Archive for the ‘DDTC’ Category

DDTC Corrects July 1 Category XI Amendments

Wednesday, February 4th, 2015 by Brooke Driver

By: Brooke Driver

In December, the State Department released corrections to its July 1 revisions of the USML Category XI (Military Electronics). The changes are minor and meant to clarify the original rule and included revisions of certain text, conforming updates to Supplement No. 1 to part 126 and a few alterations to section 126.6. The section has been altered to remove subparagraphs (c)(4) and (c)(7)(iv) and revise subparagraph (c)(6)(ii) to replace the obsolete term “Shippers Export Declaration” with “Electronic Export Information.”

State Department Upgrades DSP Forms and Common Schema to Accommodate Changes to Categories VIII, XI, XV and XIX of the USML

Wednesday, February 4th, 2015 by Brooke Driver


Industry Notice: In support of Federal Register Notices 79 FR 37536 and 79 FR 66608 , DTrade DSP forms (i.e., DSP-5, -61, and -73), DSP-85 (a fillable PDF form), and the Common Schema have been upgraded to accommodate the additions and revisions to USML Categories VIII, XI, XV and XIX. Beginning December 30, 2014, DTrade users must use version 8.5 for the DSP-5 and -61, version 8.6 for the DSP-73, version 3.0 for the DSP-85, and version 7.4 for the Common Schema to submit license applications. Earlier versions of these forms and schema will automatically be rejected by the system beginning on December 30, 2014. To access the new DTrade forms and Common Schema, go To access the new DSP-85, go to

State Department Amends ITAR to Allow Certain Defense Exports to Vietnam

Tuesday, December 30th, 2014 by Brooke Driver

By: Brooke Driver

Effective November 10, 2014, DDTC has revised the International Traffic in Arms Regulations to allow for case-by-case exports of lethal defense articles and services to Vietnam when in support of maritime security and domain awareness. The text of 22 CFR Part 126 has been revised accordingly:   (l) Vietnam. It is the policy of the United States to deny licenses or other approvals for exports or imports of defense articles and defense services destined for or originating in Vietnam, except that a license or other approval may be issued, on a case-by-case basis, for:

(l) Vietnam. It is the policy of the United States to deny licenses or other approvals for exports or imports of defense articles and defense services destined for or originating in Vietnam, except that a license or other approval may be issued, on a case-by-case basis, for:

(1) Lethal defense articles and defense services to enhance maritime security capabilities and domain awareness;

(2) Non-lethal defense articles and defense services; or,

(3) Non-lethal, safety-of-use defense articles (e.g., cartridge actuated devices, propellant actuated devices and technical manuals for military aircraft for purposes of enhancing the safety of the aircraft crew) for lethal end-items.

Note to paragraph (l). For non-lethal defense end-items, no distinction will be made between Vietnam’s existing and new inventory.

DDTC Waives Requirement for CBP to Decrement DSP-73 for Some Government Furnished Equipment

Tuesday, December 30th, 2014 by Brooke Driver

By: John Black

DDTC announced on its website that in many cases it is waiving the requirement for exporters to present DSP-73 temporary export licenses to U.S. Customs and Border Protection (CBP) to record (“decrement”) the export when “Government Furnished Equipment” is being exported for use by U.S. companies to equip personnel with certain defense articles for overseas deployment to support U.S. Government missions. This should facilitate export clearance, and should be particularly helpful for travelers carrying defense articles, because they do not have to go find a CBP officer, who typically are not close to the airline ticket counter, to decrement the DSP-73.

DDTC created specific procedures that exporters must use to take advantage of this waiver. One key aspect of the new procedure is that the application for such DSP-73s must include a specified cover letter, a copy of the pertinent government contract and a copy of the DDTC website announcement. (You may ask why you need to send to DDTC a copy of its own website announcement. The answer is if you do not do it, you do not qualify for the special procedure. Go to your room!) In addition, travelers carrying defense articles should have a copy of the DSP-73 and a copy of “the hand receipt for the equipment.” After each deployment or redeployment the traveler has 15 days to upload a special report to D-Trade regarding the use of the DSP-73.

