluded paragraph
(a)(1) articles, and directly related technical data and defense
services.
[ssquf] The exclusion of classified countermeasures and counter-
[[Page 67272]]
countermeasures is refined and split into multiple entries as follows:
Classified articles described in USML Category XI(a)(2),
other than underwater acoustic decoy countermeasures; classified
articles described in paragraphs (c)(1) through (3) or paragraph (d) of
USML Category XI specially designed therefor; and classified, directly
related technical data and defense services are excluded.
Classified articles described in USML Category
XI(a)(3)(xviii), classified countermeasures and counter-countermeasures
described in Category XI(a)(4)(iii), and classified articles described
in Category XI(a)(5)(iii); classified articles described in paragraphs
(c)(1) through (3) and (18) or paragraph (d) of USML Category XI
specially designed therefor; and classified, directly related technical
data and defense services are excluded.
Classified articles described in USML Category XI(c) or
(d) that implement countermeasures or counter-countermeasures for
defense articles described in Category XI(a), and classified, directly
related technical data and defense services, are excluded.
[ssquf] The exclusion of classified articles described in USML
Category XI(b), which also excludes classified, directly related
technical data and defense services, is split out into a separate
entry.
[ssquf] Classified articles described in USML Category XI(c)
specially designed for articles described in Category XIII(b); and
classified, directly related technical data and defense services; are
excluded. This replaces the previously proposed exclusions of articles
specially designed for Category XIII(b) articles and classified
articles for cryptographic systems.
[ssquf] The exclusion of classified articles described in USML
Category XIII(b) is split out into a separate entry, along with
classified, directly related technical data and defense services.
[cir] Following consultations with the Department of Defense (DoD),
the Department is adding classified articles described in USML Category
XI(a)(4)(i), certain classified articles specially designed for those
articles, and classified, directly related technical data and defense
services to the previously proposed exclusions. The excluded articles
and services relate to intelligence capabilities. Technology for
integrating or incorporating U.S. National Security Administration data
used in these electronic support articles requires case-by-case review
to assess the sensitivity and releasability of the specific technology.
[cir] The exclusion of classified articles described in USML
Category XII(d)(3) and directly related technical data and defense
services is removed.
[cir] The exclusion of source code and classified technical data
and defense services directly related to certain night vision
commodities is removed in its entirety.
[cir] Classified articles in paragraphs (f)(7) and (12) of USML
Category XIX, specially designed for excluded articles in paragraph
(f)(1) or (2) of that category, and directly related technical data and
defense services, are now excluded.
[cir] The entry for USML Category XX manufacturing know-how is
modified to remove the exclusion for manufacturing know-how directly
related to classified uncrewed vessels, and to also exclude design
methodology and engineering analysis for crewed vessels, articles used
only in crewed vessels, classified payloads, and classified uncrewed
underwater vessel (UUV) signature reduction techniques.
A review and response to the public comments submitted on the
proposed rule, organized by applicable proposed section of the ITAR, is
as follows.
Public Comments and Responses
ITAR Sec. 126.7: Exemption for Defense Trade and Cooperation Among
Australia, the United Kingdom, and the United States
General Comments on the Proposed Rule
Several commenters expressed support for the proposed rulemaking
effort and the Department acknowledges that support, while two
commenters noted that they opposed the exemption outright as they
assessed it could result in unsecured trade in munitions. The
Department notes the terms of the exemption support secure defense
trade and the trilaterally shared security standards associated with
the protection of defense technology.
Section 126.7(a)
Two commenters recommended regulators commit to additional industry
review for this exemption. The Department notes this rulemaking takes
the form of an interim final rule, which allows for further public
comment.
Two commenters proposed a specific exemption to allow government
contractors from Australia, the United Kingdom, and the United States
to work together more effectively without needing a license or other
approval from DDTC. The Department notes the previously proposed
exemption in Sec. 126.7 allows for designated parties, including
government contractors, from those three countries to use the exemption
in support of their work, provided the terms of the exemption are met.
Two commenters recommended the addition of ``classified and
unclassified'' before the phrase ``defense articles'' to more clearly
include the type of export allowed and instructions given in Sec.
126.7(a) and (b)(8), respectively. The Department notes throughout the
ITAR, unless specified, the term ``defense articles'' applies to both
unclassified and classified articles. For example, where a given
provision refers specifically to ``unclassified defense articles,'' the
scope of the provision applies only to unclassified defense articles.
However, a reference to ``defense articles'' should be read to apply to
both unclassified and classified defense articles.
Similarly, another commenter wanted confirmation that the Sec.
126.7 exemption included technical data. The Department confirms the
exemption includes technical data and notes that technical data is
included in the ITAR definition of ``defense article'' found at Sec.
120.31.
One commenter requested clarification as to whether retransfers are
allowed under the Sec. 126.7 exemption if the defense article was
exported to Australia or the United Kingdom under another ITAR
exemption. Similarly, another commenter asked whether one has to be an
authorized user for retransfers under the Sec. 126.7 exemption. The
Department confirms such retransfers are permitted under Sec. 126.7
provided all the criteria are met, including Sec. 126.7(b)(2)(ii)--
requirements associated with the transferor, recipient, or broker.
Two commenters requested clarification as to whether the original
U.S. exporter, the original equipment manufacturer, and the recipient
of a defense article exported under the Sec. 126.7 exemption could
apply for a retransfer or reexport authorization to a territory outside
of Australia or the United Kingdom. The Department confirms that any of
the three may apply for a retransfer or reexport authorization.
Similarly, another commenter also recommended the creation of a new
Open General License to allow for authorized users to reexport
unclassified defense articles to destinations outside of Australia, the
United Kingdom, and the United States. The Department acknowledges this
comment and may consider this recommendation in the future.
One commenter recommended the Department set out in Sec. 126.7(a)
that activities described in the section are
[[Page 67273]]
not subject to a requirement for licensing or other approvals, rather
than referring to the provision as an exemption. The Department
declines to accept this recommendation and notes the exemption
authorizes, without further licenses or other approvals from DDTC,
activities authorized by the exemption, provided the criteria for use
of the exemption are met.
Section 126.7(b)
One commenter suggested modifying Sec. 126.7(b) to add the phrase
``Except as provided in Sec. 120.54, the exemption described in
paragraph (a) . . .''. The commenter also advised finalizing and
incorporating the text from the proposed rule (87 FR 77046) to this
interim final rule, especially Sec. 120.54(a)(6) regarding the taking
of defense articles subject to this subchapter on deployment or
training exercises to countries not previously approved. The Department
notes this activity generally is already allowed, presuming there is no
change in end-user or end-use, and is the subject of a separate
rulemaking (87 FR 77046, Dec. 16, 2022) (proposed) and FR Doc. 2024-
18249, scheduled to publish on August 15, 2024 (RIN 1400-AF26). As for
the expressed reference to Sec. 120.54, the Department declines to
adopt this suggestion, as no other ITAR provision outside of part 120
references Sec. 120.54. That provision is definitional and therefore
applies to the entire ITAR. Including a specific reference in this one
instance could lead to confusion as to whether other provisions of the
ITAR must specifically reference that or other definitional provisions.
Three commenters asserted proposed Sec. 126.7(b)(4), (6), and (7)
are additional limitations and requirements not specified in AECA
section 38(l)(4). The commenter further claimed this statutory
exemption also states that it ``exempt[s]'' the applicable transfers
``from the licensing and other approval requirements'' of the AECA and
that it should not be called an exemption, but rather something else.
The Department disagrees with this commenter's interpretation. While an
exemption is a type of authorization and a type of other approval, the
statutory language in AECA section 38(l) states that the Department
``shall immediately exempt from the licensing or other approval
requirements of this section exports and transfers . . . .'' The
Department interprets the provision to refer to creating an exemption
from the requirement to obtain, prior to a regulated activity, either a
license or other approval, i.e., a written document DDTC may issue in
lieu of a license, such as a Technical Assistance Agreement, to approve
a regulated activity. Further, the Department does not interpret the
provision as creating an exemption while restricting its ability to
issue an exemption. ``Exemption'' is the term the statute repeatedly
uses, and what Sec. 126.7 will create is an exemption consistent with
the definition in Sec. 120.57(c).
Similarly, another commenter asserted that Sec. 120.11(c) does not
apply to this provision, and the Department cannot impose requirements
on reexport and retransfers. The Department disagrees. The requirements
of the ITAR, including but not limited to registration, recordkeeping
requirements, Sec. 120.11(c), and penalties for violations continue to
apply to this exemption as they do with other exemptions, such as the
Canadian exemptions. The part of the law the commenter relies upon to
support their argument, 22 U.S.C. 2778(l)(2), is not an independent
export authority. Instead, that provision simply empowers the
Department to issue a country-based exemption under its other core
unaltered authorities in section 2778(a) and (b). This is further
supported by the fact that in section 2778(f)(2) the Department's
ability to issue a country-based exemption under its core existing
authorities were at one point restricted before being allowed again for
the United Kingdom (UK) and Australia by section 1345(a) of the NDAA
for Fiscal Year 2024. Consequently, the Department is required to issue
an exemption only from the AECA and ITAR requirements to obtain a
license or other approval for exports and various transfers, not from
other ITAR provisions, which still do and will apply.
Section 126.7(b)(1)
Several commenters recommended expansion of the scope of transfers
allowed in Sec. 126.7(b)(1) to include transfers (1) to or within the
physical territory of Australia, the United Kingdom, or the United
States; (2) to members of the armed forces of Australia, the United
Kingdom, or the United States acting in their official capacity or
while on deployment; (3) to government employees of Australia, the
United Kingdom, and the United States; (4) to Sec. 126.7 authorized
users deployed in support of such armed forces, to include maintenance,
repair, and overhaul providers; (5) to international waters when in
support of AUKUS testing or operations; and (6) by Australian, U.S.,
and UK persons to export or transfer defense articles for end use by
the armed forces of Australia, the United Kingdom, or the United States
outside of their physical territories. Commenters expressed that the
proposed Sec. 126.7 precludes support in various ways, including to
the three countries' armed forces when deployed outside their physical
territories, and restricts contractors in support of those armed forces
while deployed. This exemption is subject to statutory implementation
requirements mandating its introduction in relatively short timeframes.
The scope of the suggested changes is significant and additional time
is required to consider them. The Department has determined that an
interim final rule with another round of public comments will support
continued refinement of the exemption to ensure the exemption works for
the regulated community and supports the goals of this rulemaking.
One commenter recommended revising the proposed Sec. 126.7(b)(1)
text to include the clarifying phrase ``. . . the transfer of defense
articles or performance of defense services must be to or within the
physical territory . . .'' to clarify that transfers applies to defense
articles and defense services. The Department accepts this comment in
part and amends Sec. 126.7(b)(1) to clarify that the term ``activity''
includes brokering and the provision of defense services within the
scope of the exemption.
Two commenters recommended the creation of a definition of
Australia and the United Kingdom in the ITAR, similar to how the United
States is defined in Sec. 120.60. The Department declines to adopt a
specific definition for any one foreign country. Longstanding practice
and the ordinary meaning of a country's physical territory has been
understood in both the ITAR and the Department of Commerce's Export
Administration Regulations (EAR). Should an unusual and country-
specific question as to physical territory arise, the Department
recommends asking it within an advisory opinion request pursuant to
ITAR Sec. 120.22.
One commenter sought clarification regarding the scope of the
exemption with respect to ``cyber physical space'' managed by
Australia, the United Kingdom, or the United States. The Department
clarifies that servers hosting technical data in one of the three
countries would still be within the physical territory of Australia,
the United Kingdom, or the United States; however, transfers of
technical data must be to or from those that meet the criteria set out
in Sec. 126.7(b)(2). Further, the Department notes the text of Sec.
120.54, which lists activities that are not exports, reexports,
retransfer, or temporary imports, including sending,
[[Page 67274]]
taking, or storing of certain encrypted unclassified technical data
that meet the specific criteria provided there.
Another commenter sought clarification as to whether a U.S. person
who works for a U.S. company can utilize the Sec. 126.7 exemption
while traveling outside the United States. The Department notes that,
per the proposed Sec. 126.7(b)(1), the transfer must be to or within
the physical territory of Australia, the United Kingdom, or the United
States. Similarly, the Department again notes the text of Sec. 120.54,
which lists activities that are not exports, reexports, retransfer, or
temporary imports.
Three commenters asked whether retransfers or reexports are allowed
under Sec. 126.7 if an ITAR-controlled defense article is exported
from a non-authorized user to an authorized user. The Department
clarifies that both transferors and recipients would need to be
authorized users, in addition to meeting all other criteria in Sec.
126.7, before retransfers or reexports would be allowed under this
exemption.
Section 126.7(b)(2)
Several commenters requested more information regarding the
authorized user process. While additional information and guidance on
the enrollment process will be provided separately, the Department
notes that Australian and UK entities will manage the authorized user
enrollment process through their respective governments.
Several commenters asked how often the authorized user list in the
proposed Sec. 126.7(b)(2)(ii) will be updated, as well as whether
there will be an annual reevaluation process to remain on the
authorized user list. Some commenters recommended the list be published
on a public website, rather than within a user-restricted website such
as the Defense and Export Control Compliance System (DECCS). Further,
one commenter requested guidance to confirm that ``a transferor should
require no additional due diligence steps beyond checking the list . .
.'', and another asked if industry will need to provide notice and then
wait for approval from DDTC before each transfer of a defense article.
The Department notes it is developing separate guidance on the use and
administration of the authorized user list and based off of
consultations with representatives from Australia and the UK, that will
be released shortly through the DDTC website.
Similarly, another commenter suggested the inclusion of validity
dates with the list of authorized users and provide a process to notify
current authorized users when persons are removed from the list of
authorized users. The Department reiterates that it is developing
separate guidance on the use and administration of the authorized user
list, including these points, that will be released shortly through the
DDTC website.
One commenter expressed concern that the authorized users for
Australia and the UK would only include those that chose to enroll, and
this is not the case for other ITAR exemptions. The Department cannot
require Australian or UK entities to become authorized users as that is
a business decision for them to make. The Department is designing the
authorized user process, in coordination with the UK and Australian
governments, to encourage interest to use the Sec. 126.7 exemption.
One commenter inquired if foreign entities who are authorized users
could access DECCS and if they could apply for a Technical Assistance
Agreement through DECCS or would need to submit a General
Correspondence request. The Department affirms non-U.S. authorized
users will have access to DDTC's website after enrolling and will be
able to view the authorized user list. The Department is not designing
additional functionality for non-U.S. authorized users in DECCS.
Further, under 22 U.S.C. 2778(g)(5), the Department is prohibited from
issuing export licenses to foreign persons. As a result, the Department
does not accept the commenter's suggestion to modify DECCS to allow
foreign persons to apply for Technical Assistance Agreements and other
types of export authorizations. Foreign persons can submit General
Correspondence requests seeking authorization to reexport and
retransfer defense articles, and foreign persons owned or controlled by
U.S. persons may seek approval to engage in brokering activities.
