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Department of State Directorate of Defense Trade Controls

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Title: Department of State Directorate of Defense Trade Controls


1
Department of StateDirectorate of Defense Trade
Controls
  • Mal Zerden

2
Objectives
  • Explain role of Dept. of State and DDTC in
    regulating exports
  • Review legislation and regulations
  • Understand what the USML covers
  • Explain purpose of controls and country policies

3
Objectives
  • Explain the Commodity Jurisdiction
  • process
  • Explain different types of licenses
  • Define terminology
  • Review some exemptions
  • Understand Compliance and Penalties

4
Foreign Policy Objectives
  • Support allies in mutual foreign policy and
    national security goals
  • Promote interoperability with allies
  • Keep defense technology out of the hands of
    adversaries

5
Agency Roles
  • State Department
  • Commerce Department
  • Homeland Security (CBP/ICE)
  • Justice Department (ATF)
  • Department of Defense
  • DTSA, Armed Services, DSS

6
Directorate of Defense Trade Controls (DDTC)
  • Our Mission
  • Advance U.S. national security and foreign
    policy through licensing of direct commercial
    sales in defense articles and the development and
    enforcement of defense trade export control laws,
    regulations and policies.

7
Laws Regulations
  • Arms Export Control Act (AECA)
  • International Traffic in Arms Regulations (ITAR)
  • 22 CFR Parts 120-130

8
Arms Export Control Act (AECA)
  • Controls Exports/Imports of Defense Articles
    Services
  • Establishes Munitions List
  • Mandates Registration of Manufacturers and
    Exporters
  • Mandates Registration/Licensing of Brokers

9
Arms Export Control Act (AECA)
  • Broad Authority of the Directorate to Approve,
    Deny, Suspend, Revoke and Halt Shipments from
    U.S. Ports
  • Congressional Oversight 36(c), 36(d) and 36(f)
  • End Use and Retransfer Assurances

10
Arms Export Control Act (AECA)
  • Require Monitoring/Reporting Fees, Contributions,
    and Commissions
  • Confirm Bona Fides of End Use and Users
  • Establishes Fines and Penalties
  • Foundation of Regulatory Process


11
International Traffic in Arms Regulations (ITAR)
  • 22 CFR Part 120 - 130
  • Implements AECA
  • Regulations for export of USML articles
  • Contains the USML - designates defense
    articles/services subject to Department of State
    export jurisdiction
  • Compliance and Enforcement - Violations
    Penalties

12
Delegation of Authority
  • President of the United States
  • Secretary of State
  • Undersecretary for Arms Control and International
    Security
  • Assistant Secretary for Political Military
    Affairs
  • Deputy Assistant Secretary for Defense Trade
    Controls
  • Managing Director of Defense Trade Controls

13
NSPD-56 Defense Trade Reform
  • Signed by the President on Jan 22, 2008
  • Directed the most far reaching reforms to the
    defense trade process in 16 years
  • Mandates specific process and resource
    requirements to support an export control system
    that is predictable, efficient and transparent.

14
NSPD-56 Defense Trade Reform
  • DDTC should be fully resourced to perform its
    mission
  • DDTC should be 75 self-funded
  • Electronic licensing system to accommodate
    additional types of export cases
  • Improve interagency jurisdiction decisions
  • Cases to be processed within 60 days

15
NSPD-56 Defense Trade Reform
  • Per NSPD-56, no license can take more than 60
    days unless
  • Congressional notification is required
  • A waiver is required (Presidential or UNSCR)
  • Assurances are required from the foreign
    government
  • Verification of the end user is necessary
  • DoD has not completed its review

16
License Review Statistics
  • Over 82,000 cases received in 2008
  • Approximately 5 increase last year
  • Approximately 50 officers in licensing office
    plus administrative staff

17
Improvement Metrics
  • OEF/OIF 80 faster
  • Open Cases 66 reduction in pending
  • Overall Case Processing 55 faster
  • RWA Rate 52 reduction
  • (all occurred while the number of cases increased
    by 5)

18
US Munitions List
19
U.S. Munitions List - 121
  • Designates articles, services, and related
    technical data as defense articles and defense
    services subject to Department of State export
    approval
  • Items preceded by an asterisk are designated as
    significant military equipment (SME)

20
U.S. Munitions List - 121.1
  • I Firearms
  • II Guns and Armament (over .50 cal)
  • III Ammunition/Ordnance
  • IV Launch Vehicles, Guided Missiles, Rockets,
    Torpedoes, Bombs, Mines
  • V Explosives and Energetic Materials,
    Propellants, Incendiary Agents

21
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22
Commodity Jurisdiction (CJ)
  • Purpose of CJ
  • Policy criteria
  • Process

23
Commodity Jurisdiction 120.4
  • Purpose
  • To make a determination as to whether an article
    is considered to be a defense article covered by
    the USML