Here is the DDTC Notice (in case it is dropped from the DDTC website and neither you nor DDTC has a copy to support your license application):

Government Furnished Equipment (GFE) For Use by Contractors:

Pursuant to §126.3 of the ITAR and only for the export of Government Furnished Equipment hand carried out of the United States for use in service of a U.S. government contract, the Deputy Assistant Secretary for Defense Trade Controls has waived the provision in §123.22(a)(2) which requires Customs and Border Protection (CBP) to decrement DSP-73 temporary export licenses under certain circumstances. This will serve as a temporary solution addressing the need for U.S. companies to equip personnel with certain defense articles when deploying overseas in support of U.S. government missions. DDTC has worked out this arrangement with CBP in order to ease the overseas transit of contract personnel to and from military facilities which do not have a regular CBP presence. Under this new policy, companies will be required to obtain a DSP-73 for all of the defense articles to be carried abroad by their personnel. CBP may review the documents as they see fit, but for DSP-73s issued under this policy CBP will not be required to decrement the license at the time of export or import. The license holder will need to account for exported equipment with regular updates to the license case in D-Trade. This policy will cover any defense articles approved under the DSP-73 and carried by the company personnel into or out of any U.S. Port of Entry.

Please remember that any export of defense articles not authorized on a license or claimed under an exemption with the required electronic filing with CBP is a violation of the ITAR and the reporting requirement in section 38(i) of the Arms Export Control Act (22 U.S.C. §2778(i)). In reviewing the scenarios for this policy, the §123.17(f) exemption did not allow for all of the equipment that was needed, and the §126.4 exemptions were not applicable to the majority of the transactions taking place.


 (1) Your company must be registered with DDTC in order to apply for a DSP-73 via DTrade and to use this procedure.

 (2) Your company should estimate your projected deployment needs and allow for more items than personnel to prevent situations that would make an export in a short notice situation impossible. The DSP-73 should overestimate your needs (within a reasonable amount) to allow for the missions to be completed and the personnel deployed.

 (3) Apply for a DSP-73 as normal with the following supporting documentation.

           a. A cover letter explaining that you are supporting a U.S. government contract that requires personnel to carry defense articles issued by the U.S. Government.

 b. A copy of your service contract.

 c. A copy of this web notice.

 (4) Once the DSP-73 is approved, please read and adhere to any provisos. At the time of export, ensure that the company personnel have a copy of the license under which the equipment issued to them will be exported, in addition to a copy of the hand receipt for the equipment. (Please remember that internet access may be limited and having paper copies to present to CBP if requested will be the most expeditious way to clear Customs).

 (5) Ensure that the defense articles to be exported by the company personnel are identified on your license. Equipment that is not subject to Department of State jurisdiction will not be approved for export under these licenses. Defense articles not identified on the DSP-73 will not be authorized by this policy and may require separate licensing or authorization.

 (6) After each deployment or re-deployment you must upload additional information (within 15 days) to the license case in D-Trade. This updated information must identify the date of transaction, equipment description, and number of items that have been exported or returned.

 (7) Ensure that prior to re-deployment, your personnel are in possession of their DSP-73 and their hand receipt. This will expedite the process upon return.

 (8) This policy in no way alleviates you from any other CBP regulations, documentation, or inspections requirements.

DDTC Amends USML Category XV

Tuesday, December 30th, 2014 by Brooke Driver

By: John Black

Effective November 10, 2014, DDTC published various changes to the ITAR to adjust its previous Export Control Reform list shift changes for USML Category XV.   Depending on how you count, the rule made 10 – 15 changes to Category XV.  The rule also revised Category XIII.

In addition, DDTC revised Supplement No. 1 to Part 126 which, among other things, identifies the items excluded from the ITAR exemptions for Canada, the UK, and Australia.  One of the revisions to Supp. 1 to 126 is Note 17 clarifying the availability of the exemptions for activities requiring Congressional Notification.

Please read the rule here:

IT Problems Slow DDTC Commodity Jurisdiction Responses

Wednesday, July 16th, 2014 by Brooke Driver

By: Brooke Driver

Even the government has to deal with IT problems, people. The State Department recently announced that those submitting Commodity Jurisdictions should be advised that, while the DDTC has not stopped accepting CJs for processing, there may be a delay in response due to “ongoing information technology assessments.” Here’s to hoping that “ongoing” doesn’t “go on” for long.