Two commenters requested the Department work with industry to
publish an authorized user list in a form that can be directly accessed
by industry-standard automated screening software just as it does for
denied parties. The Department, in coordination with the UK and
Australian governments, is designing the list to be as simple as
possible to use, while maintaining certain security protocols. The
Department does not develop or support third-party screening software
and cannot speak to its integration with the authorized user list.
One commenter asserted that the Department should not confirm the
eligibility of U.S. registrants who are not utilizing the exemption for
defense trade and cooperation among Australia, the United Kingdom, and
the United States. The Department clarifies DDTC will not confirm to
third parties a U.S. registrant's eligibility to participate in a
transfer via the Sec. 126.7 exemption. Similarly, another commenter
asserted the Department should not vet entities that the Australian and
UK governments have already vetted as it is counterproductive. The
Department disagrees with the premise that its vetting of parties is
counterproductive as approval by both governments ensures comprehensive
vetting of entities.
Two commenters recommended members of the Australian, UK, and U.S.
governments be separately enumerated within Sec. 126.7(b)(2) so one
does not need to check the authorized user list. The commenters added
the enumerated list should include all departments and agencies, and
contractor support personnel thereof, of the Australian, UK, and U.S.
governments. The Department requires the Australian and UK governments'
department or agencies be identified on the authorized user list,
instead of the regulatory text itself, to provide agility and
flexibility in implementing updates. The Department further clarifies
that the exemption would cover ``contractor support personnel thereof''
if the contractor personnel are authorized users.
Two commenters warned that certifying authorized users for the
Sec. 126.7 exemption will be overly complex and recommended against
using a ``positive'' list of authorized users. Conversely, another
commenter supported identifying U.S. registrants on a list accessible
to exporters and reexporters on an official website. Further, two
commenters suggested the Department have a help desk to aid entities
with inquiries about the registration status of a company. The
Department notes that only authorized users of Australia and the UK
will be identified on the authorized user list on DECCS. Further, the
Department is developing separate guidance on use and administration of
the authorized user list that will be released shortly through the DDTC
website.
Two commenters suggested certain entities should immediately be
presumed eligible to be authorized users. These include government
agencies and organizations of Australia and the United Kingdom, foreign
subsidiaries of U.S. registered companies, and any party previously
authorized for the export of defense article. Further, another
commenter suggested to identify UK and Australian companies by business
registry numbers
[[Page 67275]]
and for the Department to align changes to the authorized user list
with the general correspondence process for Foreign Entity Name Changes
to ensure that both lists remain current. The Department notes because
defense articles and defense services provide a critical military or
intelligence advantage, vetting of eligible parties is vital to
maintaining secure defense trade. The Department acknowledges these
comments and notes it will publish separate guidance on the use and
administration of the authorized user list that will be released
shortly through the DDTC website. For prospectively eligible private
entities, subsidiaries and affiliates might be included under the
parent entity's authorized user status, depending on the parent
entity's corporate structure and place of incorporation.
Three commenters requested confirmation that individual U.S.
persons, including U.S. persons working abroad (USPABs), can be
authorized users. Further, several commenters wanted confirmation that
furnishing a defense service under Sec. 126.7 is allowed by authorized
users so separate USPAB authorization is not needed, and the defense
services provided will not cause a foreign-produced defense article to
become ITAR controlled. The Department affirms that all U.S. persons,
as defined in Sec. 120.62, including individual persons, are eligible
to become authorized users. The Sec. 126.7 exemption is a unique
authorization not to be conflated with a USPAB authorization issued
under Sec. 120.22(b), which authorizes the export of limited defense
services only. The Department reconfirms that the mere presence or
involvement of a U.S. person during the design, development, etc. of a
foreign-origin defense article, or the provision of limited defense
services authorized via a USPAB authorization, does not subject a
resultant foreign-origin defense article to the ITAR or its reexport
and retransfer requirements. However, to utilize the Sec. 126.7
exemption, a U.S. person must be an authorized user--and defense
services provided via the exemption subjects technical data and any
resulting defense article to the ITAR, including retransfer and
reexport restrictions outside the authorized user community. The
Department will provide guidance on the authorized user process
separate from this rulemaking. Transferors are best positioned to
determine whether the Sec. 126.7 exemption or a USPAB authorization
best suits their needs. Similarly, another commenter requested
confirmation that UK or Australian citizens, including dual nationals,
can be authorized users such that their employers can transfer
technical data to them under this exemption. The Department clarifies
that UK and Australian dual nationals can be authorized users and Sec.
126.18(e) outlines the exemption available to them for transferring
classified defense articles.
One commenter recommended clarification that registration is
required only for the applicable activity being conducted (e.g.,
exporting or brokering). One does not need both unless they are
conducting both activities. The commenter suggested to amend the
proposed Sec. 126.7(b)(2)(i) with U.S. persons registered with the
applicable registration type (i.e., manufacturer, exporter, and/or
broker) and not debarred under Sec. 127.7. The Department accepts this
comment in part and has amended the regulatory text herein.
Several comments were submitted pertaining to brokering
requirements under the new exemption. These included:
whether brokering registration as described in part 129 is
required for proposed Sec. 126.7(b)(2)(i);
whether Sec. Sec. 129.4 and 129.10(b) should be revised
to clarify if entities that engage in brokering under this exemption
need to register and furnish reports to DDTC;
if the brokering recipient must be an authorized user that
is supporting AUKUS; and
if a foreign broker needs to be an authorized user and be
registered as a broker;
The Department confirms that brokering registration is required per
Sec. 129.3, with certain exceptions. The Department also notes that
the brokering requirements covering exemptions are already specified in
Sec. 129.4, and there is a reporting requirement in Sec. 129.10(b)
that still applies with this exemption. The recipient of any defense
article must be an authorized user or registered U.S. person per
proposed Sec. 126.7(b)(2)(i); however, the proposed exemption is
available for use between and among Australia, the United Kingdom, and
the United States, and need not be in support of AUKUS. Lastly, the
Department clarifies that foreign persons who are brokers as defined in
Sec. 129.2 must register with the Department to engage in brokering
activities and must be an authorized user, per proposed Sec.
126.7(b)(2), to use this exemption. The Department amends the proposed
Sec. 126.7(b)(2) to clarify that U.S. and foreign persons must be
registered with DDTC pursuant to Sec. Sec. 122.1 and 129.3, as
appropriate.
Relatedly, several commenters made requests for more outreach
events regarding the Sec. 126.7 exemption and the authorized user
process as well as guidance materials, including Frequently Asked
Questions (FAQs) to be shared with the regulated community. The
Department agrees and notes that it intends to conduct outreach and
issue further guidance and FAQs on the exemption.
One of these commenters sought clarification as to whether freight
forwarders, carriers, and warehousing companies need to be authorized
users. The commenter similarly asked if subcontractors need to be
authorized users if they receive documentation in relation to a defense
article from an existing authorized user. The Department clarifies
that, for purposes of Sec. 126.7(b)(2), anyone who has access to a
defense article would need to be an authorized user. We note that many
carriers and other service providers do not require such access;
however, freight forwarders often do as they require access to the
defense articles they are processing.
Four commenters recommended expansion of the scope of the Sec.
126.7 exemption to include British and Australian persons employed by
an authorized user in the United States to avoid the need for a Foreign
Person Employment (FPE) license, and to expand the exemption to include
U.S. persons working abroad (USPABs) who provide defense services to an
employer who is an authorized user. The Department notes that an
expansion of the exemption is not needed as the existing text may be
used by Australian or British FPEs or USPABs who can satisfy the
elements of Sec. 126.7, including by becoming an authorized user.
However, the Department clarifies that any defense article produced or
manufactured from U.S.-origin technical data or defense service(s)
transferred via Sec. 126.7 may only be transferred pursuant to a DDTC
license or other authorization, which may include the Sec. 126.7
exemption itself. In other words, any defense article that is designed,
developed, engineered, manufactured, produced, assembled, tested,
repaired, maintained, modified, operated, demilitarized, destroyed,
processed, or used by an FPE or USPAB pursuant to Sec. 126.7 becomes
subject to the ITAR.
Another commenter sought clarification regarding how USPAB
authorizations intersect with the Sec. 126.7 exemption, in particular
for dual nationals or those with Australian permanent residency. The
Department notes a USPAB authorization is for limited defense services.
For dual
[[Page 67276]]
nationals, the Department notes there are ITAR exemptions available,
such as in Sec. 126.18.
One commenter requested clarification regarding the text ``. . .
DDTC will confirm eligibility of parties under this exemption prior to
the transfer . . . . of defense articles or defense services'' in the
proposed rule and if this was a requirement prior to each transfer and
what the process is for confirming eligibility of parties. The
Department clarifies there is no requirement to check with the
Department prior to each transfer and additional guidance on how this
process will work will be released shortly through the DDTC website.
Section 126.7(b)(3)
One commenter recommended the addition to Sec. 126.15 of a list of
defense articles for which the U.S. Government requires a license for
national security reasons and recommended the public have an
opportunity to comment on that list. The Department notes the list,
called the Excluded Technology List (ETL), in supplement no. 2 to part
126 articulates those defense articles and defense services that are
not eligible for the exemption in Sec. 126.7. This list was created
based on a combination of statutory obligations and policy decisions,
including national security reasons. The public had an opportunity to
comment on that list when the proposed rule published on May 1, 2024.
Further, the public may continue to comment on that list with this
interim final rule.
Many commenters asked how often the ETL will be updated, and some
asked if there would be an opportunity for industry input. The
Department notes that it is statutorily required to conduct a review of
the USML every three years and any applicable changes resulting from
those reviews will be reflected in the ETL. Further, the U.S.
Government has also committed to ensure that the items on the ETL will
be specifically reviewed on a more frequent basis, annually for the
first five years from implementation and periodically thereafter, and
changes will be made to the ETL, depending on the outcome of each
review.
One commenter asked whether transfers of third-country origin
(e.g., South African-origin; German-origin) defense articles between
and among authorized users is allowed under Sec. 126.7, provided such
transfer occurs to or within the physical territory of Australia, the
United Kingdom, and the United States and the defense articles are not
listed on the Excluded Technology List. The Department notes the ETL
describes defense articles, which includes foreign-origin defense
articles, and if the foreign-origin defense articles are subject to the
ITAR, are not on the ETL, and all other criteria are met, one may elect
to use the Sec. 126.7 exemption.
Section 126.7(b)(4)
Several commenters asked if the recordkeeping requirements in Sec.
120.15(e) apply to the proposed Sec. 126.7 exemption and how the
proposed Sec. 126.7(b)(4) differs. Similarly, several commenters
recommended the replacement of Sec. 126.7(b)(4) with Sec. 120.15(e),
and another commenter recommended confirmation that ITAR recordkeeping
requirements are satisfied if the recordkeeper meets the recordkeeping
obligations of the comparable national export control system in their
nation. Because the recordkeeping requirements are already present in
Sec. 120.15(e) and are applicable to any kind of exemption, including
the one at Sec. 126.7, the Department will remove Sec. 126.7(b)(4)
from Sec. 126.7 to avoid suggesting the recordkeeping requirements for
the new exemption are any different than those for any other exemption.
The requirements set out in the proposed Sec. 126.7(b)(4) were similar
to Sec. 120.15(e), with the exception of criteria such as recording
the Electronic Export Information (EEI) Internal Transaction Number
(ITN) in one's records. Of note, the EEI number required in Sec.
120.15(e) is only applicable to certain transfers as it is the
electronic export data filed in the U.S. Customs and Border
Protection's Automated Export System (AES). If your transaction
required an EEI filing, then you should maintain it in your records; if
it did not, then that is not part of the record. The Department also
declines to accept a different nation's recordkeeping requirements as
meeting the ITAR's requirements.
One commenter claimed there is nothing established regarding
processes and procedures to track and report defense articles received
under this exemption and differentiate between this exemption and other
ITAR exemptions. The Department acknowledges this comment; however, the
standard recordkeeping requirements under this exemption are the same
as the standard recordkeeping requirements other ITAR exemptions are
subject to (see Sec. 120.15(e)). How companies wish to document and
track and report ITAR-controlled technical data releases or transfers
of defense articles is at the discretion of each company. The
Department does not set expectations about what processes or procedures
to use to meet that requirement.
Several commenters raised a concern that recording an individual's
personal information and associated data has privacy implications and
suggested recording the details of the entity rather than the natural
person. The Department clarifies maintaining internal records of ``the
name of the natural person responsible for the transaction'' refers to
the transferor, not the recipient. Understanding who is responsible for
executing a transfer is standard in a compliance program, allowing
entities to identify problems and self-correct, and supports audits.
Similarly, several commenters raised concerns that tracking certain
information required for record keeping may violate the European
Union's General Data Protection Regulation if shared with the
Department and sought clarification as to what the term ``transaction''
means in this provision. The Department notes that these are the
standard recordkeeping procedures that exist today and with which
companies must comply with to operate under the provisions of the ITAR.
Review of these recordkeeping requirements is not the subject of this
rulemaking, but the Department may use the information obtained here to
inform a future rulemaking. Further, the Department clarifies that term
``transaction'' in the proposed Sec. 126.7(b)(4) referred to the
transfer of the defense article or provision of the defense service;
however, that proposed provision has been removed in this interim final
rule since recordkeeping requirements are already captured in Sec.
120.15(e).
One commenter requested confirmation that the Sec. 126.7 exemption
requires the authorized user to keep all shipping information pursuant
to the exemption. The Department notes that Sec. 120.15(e) articulates
the recordkeeping requirements for ITAR exemptions, to include shipping
information.
One commenter requested clarification as to who is responsible for
keeping records and what constitutes a sufficient record for a
technical data exchange. The Department notes technical data releases
are subject to recordkeeping requirements. The Department further
confirms it is removing the previously proposed Sec. 126.7(b)(4), as
Sec. 120.15(e) sufficiently articulates the recordkeeping requirements
for the Sec. 126.7 exemption and Sec. 120.15(e) is the provision to
which a transferor should refer.
One commenter sought clarification regarding the phrase ``. . . and
such records must be made available to DDTC upon request . . .'' in
Sec. 126.7(b)(4). The
[[Page 67277]]
Department acknowledges this comment while noting that the subject
subparagraph is removed in this rule, as explained above.
Section 126.7(b)(5)
One commenter suggested modification of the proposed Sec.
