Archive for the ‘DDTC’ Category

Military Importers and Exporters Beware: State Department Modifies Sanctions against Rosoboronexport

Tuesday, January 19th, 2016 by Danielle McClellan

By: Danielle McClellan

It is the significance of the target, Rosoboronexport, that makes this a noteworthy development.   According to its own website:

The Joint Stock Company Rosoboronexport, part of the Russian Technologies State Corporation, is the sole Russian state intermediary agency responsible for import/export of the full range of defense and dual-use end products, technologies and services.

Rosoboronexport was set up by RF President’s Decree 1834 of 4 November 2000 as a federal state unitary enterprise tasked to implement the national policy in the area of military-technical cooperation between Russia and foreign countries. Since 1 July 2011 Rosoboronexport has been operating as an open joint stock company.
Rosoboronexport operates under the strict supervision of the Russian President, the Russian Government, and in full conformity with the UN arms control treaties and the relevant international agreements.
Only Rosoboronexport has the right to supply the world market with a full range of arms and military equipment manufactured by Russia’s defense industrial complex and approved to be exported. Rosoboronexport accounts for more than 85% of Russia’s arms exports.
Rosoboronexport is among the major operators in the world market for arms and military equipment. Rosoboronexport cooperates with more than 70 countries.

The official status of the exclusive state intermediary agency gives Rosoboronexport unique opportunities to expand long-term mutually beneficial cooperation with foreign partners, provide guaranteed state support of all export-import operations, and strengthen Russia’s leadership in the world arms market.

On September 2, 2015 the US Government  released the following notice: ‘No department or agency of the United States Government may procure or enter into any contract for the procurement of any goods, technology, or services from [Rosoboronexport (ROE) (Russia) and any successor, sub-unit, or subsidiary thereof], except to the extent that the Secretary of State otherwise may determine .  .  .  .’’

The Department of State has now released (November 19, 2015) the following modification to the September notice: “The United States Government has decided to modify the measure described above against ROE and any successor, sub-unit, or subsidiary thereof as follows. The measure described above shall not apply to subcontracts at any tier with ROE and any successor, sub-unit, or subsidiary thereof made on behalf of the United States Government for goods, technology, and services for the maintenance, repair, overhaul, or sustainment of Mi-17 helicopters for the purpose of providing assistance to the security forces of Afghanistan, as well as for the purpose of combating terrorism and violent extremism globally.”

This modification includes subcontracts for the purchase of spare parts, supplies, and related services for these purposes and can be applied retroactively as of the effective dates of the sanctions (they will remain in place for 2 years unless otherwise determined by the US Government).

This change does not apply to any other measures imposed pursuant to INKSNA.

Federal Register Notice:

Intelligence Analytics Software is on the USML…In Case You Read it Wrong

Tuesday, January 19th, 2016 by Danielle McClellan

By: Danielle McClellan
This notice, while it impacts few exporters, should be clear reminder that as DDTC starts the results of the wide ranging changing changes to the US Munitions List over the past few years, we are bound to see adjustments.   DDTC tends to call these changes to the USML something like clarifications of current policy, instead of changes to the USML.  Regardless of what they are called, exporters should be constantly on the lookout for clarifications or changes to various aspects of the USML and CCL changes made during Export Control Reform.

In this case, the State Department revised paragraph (b) of Category XI after determining that the current language may lead exporters to determine that certain intelligence analytics software is no longer controlled on the USML, when in fact it still is.

On July 1, 2014 DDTC published a final rule amending Category XI of the USML (effective December 30, 2014). This temporary revision clarifies that the scope of control is in existence prior to December 30, 2014 for USML paragraph (b) and directly related software in paragraph (d) remains in effect. This rule inserts the words, “analyze and produce information from” and by adding software description of items controlled.

On July 2, 2015 a final rule was published that temporarily modified Category XI(b) until December 29, 2015. This rule extends the July 2, 2015 modification to August 30, 2017 to allow DDTC more time to consider the controls in Category XI(b).