State Department Clarifies Recent Press Release Regarding Tokenization and Cloud Computing

Wednesday, July 16th, 2014 by Brooke Driver

By: Brooke Driver

The Department of State’s Directorate of Defense Trade Controls recently issued minor clarifications to the postings on the Perspecsys, Inc. website relating to an advisory opinion on the secure transfer of technical data via the internet. The advisory opinion is stated below:

“In accordance with [ITAR] § 125.4(b)(9), tokenization may be used to process controlled technical data using cloud computing applications without a license even if the cloud computing provider moved tokenized data to servers located outside the U.S., provided sufficient means are taken to ensure the technical data may only be received and used by U.S. persons who are employees of the U.S. government or are directly employed by a U.S. corporation and not by a foreign subsidiary throughout all phases of the transfer, including but not limited to transmission, storage, and receipt. Inclusions of transfers to foreign persons would require the appropriate authorization from the Directorate of Defense Trade Controls.”

“Additionally, in all cases the technical data must be sent by a U.S. person who is an employee of a U.S. corporation or a U.S. government agency. Transmission of classified information through this means if sent or taken outside of the United States must be accomplished in accordance with the requirements of the Department of Defense National Industrial Security Program Operating Manual.”

The DDTC claims that the advisory opinion is not intended to imply that “sufficient means” to accomplish the requisite assurance levels exist today technologically, nor that tokenization by itself could achieve that end. In addition, the DDTC insists that the advisory opinion states that the use of cloud computing applications (even through tokenization) is limited to receipt and use of unclassified technical data by U.S. entities; transfer to a foreign entity would require separate authorization.
Finally, the DDTC asks readers to remember that advisory opinions are released in response to individual submissions and particular to individual situations, and therefore should not be considered reliable guidance or precedence for the general audience.

Inadequate Compliance Procedures Net $20 Million Penalty for Esterline

Tuesday, May 6th, 2014 by Brooke Driver

By: Brooke Driver

After an extensive compliance review conducted by the DDTC, Esterline Technologies corporation has agreed to a $20 million dollar fine. Why such a hefty amount? The settlement addresses Esterline’s hundreds of apparent civil violations of the AECA and ITAR that took place over the course of many years. Due to a severely inadequate compliance program, Esterline and its affiliates apparently violated the AECA and ITAR by repeatedly executing unauthorized exports of defense articles, including technical data and defense services and unauthorized temporary imports of defense articles. The company also directly violated terms and conditions of licenses it did obtain—by exporting defense articles in higher quantities and values than approved amounts, for instance.

Alleged violations also include counts of incorrectly documented AES entries and failure to file completely. One would think that Esterline’s high number of violations indicates a conscious intent to evade US law; however, the DDTC determined that most of the violations were a result of ineffectual determination of jurisdiction over the company’s defense articles and technical data, negligence in regards to the administration of licenses and agreements and shoddy recordkeeping.

According to the terms of the settlement, Esterline will pay $10,000,000 over the course of a three year period, with the other half of the $20 settlement amount to be suspended and waived assuming that the company exhibits significant effort to improve its faulty compliance program, including performing two audits, hiring a Special Compliance Official, providing training for employees and building a successful export compliance program.

Due to Esterline’s cooperation with the Department’s investigation, disclosure of its violations and timely remedial actions, the DDTC has decided that debarment is not necessary at this time.

Esterline President & CEO Curtis Reusser said, “We accept responsibility for the actions leading to these penalties and we are cooperating with the Department of State to address the issues and strengthen our systems going forward.  This process has given us the opportunity to focus on making our entire compliance program better, and we’ve already independently begun the improvement process with more to come. …  Esterline has proactively invested more than $5 million to strengthen our compliance infrastructure over the past two years, including additions to staff, voluntary compliance audits, IT system enhancements, and employee training. Now, with the terms of this agreement, Esterline will further accelerate its improvements.  We will invest in skilled people, implement the right processes, and provide effective oversight to ensure best practices.”