126.7(b)(5) to state that ``The value of the transfer does not exceed
the amounts described in Sec. 123.15 and does not enable the
manufacturing abroad of significant military equipment as described in
Sec. 124.11.'' The Department notes there are separate statutory
requirements for congressional certifications (sometimes referred to as
congressional notifications), which are based on value thresholds
associated with the transaction, including those for exports of major
defense equipment, as described in Sec. 123.15. Further, manufacturing
abroad of significant military equipment is not allowed under this
exemption, as this activity is subject to congressional certification
requirements. To the extent the commenter suggests replacing the word
``involve'' with ``enable'' in the regulatory text, the Department
declines that suggestion and will keep the former term, which is also
the one used in the controlling statute, 22 U.S.C. 2776(d).
Two commenters noted there is an opportunity to reform how
congressional certifications are handled with the Sec. 126.7
exemption. Similarly, another commenter suggested changing the
congressional certification process for transfers eligible for
expedited licensing but subject to reporting to Congress. The commenter
stated 22 U.S.C. 2276(c) and (d) set requirements for the President to
report to Congress when licenses are submitted, and both provisions
grant the President the opportunity to use an emergency certification
to waive the requirement and instead issue the license. The commenter
further recommended furnishing an annual report for the AUKUS-related
licenses to Congress. The Department presumes the commenter intended to
cite 22 U.S.C. 2776(c) and (d) and not 2276(c) and (d). Given the type
of transfers the Department anticipates being eligible for the
exemption at Sec. 126.7, the Department does not assess it could
certify that each transfer constitutes the type of emergency
contemplated under 22 U.S.C. 2776. The Department appreciates feedback
on how it may expedite existing processes and will use the information
provided as appropriate.
Four commenters suggested the Department remove Sec. 126.7(b)(5)
and eliminate unnecessary congressional certification requirements
because the commenters asserted that, under 22 U.S.C. 2778(l)(2),
Congress explicitly required that the Department exempt certain defense
articles from export license requirements. Thus, by failing to
eliminate corresponding congressional certification requirements for
these covered defense articles, the proposed rulemaking will require
exporters to apply for licenses to ensure that congressional
certifications are submitted. Further, the commenters suggest, the
Department will be notifying Congress of exports Congress already
exempted from the export licensing requirements and any associated
congressional certification requirements. The Department disagrees with
the comment and assesses that the exemption at Sec. 126.7 is
consistent with both the scope of 22 U.S.C. 2778 and with the
Department's obligations under 22 U.S.C. 2776 to provide notification
to Congress of the types of exports described in 22 U.S.C. 2776(c) and
2776(d). Within 22 U.S.C. 2778(l)(6), Congress specifically made the
congressional certification requirements of 22 U.S.C. 2753 not
applicable to items transferred under the exemption but did not mention
22 U.S.C. 2776. Furthermore, the authority to issue the exemption under
22 U.S.C. 2778(l) is modeled after many provisions in 22 U.S.C. 2778(j)
and 2778(j)(3)(C), which requires that congressional certifications
continue to be notified regardless of any exemption issued under 22
U.S.C. 2778(j). One commenter suggested to task the State Department's
Defense Trade Advisory Group (DTAG) to explore whether congressional
approval requirements should remain in place under the Arms Export
Control Act for exports to (Sec. 123.15) and manufacturing of
significant military equipment (SME) (Sec. 124.11). The Department
notes it is unnecessary to task the DTAG with assessing the
Department's legal obligations, as that is the Department's
responsibility. The Department assessed, consistent with 22 U.S.C.
2778(j)(3)(C) and (l)(6) the congressional certification obligations
contained in 22 U.S.C. 2776 apply to exports conducted under the
exemption in Sec. 126.7.
Two commenters sought clarification regarding the Sec. 126.7
exemption and congressional certification given the fact that both
existing Australia and UK Defense Trade Cooperation Treaties (DTCT)
exemptions contain an entire section on congressional certifications.
Similarly, another commenter recommended inclusion of a provision
similar to the procedures for legislative notification described under
Sec. 126.16(o) as the commenter asserts it allows for the
congressional certification process to be executed without a license
application. The Department notes the statutorily authorized Sec.
126.7 exemption is separate from the Australia and UK DTCT exemptions,
which were authorized under treaties. Comparing the criteria and
conditions of Sec. 126.7 to those articulated in Sec. Sec. 126.16 and
126.17 is not appropriate because those sections implement the DTCT,
rather than exemptions to the routine ITAR license requirements. The
congressional certification requirements for transfers conducted
pursuant to the DTCTs are unique and distinct from those articulated in
22 U.S.C. 2776 and ITAR Sec. Sec. 123.15 and 124.11. Further,
transfers that do not meet all of the criteria articulated in Sec.
126.7 are not eligible for the exemption. This includes transfers that
exceed a certain dollar value threshold or those that involve the
manufacture of significant military equipment abroad. Those transfers
will continue to require licenses or other authorizations consistent
with the routine procedures and requirements, and the export
authorization for those transfers will be the applicable license or
agreement rather than the exemption.
One commenter sought clarification as to how the values of
intangibles, such as conversations involving technical data, should be
calculated. The Department confirms that the value of every transfer
should be calculated because transfers that exceed certain values are
not eligible under Sec. 126.7(b)(5) and may require congressional
certification in line with the provisions of ITAR Sec. Sec. 123.15 and
124.11. The Department defers to exporters on the most appropriate
formula to calculate the value of intangible transfers. When
establishing the value of a transfer, exporters should strive for
consistency regardless of whether a transfer will occur pursuant to a
license, agreement, or exemption.
One commenter sought confirmation as to whether a license is
required if a contract was modified and the values exceeded the
congressional certification thresholds articulated in Sec.
126.7(b)(5). The Department confirms a license or other authorization
would be required for exports exceeding the congressional certification
value thresholds or involving the manufacture of significant military
equipment abroad.
One commenter suggested the Department provide information
regarding the use of the Sec. 126.7 exemption and the congressional
certification requirement pursuant to Sec. 123.15. The Department
confirms the Sec. 126.7 exemption may not be used to
[[Page 67278]]
conduct exports that require congressional certification as described
in Sec. 123.15.
One commenter recommended that congressional certification values
be calculated separately for each transfer under the exemption provided
the transfer is not split or structured to avoid exceeding applicable
notification dollar value limits. The Department does not dispute this
approach.
Section 126.7(b)(6)
One commenter recommended replacing Sec. 120.16 with Sec.
120.16(c) in the proposed Sec. 126.7(b)(6) text. The Department
rejects this comment, as all of Sec. 120.16 applies to the Sec. 126.7
exemption. The same commenter suggested Sec. 126.7(b)(6) is redundant
and the Department should consider its removal. The Department accepts
this comment and removed this provision; however, the Department notes
that use of the exemption still requires adherence to all applicable
sections in the ITAR, including registration and recordkeeping
requirements.
Three commenters asked if part 130 reports are required with the
proposed Sec. 126.7 exemption, how those reports should be provided to
DDTC with no associated license application in DECCS, and whether ITAR
exemptions in general require part 130 reporting. The Department
clarifies that ITAR exemptions do not require part 130 reporting, as
exemptions do not require an applicant to seek authorization from DDTC
pursuant to Sec. Sec. 130.2 and 130.9.
Four commenters recommended removal of the requirement to obtain
nontransfer and use assurances through the DSP-83 form from the Sec.
126.7 exemption and incorporation of those assurances in the authorized
user process. The Department accepts this comment and amends Sec.
123.10(a) with a clarification to that effect. Similarly, five
commenters requested removal of the DSP-83 signature requirement for
Australia and the United Kingdom, similar to how the Canadian
government is treated. The Department accepts this comment. The
Department notes that the Canadian government is not required to sign
DSP-83s because the government has communicated the necessary
assurances to the Department through other means. The UK and Australia
governments have also provided the necessary assurances through other
means. Two commenters recommended that Australia, the United Kingdom,
and the United States agree to one common format for nontransfer and
use assurances. Lastly, one commenter asked if nontransfer and use
assurances require ink signature and original copies to be maintained
and are electronic signatures and/or scanned copies allowed. As
previously mentioned, the Department has incorporated the nontransfer
and use assurances into the authorized user process. Separately, the
Department accepts the use of electronic, digital, or wet signatures
provided the name of the individual signing is clearly legible (e.g.,
printed below the electronic signature), and there is a date provided
with the signature.
Section 126.7(b)(7)
One commenter requested clarification on how Sec. 123.9(b) works
with this exemption, particularly in the case where a recipient is
receiving an intangible, e.g., certain technical data. The Department
clarifies that Sec. 123.9(b) refers to tangible items only and it sets
the requirement that the exporter must notify the end user of certain
criteria, including the exemption citation, if an exemption is used.
Section 126.7(b)(8)
One commenter recommended the addition of a note to Sec.
126.7(b)(8) stating: ``NOTE: Refer to the Atomic Energy Act of 1954 for
any transfers of Restricted Data as defined in that Act'' since the
proposed exemption appears to imply that Restricted Data could be
exported under the exemption. The Department acknowledges and partly
accepts the comment. The Department deleted reference to Restricted
Data and the Atomic Energy Act of 1954 from the regulatory text, given
it is already referenced in Sec. 120.5(c). Because that text regarding
Restricted Data was deleted from what was originally proposed in Sec.
126.7(b)(8), there is no need for the clarifying note. Relatedly, the
Department takes this opportunity to remind the public that the ITAR
exemption does not authorize permanent imports of defense articles and
defense services described on the U.S. Munitions Import List (USMIL).
Regulations pertaining to permanent imports are administered by the
Bureau of Alcohol, Tobacco, Firearms, and Explosives and are found at
27 CFR part 447.
One commenter asked if Sec. 126.7(b)(8) was necessary to include
in the exemption given the handling of classified materials are subject
to other laws, and it should be a note to paragraph (b) rather than a
limitation or requirement, especially since it is not specified by AECA
section 38(l)(4). The Department accepts this comment and amends the
regulatory text with the addition of a note to paragraph (b).
ITAR Sec. 126.15: Expedited Processing of License Applications for the
Export of Defense Articles and Defense Services to Australia, the
United Kingdom, or Canada
Section 126.15(c)
Two commenters recommended revision and expansion of the expedited
license process to include the armed forces of Australia, the United
Kingdom, or the United States acting in their official capacity outside
the physical territory of the countries and to entities deployed in
support of the armed forces of Australia, the United Kingdom, or the
United States acting in their official capacity. Further, the
commenters suggested the term ``corporate entities'' in the proposed
Sec. 126.15(c) is confusing, leading one commenter to recommend
replacing that term with ``person'' as defined in Sec. 120.61. This
would, the commenter suggested, clarify that natural persons and
academia qualify for expedited licensing too. The Department declines
to accept the comment to expedite the license processing timelines for
exports to members of the armed forces of Australia, the United
Kingdom, or the United States and entities that support those armed
forces while deployed outside the physical territories of these
countries. That would expand the expedited licensing application
processing timelines beyond that which Congress required. Moreover, the
ability for a country's armed forces to take defense articles to third
countries is the subject of a different rulemaking (87 FR 77046, Dec.
16, 2022) (proposed) and FR Doc. 2024-18249, scheduled to publish on
August 15, 2024 (RIN 1400-AF26). However, the Department does accept
the recommendation to replace ``corporate entities'' with ``person'' in
Sec. 126.15(c).
Four commenters recommended expanding the expedited licensing
process beyond exports to also include reexports, retransfers, and
temporary imports of defense articles; the performance of defense
services; and brokering to, among or within Australia, the United
Kingdom, Canada, or the United States. The Department appreciates the
comment but declines to expand the scope of Sec. 126.15(c) as it
implements the provisions of section 1344 of NDAA for Fiscal Year 2024,
which require the Department to expedite export license applications
and do not extend to reexports, retransfers, brokering, or temporary
import requests.
Three commenters recommended the Department create a policy of
``presumption of approval'' in Sec. 126.15 for all AUKUS-related
applications;
[[Page 67279]]
where the ultimate end user is the Government of Australia or the
Government of the United Kingdom and where all parties to the
transaction, with the exception of freight forwarders and brokers, are
incorporated in the United States, United Kingdom, Canada, New Zealand,
or Australia who have previously received a DDTC approval for the same
articles. The Department acknowledges this comment; however, it is
outside the scope of the rulemaking. The Department is implementing the
provisions of section 1344 of NDAA for Fiscal Year 2024. Three
commenters suggested the Department make public how it intends to
facilitate the expedited licensing process, including the U.S.
Government's adjudication timeframes. Further, one commenter
recommended the Department update its licensing guidelines, including
the Agreement Guidelines, with standardized language to easily identify
which applications meet the expedited licensing criteria. Two
commenters suggested that DDTC create a dedicated, internal AUKUS
coordination office. The Department declines to publish detailed
information about the deliberative license adjudication process.
Further, the Department notes it is not necessary to update the
Agreements Guidelines to identify license applications that qualify for
expedited treatment under Sec. 126.15 as the Agreements Guidelines and
other licensing instructions already require submission of any
information necessary to determine whether Sec. 126.15 applies to a
specific submission. The Department also can confirm that National
Security Presidential Directive-56 has already established defined
timeframes for U.S. Government adjudication of all license requests,
including those licenses that involve Australia, the United Kingdom,
and Canada. Adherence to those existing timeframes will enable the
expedited processing of license applications consistent with Sec.
126.15. Lastly, the Department notes the recommendation to establish a
AUKUS coordination office is outside the scope of this rulemaking.
Another commenter recommended that DDTC provide standardized
provisos for these expedited license applications to alleviate
uncertainty on the scope of activities, technical exchanges, and
defense services that are authorized. The Department appreciates the
comment; however, the Department has endeavored to create the Sec.
126.7 exemption with the broadest possible applicability and
predictability. The transfers that cannot be undertaken pursuant to the
exemption at Sec. 126.7 or another exemption within the ITAR are
likely to be more unique transfers that may not lend themselves to
standard provisos. To the extent the commenter is encouraging the
Department to standardize provisos more generally, the Department
recognizes the value in that line of effort and is already undertaking
steps to ensure provisos are applied more consistently on licenses in
the future.
Another commenter recommended that AUKUS-related licenses be free
of provisos and conditions. The Department notes a commitment by DDTC
to expedite the licensing review timeline should not be confused with a
commitment by DDTC to approve the scope and content of all license
requests for Australia, the UK, or Canada. The Department is still
required to vet license applications for foreign policy and national
security considerations. This requires vetting individual parties on
license applications to assess risks of diversion and to ensure
proposed exports are consistent with the United States's multilateral
regime commitments, including those articulated in the Missile
Technology Control Regime (MTCR). Occasionally, that vetting will
require DDTC to include provisos or conditions when approving a
license.
Four commenters recommended that AUKUS-related license applications
not be staffed to the interagency for review when they are ``in
furtherance of'' (IFO) licenses, or licenses that require congressional
certification. Additionally, one commenter stated that licenses that do
require congressional certification should be subject to a shorter
processing period, for example, less than five business days. These
commenters suggest that those applications, including relevant IFO
licenses, were already reviewed when the existing agreement was
adjudicated and as part of the congressional certification process.