24
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25
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26
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27
Designating/Determining Defense Articles - 120.3
  • Policy criteria
  • specifically designed or modified for military
    application
  • does not have predominant civil application
  • does not have performance equivalent to an
    article used for civil application

28
Designating/Determining Defense Articles - 120.3
  • Policy criteria
  • specifically designed, developed, configured,
    adapted, or modified for military applicationAND
    HAS
  • significant military or intelligence
    applicability such that ITAR control is necessary

29
Commodity Jurisdiction
  • Process
  • Registration is not required prior to submission
    of a CJ
  • Request submitted by letter
  • Request reviewed by CJ officer
  • Case staffed to DOC and DOD
  • Replies received and analyzed by CJ officer

30
Commodity Jurisdiction
  • If disagreement CJ officer reconciles positions
    or if he cant
  • Escalation of decision making
  • Decision made
  • Determination reply letter to requestor

31
Registration - 122.1
  • Any person who engages in the U.S. in the
    business of either manufacturing or exporting
    defense articles or furnishing defense services
    is required to register with the Directorate of
    Defense Trade Controls
  • Manufacturers who do not engage in exporting must
    nevertheless register

32
Definitions
  • Export 120.17
  • Defense Article 120.6
  • Significant Military Equipment 120.7
  • Technical Data 120.10
  • Defense Service 120.9

33
Purpose of Controls
  • Foreign Policy
  • National Security
  • Human Rights
  • Regional Stability
  • Proliferation

34
CountryLicensingPolicies
35
Prohibited Destinations126.1
  • U.S. arms embargo
  • U.N. arms embargo
  • countries supporting international
  • terrorism
  • policy of denial

36
DDTC ORGANIZATION
Deputy Assistant Secretary Directorate of Defense
Trade Controls
Managing Director Directorate of Defense Trade
Controls
Office of Defense Trade Controls Licensing
(PM/DTCL)
Office of Defense Trade Controls Compliance
(PM/DTCC)
Office of Defense Trade Controls Policy (PM/DTCP)
37
Office of Defense Trade Controls Licensing
Military Vehicle Naval Vessel Division
Aircraft Division
Electronic Systems Division
Space Missile Division
Emerging Technologies
Firearms Team
38
Application Process
39
Application Process
40
Types of State Dept. Licenses
  • DSP-5
  • DSP-61
  • DSP-73
  • DSP-85
  • Permanent Export
  • Temporary Import
  • Temporary Export
  • Classified Exports/Imports

41
Other State Dept. Approvals
  • DSP-119 Amendment to License
  • GC General Correspondence
  • Offshore Procurement
  • Agreements
  • Technical Assistance
  • Manufacturing License
  • Distribution

42
DSP-5 Permanent Export
  • Unclassified permanent export of defense articles
  • unclassified export of technical data - 125

43
Documentation Requirements
  • Purchase order
  • Letter of intent
  • Other appropriate documentation (e.g. signed
    contract)

44
Required Information
  • specific article
  • quantity
  • value
  • ultimate end-user
  • end-use

45
Aircraft Programs
  • A400M
  • Eurofighter Typhoon
  • Panavia Tornado
  • JAS Gripen
  • NH-90 Helicopter
  • EH-101/AW-101 Helicopter
  • C27J Spartan
  • Eurocopter Tiger Helicopter

46
DSP-83 Non-transfer Use Certificate - 123.10
  • DSP-83 is required for
  • permanent export of significant military
    equipment ( in USML) - 123.10
  • export of all classified hardware data - 125.7
  • Must be executed by foreign consignee, foreign
    end-user, and applicant - 123.10

47
DSP-83 Non-transfer Use Certificate - 123.10
  • DDTC may also require foreign government official
    to sign DSP-83 when export is to non-governmental
    foreign end-user - 123.10
  • Stipulates that SME will not be reexported,
    resold outside of country, or to any other person
  • DDTC may require DSP-83 for any other defense
    article or service - 123.10(b)

48
General Correspondence
  • Advisory opinion
  • Reexport request
  • Reconsideration of proviso
  • ITAR interpretation question

49
Agreements
  • Technical Assistance
  • Manufacturing License
  • Distribution

50
Technical Assistance Agreement
  • US person furnishes assistance to foreign person
    in design, assembly, repair, maintenance,
    operation, etc. of a defense article
  • -- export of technical data

51
Manufacturing License Agreement
  • US person grants a foreign person manufacturing
    rights or know-how concerning defense articles
  • -- export of technical data

52
Distribution Agreement
  • Warehouse/Distribution abroad of defense
    articles exported from US
  • -- distribution to approved sales

    territory

53
DTRADE
  • DDTCs Automated Export Licensing System
  • - DSP 5, 61, 73
  • - amendments
  • - soon to include TA/MA/DA/GC
  • - cases reviewed by DDTCs computer
  • system

54
DTRADE
  • - rejected if submission isnt properly
  • completed
  • - automatically assigned by USML
  • Category
  • - assigned to Division Chief
  • - Division Chief reviews and assigns to
  • LOs