Federal Register:

“Living in a Licensing Wonderland,” DDTC Posts License Process Times for November 2015

Tuesday, January 19th, 2016 by Danielle McClellan

DDTC Source (lyrics by John Black)
Licensing officers sing, are you listening?
In the cue, licenses glistening!
A button to press, it’s licensing success!
Living in a licensing wonderland!

In order to provide greater transparency and predictability for US defense firms in planning munitions license submissions, the Directorate of Defense Trade Controls will provides monthly update of the Directorate’s processing times. The timelines are expressed in averages across all case activity. For electronic cases, the average is based on the date the case was signed by the applicant until the date of final action. For hardcopy cases, the processing times are determined by the date the case entered the Directorate until the time the case is signed out of the Directorate. Processing numbers include all case types except Commodity Jurisdictions (CJs), Government Jurisdictions (GJs), and Electronic Rejections.

Month and Year  Jun ’15 Jul ’15 Aug ’15 Sep ’15 Oct ’15 Nov ’15
Cases Received 4,171 3,972 3,607 3,509 3,670 3,117
Cases Closed 4,102 4,020 3,777 3,570 3,861 3,185
Cases Open at
End of Month
3,336 3,307 3,175 3,134 2,968 2,928
Average Processing
(in Calendar Days)
24 27 26 28 26 28


A Little Help from DDTC… DSP5 Copies No Longer Required at Port of Export

Tuesday, January 19th, 2016 by Danielle McClellan

By: Danielle McClellan (lyrics by John Black)

What would Customs do, if I didn’t lodge my DSP?
Would it come out and arrest me?
Thanks to reform, I’m mainly EAR,
And now ITAR exports are lodging-free.
Yea, I’ll get by with a little help from DDTC.
I won’t fry if I submit a VSD.

One less bureaucratic steps for ITAR exports under licenses: No more lodging a copy of the license with Customs and Border Protection.

Although the Federal Register notice has yet to be released, CBP and DDTC issued a notice on December 21, 2015 that exporters are no longer required to lodge copies of DSP5 export licenses with that agency at the port of export.

The ACE/AES transition now allows CBP to see all license information so they no longer need a separate copy of the license at the port.

The actual regulation change will change ITAR 123.22 in the coming months.

DDTC Updates GC’s for Amendments and Adds Time Restrictions

Friday, December 4th, 2015 by Danielle McClellan

By: Danielle McClellan

DDTC has posted an updated guidance that will simplify the authorization matrix and spreadsheets and add a new time restriction for amending the General Correspondence (GC) for Amendments of Existing ITAR Authorizations. They will also clarify who may submit the GC and will take comments from industry after they implement the update. Contact Pete Walker at, 202-663-2806 with questions and comments.

§122.4 states that a registrant must notify DDTC of all material changes to their registration file. These include:

  • Restructuring,
  • Merger/acquisitions and/or
  • Registration code consolidations and combinations thereof

Per §122.4(c)(3), the licenses affected by these changes must be identified to DDTC via a spreadsheet/matrix attached to a General Correspondence letter. Any license not identified will be considered invalid. Per §122.4(c)(4), affected agreements require an executed amendment for a US entity name change within 60 days of notification. Any agreements not so amended will be considered invalid.

GC requests are applicable regardless of the number of authorizations involved and will cover approval of both DSP licenses and agreements. NEW CHANGE:

  • The GC request must be submitted within 60 days after DDTC approval or acknowledgment of the change.
  • DDTC will entertain name/address changes or registration code change amendments up to 180 days after the date of the approved GC
  • DDTC general policy will be to RWA amendments to GCs that fall outside of the 180 day time frame (they will review these on a case-by-case basis)
    • If the GC amendment is RWA (Return without Action), the applicant will have to individually replace any remaining licenses, and amend any agreements pursuant to 124.1(c)

Name or Registration Change:

When requesting a name or registration code change the following documentation must be included in with the submitted GC for the US entity:

  1. A letter identifying the requested changes;
  2. A §126.13 certification letter;
  3. A copy of the DTCC’s letter acknowledging the requested change(s), if issued, and;
  4. A matrix/spreadsheet containing the authorizations to be transferred.