Another commenter suggested removing the current increase in value
thresholds or scope expansions that prompt re-notification of
previously notified programs. The Department notes these comments are
outside the scope of the rulemaking as they offer recommendations
regarding the Department's internal deliberative process for
adjudicating licenses and not the previously proposed regulatory text.
However, the Department takes this opportunity to note that the types
of license applications that trigger congressional certification
thresholds or involve the manufacture of SME abroad are generally the
types of cases that warrant case-by-case review and consideration. As a
result, it would not be appropriate to short-circuit the interagency
staffing process for these cases or to mandate that they be notified to
Congress in five business days or less. Furthermore, the Department has
a long-standing arrangement and practice with Congress regarding the
timeframe afforded for informal congressional review of license
applications prior to formal certification. These suggestions would be
inconsistent with that long-standing expectation and practice.
One commenter questioned whether anything should be notated in a
license application submission to make it eligible for expedited
review. The Department notes applicants are encouraged to submit any
information that they believe would help facilitate an expeditious and
streamlined review by the Department. Additionally, license application
submissions are regularly reviewed to identify cases that qualify for
expedited processing consistent with the provisions of Sec. 126.15.
Two commenters requested retention of the ability to make licensing
requests from Australia and the United Kingdom to the Department
directly because U.S. exporters, at times, are no longer available to
submit a reexport or retransfer authorization request. The Department
confirms that Australian and UK companies are free to submit reexport
and retransfer requests. To the extent that such requests by Australian
and UK companies are intended to change the scope of existing active
agreement, those amendments should be submitted by the U.S. exporter in
order to ensure that the Department has a single record and
authorization of the full scope of activities necessary to support a
given line of effort. This is necessary, among other reasons, to ensure
that the Department complies with applicable congressional
certification requirements under 22 U.S.C. 2776.
One commenter requested confirmation that a UK company could rely
on Sec. 126.15(a) for expedited processing of a license application.
The Department notes that the expedited licensing procedures outlined
in Sec. 126.15 apply to export licenses, not licenses for reexports,
retransfers, or temporary imports. Because foreign companies are not
permitted to submit export license applications under 22 U.S.C.
2778(g)(5), a UK company would not be able to request expedited
processing under Sec. 126.15. The same commenter inquired if there
could be expedited processing for General Correspondence requests. The
Department notes that the NDAA for
[[Page 67280]]
Fiscal Year 2024 requirements being implemented by this section apply
to export licenses, not reexport or retransfer authorizations. The
Department, therefore, will not commit to expediting such requests in
this section of the ITAR but will continue to process them as
appropriate.
Section 126.15(d)
Five commenters recommended the Department clarify whether
Memorandums of Understanding (MOUs) and Foreign Military Sales (FMS)
benefit from the expedited licensing process described in Sec.
126.15(d). Expedited licensing is not applicable to MOUs or FMS cases
as the ITAR only regulates direct commercial sales (DCS) and does not
govern the government-to-government process for concluding MOUs or
Letter of Offer and Acceptances (LOAs) for FMS cases.
Further, two commenters asserted that expedited processing is
reserved for license applications ``that are not covered'' by an ITAR
exemption; however, the proposed rule stated, ``describing an export
that cannot be undertaken under an exemption'' and recommends the
provision be modified by replacing ``cannot be undertaken'' with ``is
not covered.'' The Department declines to accept this recommendation
because the Department assesses that the phrases ``cannot be undertaken
under an exemption'' and ``is not covered by an exemption'' would apply
equally to the scenarios presented by the commenters. In particular, if
the U.S. Government has declined to take some step that is necessary
for an exporter to rely on any exemption within the ITAR for a proposed
export, that proposed export cannot be undertaken under an exemption
and is not covered by an exemption.
One commenter recommended additional resources be committed to
support the expedited licensing process because historically the
proposed timeframes proposed in Sec. 126.15(d) have not materialized.
The Department disagrees, as data collected on license processing
timelines does not support the commenter's statement. The same
commenter also recommended the Department include in the annual report
required by section 1344 of the NDAA for Fiscal Year 2024 a
certification that the expedited timelines have been satisfied. This
comment is outside of the scope of this rulemaking and section 1344 of
the NDAA does not have an annual report requirement. The Department
believes that the commenter may have meant to refer to section 1341 of
the NDAA, which does require a related annual report. When preparing
and submitting the report required by 22 U.S.C. 10411(e) (the location
to which section 1341 of the NDAA for Fiscal Year 2024 was classified)
the Department will include all required information.
Three commenters noted the expedited licensing timeframes proposed
in this provision could result in cases being returned without action
(RWA) if an agency is not ready to position the case and provide a
response back to the DDTC within 30 or 45 days. Similarly, another
commenter suggested the Department implement a process to hold a
license for a specified period of time to permit minor changes and
adjustments to a license that would otherwise be returned without
action. The Department accepts these comments and amends Sec.
126.15(d) with the qualifying phrase ``to the extent practicable'' in
order to better reflect the statutory NDAA language in section 1344(c)
(classified to 22 U.S.C. 10423(c)) to expedite certain applications and
avoid unnecessary and burdensome RWAs when adjudication in the 30- or
45-day timeframe is not practicable.
Three commenters suggested the inclusion of a provision stipulating
the automatic approval of licenses exceeding the 45-day review period
and to identify which USML categories should trigger staffing to
certain intra- and interagency offices/agencies that participate in the
licensing review process, including the Defense Technology Security
Administration (DTSA) for AUKUS-related cases instead of staffing all
license requests to these offices/agencies. The Department declines to
accept the recommendation to automatically approve licenses after 45
days. A commitment by the Department to expedite the license is not a
commitment by the Department to approve all license requests for
Australia, the United Kingdom, or Canada. The Department is still
required to vet license applications for foreign policy and national
security considerations. This requires vetting individual parties on
license applications to assess risks of diversion and to ensure propose
exports are consistent with the United States's multilateral regime
commitments, including those articulated in MTCR. Additionally,
recommendations regarding the policies and procedures the Department
and the interagency apply to the deliberative process of reviewing
individual license applications are outside the scope of this
rulemaking.
One commenter sought clarification as to what constitutes a
government-to-government agreement and how would the regulated
community know if a government-to-government agreement exists. A
government-to-government agreement is used to authorize Foreign
Military Sales (FMS), coproduction agreements, or other authorizations
between governments to export defense articles and defense services
outside of the ITAR or direct commercial sales (DCS) framework. Parties
to exports that are related to such agreements would have such
information from their company or contractor and would identify it on
their license applications to qualify for the expedited process.
Two commenters suggested the Department provide expectations
regarding the Department of Defense's Technology Security & Foreign
Disclosure (TSFD) review process and Low Observable and/or Counter Low
Observable (LO/CLO) review process and mandate that interagency review
for AUKUS applications include expedited TSFD and LO/CLO approvals to
ensure meeting the statutory timelines. The Department notes that the
comment is outside the scope of the rulemaking as it offers recommended
changes to the U.S. Government's internal deliberative process. The
Department has, however, relayed this comment to the Department of
Defense.
One commenter asked how AUKUS-related licenses would be identified
to be subject to expedited licensing; requested Canada be included for
expedited licensing; inquired if other countries will be considered for
expedited licensing aside from those listed in Sec. 126.15(c) and (d);
and suggested to update DDTC's Agreement Guidelines to enable the quick
identification of licenses subject to expedited processing. The
Department notes that all export license applications meeting the
requirements of Sec. 126.15(d) are subject to expedited review, not
just those in support of AUKUS-related programs. Additionally, licenses
that include parties from countries other than those listed in Sec.
126.15(c) and (d) will not benefit from the expedited license
processing timelines. Lastly, the Department confirms that Canada was
already included in the proposed Sec. 126.15(c) and (d) text as
section 1344 of the NDAA for Fiscal Year 2024 applies to applications
to export to Australia, the United Kingdom, and Canada.
The same commenter recommended the inclusion of technical data in
Sec. 126.15(d) and a stipulation that any license application that is
returned or denied must be done so within 14 days of receipt with an
explanation for the return or denial, with an opportunity for the
applicant to resubmit if the reason
[[Page 67281]]
for return or denial can be addressed. The Department declines to
accept these suggestions as it is not possible to guarantee that all
license applications will be returned or denied within 14 days of
receipt because DDTC is not always able to determine within 14 days how
a specific license will be adjudicated. The Department is committed to
expediting export license applications for Australia, the UK, and
Canada to the greatest extent possible and to meeting 30- and 45-day
processing timelines for those applications. It is not currently
possible to shorten that timeframe to 14 days. Additionally, the
Department will not add the term ``technical data'' to this provision
as ``technical data'' is already covered by the term ``defense
article,'' as defined in Sec. 120.31.
One commenter requested the term ``review'' be replaced with
``approved, returned, or denied'' in Sec. 126.15(d) to ensure final
adjudications of a license applications are provided to the applicant
within the 45-calendar day timeframe. The Department declines to accept
this comment as the proposed text already states ``. . . any review
shall be completed no later than 45 calendar days . . . ,'' which is
the equivalent of the proposed change.
ITAR Sec. 126.18: Exemptions Regarding Intracompany, Intra-
Organization, and Intragovernmental Transfers to Employees Who Are Dual
Nationals or Third-Country Nationals
Section 126.18(e)
Three commenters asked if a dual national with Australian
citizenship who was born in a Sec. 126.1 country, who holds an
Australian security clearance and works for a U.S. or Australian
company, can have classified technical data under this exemption. The
Department notes if the criteria in Sec. 126.18(e) are met then no
additional authorization is required and the dual national can receive
classified technical data. Similarly, another commenter requested the
U.S. Government provide details regarding multilateral efforts to
ensure personnel and facilities' security clearance processes in all
three countries can support the final implementation of the proposed
exemption. The Department notes this comment is outside the scope of
this rulemaking.
Three commenters wanted clarification as to several aspects of the
Sec. 126.18(e) exemption: if this exemption is only available for use
in relation to the Sec. 126.7 exemption, or if one can just be an
authorized user; if Sec. 126.18(e) can be used with existing ITAR
agreements that involve classified technical data; if Sec. 126.18(e)
can be used for FMS transfers and MOU/Cooperative Armament Programs; if
Sec. 126.18(e) can be used by contractors who are not ``regular
employees'' as defined in Sec. 120.64; whether one needs approval from
a U.S. original equipment manufacturer (OEM) to use the exemption; and
if there are provisos in an existing DDTC authorization, whether this
exemption supersedes those provisos. The Department notes the Sec.
126.18(e) provision is not just available for use in relation to the
Sec. 126.7 exemption and can be used with existing ITAR agreements
provided the terms of the provision are met. Further, for clarity, the
Department amends Sec. 126.18(e) by replacing ``transfer'' with
``reexport'' and ``retransfer.'' The exemptions within the ITAR are not
applicable to FMS cases or MOU/Cooperative Armament Programs (unless
the MOU/Cooperative Armament Programs are executed under the
authorities of the ITAR). The Department notes the exemption cannot be
used by contractors that are not regular employees and suggests
reviewing the definition of ``regular employee'' in Sec. 120.64. The
Department further notes ITAR exemptions are self-certifying, so no
additional approval is needed from a U.S. OEM to utilize this provision
of the ITAR; however, this exemption does not supersede any existing
provisos placed on authorizations issued by DDTC. To the extent an
exporter chooses to rely on a particular export authorization to
conduct a transfer, including exemptions, the provisos, conditions, and
limitations that were applied to that authorization continue to govern
the transfer.
Two commenters wanted confirmation that Sec. 126.18(e) was not
limited by the ETL and requested that ``regular employee'' be removed
from this provision. The Department declines to accept the comment to
remove ``regular employee'' from this provision and notes that Sec.
126.18(e) is not limited by the ETL.
Finally, in light of the comments received about this subsection,
the Department made certain clarifying but minor and non-substantive
changes to its phrasing and presentation.
Section 126.18(e)(1)
One commenter wanted clarification that ``dual nationals of another
country'' in Sec. 126.18(e)(1) includes Sec. 126.1 countries. The
Department acknowledges this comment and notes Sec. 126.1(a) is
amended by this rule to include Sec. 126.18(e).
One commenter sought clarification regarding whether Sec.
126.18(e)(1) applies to third-country nationals, and if not, what
authorization is needed to receive classified defense articles. The
Department confirms that this provision only applies to dual nationals
and not third-country nationals. There are other provisions within
Sec. 126.18 that apply to third-country nationals for transfers of
unclassified defense articles; however, to transfer classified
technical data to third-country nationals, separate DDTC authorization
would be required.
Section 126.18(e)(2)
Two commenters recommended the removal of the criteria of ``regular
employees of an authorized user of the exemption in Sec. 126.7'' as
the individuals are still required to hold a security clearance under
the Sec. 126.18(e) exemption and limiting the criteria to an
individual being a regular employee of an authorized user provides no
additional assurances for the Department. Similarly, another commenter
requested clarification on what constitutes a regular employee. The
Department declines to accept the comment to remove ``regular
employee'' from Sec. 126.18(e) as previously mentioned and clarifies
that ``regular employee'' is defined in Sec. 120.64.
Section 126.18(e)(4)
One commenter asked if UK and Australian militaries can take
defense articles transferred under the Sec. 126.18 exemption outside
their physical territories while on deployment in other countries. The
Department clarifies that this provision is only applicable to dual
nationals and one must meet all other criteria in Sec. 126.18(e)
before it may be used, but the Department confirms that military
members acting in their official capacity can transfer classified
defense articles to dual nationals who are citizens of Australia and
the United Kingdom. Of note, this provision is only for classified
defense articles and not for unclassified defense articles. For either
unclassified or classified defense articles, this comment is the
subject of a separate rulemaking (87 FR 77046, Dec. 16, 2022)
(proposed) and FR Doc. 2024-18249, scheduled to publish on August 15,
2024 (RIN 1400-AF26).
Supplement No. 2 to Part 126--Excluded Technology List
General Comments on the ETL
Several commenters requested that the Department reduce the overall
size of the ETL to facilitate AUKUS Pillar II objectives and that the
list of exclusions be defined as narrowly as possible,
[[Page 67282]]
including limiting the list to those articles required by law or
critical to national security and citing the relevant USML entries as
specifically as possible. The Department's initial development of the
ETL included a detailed review of statutory obligations, coordination
with its Australian and UK partners, and coordination across the U.S.
Government to ensure exclusion of only those technologies required by
statute or otherwise determined to require continued licensing review
for national security reasons. The Department, in coordination with the
Department of Defense, has now reviewed concerns raised in the public
comments regarding the need to update the list of exclusions as
described in this rule and has made reductions in the scope of
exclusions. The exclusions represent the technologies that require
continued--and now expedited--licensing review for statutory or
national security reasons.
