State Dept Expands ITAR Export Exemption for Certain Technical Data
The State Department has issued a final rule, effective August 27, 2010, which amends the International Traffic in Arms Regulations so that the export license exemption provided by 22 CFR 125.4 allows the hand carrying or “taking” of technical data regardless of its media or format, by a U.S. person who is an employee of a U.S. corporation or a U.S. Government agency to a U.S. person employed by that U.S. corporation or to a U.S. Government agency outside the U.S.
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(22 CFR 125.4 provides for exemptions of general applicability from licenses for the export of technical data and classified defense articles, as long as certain criteria in 22 CFR 125.4(b)(9) and 125.4(b)(9)(i)-(iii) are met.)
Sources State That Change Had Been Implemented Early
According to sources at the State Department, the Directorate of Defense Trade Controls was treating the proposed rule as though it had been published and was in effect, prior to publication of this final rule.
ITAR Exemption Language as Amended
Specifically, 22 CFR 125.4(b)(9) is revised1 to state that:
“Technical data, including classified information, and regardless of media or format, sent or taken by a U.S. person who is an employee of a U.S. corporation or a U.S. Government agency to a U.S. person employed by that U.S. corporation or to a U.S. Government agency outside the United States.
This exemption is subject to the limitations of 22 CFR 125.1(b) and may be used only if:
(i) The technical data is to be used outside the United States solely by a U.S. person;
(ii) The U.S. person outside the United States is an employee of the U.S. Government or is directly employed by the U.S. corporation and not by a foreign subsidiary; and
(iii) The classified information is sent or taken outside the United States in accordance with the requirements of the Department of Defense National Industrial Security Program Operating Manual (unless such requirements are in direct conflict with guidance provided by the Directorate of Defense Trade Controls, in which case the latter guidance must be followed).”
(As stated in 22 CFR 125.4(a), this exemption does not apply to exports to proscribed destinations under 22 CFR 126.1.)
U.S. Company Required to Take Reasonable Precautions When Sending Data
One commenting party inquired whether a U.S. corporation (manufacturer) could use the exemption to send (orally or via e-mail) technical data to an employee of a U.S. Government agency outside the U.S., as well as what steps the U.S. manufacturer would take to ensure that 22 CFR 125.4(b)(9)(i)--(ii) are met. The Department states that U.S. corporation (in compliance with 22 CFR part 122) is able to use the exemption to send (orally or via e-mail) technical data to a U.S. person employed by a U.S. Government agency outside the U.S., so long as the U.S. company takes reasonable precautions to ensure that conditions in 22 CFR 125.4(b)(9)(i) through (ii) are met.
Use of Technical Data Must be Related to Employment
Two parties that had commented on the proposed rule recommended that it be explicit that the technical data could be for "personal use" by the U.S. person claiming the exemption. According to the StateDepartment, that recommendation was not adopted since it introduced uncertainty about uses beyond those related to employment.
DDTC is Reviewing Possibility of Exemption Reporting Through AES
One commenting party pointed out that when technical data is exported from a U.S. port using an exemption, the ITAR does not require the report of such an export using the Census Bureau's Automated Export System (AES); instead, the exporter is to provide electronic notification directly to DDTC.
The Department stated that for exports of technical data using exemptions, there is no system to electronically file directly to DDTC. DDTC is reviewing carefully the possibility of having all exports of technical data using an exemption be reported using AES.
1The State Department is amending the exemption at 22 CFR 125.4(b)(9) to add “regardless of media or format.” Also, the words “sent by a U.S. corporation to a U.S. person employed by that corporation overseas or to a U.S. Government agency” have been replaced by “sent or taken by a U.S. person who is an employee of a U.S. corporation or a U.S. Government agency to a U.S. person employed by that corporation or to a U.S. Government agency outside the U.S.” (Additionally, the word “overseas” is replaced by “outside the United States,” and 22 CFR 125.4(b)(9)(iii) is amended to add the words “or taken” after the word “sent.”)
The State Department’s proposed rule (FR Pub 11/24/09) is available here.
State Dept contact -- Charles Shotwell (202) 663-2792
(Public Notice 7135, FR Pub 08/27/10)