Mergers & Acquisitions Changes:

For these, the GC must come from the acquiring party and if the GC does not come from the acquirer the GC will likely be RWA’d. The GC must contain the following:

  • A subject line clearly indicating that the GC will amend export authorizations as a result of a corporate restructuring, merger/acquisition and/or registration code consolidation or any combination thereof.
  • Concise description of the proposed transaction, in particular the
    • Acquirer and acquiree’s registrant codes (i.e., the “before and after” registration codes.)
  • The request must reference the submitted documentation and, if applicable, provide an attached DTCC approval letter.
  • The following statement MUST be included: “Modifications to the existing agreements submitted as part of this letter are specifically limited to a change to the registration code and/or to the U.S. entity name as a result of an approved merger or acquisition, and are signed by the new U.S. entity, the former U.S. licensor and the foreign licensee(s). Any other modifications will be requested through a proposed amendment in accordance with §124.1(c) or (d).” If no executed amendment is required (such as registration code change only) then this statement is not necessary.
  • The spreadsheet/matrix of authorizations to be transferred must include all existing and pending authorizations. Only those authorizations identified in the list will be amended. Any authorization not included will be considered invalid and a new authorization must be obtained. The spreadsheet/matrix must include the following information for each authorization:
  1. License or agreement number; (Note: §122.4(c)(3) states that registrants shall advise DDTC of all approvals on which unshipped balances will be shipped under the surviving registration code. However, registrants should also consider referencing exhausted licenses in order to retain access to such licenses in DTrade;)
  2. Disposition of authorization (Approved or Pending Approval);
  3. Date of Authorization Expiration;
  4. New registration number and/or company name (if applicable), and;
  5. State Y or N if an executed amendment is required (for agreements only.)

For expeditious review, the applicant should filter the spreadsheet as follows: registration #/new name/existing authorizations/pending authorizations.
Agreements Changes

DDTC will annotate affected agreements in its database.

Changing the Registration Code for Agreements:

  • Submit a GC request

US Entity Name Change for Agreements issued thru DTrade:

  • Upload a cover letter
  • Upload executed “minor amendment” (defined by §124.1(d)) into DTrade case file


US Entity Name Change for Paper Agreements:

  • The following documents must be sent via separate cover letters
    • Upload a cover letter citing GC case number in the body
    • Upload executed “minor amendment” (defined by §124.1(d)) into DTrade case file

Third Parties Affected by Change

A third-party is a US entity other than the license holder who has submitted the GC request. Third party licenses affected by a US entity name change does not require a DSP amendment for he affect DSP license. The DDTC issues web notice of name change serves as approval for the change. This notice should be attached to all affected licenses.

Agreements affected by US entity name changes will require the agreement holder to amend the agreement. The executed amendment will serve as a minor amendment (§124.1(d)). The agreement holder must upload the re-executed agreement to the relevant DTrade Case. Any applicants with a pending agreement or amendment must notify the respective DDTC Agreement or Licensing Officer of the upload of a revised executed agreement.
For Company Address Changes Only:

If the US registrant changes address (i.e. address change only, no change in company name or registration code) the following must be submitted:

  1. A letter identifying the requested changes to the company address;
  2. A §126.13 certification letter, and;
  3. A copy of the DTCC’s letter acknowledging the requested change(s), if issued.

DDTC will issue an acknowledgement letter to the US registrant regarding the address change and issue a web notice to alert the US applicants of the address change and provide guidance.

View DDTC’s full notice here:

DDTC Agrees that the Public Domain Prior Approval Requirement is Unreasonable

Thursday, November 5th, 2015 by Danielle McClellan

Source: Author. Reprinted by permission.)

By: Christopher B. Stagg, Esq.,, 202-765-2278; Stagg P.C..