Two commenters noted that the proposed ETL was in some ways more
restrictive than the Canadian exemptions in Sec. 126.5 and recommended
that the ETL not be more restrictive than that exemption. The
Department, in coordination with the Department of Defense, reviewed
the ETL in light of this concern. The Department has removed the entry
restricting certain source code. Further, the Department notes that the
ETL's exclusion of classified Category XIII(b) articles and classified
cryptographic devices is not more restrictive than the Canadian
exemptions, which is limited to unclassified articles. The Department
declines to remove the other ETL entries highlighted by the commenters
because they are based on legal requirements or other policy factors.
One commenter suggested carving out certain DoD programs, such as
the F-35 aircraft program, from the exclusions in the ETL because those
programs are already subject to significant U.S. Government involvement
and oversight. The Department declines to adopt this suggestion, as the
license review process is an important mechanism for such oversight and
the excluded technologies have been identified as warranting continued
license review.
Several commenters requested guidance on how to read the ETL. For
example, one commenter asked if technical data and defense services
excluded by the ETL row for USML Categories XIV(a), (b), (c)(5),
(f)(1), (i), and (m) are limited to technical data and defense services
directly related to articles described in the other specified
paragraphs. The Department affirms that this row excludes Category
XIV(m) technical data and defense services directly related to articles
described in paragraph (a), (b), (c)(5), (f)(1), or (i) of Category
XIV. It does not affect the availability of the Sec. 126.7 exemption
for other Category XIV(m) technical data and defense services, such as
those directly related only to articles described in Category
XIV(f)(2).
The Department also offers the following example of how to utilize
the ETL. This example considers the use of the Sec. 126.7 exemption to
export a part that (1) is classified, (2) is described only in USML
Category XI(c)(18), (3) is specially designed for a radio described in
USML Category XI(a)(5)(iii), (4) does not have anti-tamper features,
and (5) does not implement countermeasures or counter-countermeasures.
To review the requirement in Sec. 126.7(b)(3) that the part not be
identified on the ETL as ineligible for transfer, first review each row
of the ETL to determine which entries include USML Category XI(c)(18)
in the first column. Second, for each of those entries that include
USML Category XI(c)(18) in the first column, determine whether the
second column of the entry excludes the part specific article. In this
example, only five ETL entries include USML Category XI(c)(18) in the
first column. If none of those five ETL entries identifies the part,
then this example part is not excluded by the ETL:
The first three applicable entries don't apply, as the
part does not have an ``MT'' designation in paragraph (c)(18), is not
an article with anti-tamper features, and is designed for a radio (not
a cluster munition).
The next applicable entry begins with ``XI(a)(5)(iii).''
If the part is specially designed for a classified radio described in
USML Category XI(a)(5)(iii), then it is described by the second clause
in the second column (``classified articles specially designed [for]
classified articles described in USML Category XI(a)(5)(iii)'') and
thus is excluded by this entry. In that case, the review stops, as it
is excluded by at least one entry on the ETL.
The last applicable entry, for ``XI(c) and (d),'' would
not apply, as the part is specially designed for a radio described in
XI(a)(5)(iii)--and is thus not described in the second column of this
entry.
One commenter suggested improving the readability of the ETL by
including the full names of the USML Categories and the full text of
excluded USML entries in the ETL entries. The Department to declines to
adopt this suggestion. The Department refers to USML Category numbers
and entries in the ETL to keep the text concise and to require fewer
updates when USML language may be revised in the future. Furthermore,
to assess whether a defense article or defense service is described in
a USML entry, it is often necessary to view the USML entry noted in the
ETL in the context of other USML entries and applicable notes and
definitions. Therefore, the Department declined to fully reproduce USML
text in the ETL entries, to simplify interpretation and clearly
identify instances wherein the scope of a USML entry and an ETL entry
are the same.
Several commenters noted difficulty understanding various
terminology used in the ETL. Some terminology referenced by commenters
is defined in ITAR part 120 (e.g., ``commodity'' and ``specially
designed''). While the ITAR does not define ``directly related,'' this
term has been used throughout the USML for decades and is implemented
daily by the regulated community. However, the entry excluding certain
underwater equipment has been updated to use the term ``specially
designed'' instead of ``directly related'' in relation to specially
designed articles. Similarly, the entry for USML Category XX(d) has
been revised to refer to articles ``used only in,'' rather than
``directly related to,'' classified payloads and classified underwater
unmanned vehicle signature reduction techniques. Commenters also
recommended that, to improve clarity, the ETL should refer only to
specific USML subentries instead of broader categories. For most ETL
entries, the Department referenced USML entries and terms defined in
the ITAR instead of using novel regulatory language. However, in some
entries, it was necessary to use terminology not defined in the ITAR
(e.g., ``cluster munitions'') to more narrowly specify an exclusion not
coextensive with the related USML entries.
One commenter asserted that using the term ``article'' instead of
``hardware'' or ``defense article'' is ``undefined, unclear, and/or
subjective,'' and that doing so unintentionally expands the scope of
the ETL. The Department disagrees and retains the term ``article'' as a
more concise equivalent for ``defense article'' in this context.
Specifically, as only defense articles are described on the USML and
the ETL, and all defense articles are articles (by definition), all ETL
entries referring to ``articles'' refer to all ``defense articles''
otherwise described by the ETL entry.
A commenter also asked whether it may use the Sec. 126.7 exemption
for programs that involve defense articles eligible for the exemption
and other defense articles identified on the ETL as ineligible for the
exemption. Articles
[[Page 67283]]
and services identified on the ETL are not eligible for export under
the exemption, regardless of whether they are packaged with eligible
articles. Provided that all other conditions of the Sec. 126.7
exemption are met, an exporter may use the exemption for the articles
not described on the ETL but must obtain a license or an authorization
other than the Sec. 126.7 exemption for articles identified on the
ETL.
One commenter asked whether articles in USML Categories XI and XII
are excluded from export when packaged as spares or kits for larger
assemblies or end items. Unless otherwise specified in the relevant ETL
entry (e.g., the anti-tamper entry), the Department confirms excluded
articles are ineligible for use of the Sec. 126.7 exemption,
irrespective of whether those articles are shipped individually,
packaged with other articles, or already incorporated and integrated
into a larger assembly. For example, a classified article described in
Category XI(b) is ineligible for the exemption, either as a spare or
when installed in an aircraft.
Several commenters encouraged the Department to work with its AUKUS
partners to implement consistent lists of excluded articles and
services. The Department appreciates these comments and anticipates
continued efforts by all three nations to harmonize the lists to the
extent feasible and consistent with national legislation and notes that
there will still be nuanced differences in definitions and regulatory
structures between Australia, the United Kingdom, and the United
States.
One commenter suggested the creation of a single table of excluded
technologies with the applicable categories from the USML and the
Australian and United Kingdom munitions lists. The Department
acknowledges this comment but declines to adopt this recommendation.
Though consistency across the three nations' exclusion lists is
desirable, the lists do not perfectly align, and each partner must
maintain its own list to account for separate national legal and policy
requirements and to remain agile in adapting to revisions to its own
national regulations.
Several commenters requested that the Department implement a
process to confirm for exporters whether a particular defense article
or defense service is identified on the ETL. The Department declines to
accept this request, as exporters must conduct a case-by-case review to
validate whether all requirements to use an exemption have been
satisfied. The Department does not provide exemption validation as
exporters are best positioned to make their own determination based on
the particular conditions associated with any controlled event, to
include exports. The Department notes the advisory opinion process
described in Sec. 120.22(c) is available to request an interpretation
of the language used in the ETL, but not whether a specific technology
is described.
Two commenters suggested renaming the ETL to ``Excluded Defense
Article List.'' The Department declines this suggestion and notes the
list applies not only to defense articles, but also to defense
services, and novice exporters could misinterpret ``defense articles''
as applying only to hardware.
Two commenters requested that the Department publish the rationale
for each exclusion in the ETL, which the Department declines to do.
Some ETL entries are required by law, while others are based on policy
assessments that involve ongoing internal deliberative processes. The
Department notes it continues to discuss iterative improvements to the
ETL with its interagency and AUKUS partners.
One commenter asked if articles will be removed from the ETL
automatically as they are removed from the Wassenaar Arrangement
Munitions List or the MTCR Annex. The Department notes the ETL will
only be updated by established rulemaking processes. The ETL will
remain as specified in supplement no. 2 to part 126 until modified by
the Department.
The same commenter requested a 90-day prior notice to removal of
items from the ETL to allow industry to secure alternate authorizations
(DSP-5, TAA, etc.). The Department declines to do so because removing
something from the ETL does not impose additional licensing
requirements. Rather, items described in any ETL entry are not eligible
for the exemption provided at Sec. 126.7, while items not described in
any ETL entry may be transferred without additional licensing provided
the other requirements of Sec. 126.7 are met.
The same commenter also asked what criteria are used to determine
inclusion or exclusion of items on the ETL. The Department declines to
provide specific criteria, noting that some ETL entries are required by
law, while others are based on policy assessments that consider a
variety of factors.
Missile Technology Control Regime
Several commenters noted the Department of Commerce does not
require a license for many exports of MTCR-controlled articles to
Australia and the United Kingdom. In contrast, most MT-designated
articles on the USML continue to require a license. The Department
notes there is no requirement for the Departments of State and Commerce
to perfectly align their licensing requirements, as the agencies derive
their authorities and mandates from separate sources and regulate
technologies of differing importance to U.S. national security and
foreign policy interests.
Several commenters noted that the MTCR entry on the ETL is broader
than required by law, with one recommending the Department use the
language from the MTCR and AECA instead. The Department declines to
rely on the regulated community to interpret elements of the AECA and
MTCR, including the term ``for use in rocket systems.'' The Department
has not included USML entries with an ``MT'' designation in the MTCR
entry on the ETL when the USML entry (1) does not include MTCR Category
I commodities and (2) does not include MTCR Category II commodities for
use in rockets. USML Category XIX is an example from the proposed rule.
In this interim final rule, the Department also removes the ETL
exclusion for MT-designated articles described in paragraph (h)(12) of
Category VIII, as the defense articles described therein are
demonstrably for use in UAVs, not rockets (flight control systems for
rockets are described in paragraph (h)(1) of Category IV and remain
excluded). The Department appreciates the intent of these comments and
is reviewing other ways to facilitate collaboration on MTCR
technologies among and between Australia, the United Kingdom, and the
United States.
Similarly, two commenters observed the MTCR entry on the USML
treats USML Category IV propulsion differently than Category XIX,
asserting technologies excluded from one category but not the other
will introduce conflicts and recommending removal of Category IV
propulsion from the ETL. Another commenter asked why MT-designated
articles in Category XIX are not excluded. The Department notes this
was intentional, as engines described in USML Category XIX are
generally not for use in rocket systems (including ballistic missiles,
space launch vehicles, and sounding rockets, while excluding cruise
missiles, target drones, and reconnaissance drones), and therefore are
not excluded. Engines described in USML Category IV with an MT
designation are excluded from eligibility due to their use in rocket
systems.
One commenter recommended the Department ``declare a general policy
exception for MT cooperation'' with
[[Page 67284]]
Australia and the United Kingdom, and another suggested clearing
specific programs that involve the transfer of MT-designated defense
articles. The Department acknowledges these comments; however, policies
of this nature are outside the scope of this rulemaking.
One commenter asserted the distinction between hypersonic kinetic
energy weapons and MT-designated defense articles is unclear and
requested clarification that hypersonic systems are not excluded from
the Sec. 126.7 exemption. The Department declines this request as
beyond the scope of the current rulemaking. The ETL specifies excluded
technologies based upon their USML categories, and a case-by-case
review is necessary to assess whether, and in which USML paragraph(s),
any particular hypersonic system is described on the USML. Multiple
USML paragraphs may describe a given commodity, and the commodity
jurisdiction process described in Sec. 120.12 is available for
resolving doubt with regard to the jurisdiction and classification of a
particular defense article or defense service.
One commenter suggested limiting the MTCR exclusion to classified
articles or creating a separate exemption for MTCR commodities. The
Department declines to limit the MTCR exclusion to classified articles,
as the underlying reasons for the ETL exclusion, including 22 U.S.C.
2778(j)(1)(C)(ii)(I) through (III), are not limited to classified
articles. A separate exemption for MTCR commodities is outside the
scope of this rulemaking.
Anti-Tamper
Several commenters asked the Department to define ``anti-tamper''
and ``readily identifiable'' as used in the anti-tamper exclusion.
Following consultations with DoD, the Department has clarified the
exclusion, which is intended to apply to articles developed in
accordance with a DoD Program Protection Plan. Companies that implement
anti-tamper methodologies to protect DoD Critical Program Information
are well versed in this area. The Department has also deleted the term
``readily identifiable'' from the entry. The Department confirms that
the anti-tamper exclusion does not apply to commodities protected by
incorporated anti-tamper mechanisms but not otherwise listed on the
ETL. For these reasons, the Department declines to define ``anti-
tamper.''
One commenter asked where anti-tamper articles are described on the
USML. Such articles may be described in multiple USML entries,
depending upon their characteristics and functions, and commonly in
catch-all controls. The exclusion applies to all anti-tamper articles
described on the ETL, regardless of which USML entry describes them.
Source Code
Five commenters requested removal, limitation, or clarification of
the ETL entry that excluded certain source code. Commenters noted the
necessity of source code for co-development and integration efforts,
and they noted certain inconsistencies with the Canadian exemption. The
Department accepts these comments and, after interagency consultation,
deletes that entry from the ETL, as well as the entry that excluded
source code pertaining to certain night vision commodities in USML
Category XII.
Manufacturing Know-How
Commenters recommended removing the exclusion of certain
manufacturing know-how in USML Categories II(k), III(e), IV(i), X(e),
and XIX(g), particularly with regard to hypersonic weapons capabilities
and kinetic energy weapons. The Department concurs that some
manufacturing know-how is critical to the success of AUKUS Pillar II
objectives concerning hypersonics. However, the specific technologies
excluded by the ETL have been identified, following consultations with
DoD, as warranting continued licensing review.
One commenter asserted that the exclusion of USML Category XIX
manufacturing know-how is overly restrictive. The Department disagrees
with the commenter's assessment that manufacturing know-how for
Category XIX engines is ``relatively low-level technology.'' Following
consultations with the Department of Defense, the Department of State
confirms that the technology in question continues to require exclusion
from the exemption for national security reasons and the Department
declines to modify the exclusion of manufacturing know-how for Category
XIX articles.
Several commenters requested the Department remove the exclusion of
classified manufacturing know-how for articles described in USML
Categories XI(a)(3) or (4), or XII(d). Commenters asserted these
exclusions would impede AUKUS goals with regard to electronic warfare
(EW) and other collaborative efforts such as position, navigation, and
timing (PNT) capabilities. The Department has removed this exclusion,
while noting the remaining ETL entries (such as the MTCR exclusion and
the exclusion pertaining to Category XI) may continue to restrict use
of the exemption for some of these systems.