55
Application Submission
DTC Review
DOD DTSA Armed Services
State Regional Bureau Human Rights PM Offices
Other NASA Energy
DTC Final Action
Congressional Notification MTEC Assurance
Industry
56
Congressional Notification
  • 30 calendar days notice
  • (countries other than NATO members, AS, JA,
    NZ)
  • Manufacture abroad of SME
  • Major Defense Equipment 14 million or more
  • Defense articles/services 50 million or more
  • Firearms 1 million or more

57
Congressional Notification
  • 15 calendar days notice
  • (NATO, AS, JA, NZ)
  • Manufacture abroad of SME
  • Major Defense Equipment 25 million or more
  • Defense articles/services 100 million or more
  • Firearms 1 million or more

58
Reexport/Retransfers
59
Reexport/Retransfer
  • Definition 120.19
  • the transfer of defense articles or defense
    services to an end use, end user or destination
    not previously authorized


60
Reexport/Retransfer
  • All reexports/retransfers require prior
    approval from DDTC pursuant to the ITAR
  • - new end-use
  • - new end-user
  • - new destination

61
Reexport/Retransfer
  • submit written request to DDTC (submit through
    U.S. exporter if possible)
  • provide previous authorization
  • evidence (e.g. license )
  • describe defense article, quantity,
  • value

62
Reexport/Retransfer
  • describe new end-user
  • describe new end-use
  • provide any other details of
  • transaction

63
Provide Appropriate Documentation
  • Purchase Order or Signed Contract
  • DSP-83
  • Descriptive Literature
  • Part 126.13 Statement


64
Reexport/Retransfer
  • DDTC will provide written
  • reply

65
Reexport Exemption
  • ITAR 123.9(e) allows re-export/retransfer without
    prior written approval
  • US origin components
  • Incorporated into a foreign defense article
  • For government of NATO country, Australia or
    Japan


66
Reexport Exemption
  • Conditions
  • US origin components were previously authorized
    for export
  • US origin components are not
  • SME
  • MTCR items
  • Of a value triggering congressional notification


67
Reexport Exemption
  • Reporting Requirement
  • Written notification to DDTC within 30 days of
    reexport
  • Specify articles re-exported and recipient
    government


68
Temporary Import License Exemption - ITAR 123.4
  • US origin, unclassified hardware
  • Repair, overhaul, replacement, calibration,
    testing or reconditioning
  • Incorporation in to hardware already approved for
    export
  • Demonstration/marketing in US
  • Rejected for permanent import
  • Approved under Foreign Military Sales program

69
Temporary Import License Exemption - ITAR 123.4
  • U.S. company must declare import prior to import
  • Foreign company must notify U.S. company before
    sending the defense article to the U.S.

70
Reminder
  • Reexports/retransfers require prior approval
  • Approval will be a letter from DDTC (unless the
    exemption applies)

71
Compliance Enforcement
72
Office of Defense Trade Controls Compliance
  • Registration
  • Watchlist
  • End-use checks
  • Audits of U.S. companies

73
Office of Defense Trade Controls Compliance
  • Support Licensing Office with
  • intelligence
  • Liaison with Customs (ICE) FBI
  • Work with US attorneys on court
  • cases involving violations of AECA

74
Responsibilities
  • Licensees are responsible for acts of their
    employees, agents, and all authorized persons to
    whom possession of licenses and/or licensed
    articles have been entrusted regarding use,
    operation, possession, transportation, and
    handling

75
Violations
  • Unlawful to import/export or to attempt to
    import/export any defense articles / technical
    data or furnish any defense service without a
    license or other approval from the US Dept. of
    State
  • Unlawful to violate any of the terms and
    conditions of the ITAR

76
Violations
  • Unlawful to make a false statement or
  • misrepresent on export/import
  • documentation
  • Purchase order
  • Foreign import certificate
  • Bill of lading
  • Nontransfer and use certificate

77
Penalties
  • Any person who willfully violates a provision of
    the ITAR may be subject to fine, imprisonment, or
    both
  • Person and company may be prohibited from
    participating directly or indirectly in the
    export of defense articles, technical data, or
    services

78
Penalties
  • Criminal penalty
  • each violation a fine of up to 1,000,000, or
    imprisonment up to 10 years, or both
  • Civil penalty
  • each violation a fine of not more than 500,000

79
Voluntary Disclosure - 127.12
  • Strongly encouraged if company discovers a
    violation
  • Could be considered a mitigating factor in
    determining penalties
  • Must be made prior to USG awareness and inquiry
    into the activity

80
Contact Information
  • DDTC Web Site
  • - pmddtc.state.gov
  • Response Team
  • - telephone
  • 202-663-1282
  • - email
  • DDTCResponseteam_at_state.gov

81
Summary
  • Understand export control regulations
  • Provide U.S. party and/or USG with all pertinent
    information
  • Comply with export control laws/policies/
  • procedures
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