On June 3, 2015, the Directorate of Defense Trade Controls issued a proposed rule to amend the public domain exclusion within ITAR § 120.11 to include a prior government approval requirement. In proposing this revision, DDTC made a curious statement in the preamble that prior government approval is not a new requirement and that the proposed revision is merely “a more explicit statement of the ITAR’s requirement that one must seek and receive a license or other authorization [to put information into the public domain].”  The federal court case where DDTC made these statements is Bernstein v. Department of State in DDTC’s opposition to the plaintiff’s motion for summary judgment at 25, 945 F. Supp. 1279 (N.D. Cal. 1996).  A copy of DDTC’s statements to the federal court is provided here.

This is a curious statement because DDTC has previously stated to the federal courts that reading ITAR § 120.11 to impose a prior approval requirement is “by far the most un-reasonable interpretation of the provision” and also “one that people of ordinary intelligence are least likely to assume is the case.” Accordingly, DDTC confirmed to the federal courts in 1996 that there is no prior approval requirement to put information into the public domain.

The federal court case where DDTC made these statements is Bernstein v. Department of State. A copy of DDTC’s statements to the federal court is provided here (click on image for a high-resolution version):

These are highly damaging statements by DDTC. Not only does DDTC’s statement unequivocally maintain that there is no prior approval requirement, but it also establishes that the position DDTC now takes is admittedly “by far the most un-reasonable interpretation of the provision” and “that people of ordinary intelligence are least likely to assume is the case.”

Since DDTC concedes that “people of ordinary intelligence” would not read the public domain exclusion to impose a prior approval requirement, this raises a due process claim under the Fifth Amendment that DDTC’s new interpretation is unconstitutionally vague. The legal standard for a due process vagueness claim is whether the law would give fair notice to persons of ordinary intelligence of the legal requirements. Also, in laws that concern speech covered by the First Amendment, the federal courts impose an even higher standard by requiring that the law has even greater clarity. Here, DDTC concedes that such persons would not have notice.

DDTC’s statements in the court case also confirms that it has a long-standing practice of not requiring prior government approval to put information into the public domain. In changing its practice, it is well-established law that a regulatory agency must (1) acknowledge it is departing from prior practice and (2) explain the reason for the departure. The failure by a regulatory agency to follow these requirements raises due process issues. For instance, without an agency following these procedural requirements in changing its position, courts could not know whether a regulatory agency acted erroneously.

Here, DDTC fails both requirements. Instead of recognizing it is departing from prior practice, DDTC simply asserts that this is not a new requirement. Yet, the regulatory history of the public domain exclusion and DDTC’s own admissions to the federal courts clearly evidences this is incorrect. Since DDTC failed to acknowledge it is departing from prior practice, it also failed to fulfill the second well-established requirement of explaining the reason for its departure.

To read the rest of this article (including exhibits), please click here.

Another Contract Bites the Dust

Thursday, November 5th, 2015 by Danielle McClellan

By: Danielle McClellan

The United States Naval Air Warfare Center (NAVAIR) Aircraft Division awarded Tactical Lighting Systems Inc. (Tactical) with a contract to develop landing lights. Tactical announced on May 19, 2015 that they planned to add Carmanah Technologies Corporation (Carmanah) of Victoria, BC as a subcontractor to the contract.

Fast forward about 6 months, after struggles with the International Traffic in Arms Regulations (ITAR), Tactical and Carmanah have mutually agreed to stop working together on the project. The decision was based on significant operational challenges related to the ITAR under the contract with NAVAIR. The two companies agreed that the ITAR placed such significant barriers for the two to work together on the project that they could not jointly work together and comply with the export controls required.

More information:

DTrade Upgraded DSP Forms—Never Mind

Friday, September 11th, 2015 by Danielle McClellan

On July 6, 2015 DDTC announced that the new DTrade forms posted on July 1 have problems and may not be used.  DDTC assures exporters it will fix the problems and make the new forms available in the “future.”