US Implements Third Set of Export Control Reform List Shifts

Thursday, January 30th, 2014 by Brooke Driver

By: John Black

In the January 2, 2014 Federal Register the departments of Commerce and State published notices shifting export control jurisdiction over certain military items and technologies in the US Munitions List (USML) in the International Traffic in Arms Regulations (ITAR) to the Commerce Control List (CCL) in the Export Administration Regulations (EAR).  This is the third group of items that has undergone the shift from the USML to the CCL as part of the US Export Control Reform initiative.  The changes published on January 2, 2014 do not enter into force until July 1, 2014.


The Directorate of Defense Trade Controls revised the USML so that this list shift applies primarily to four categories in the USML.  Those categories and the highlights of the changes are:

Category IV,  Launch Vehicles, Missiles Rockets, Torpedoes, Bombs and Mines

DDTC clarified the scope of Category IV by enumerating the items controlled in paragraphs (a) and (b).  DDTC also shifted demolition blocks, blasting caps and military explosive excavating devices to the CCL in the EAR (for example, ECCN 0A604.b for military explosive excavating devices).  DDTC also moved ablative materials from paragraph (f) to Category XIII(d).

The new IV(h) controls specified systems, subsystems, components, parts, accessories, attachments and associated equipment.  IV(h) controls certain items using the “specially designed” approach and other items using an enumerated approach.  IV(h)(28) enumerates controls on pneumatic, hydraulic, mechanical, electro-optical or electromechanical flight control systems (including fly-by-wire systems) and attitude control equipment for rockets and missiles—interestingly, IV(h)(28) does not specify attitude control equipment for teenagers as such items are not known to exist.  If attitude control equipment for teenagers were developed, I would expect the US Government would apply a 0y521 control to it.

Category V: Explosives, Energetic Materials, Propellants, Incendiaries

A significant change here is that DDTC enumerated specific controlled items and replaced the former catch-all approach in Category V.  As a result certain spherical aluminum powder and hydrazine and its derivatives shift to the CCL.

Category IX: Military Training Equipment

DDTC’s objective in Category IX is to establish a bright line between the items the USML controls and the items the CCL controls.  The newly enumerated paragraph (a) identifies training equipment, including, for example, towed targets and models or mockups used for maintenance or ordinance disposal training.  The new paragraph (b) identifies simulators including system simulators that replicate the operation of an individual crew station, a mission systems or a weapon of a controlled end-item, and simulation software.

Category X: Personal Protective Equipment

DDTC’s objective in Category X is to establish a bright line between the items the USML controls and the items the CCL controls.  Protective shelters shifted from the USML to the EAR in ECCN 1A613.  Anti-gravity suits, pressure suits and atmosphere diving suits also shifted to the EAR.  Equipment for producing Category X items shifted to EAR ECCN 1B613.  Finally, DDTC clearly narrowed the scope of Category X controls on parts and components to focus on things such as ceramic or composite body armor plates, laser protective lenses and other items.

Category XVI:  Nuclear Weapons Materials

DDTC clarified that neither the ITAR nor Category XVI apply to most of the items described in Category XVI prior to this notice because those items and technologies are under the jurisdiction of the Nuclear Regulatory Commission or the Department of Energy.  This category will continue to control tools that model or simulate the environments generated by nuclear detonations.

In addition to the changes described for the individual categories above, DDTC, as it has done with past list shift rules, added a new paragraph (x) to each category, which will be used to identify CCL controlled items on DDTC license applications.

EAR/CCL Changes

The 31-page Commerce Department notice created many detailed, new ECCNs and revised existing ECCNs.  In addition, Commerce revised License Exception TMP in EAR 740.9(a)(11) and License Exception BAG in EAR 740.14(h) to authorize exports, reexports and transfers of personal protective equipment classified under 1A613.c or d. in a fashion similar to the existing ITAR exemption for exports of personal protective equipment.

These new and revised ECCNs require careful review, especially if you are involved in the areas shifted off the USML.  The following summary is not a substitute for analyzing the new EAR controls, but it may be a useful road map.

Commerce created new 600 series ECCNs to receive the items shifted off the USML.  New ECCNs 0A604, 0B604, 0D604, 0E604 9A604, 9B604, 9D604, 9E604 control items shifted off USML Categories IV and V, with the new ECCNs in Category 0 controlling the shifted explosives/propellant-type stuff and related items and the new ECCNs in Category 9 controlling the items related to missiles and launch vehicles. Commerce created ECCNs 0A614, 0B614, 0D614 and 0E614 to receive military training equipment and related items.  ECCN0A614.a controls equipment specially designed for military training that is not controlled by Category IX.  0A614.x controls specially designed parts and components in the standard 600 series fashion. Interestingly, there is no y. paragraph in 0A614.

