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Office of Defense Trade Controls Policy Office of Defense Trade Controls Policy

Office of Defense Trade Controls Policy - PowerPoint Presentation

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Office of Defense Trade Controls Policy - PPT Presentation

Bureau of Political Military Affairs Implementation of the DualThird Country National Rule in the ITAR 2 Problems with the Old Rule Nationality or Place of Birth was criteria for access to ITAR defense articles amp technology ID: 496723

124 126 rule defense 126 124 defense rule country foreign dual agreement ddtc nationals required place prior diversion vetting

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Slide1

Office of Defense Trade Controls PolicyBureau of Political Military Affairs

Implementation of the Dual/Third Country National Rule in the ITAR Slide2

2Problems with the Old Rule

Nationality or Place of Birth was criteria for access to ITAR defense articles & technology

Equated citizens themselves to “proscribed” destinations

Absolute bar to citizens of §126.1(a) countries

Not a valid indicator of loyalty or trustworthiness

Overly broad criteria led to unintended results

Went beyond AECA requirementSlide3

3Risks of Diversion

The intent of the new rule is to create a policy for transfers to certain dual-third country nationals in a manner that would prevent diversions of defense articles to unauthorized end-users.

The rule recognizes the vested interests within companies, organizations, foreign governments to carefully screen employees.Slide4

4Risks of Diversion

Front companies

Some operate on behalf of governments

Some operate for private interests

Individual profiteers

Some specialize in certain destinations

Others are indiscriminate for ultimate destination(s) Slide5

Applies only to transfers to licensed end-users and consignees (and sub-licensees) -

§ 126.18 (a)

Limited to transfers within the scope of the license and within scope of employment -

§

126.18 (a)

Regular, full-time employees, & embedded contractors – see also

§

120.39 (a)

Either clearance or screening required -

§

126.18 (c) If screening option used, then NDA is required.

Dual/Third Country National Rule Slide6

6Substantive Contacts – §126.18 (c)

Government contacts

Business contacts

Allegiance

Proprietary interests

Foreign travel

Other contacts indicating a risk of diversionSlide7

Canadian Model

Exchange of Letters with Canada recognized the

Controlled Goods Program (CGP)

as an acceptable screening IAW 126.18(c)(2)

http://ssi-iss.tpsgc-pwgsc.gc.ca/dmc-cgd/bulletins/bulletin3-eng.htmlSlide8

8The New Rule

Ends the requirement for separate licensing for dual and third country nationals

Requires end-user employees have clearances or be screened for risk of diversion

Requires end-users have technology security programs

Slide9

9The New Rule does not

Force foreign end-users to layoff workers who are dual or third country nationals

Require foreign end-users to layoff an employee because of his/her place of birth

Automatically disqualify anyone because of family ties, travel, or other contacts with foreign nationals Slide10

SummaryNew rule moves us away from

mere nationality or place of birth

as criteria

not a good measure of trustworthiness

no real nexus to national security

New rule recognizes core concern as

risk of diversion

behavior/activities aimed at breach of security

Trusted community –

mutual security interests

share our best defense technologySlide11

Guidance for non-agreement authorizationsProcess for amending authorizationsRequired changes

Submission options

Process for DDTC vetting of individuals

Implementation trends

Implementing § 126.18Slide12

§ 126.18(a) applies to the transfer of defense articles exported under/within scope of:Approved Export License (DSPs)

Other Written Authorizations (WDAs, GCs)

License Exemptions

No change in current policy

No need to specifically request or identify the use of § 126.18

Non-Agreement

AuthorizationsSlide13

Agreements must be amended to include updated §124.8(5) prior to using exemption:

“(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 §§124.16 and 126.18, as specifically authorized in this agreement, or where prior written approval of the Department of State has been obtained

.”

First Required Change to

Utilize § 126.18Slide14

§ 124.7(4) requires the identification of all countries of transferNew required statement for delegation of DN/TCN vetting

“Transfers of defense articles, to include technical data, to dual nationals and/or third country nationals by foreign licensees (and its approved

sublicensees

– if applicable) must be conducted in accordance with the provisions of 22 CFR 124.8(5).”

Agreements must be amended to include this new language

prior to using exemption

:

Second Required Change to

Utilize §126.18Slide15

Amending to Utilize New Policy

Countries Restricted via Proviso

Currently Approved AgreementsSlide16

Amending to Utilize New PolicyAmendment will:

Modify § 124.7(4) to update required language

Modify § 124.8(5) to reflect new clause

Must be executed prior to implementation of new policy

Submission

As a minor amendment pursuant to § 124.1(d)

Uploaded to the latest DSP-5 vehicle

As part of the next major amendment pursuant to §124.1(c)

Currently Approved AgreementsSlide17

Countries Restricted via ProvisoIf your agreement has a proviso specifically removing a country for dual/third country nationals

You need a Proviso Reconsideration

Major amendment must be submitted

Provisos must be specifically requested for deletion via a proviso reconsideration

There is no process for the “blanket” deletion of provisos

Currently Approved AgreementsSlide18

§ 126.18(c)(2) affords the option for DDTC to make the determination on substantive contactsShould be requested in accordance with § 124.8(5) (“where prior written approval of the Department of State has been obtained”)Submitted by foreign licensee (employer)

Support Documentation

Full legal name of specific individual, date/place of birth, copy of passport, resume, and a detailed job description

Information concerning substantive contact concerns

Applicable to any future agreement

Copy of GC provided to applicant upon request

DDTC Vetting: General

Correspondence OptionSlide19

§ 126.18(c)(2) affords the option for DDTC to make the determination on substantive contactsShould be requested in accordance with § 124.8(5) (as specifically authorized in this agreement)Follow the current guidance

Support Documentation

Full legal name of specific individual, date/place of birth, copy of passport, resume, and a detailed job description

Information concerning substantive contact concerns

Identified in Block 18 by full legal name

Specific to that agreement only!

DDTC Vetting: §

124.8(5

) OptionSlide20

Difficult to judge use of the exemptionMany companies adding as a proactive measure

§ 126.18(c)(2) vetting requests

Very few submissions received

Those received have been for non-countries of concern

Agreements concerns:

New § 124.8(5) verbatim statement missing

NDAs not consistent

Old § 124.16 language

Implementation TrendsSlide21

References DDTC Response Team 202-663-1282

DDTC Website:

http://pmddtc.state.gov/