DDTC Looking for Comments Regarding Amendments to Parts 120, 122, 124, 125 & 126

Tuesday, July 14th, 2015 by Danielle McClellan

By: Danielle McClellan

The Department of State wants to clarify requirements for the licensing and registration of US person providing defense services while in the employ of foreign persons. They also want to clarify when these same persons may be covered under existing DDT C authorizations previously issued to their employers and affiliates, and when they are instead obligated to apply for their own license or agreement prior to engaging in the provisions of the defense service.

Comments regarding the following proposed rules will be accepted until July 27, 2015

FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-1282; email ATTN: Regulatory Change, U.S. Persons Employed by Foreign Persons.

The Department of State’s full plan can be accessed here.

For the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 120, 122, 124, 125 and 126 are proposed to be amended as follows:


1. The authority citation for part 120 continues to read as follows:     . . . .

2. Section 120.39 is amended by revising paragraph (a)(2) to read as follows:

Sec.  120.39  Regular employee.

(a) * * *

(2) An individual in a long term (i.e., 1 year or longer) contractual relationship with the company where the individual:

(i) Works at the company’s facilities;

(ii) Works under the company’s direction and control;

(iii) Works full time and exclusively for the company;

(iv) Executes nondisclosure certifications for the company; and

(v) Where the staffing agency that has seconded the individual (if applicable) has no role in the work the individual performs (other than providing that individual for that work) and does not have access to any controlled technology (other than where specifically authorized by a license).

3. Section 120.40 is amended by removing the Note and adding Note 1 and Note 2 to read as follows:

Sec.  120.40  Affiliate.

Note 1 to Sec.  120.40: For purposes of this section, “control” means having the authority or ability to establish or direct the policies or operations of the firm with respect to compliance with this subchapter. Control is rebuttably presumed to exist where there is ownership of 25 percent or more of the outstanding voting securities if no other person controls an equal or larger percentage.

Note 2 to Sec.  120.40: A registrant may establish a control relationship with another entity via written agreement such that the entity then becomes an affiliate in accordance with section. The registrant may include such an affiliate on its registration, in accordance with this subchapter and subject to DDTC’s disallowance. If an affiliate listed on a registration ceases to meet the requirements of this section, the registrant must immediately remove the affiliate from its registration and notify DDTC pursuant to Sec.  122.4(a) of this subchapter.

4. Section 120.43 is added to read as follows:

Sec.  120.43  Natural person.

Natural person means an individual human being, as distinguished from a corporation, business association, partnership, society, trust, or any other entity, organization or group.


5. The authority citation for part 122 continues to read as follows:…

6. Section 122.1 is amended by revising paragraph (a) and adding a note to paragraph (a) to read as follows:

Sec.  122.1  Registration requirements.

(a) Any person who engages in the United States in the business of manufacturing, exporting, or temporarily importing defense articles or furnishing defense services; and any U.S. person who engages in the business of furnishing defense services wherever located, is required to register with the Directorate of Defense Trade Controls under Sec. 122.2. For the purpose of this subchapter, engaging in such a business requires only one occasion of manufacturing or exporting or temporarily importing a defense article or furnishing a defense service. A manufacturer who does not engage in exporting must nevertheless register. (See part 129 of this subchapter for requirements for registration of persons who engage in brokering activities.)

Note to paragraph (a): Any natural person directly employed by a DDTC-registered person, or by a person listed on the registration as a subsidiary or affiliate of a DDTC-registered U.S. person, is deemed to be registered.

Sec.  122.2  [Amended]

7. Section 122.2(a) is amended by adding a comma between the words “registrant” and “or” in the third sentence.

8. Section 122.4 is amended by revising paragraph (a)(2)(v) to read as follows:

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

(a) * * *

(2) * * *

(v) The establishment, acquisition, or divestment of a U.S. or foreign subsidiary or other affiliate who is engaged in manufacturing defense articles, exporting defense articles or defense services, or the inability of an affiliate listed on the registration to continue meeting the requirements in Sec.  120.40 of this subchapter;



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

10. Section 124.1 is amended as follows:

a. Add two sentences at the end of paragraph (a).

b. Revise paragraph (b).