Commerce revised existing ECCN 1A005 for body armor and added several new 1Axxx ECCNs to control devices to initiate charges, devices containing energetic materials, charges, and other armored and protective equipment.  Corresponding changes were made to ECCNs in sub-categories B, C, D, and E in Category 1.

Finally, Commerce made revisions and conforming changes to many existing ECCNs.


Action Items

Even though the rules do not enter into force until July 1, 2014, export compliance personnel should find time soon to take a look at the changes to the USML and CCL.  After an initial review, you may find that you will need to work with technical experts to make specific decisions as to how the changes impact the export control classifications of your products and technologies.  This is an important, and, in some cases, difficult task.  The bad news is that, based on my initial analysis, this export control list shift does not seem to offer the benefit of moving as many items into EAR No License Required (NLR) eligibility as was the case for past changes for aircraft, gas turbine engines, land vehicles, surface vessels and submersible vessels.

As with past reform changes, after you determine how this impacts  your classifications, you need to decide your strategy for using existing ITAR approvals, transitioning to EAR approvals, and determining what type of EAR approvals you will need.  In addition, if your EAR expertise is not at the level of your ITAR expertise, you need to increase your EAR knowledge.

July 1 will be here before you know it.

DDTC Updates Part 130 Guidelines

Thursday, January 30th, 2014 by Brooke Driver

By: Brooke Driver

The State Department has updated its written guidelines on its ITAR Part 130 rules for payment and reporting of political contributions, fees and commissions.  These guidelines are a hand reference guide that help exporters sort through the complex Part 130 rules.  Here is a quick look at the guidelines.

The revised Part 130 guidelines say that license applications for exports of defense services or articles valuing $500,000 or more to or for the use of foreign military forces must inform the DDTC as to whether they or their vendors have paid, offered or agreed to pay political contributions of $5,000 or more or fees and commissions of $100,000 or more. The applicant must obtain the same information from any party that provided the applicant with more than $500,000 worth of defense articles or services for the application.

In addition, the reporting requirement does not end with the submission of the application.  Applicants are required to provide supplementary reports detailing any related substantial political contributions ($2,500 or more) or fees and commissions ($50,000 or more) agreed upon or paid after the initial license is submitted (within 30 days, to be exact).

Part 130 reports must contain:

  • The total contract price of the sale to the foreign purchaser. Contract name and/or description of the export should be incorporated into the Subject header. Subject should also include agreement number, if applicable, and license number at a minimum.
  • The name, nationality, address and principal place of business of the applicant or supplier. Note, all four items must be provided. Additionally, if the name of the applicant/supplier’s employer differs from the above, then this information, as well as the employer’s title must be provided.
  • The name, nationality, address and principal place of business for each foreign purchaser, to include the ultimate end-user (to be identified as such). Again, if the name of the employer for any of these parties differs from the party itself, then this information, as well as the employer’s title must be provided.

Supplementary reports should contain:

  • The amount of each payment, offer, or payment agreed upon. These entries should reflect the individual transactions, and not total or aggregate figures.
  • The date or dates on which each reported amount was paid, or offered or agreed to be paid. This requirement applies to each entry made in response to the previous paragraph.
  • The recipient of each such amount paid, or intended recipient if not yet paid. Reference item (b)(2) below for additional requirements.
  • The person who paid, or offered or agreed to pay such amount.
  • The aggregate amounts of political contributions and of fees or commission.
  • With respect to each payment reported, state whether such payment was in cash or in kind. If in kind, it must include a description and valuation thereof. In the example matrix provided below, these data have been combined with the “Amount Paid or to be Paid” figure. Should a transaction be input as “paid in kind,” then the related description and valuation data should appear immediately following the entry.

With respect to each recipient, state its name, nationality, address and principal place of business, its employer and title, and its relationship, if any, to the applicant, supplier, or vendor, and to any foreign purchaser or end-user. For reasons of efficiency, these data may be merged with the response to (a)(4)(iii) above.