Courtesy Doug Jacobson of International Trade Law News here's his summary of this morning's deemed export breakout session:
Department of State Export Controls and Licensing, Ann Ganzer, Director of Office of Defense Trade Controls Policy
--Provided an overview of DDTC – The ITAR is an illustration of what is controlled. “We believe that we control things that have not been invented yet.”
--Export – Conversation, fax, tech data by e-mail. Many things that are exported are electrons only, such as the JSF which is being exported
--Licenses – Going electronic. Had a wake for Ellie Net on Friday. D-Trade licenses get processed first. First, look at applicant first. Exporting is a privilege not a right. Look at end-user and end-use. Look at foreign policy. What impact on country seeking equipment, etc. Look at human rights impact on other countries.
--DOD reviews 1/3 of applications. Staffed to other agencies, such as NASA. But DDTC makes final decision.
--Congressional notifications. When required, DDTC does not notify Congress when it is not in session. This impacts the licensing timetable.
--If approved, will issue with provisos. If not, will RWA or deny. Unlike BIS, at DDTC RWAs are not a good thing. Many licenses have technical flaws or carelessness that cause the application to rejected. Many of these problems are addressed by D-Trade.
--DDTC processed 70K applications in FY 2006.
--After about 15 minutes, Anne started taking questions from the audience.
-- Deemed exports under State – Long running joke between BIS and State. At State, it is an export, not a deemed export. DDTC looks at all citizenships held.
--Review of USML? Still working on it. Now looking at revising sections of ITAR, not entire category. Under “constant review” since 2000, but becoming more and more complex.
--Demilitarized Aircraft policy – not a broad brush policy. Need to see specifics of proposed transactions.
--License processing times – Taking from 2 days to 5 months by D-Trade. Could have been an electronic glitch, but would need to see specifics.
--How to get items decontrolled by DDTC? Come in and talk.
--DDTC Venezuela sanctions not in accordance with BIS. Working on revising ITAR, but should assume in section 126.1.
--Greg Suchan noted 10,000 case backlog will it ever get fixed? “always hopeful”. Like filling a bathtub with drain open. Have a few new people, but are new. Take time to train. Times are decreasing.
--Public domain technology – Can take public domain info and create defense article. Like Oklahoma City bonding. Can provide defense service even if items are not ITAR controlled.
--Punted brokering questions.
--Trying to improve outreach efforts – Staffing problems caused nearly zero programs last year. Trade between work and outreach. Working on it.
--Aircraft Parts – Does ITAR part ever lose its ITAR identity? Section 38(f) requires congressional notification to remove from USML. If aircraft part, needs to be removed from USML before migrating to commercial. Easier to use commercial components on military aircraft, rather than the reverse.
--Item on USML does not lose its character. Used QRS-11 as example. Three CJs held that QRS-11 was on USML. “Bomb in a suitcase is still a bomb, not a suitcase.” QRS-11 carve-out for stand-by instruments. Carve out for FPAs in night vision. Carve out for personal protection gear.
--Providing USML item to foreign person in US would require a license. Transfer of title can be an export.
--Best not to contact licensing officers, contact Response Team.
--Have to register with DDTC if you are engaged in defense services or are manufacturing defense articles. If you are selling toothbrushes to the Navy, no need to register.
--Electronic registration is being worked on, but time table is not set.
-UK and TAAs. No broader change of policy, but let DDTC know if there is a problem.
--Due diligence on buying and selling ITAR within US. Depends on case. Confirming registration is good. Depends on who you are selling to though.
--Voluntary disclosures – Concerned about companies that do not submit VSDs.
--Consistency of license approvals is an issue – DDTC is looking at this issue. End-users can change, though, requiring a fresh look. Concerned about consistency.
--No additional brochures publish on defense service, but will look at that.
--If you changed fit for military use, it is subject ITAR.
--Freight forwarders and export licenses – if FF can fulfill requirements of exporter under ITAR, they can apply for and obtain a license. However, if a FF can’t open the package then they can’t apply for a license.
--DFARS and export control policy change – Doesn’t think that DDTC will be issuing additional guidance.
--Whether to release licenses to a customer is the exporter’s decision.
--Example of an item that is first used for military, but not subject to ITAR. For example, an aircraft part that was first used by military while waiting for FAA certification.
--Can’t rely on Response Team guidance for legal purposes. Response Team is supposed to be a help to the exporting public, but can’t absolutely rely on it. Even if you contacted Response Team 27 times, it won’t absolve exporter of liability.
--Can exporter find out which agency provided provisos. Not specifically, but they can be figured out. Most come from DOD.
--If major reorganization of a registered company is pending, request a meeting.
--DDTC considers all citizenships when reviewing licenses. Thus, if person holds Chinese citizenship, prohibits exports of USML items to China and Chinese nationals.
--DDTC wants to get the word out. Has long-relationship with SIA, but interested in working with other organizations.
--10% in crease in CJs in 2006. Total of 364. Expect companies to do their own CJs, but consult with DDTC in gray areas or where you can’t figure it out. Working with groups to develop best practices in CJs.
--DDTC has been successful on keeping aircraft parts from Iran’s military.
--President Bush has only waived sanctions on China three time. Very rare. Examples included bomb disposal equipment and chemical weapons destructions equipment.
--Regarding military grade safety glass, some on USML and some on CCL. Armored Suburban may be on CCL, but would want to look at this issue closely.