The addition and revision read as follows: Sec.  124.1  Manufacturing license agreements and technical assistance agreements.

(a) * * * The provision of defense services by a natural U.S. person may be authorized on a Form DSP-5. Natural U.S. persons employed as regular employees of a foreign subsidiary or affiliate listed on the registration of a U.S. person may receive authorization to provide defense services via an agreement between the registered U.S. person and the foreign subsidiary or affiliate, provided the registered U.S. person accepts responsibility for, and demonstrates ability to ensure, the natural U.S. person’s compliance with the provisions of this subchapter.

(b) Classified Articles. Copies of approved agreements involving the release of classified defense articles will be forwarded by the applicant to the Defense Security Service of the Department of Defense.

11. Section 124.17 is added to read as follows:

Sec.  124.17  Exemption for natural U.S. persons employed by foreign persons.

(a) A natural U.S. person employed by a foreign person may furnish defense services to and on behalf of the foreign person employer without a license if all of the following conditions are met:

(1) The employer is located within a NATO or EU country, Australia, Japan, New Zealand, and/or Switzerland, and the defense services are provided only in these countries;

(2) The end user(s) of the associated defense article(s) are located within NATO, EU, Australia, Japan, New Zealand, and/or Switzerland;

(3) No U.S.-origin defense articles, to include technical data, are transferred from the U.S. persons to the employer without separate authorization;

(4) No classified, SME, or MT technical data is transferred (even if separately authorized) in connection with the furnishing of defense services; and

(5) The U.S. person furnishing the defense services maintains records of such activities and complies with registration requirements in accordance with part 122 of this subchapter.

(b) [Reserved]


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

Sec.  125.4  [Amended]


13. Section 125.4 is amended by removing and reserving paragraphs (b)(2) and (b)(12).


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

15. Section 126.6 is amended by revising paragraph (c) introductory text and adding paragraph (c)(7) to read as follows:

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

(c) Foreign Military Sales Program. A license from the Directorate of Defense Trade Controls is not required if the classified or unclassified defense article or defense service to be transferred was sold, leased, or loaned by the Department of Defense to a foreign country or international organization under the Foreign Military Sales (FMS) Program of the Arms Export Control Act pursuant to a Letter of Offer and Acceptance (LOA) authorizing such transfer (permanent or temporary), which meets the criteria stated below:

(7) Natural U.S. persons employed by foreign persons may provide defense services to and on behalf of their employers without a license if all of the following conditions are met:

(i) The defense services are provided in support of an active FMS contract and are identified in an executed LOA;

(ii) No U.S.-origin defense articles are transferred from the U.S. person to the employer, without separate authorization;

(iii) The provision of defense services is not to a country identified in Sec.  126.1;

(iv) No classified or SME technical data is disclosed (even if separately authorized) in connection with the furnishing of defense services; and

(v) The U.S. person furnishing the defense services maintains records of such activities and complies with registration requirements in accordance with part 122 of this subchapter.

Free, Updated Searchable ITAR and CCL Available Now!

Tuesday, June 2nd, 2015 by Danielle McClellan

By: Jill Kincaid

ECTI strives to provide useful tools and resources for trade compliance professionals in addition to our live training seminars, webinars and e-Seminars.   For that reason, ECTI has created a searchable ITAR and a searchable CCL.  You might think DDTC and BIS already offer these—in which case you would be wrong.

ECTI’s newest tool is a FREE Searchable ITAR document.  The ITAR document includes all of Parts 120-130 in one single pdf file which is updated and current with all ITAR  changes on a monthly basis.  The document is downloadable in searchable PDF format with bookmarks so it is easy to find what you are looking for—in one convenient file!

Similarly, for some time now ECTI has been offering a CCL tool that includes all of CCL categories 0 – 9 in a single pdf file which is updated and current with all CCL changes on a monthly basis.    Both of these tools are FREE and available for download at any time on our website!

Searchable ITAR

Searchable CCL