USML Category II
Four commenters requested clarification or removal of the ETL entry
for USML Category II(j)(9) through (11) and (k). The Department
clarifies that this ETL entry exists to ensure that articles described
in Category II(j)(9) through (11), and directly related technical data
and defense services, are not transferred under the Sec. 126.7
exemption unless they are elements of armaments, weapons, or military
platforms. This ETL entry does not affect the use of the Sec. 126.7
exemption for articles designed for integration into, or incorporated
as elements of, platforms such as military aircraft, or technical data
and defense services directly related to such articles.
One commenter requested clarification for USML Category II(j) and
referred to ``difficulties carving out items in [USML Categories] XI
and XII.'' The Department cannot respond because it does not understand
this comment.
USML Category IV
Multiple commenters requested the Department further limit the ETL
scope when able. Consistent with that request, the Department further
revised one ETL entry to continue to exclude launchers for MANPADS
described in USML Category IV(b)(2), while removing the exclusion of
other articles described in Category IV(b)(2).
Naval Nuclear Propulsion
One commenter objected to the ETL excluding articles described in
USML Category VI(e) or (f)(5) and Category XX, asserting that excluding
support for nuclear propulsion may be ``counter to the whole purpose of
AUKUS.'' The Department disagrees and notes naval nuclear propulsion
capabilities must be transferred pursuant to a mutual defense agreement
such as the one required for AUKUS Pillar I. Such agreements are
described in sections 91(c), 123, and 144(c) of the Atomic Energy Act
of 1954 (AEA) (42 U.S.C. 2121(c), 2153, 2143(c)), as well as section
1352(d)(3) of the 2024 NDAA (22 U.S.C. 10431(d)(3)).
One commenter suggested the establishment of a new Naval Nuclear
Propulsion Plant Information (NNPI) agreement between the United
States, Australia, and the United Kingdom. Another commenter proposed a
secure data management program to enable the safe and secure sharing of
submarine data, including NNPI and Alternate and Compensatory Control
Measures (ACCM). The Department acknowledges
[[Page 67285]]
these comments; however, they are outside the scope of the rulemaking.
One commenter opined that the ``boundaries'' defining naval nuclear
propulsion items require further clarification because such items may
be interconnected with the overall operation and maintenance of
military vessels. The Department declines to further define such
boundaries, as the ETL entry excluding naval nuclear propulsion items
clearly identifies specific USML entries and uses established ITAR
terms. If doubt exists as to the export classification of an item, the
Commodity Jurisdiction process at Sec. 120.12 is available.
USML Category VIII
One commenter incorrectly asserted that the ETL does not exclude
articles for the F-22 aircraft, such as the mission computer and
engine, which are described in USML entries other than paragraphs
(a)(2), (h)(1), and (i) of USML Category VIII, because they are
described in other USML paragraphs. The Order of Review in Sec. 120.11
identifies that an item may be described in multiple entries. Paragraph
(h)(1) of Category VIII describes parts, components, accessories, and
attachments specially designed for the F-22 aircraft, subject to the
Note to that paragraph, irrespective of whether those articles are also
described in other USML entries. As such, the Department rejects the
comment and resulting recommendation to exclude further F-22 parts
described elsewhere on the USML, as a redundancy.
USML Categories XI and XIII(b)
Several commenters observed that the previously proposed ETL entry
for USML Categories XI(a) through (d); and XIII(b) and (l) appeared to
exclude technical data and defense services only if they are directly
related to naval acoustic spectrum control and awareness and asked the
Department to revise the entry to clarify its intent. Having consulted
with DoD, the Department clarifies the intent was to exclude all
technical data and defense services directly related to unclassified
articles excluded in this ETL entry and to exclude only classified
technical data and defense services directly related to classified
articles excluded in this entry.
Two commenters recommended separating USML Category XIII(b) and (l)
onto a separate row from Category XI or placing them with other
Category XIII exclusions. The Department accepts this comment. This
entry has been split into multiple rows to address different exclusions
and to more clearly specify the relevant USML entries.
Many commenters advocated clarifying, eliminating, or narrowing the
scope of the exclusion for articles directly related to naval acoustic
spectrum control and awareness. One commenter asked whether this phrase
describes all of USML Category XI(a)(1)(i). Two commenters suggested
limiting the exclusion to classified articles. Another proposed
removing the phrase ``and awareness.'' Following consultations with
DoD, the Department declines to narrow the scope of this exclusion, as
these articles continue to require (now expedited) case-by-case review
for export. The Department has modified this entry to clarify the
exclusion applies to all articles described in USML Category
XI(a)(1)(i) and (ii), specially designed articles therefor, and
directly related technical data and defense services.
Several commenters requested clarification as to whether the
exclusion of classified countermeasures and counter-countermeasures in
USML Category XI applies to unclassified hardware designed for a
classified system. They noted that in some cases, the only classified
element of the system is software provided on a government-to-
government basis and installed onto the hardware after export.
Furthermore, one commenter requested the Department review whether the
exclusion would prevent collaboration on aspects of a defense article
not related to the classified portions of the defense article. Another
commenter asserted that Sec. 120.11(c) should not apply to excluded
defense articles--specifically, that end items incorporating classified
countermeasures or counter-countermeasures should be eligible for
export. Yet another commenter requested clarification as to which USML
entries describe the specially designed parts, components, accessories,
and attachments excluded under this entry. And one commenter expressed
confusion on how to interpret the term ``classified.''
The Department has revised the proposed countermeasures and
counter-countermeasures exclusion both for greater clarity and to focus
the exclusion more precisely on relevant, classified defense articles.
Such revisions include distributing the contents of the proposed entry
across multiple narrower entries, more clearly identifying the relevant
USML entries, and removing unclassified articles designed for
classified articles. Classified, directly related technical data and
defense services are also excluded. Articles excluded from the
exemption at Sec. 126.7 remain excluded even when incorporated into an
article that is not otherwise excluded. The Department also confirms
that an exclusion of classified articles and classified, directly
related technical data and defense services, does not prevent use of
the exemption to transfer unclassified articles used in the classified
article, or unclassified technical data and defense services. The
Department further notes the term ``classified'' is defined within the
ITAR in Sec. 120.38.
One commenter requested removal of USML Category XIII(b)
cryptographic devices, software, and components from the ETL, asserting
they are authorized for transfer under the Canadian exemptions in Sec.
126.5. The Department notes that the Canadian exemptions are distinct
from the Sec. 126.7 exemption. Nonetheless, the classified articles
described in Category XIII(b) previously proposed for exclusion are
today excluded from the Sec. 126.5 Canadian exemptions, as it is
limited to the transfer of unclassified articles.
One commenter objected to the exclusion of classified articles
described in USML Category XIII(b), asserting it will prevent the use
of the exemption for UK, Australian, North Atlantic Treaty Organization
(NATO), and other allied classified cryptography that is not used to
access U.S. Top Secret or Sensitive Compartmented Information (SCI)
information, some of which is provided by the U.S. Defense Industrial
base. Following consultation with DoD, including the National Security
Agency, the Department declines to limit this entry. Classified
cryptography, even that which is shared with U.S. allies, must remain
subject to significant oversight and distribution limits, including
that which is provided by the (now expedited) licensing process.
Many commenters observed the proposed rule excluded classified
articles described in USML Category XIII(b), but excluded all articles
specially designed for a Category XIII(b) article, regardless of
classification status. Commenters were uncertain how to interpret this
exclusion and asked whether the Department intended to exclude only
classified articles, and which USML paragraphs describe the specially
designed articles that are excluded. The Department recognizes the
requested clarifications of this entry. Following consultations with
DoD, the Department revises the scope consistent with the intent to
exclude (1) classified articles described in USML Category XIII(b), (2)
classified articles in USML Category XI specially designed for the
excluded Category XIII(b) articles and
[[Page 67286]]
(3) classified, directly related technical data and defense services.
In a section of its comment devoted to the ETL, one commenter
advocated for ``more harmonization on cryptographic technology.'' The
Department assesses any actionable response to this comment falls
outside the scope of the proposed rule.
One commenter requested confirmation that the Department is not
asserting jurisdiction over articles not described on the USML. As an
example, the commenter noted the use of the phrase ``specially designed
parts, components, accessories, and attachments therefor'' in the ETL
entry that excludes classified countermeasures and counter-
countermeasures, incorrectly asserting there is no catch-all entry on
the USML for such items. The Department confirms it does not assert
regulatory jurisdiction via the ETL, which only identifies the articles
and services already under the Department's jurisdiction that are
excluded from transfer via the Sec. 126.7 exemption. The Department
notes the proposed exclusion, which would have applied to paragraphs
(a) through (d) of USML Category XI, in addition to paragraphs (b) and
(l) of USML Category XIII, would have applied to articles described in
USML Category XI(c)(1) through (19) that are specially designed for
classified countermeasures or counter-countermeasures.
USML Category XII
One commenter requested narrowing of the exclusion for source code
and classified technical data and defense services pertaining to night
vision-related items. After further review and consultation with DoD,
the Department removed this exclusion.
Also, consistent with commenters' requests to narrow the ETL, the
Department has, after consultation with DoD, removed the exclusion for
classified articles described in Category XII(d)(3).
USML Category XV
Two commenters welcomed the ability to transfer unclassified
Category XV(f) technical data and defense services under the exemption
because such transfers will facilitate initial unclassified discussions
related to the bid phase for novel space-based power generation
systems. They and three other commenters requested complete or partial
removal of the ETL entry excluding classified articles described in
Category XV(a) or (e); and directly related classified technical data
and defense services. Based on interagency consultations, the
Department declines to do so. Such articles necessitate a case-by-case
review prior to export, which is inherent in the licensing process.
One commenter requested that the Department confirm that
information collected by excluded defense articles in USML Category XV
is not subject to the ITAR, or that such information falls within the
scope of the Sec. 126.7 exemption. The Department declines this
request as a case-by-case review is necessary to assess whether such
information is described on the USML or the ETL. The requested carve-
outs are overly broad and not actionable within this rulemaking. The
Department notes that just because information was ``collected by a
defense article'' does not make that information ``directly related to
the defense article that collected it''; and most ETL entries exclude
information only as technical data directly related to excluded defense
articles.
One commenter requested removal of ``cooperative docking''
capability from the list of technologies described in USML Category XV.
The Department notes that this comment is outside the scope of this
rulemaking, as the rule does not contemplate changes to the USML.
USML Category XVI
One commenter requested the Department specify the relevant
paragraphs within USML Category XVI that are excluded; the Department
confirms all articles described in USML Category XVI are excluded, and
thus declines to specify each paragraph individually.
USML Category XVIII
One commenter requested removal of the ETL entry that excludes
classified articles in Category XVIII specially designed for counter-
space operations, asserting this would improve the relationship between
the three countries' Space Commands and facilitate collaboration
between their industrial bases. The Department, based on U.S.
Government review, declines to remove this entry at this time, as the
excluded technologies warrant continued, and now expedited, case-by-
case review for national security concerns.
USML Category XIX
One commenter noted that it would be unable to take advantage of
the proposed exemption for exports related to classified parts for use
in the engine for the F-35 aircraft. The Department confirms this,
based on the description of those parts in an excluded entry.
One commenter suggested that paragraphs (f)(6) and (7) of USML
Category XIX should be added to the exclusion for classified articles
described in paragraphs (e) and (f)(1) and (2) of USML Category XIX, as
those paragraphs describe production commodities directly related to
the technologies excluded by the existing Category XIX entry. The
Department appreciates this comment and notes that excluding the
articles described in paragraphs (f)(7) and (12) for manufacturing the
excluded articles is consistent with the Department's intent to exclude
articles not yet integrated and their technical data. Following
consultations with DoD, the Department declines to add defense articles
described in paragraph (f)(6), as the Category XIX classified defense
articles warranting exclusion are already described in the ETL entry.
Thus, following consultations with DoD, State is excluding the articles
described in paragraphs (f)(7) and (12) for manufacturing the excluded
articles in paragraphs (f)(1) and (2).
USML Category XX
Multiple commenters recommended the Department eliminate or narrow
the exclusions in USML Category XX. Commenters noted that exchange of
Category XX articles, including manufacturing know-how, will be
necessary to support AUKUS Pillar I, which is intended to enable
Australia to safely and effectively operate nuclear-powered submarines
and establish a corresponding manufacturing industrial base in
Australia. One commenter noted that the exclusion of certain Category
XX manufacturing know-how is not required by AECA and asserted that
exclusions of articles not otherwise restricted by law or other
international obligations is contrary to the premise that Australia and
the UK have comparable systems with the United States. Commenters
specifically cited the need for transfer of information regarding
processes necessary to meet materials specifications, instruction with
regard to test and commissioning software, and design models that may
contain manufacturing know-how. One commenter recommended eliminating
the exclusion for manufacturing know-how pertaining to classified UUV
signature reduction techniques or making the exclusion specific to
current U.S.-fielded technologies in programs of record. One commenter
also estimated that, without an exclusion for manufacturing know-how,
approximately 200 manufacturing
[[Page 67287]]
license agreements would be necessary to support the anticipated
transfers of submersible manufacturing capabilities. Another commenter
suggested restricting the exclusions in Category XX to classified
technologies.
The Department affirms the articles and services described in USML
Category XX(d) are critical to the success of AUKUS Pillar I and
further notes this exemption is not the only means of facilitating the
safe and effective operation or manufacture of nuclear-powered
submarines. The specific technologies excluded by the ETL have been
identified as warranting continued (and now expedited) licensing
review. Having consulted with DoD, the Department further amends the
USML Category XX(d) entry to (1) remove manufacturing know-how directly
related to uncrewed vessels, (2) clarify the entry, and (3) further
exclude design methodology and engineering analysis directly related to
certain USML Category XX commodities for the same reasons manufacturing
know-how is excluded for those commodities.
One commenter requested clarification whether manufacturing know-
how is excluded if it pertains to a USML Category XX(c) defense article
used in both crewed vessels and classified UUVs. The Department has
revised the manufacturing know-how entry for Category XX, which no
longer specifically excludes all manufacturing know-how for classified
UUVs. Manufacturing know-how directly related to crewed vessels remain
excluded. For Category XX(c) defense articles used both in crewed and
uncrewed vessels, exporters must assess whether the information under
consideration is directly related to crewed vessels and is therefore
excluded. The Department further notes that technical data directly
related to a Category XX(c) commodity may be excluded by other ETL
entries. For example, other ETL entries exclude technical data directly
related to Category XX(c) articles specially designed for articles in
Categories XX(b)(1) and (2).
Other Public Comments
Several commenters cautioned against finalizing a Sec. 126.7
exemption that hampers collaboration and innovation for technological
development in support of future AUKUS programs. The Department notes
that the exemption was developed by the U.S. Government cognizant of
the goals of AUKUS and the exemption was designed to support these
goals while maintaining individual licensing requirements for the most
sensitive items subject to the ITAR.
Multiple commenters argued that, because section 38(l) of the AECA
(22 U.S.C. 2778(l)) requires all three nations to have ``comparable''
export control systems, an exporter should not need U.S. authorization
to retransfer or reexport defense articles previously exported via the
Sec. 126.7 exemption outside of the authorized user community or
outside of the three AUKUS nations. Instead, these commenters
recommended a license or other authorization from Australia or the
United Kingdom from which the defense article is to be retransferred or
reexported should suffice. DDTC declines to accept this recommendation.
The Sec. 126.7 exemption does not authorize the reexport or retransfer
of defense articles outside its scope for several reasons. The
Department was provided legal authority under section 38(l) of the AECA
to implement such license-free defense trade for Australia and the
United Kingdom and only under certain conditions. Having comparable
export controls ensures that all three nations are using similar
systems to protect technologies within their territory from being
transferred illicitly. However, government decisions to authorize the
export of defense articles implicate a range of national security and
foreign policy interests of a nation.
Multiple commenters also requested the Department eliminate the
effect of Sec. 120.11(c) (commonly referred to as the ``see-through
rule'') for transactions that take place under the proposed Sec. 126.7
exemption or the proposed Sec. 126.15 expedited licensing process, to
simplify export compliance for Australian and UK exporters. The
Department declines this request, for the same reasons it requires
entities to obtain a license or other authorization for retransfers or
reexports outside the authorized user community. The underlying reasons
for ITAR regulation of defense articles do not change following
incorporation or integration into another item, unless specifically
provided otherwise in the ITAR (e.g., see USML Category XV, Note 2 to
paragraph (e)).
Several commenters requested clarification that Sec. 124.8(a)(5)
does not apply to the proposed exemption. ITAR Sec. 124.8(a)(5)
requires certain agreements to include a clause specifying that
technical data or defense services exported from the United States in
furtherance of the agreement, and any defense article which may be
produced or manufactured therefrom, may not be transferred to a foreign
person except pursuant to Sec. 126.18, as specifically authorized in
the agreement, or where prior written approval of the Department of
State has been obtained. While Sec. 124.8(a)(5) does not apply, the
Department notes that a similar provision is included in the authorized
user process. Use of the Sec. 126.7 exemption does not eliminate the
equities underlying Sec. 124.8(a)(5) regarding transfers outside of
Australia, the United Kingdom, or the United States. Moreover,
maintaining this regulatory provision is key to ensuring know-how
transferred under the exemption is not repurposed for use in defense
articles not described in Australia and the UK's munitions lists.
Without this provision, AECA section 38(j)(1)(C)(ii)(VI) and (VII)
would require the Department to substantially expand the ETL to prevent
unlicensed exports of U.S. technological capabilities outside of the
United Kingdom and Australia. However, to further facilitate trade
within the approved user community, and for clarity, the Department is
amending Sec. 124.8(a)(5) to affirm the exemption at Sec. 126.7 may
be used to retransfer and reexport articles and services within the
authorized user community that were originally exported via an
agreement subject to Sec. 124.8(a)(5).
One commenter inquired when the Department plans to certify that
Australia and the United Kingdom have comparable export controls. The
Department notes that such a certification must occur prior to the
effective date of this final rule implementing the exemption.
One commenter supported the passing of the Australian Defence Trade
Controls Amendment Act 2024; however, expressed concern that the law
will increase compliance requirements for Australian industry. The
Department notes that this comment is outside the scope of this
rulemaking regarding the ITAR exemption that the United States
Government proposed.
One commenter requested clarification as to whether the term
``export'' in the proposed rule refers to both permanent and temporary
exports. The Department clarifies that, consistent with how the term
``export'' is used elsewhere in the ITAR, unless otherwise specified,
the term ``export'' refers to both permanent and temporary exports.
One commenter sought clarification as to whether the Sec. 126.7
exemption would supersede an existing license or other authorizations
already issued by DDTC, and if provisos in an existing license or other
authorization include tighter restrictions than the Sec. 126.7
exemption, which authorization should
[[Page 67288]]
the exporter refer to. Another commenter suggested the Department
clarify that provisos in an existing authorization no longer apply if
the Sec. 126.7 exemption is available for use. Similarly, two
commenters inquired if there is a transition period for existing
license or other authorizations to using the Sec. 126.7 exemption. The
Department notes that use of the Sec. 126.7 exemption in lieu of an
existing license or other authorization is allowed effective
immediately upon the effective date of this interim final rule provided
all exemption criteria are met, consistent with the application of
other ITAR exemptions. There is no transition period required for this
exemption. The Department notes ITAR exemptions do not automatically
invalidate previously authorized licenses or agreements. For example,
to the extent an exporter chooses to rely on a particular authorization
to export, the provisos, conditions, and limitations that were applied
to that authorization continue to govern the authorization.
One commenter sought clarification if this exemption could be used
for a defense article originally shipped via FMS and what the
requirements were for continued transfers. The Department confirms that
the ITAR authorizes commercial exports of defense articles and defense
services, also known as direct commercial sales or DCS. Defense
articles transferred via government-to-government channels such as FMS
are conducted pursuant to separate and distinct authorities. Those
separate authorities continue to govern the export, reexport, and
retransfer of those defense articles. This means that defense articles
originally exported pursuant to an FMS case continue to be subject to
the terms and conditions of the FMS Letter of Offer and Acceptance and
are not eligible for retransfer or reexport under Sec. 126.17 or any
other provision of the ITAR.
One commenter sought clarification on the proposed rule's impact on
the existing United Kingdom and Australian DTCTs and if this rule will
replace or alter Sec. Sec. 126.16 and 126.17. The Department notes
that the existing United Kingdom and Australian DTCTs will not be
altered. The Sec. 126.7 exemption is new and a separate exemption.
One commenter expressed concern about arms transfers and money
laundering. The Department notes that this comment is outside the scope
of this rulemaking.
One commenter expressed that all defense trade and cooperation
should exclude Israel. The Department notes the Sec. 126.7 exemption
is solely for Australia, the United Kingdom, and the United States and
that the comment is otherwise outside the scope of this rulemaking.
Two commenters recommended the Department waive agreement
signatures and nondisclosure agreements (NDA) for authorized users who
are a party to ITAR agreements which are for end-use by AUKUS
governments and include non-AUKUS parties and suggested that the NDA
requirement be included in the authorized user enrollment process to
mitigate administrative hurdles. Similarly, one commenter recommended
the same waivers but for end-use by AUKUS governments, authorization to
export defense articles on the ETL, and only include authorized users.
The commenter acknowledges that the latter recommendation requires a
license but asserts that without these waivers it is burdensome and
does not support AUKUS objectives. The Department notes that these
recommendations exceed the scope of the proposed rulemaking insofar as
it recommends changing requirements that apply to transfers that are
not described within the Sec. 126.7 exemption being proposed or the
expedited processing timelines that would apply under Sec. 126.15. The
Department also does not agree with the commenter's suggestion that
signatures on approved agreements are ``administrative hurdles.'' A
party's signature to an agreement is an acknowledgement that the party
has been made aware of and agrees to comply with the terms and
conditions of the specific agreement to which the party has affixed its
signature. Further, exports of defense articles on the ETL especially,
these specific assurances are an important measure designed to help
ensure that all parties to the transaction, including authorized user
understand their specific obligations.
Similarly, another commenter suggested to remove the NDA
requirement for sublicensees when transfers are on the ETL and require
licensing. The Department notes that these recommendations exceed the
scope of the proposed rulemaking.
One commenter noted classified and FMS are not captured in the
Sec. 126.7 exemption and recommended the Department consider
harmonizing licensing pathways for users of the exemption. The
Department acknowledges this comment; however, classified is not
prohibited in the Sec. 126.7 exemption provided all criteria in that
section are met, and regarding different licensing pathways, the ITAR
does not regulate FMS. The Department acknowledges that continued
efforts to streamline and facilitate defense trade generally and may
consider this comment within other efforts.
Two commenters recommended to create an exception similar to Sec.
120.54(a)(3) for authorized users. While this is outside the scope of
this particular rulemaking, the Department may consider it in a future
rulemaking.
Two commenters acknowledged this is outside the realm of export
controls but recommended all three nationals have harmonized cyber
security standards. The Department notes that this comment is outside
the scope of this rulemaking.
The same commenter inquired how controlled unclassified information
(CUI) will be handled with AUKUS, what upcoming AUKUS-related
streamlining of the FMS system are being considered and requested the
creation of a non-U.S. Defense Trade Advisory Group (DTAG). The
Department notes that this comment is outside the scope of this
rulemaking, however there are several mechanisms for foreign industry
to provide comments to the U.S. Government on defense trade matters,
including through their governments. These comments were passed to the
U.S. Government entities overseeing CUI and FMS processes.
One commenter expressed that efforts to expedite transfers to NTIB
(National Technology and Industrial Base) partners is still important.
The Department notes that this comment is outside the scope of this
rulemaking.
One commenter suggested to amend Sec. 123.9(c)(4) to include the
proposed Sec. 126.7 exemption to reflect Australian and UK authorized
users are allowed to submitted retransfer authorizations. The
Department declines to accept this comment as the Sec. 123.9(c)(4)
provision imposes conditions on reexports and retransfers of defense
articles originally exported pursuant to the Defense Trade Cooperation
Treaties in Sec. Sec. 126.16 and 126.17, which impose unique
requirements, including on reexports and retransfers.
One commenter suggested DDTC work with the Office of Regional
Security and Arms Transfers (RSAT), the Defense Security Cooperation
Agency (DCSA), and other government entities to inform the public about
changes to DCS and FMS processes within the AUKUS framework, including
activities done through FMS channels which can transition to be handled
through the Sec. 126.7 exemption. The Department reemphasizes that the
ITAR regulates DCS only and ITAR exemptions cannot be used for FMS
transfers. However, the Department
[[Page 67289]]
recognizes the need for continued outreach and education on defense
trade process more generally and will aim to coordinate outreach
between the DCS and FMS communities.
One commenter applauded the Department of State and the Department
of Commerce for aligning its export controls, in particular the
inclusion of the AUKUS exemption and conforming authorizations in the
Export Administration Regulations (EAR). The commenter further
suggested both agencies consider revising the treatment of nationality
to ensure that national security concerns and risks relating to dual-
and third-country nationals are consistent across the ITAR and the EAR,
particularly with respect to technology transfers and ``deemed
exports.'' The Department notes that the Department of State and
Department of Commerce have different authorities for export controls
and thus the ITAR and EAR have different scopes of technology, with the
ITAR controlling more sensitive defense articles and defense services.
As such, the ITAR control may be more stringent than those implemented
by the EAR.
One commenter proposed to have a series of tabletop exercises with
the governments of Australia, the United Kingdom, and the United States
to better streamline policies or regulations, conduct gap analyses, and
support harmonization prior to the finalization of this rule. The
Department notes it continues to coordinate with the United Kingdom and
Australia on this rulemaking and the reciprocal exemptions being
created by the United Kingdom and Australia.
One commenter wanted clarification if the requirements set out in
Sec. 126.18(a), (b), and (c)(2) apply to Sec. 126.7. The Department
notes that those provisions are separate and do not apply to Sec.
126.7 but are still available for use if all the criteria are met.
Moreover, the Department notes that these provisions are for dual and
third-country nationals.
One commenter recommended Canada be included in Sec. Sec. 126.7
and 126.18(e). The Department notes its focus on implementing the
requirements set forth in section 38(l) of the AECA, which are specific
to Australia and the United Kingdom.
One commenter suggested the Department align subject matter experts
to specific AUKUS pillars, each country would have an administrator
that manages those pillars, and the administrator is responsible for
vetting entities as authorized users. The Department notes that this
comment is outside the scope of the rulemaking in terms of how future
AUKUS programs will be structured and which countries will collaborate
on those projects or programs.
One commenter recommended that DoD and the intelligence community
conduct a comprehensive review of classification policy to ensure
defense articles are not routinely marked with classifications that
limit sharing with Australian and UK partners. The Department notes
this comment is outside the scope of this rulemaking.
Regulatory Analysis and Notices
Administrative Procedure Act
This rulemaking is exempt from the notice-and-comment rulemaking
requirements of the Administrative Procedure Act (APA) pursuant to 5
U.S.C. 553(a)(1) as a military or foreign affairs function of the
United States Government. Good cause also exists under 5 U.S.C.
553(b)(B) and (d)(3) to issue this final rule with an immediate
effective date, as 22 U.S.C. 2778(l)(2) requires that this rule
implementing an exemption be immediately issued upon an assessment of
comparability. The Department believes that the statutory directive is
a result of congressional intent and recognition that the foreign
affairs function exception to the requirements of 5 U.S.C. 553 apply to
ITAR rules. E.g., 22 CFR 120.20. Moreover, since Australia and the
United Kingdom have implemented a comparable exemption from their
export control requirements for the United States in furtherance of the
trilateral trade concept envisioned by statute, and have made changes
and commitments regarding their own laws and processes, good cause
exists to quickly issue a final rule, have certain limitations to the
exemption based on security and shared objectives, ensure it goes into
effect on or near a certain coordinated date, and otherwise facilitate
the enhanced trilateral partnership envisioned by AUKUS.
Regulatory Flexibility Act
Since this rule is exempt from the notice-and-comment provisions of
5 U.S.C. 553 as a military or foreign affairs function, and based on
the Department's finding of good cause, the rule does not require
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 are deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
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 amendment does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this rulemaking.
Executive Orders 12866, 14094 and 13563
Executive Order 12866, as amended by Executive Order 14094, and
Executive Order 13563 direct agencies to assess all 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). Executive Order 13563 emphasizes the
importance of quantifying both costs and benefits, of reducing costs,
of harmonizing rules, and of promoting flexibility. Because the scope
of this rule does not impose additional regulatory requirements or
obligations, the Department believes costs associated with this rule
will be minimal. Regarding the exemption, Australia and the United
Kingdom, as set forth in the section 655 reports required annually by
the Foreign Assistance Act of 1961, as amended, are ordinarily among
the most commonly licensed destinations for transfers subject to the
ITAR. The Department expects that fewer license applications will be
submitted as a result of this rule for authorized users that meet the
criteria of the exemption, for eligible transfers of defense articles
and defense services to and between Australia, the United Kingdom, and
the United States. Consequently, this exemption will relieve licensing
burdens for some exporters. Regarding the expedited licensing review
process when an ITAR exemption is not available for use, the Department
expects minimal costs associated with this provision for the
[[Page 67290]]
public, with the benefit of license applications involving Australia,
the United Kingdom, or Canada being subject to faster adjudication. The
Department is seeking public comment on its assessment of the costs and
benefits of this interim final rule. This rule has been designated as a
significant regulatory action by the Office and Information and
Regulatory Affairs under Executive Order 12866.
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, Executive Order 13175 does not apply to this
rulemaking.
Paperwork Reduction Act
This rulemaking does not impose or revise any information
collections subject to 44 U.S.C. Chapter 35.
List of Subjects in 22 CFR Parts 123, 124, and 126
Arms and munitions, Exports, Reporting and recordkeeping
requirements, Technical assistance.
For the reasons set forth above, title 22, chapter I, subchapter M,
parts 123, 124, and 126 of the Code of Federal Regulations are amended
as follows:
PART 123--LICENSES FOR THE EXPORT AND TEMPORARY IMPORT OF DEFENSE
ARTICLES
0
1. 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; Sec. 520, Pub. L. 112-55; Section 1261, Pub. L. 112-239;
E.O. 13637, 78 FR 16129.
0
2. Amend Sec. 123.10 by revising the section heading and paragraph (a)
to read as follows:
Sec. 123.10 Nontransfer and use assurances.
(a) A nontransfer and use certificate (i.e., Form DSP-83) is
required for the export of significant military equipment and
classified articles, including classified technical data, pursuant to a
license or other authorization, except for the exemptions in Sec. Sec.
126.5 and 126.7 of this subchapter. 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.
* * * * *
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT, AND OTHER DEFENSE
SERVICES
0
3. 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); 22 U.S.C. 2651a; 22 U.S.C. 2776;
Section 1514, Pub. L. 105-261; Pub. L. 111-266; Section 1261, Pub.
L. 112-239; E.O. 13637, 78 FR 16129.
0
4. Amend Sec. 124.8 by revising paragraph (a) to read as follows:
Sec. 124.8 Clauses required both in manufacturing license agreements
and technical assistance agreements.
(a) * * *
(5) ``The technical data or defense service exported from the
United States in furtherance of this agreement and any defense article
which may be produced or manufactured from such technical data or
defense service may not be transferred to a foreign person except
pursuant to 22 CFR 126.7 or 126.18, as specifically authorized in this
agreement, or where prior written approval of the Department of State
has been obtained.''
* * * * *
PART 126--GENERAL POLICIES AND PROVISIONS
0
5. The authority citation for part 126 is revised to read as follows:
Authority: 22 U.S.C. 287c, 2651a, 2752, 2753, 2776, 2778, 2779,
2779a, 2780, 2791, 2797, 10423; sec. 1225, Pub. L. 108-375, 118
Stat. 2091; sec. 7045, Pub. L. 112-74, 125 Stat. 1232; sec. 1250A,
Pub. L 116-92, 133 Stat. 1665; sec. 205, Pub. L. 116-94, 133 Stat.
3052; and E.O. 13637, 78 FR 16129, 3 CFR, 2013 Comp., p. 223.
0
6. Amend Sec. 126.1 by revising paragraph (a) to read as follows:
Sec. 126.1 Prohibited exports, imports, and sales to or from certain
countries.
(a) General. It is the policy of the United States to deny licenses
and other approvals for exports and imports of defense articles and
defense services, destined for or originating in certain countries. The
exemptions provided in this subchapter, except Sec. 123.17 of this
subchapter and Sec. Sec. 126.4(a)(1) or (3) and (b)(1) (paragraph
(a)(2) or (b)(2) when the export is destined for Russia and in support
of government space cooperation), 126.6, and 126.18(e), or when the
recipient is a U.S. Government department or agency, do not apply with
respect to defense articles or defense services originating in or for
export to any proscribed countries, areas, or persons. (See Sec. 129.7
of this subchapter, which imposes restrictions on brokering activities
similar to those in this section.)
* * * * *
0
7. Add Sec. 126.7 to read as follows:
Sec. 126.7 Exemption for defense trade and cooperation among
Australia, the United Kingdom, and the United States.
(a) No license or other approval is required for the export,
reexport, retransfer, or temporary import of defense articles, the
performance of defense services, or engaging in brokering activities as
described in part 129 of this subchapter, between or among authorized
users of this exemption, subject to the requirements and limitations in
paragraph (b) of this section.
(b) The exemption described in paragraph (a) of this section is
subject to the following requirements and limitations:
(1) The activity must be to or within the physical territory of
Australia, the United Kingdom, or the United States;
(2) The transferor, recipient, or broker must each be:
(i) U.S. persons registered with the applicable Directorate of
Defense Trade Controls (DDTC) registration pursuant to Sec. Sec. 122.1
and 129.3 of this subchapter, and not debarred under Sec. 127.7 of
this subchapter;
(ii) A U.S. Government department or agency; or
(iii) Authorized users identified through the DDTC website and, if
engaging in brokering activities, registered with DDTC pursuant to
Sec. 129.3 of this subchapter;
(3) The defense article or defense service is not identified in
supplement no. 2 to this part as ineligible for transfer under the
exemption in paragraph (a) of this section;
(4) The value of the transfer does not exceed the amounts described
in Sec. 123.15 of this subchapter and does not involve the
manufacturing abroad of significant military equipment as
[[Page 67291]]
described in Sec. 124.11 of this subchapter; and
(5) Transferors must comply with the requirements of Sec. 123.9(b)
of this subchapter.
Note 1 to paragraph (b): The exemption in paragraph (a) of this
section does not remove other applicable U.S. statutory and regulatory
requirements. For example, for U.S. authorized users, transfers of
classified defense articles and defense services must still meet the
requirements in 32 CFR part 117, National Industrial Security Program
Operating Manual (NISPOM), in addition to all other applicable laws.
Australian authorized users must, for example, meet the requirements in
the Australian Protective Security Policy Framework, including
appropriate security risk management for contracted providers. United
Kingdom authorized users must, for example, meet the requirements in
the Government Functional Standards GovS 007: Security.
0
8. Amend Sec. 126.15 by revising the section heading and adding
paragraphs (c) and (d) to read as follows:
Sec. 126.15 Expedited processing of license applications for the
export of defense articles and defense services to Australia, the
United Kingdom, or Canada.
* * * * *
(c) Any application submitted for authorization of the export of
defense articles or defense services to Australia, the United Kingdom,
or Canada, describing an export that cannot be undertaken under an
exemption provided in this subchapter, will be expeditiously processed
by the Department of State. The prospective export must occur wholly
within, or between the physical territories of Australia, the United
Kingdom, Canada, or the United States, and between governments or
persons from such countries.
(d) To the extent practicable, any application in paragraph (c) of
this section to export defense articles and defense services related to
a government-to-government agreement between Australia, the United
Kingdom, or Canada, and the United States must be approved, returned,
or denied within 30 days of submission. For all other license
applications, any review shall be completed no later than 45 calendar
days after the date of the application. The provisions of this
paragraph (d) do not apply to any applications which require
congressional certification.
0
9. Amend Sec. 126.18 by adding paragraph (e) to read as follows:
Sec. 126.18 Exemptions regarding intra-company, intra-organization,
and intra-governmental transfers to employees who are dual nationals or
third-country nationals.
* * * * *
(e) Notwithstanding any other provisions of this subchapter, no
license is required for the retransfer or reexport of classified
defense articles to citizens of Australia or the United Kingdom,
provided such individuals:
(1) Are dual nationals of another country;
(2) Are authorized users or regular employees of an authorized user
of the exemption in Sec. 126.7;
(3) Hold a security clearance approved by Australia, the United
Kingdom, or the United States that is equivalent to the classification
level of SECRET or above in the United States; and
(4) Are either:
(i) Within the physical territory of Australia, the United Kingdom,
or the United States; or
(ii) A member of the armed forces of Australia, the United Kingdom,
or the United States acting in their official capacity.
10. Add supplement no. 2 to part 126 to read as follows:
Supplement No. 2 to Part 126--Excluded Technology List
This supplement lists the defense articles and defense services
excluded from the scope of the exemption provided at Sec. 126.7. The
United States Munitions List (USML), see 22 CFR 121.1, entries in
column 1 represent the location of the excluded defense articles and
defense services within the USML and does not indicate the entire USML
entry in column 1 is excluded; only the portions of those entries that
are further described in column 2 are excluded.
------------------------------------------------------------------------
USML entry Exclusion
------------------------------------------------------------------------
I through XV, and XX.............. Missile Technology Control Regime
(MTCR) articles, as annotated on
the USML by an ``MT'' designation,
except for articles described in
USML Category VIII(h)(12); and
directly related technical data and
defense services.
I through XX...................... Articles having anti-tamper features
developed in accordance with a U.S.
Department of Defense (DoD) Program
Protection Plan, not already
installed in the commodity they are
intended to protect; and directly
related technical data and defense
services.
II(k), III(e), IV(i), X(e), and Manufacturing know-how (see Sec.
XIX(g). 120.43(e) of this subchapter)
directly related to:
--articles described in USML
Categories II(d), III(d)(1) or (2),
IV(a), (b), (d), (g), or (h),
X(a)(1) or (2), or XIX; or
--parts, components, accessories, or
attachments that are only used in
those articles.
II(j)(9) through (11), and (k).... Articles described in USML Category
II(j)(9) through (11) that are not
an element of an armament, weapon,
or military platform; and directly
related technical data and defense
services.
III(a)(9) and (e); IV(a)(5) and Cluster munitions and articles
(6), (b)(2), (c), (g), (h), and specially designed for cluster
(i); VI(f)(6) and (g); VIII(h)(6) munitions; and directly related
and (i); XI(c) and (d); XII(a), technical data and defense
(d), (e), and (f); and XX(c) and services.
(d).
IV(a)(3), (9), (10), and (11), Articles described in USML Category
(b)(2), (h)(5), and (i). IV(a)(3), (9), (10), or (11), or
(h)(5); launcher mechanisms for
MANPADS; and directly related
technical data and defense
services.
V(a)(13)(iii) and (iv), Articles described in USML Category
(a)(23)(iii), (d)(3), (i), and V(a)(13)(iii) or (iv),
(j). (a)(23)(iii), or (d)(3); articles,
other than propellants, described
in USML Category V(i); and directly
related technical data and defense
services.
VI(e), (f)(5), and (g); and Articles described in USML Category
XX(b)(1), (c), and (d). VI(e) or (f)(5), or XX(b)(1);
articles specially designed for
articles described in USML Category
XX(b)(1); and directly related
technical data and defense
services.
VIII(a)(2), (h)(1), and (i)....... The F-22 aircraft and articles
specially designed for the F-22,
other than those also used in
aircraft other than the F-22; and
directly related technical data and
defense services.
X(a)(7)(ii), (d)(2) and (3), and Articles described in USML Category
(e). X(a)(7)(ii); articles specially
designed therefor; and directly
related technical data and defense
services.
[[Page 67292]]
XI(a)(1)(i) and (ii), and (d)..... Articles described in USML Category
XI(a)(1)(i) or (ii); and directly
related technical data and defense
services.
XI(a)(2),(c)(1) through (3), and Classified articles described in
(d). USML Category XI(a)(2), other than
underwater acoustic decoy
countermeasures; classified
articles specially designed
therefor; and classified, directly
related technical data and defense
services.
XI(a)(3)(xviii),(c)(1) through Classified articles described in
(3), and (d). USML Category XI(a)(3)(xviii);
classified articles specially
designed therefor; and classified,
directly related technical data and
defense services.
XI(a)(4)(i),(c)(1) through (3), Classified articles described in
and (d). USML Category XI(a)(4)(i);
classified articles specially
designed therefor; and classified,
directly related technical data and
defense services.
XI(a)(4)(iii),(c)(1) through (3), Classified countermeasure and
and (d). counter-countermeasure equipment
described in USML Category
XI(a)(4)(iii); classified articles
specially designed therefor; and
classified, directly related
technical data and defense
services.
XI(a)(5)(iii),(c)(1) through (3) Classified articles described in
and (18), and (d). USML Category XI(a)(5)(iii);
classified articles specially
designed therefor; and classified,
directly related technical data and
defense services.
XI(b) and (d)..................... Classified articles described in
USML Category XI(b); and
classified, directly related
technical data and defense
services.
XI(c) and (d)..................... (1) Articles described in USML
Category XI(c) or (d) specially
designed for articles described in
USML Category XI(a)(1)(i) or (ii);
and directly related technical data
and defense services.
(2) Classified articles described in
USML Category XI(c) or (d) that
implement countermeasures or
counter-countermeasures for defense
articles described in USML Category
XI(a); and classified, directly
related technical data and defense
services.
(3) Classified articles described in
USML Category XI(c) specially
designed for articles described in
USML Category XIII(b); and
classified, directly related
technical data and defense
services.
XIII(b) and (l)................... Classified articles described in
USML Category XIII(b); and
classified, directly related
technical data and defense
services.
XIII(d)(2) and (l)................ Articles described in USML Category
XIII(d)(2); and directly related
technical data and defense
services.
XIV(a), (b), (c)(5), (f)(1), (i), Articles described in USML Category
and (m). XIV(a), (b), (c)(5), (f)(1), or
(i); and directly related technical
data and defense services.
XV(a), (e), and (f)............... Classified articles described in
USML Category XV(a) or (e); and
classified, directly related
technical data and defense
services.
XVI............................... Articles described in USML Category
XVI; and directly related technical
data and defense services.
XVIII............................. Classified articles described in
USML Category XVIII specially
designed for counter-space
operations; and classified,
directly related technical data and
defense services.
XIX(e), (f)(1), (2), (7), and (1) Classified articles described in
(12), and (g). USML Category XIX(e), (f)(1), or
(f)(2), not already integrated into
a complete engine; and directly
related technical data and defense
services.
(2) Classified articles described in
USML Category XIX(f)(7) or (12) for
excluded articles described in USML
Category XIX(f)(1) or (2); and
directly related technical data and
defense services.
XX(b)(2), (c), and (d)............ Articles described in USML Category
XX(b)(2); articles specially
designed therefor; and directly
related technical data and defense
services.
XX(d)............................. Design methodology, engineering
analysis, and manufacturing know-
how (see Sec. 120.43 of this
subchapter) directly related to:
--crewed vessels described in USML
Category XX(a); or
--articles described in USML
Category XX(b) or (c) that are used
only in:
[cir] crewed vessels,
[cir] classified payloads, or
[cir] classified Uncrewed Underwater
Vehicle (UUV) signature reduction
techniques.
XXI............................... Commodities, software, technical
data, and defense services, unless
specifically designated as eligible
for the exemption provided at Sec.
126.7 in State's written Category
XXI determination.
------------------------------------------------------------------------
Bonnie D. Jenkins,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2024-18043 Filed 8-16-24; 11:15 am]
BILLING CODE 4710-25-P