External factors to consider!
Do you know what is classified as Technical Data in ITAR § 120.10 and how it affects your defense article?
After some intensive days with basic ITAR, the course continued with an “Advanced ITAR Workshop”, analyzing the latest updates from Directorate of Defence Trade Controls (DDTC). The focus this day was on practical exercises and understanding best practices.
There are new USML clarifications to consider as “specially designed for a military end user”. A “military end user” means (specially designed is merely “achieving or exceeding the controlled performance”)
- the national armed services; army, navy, marines, air force and coast guard
- national guard and national police
- government intelligence or reconnaissance organizations or
- any person or entity who supports military end users
This is another example of “catch and release” by the US, so it is vital to clarify and understand exactly who one is supplying to, as there are no excuses for possible misconceptions. One can also state that it was developed for both military and non-military end users, however, do make sure that your documents can verify and prove this statement. Remember that most Commodity Jurisdiction (CJ) is in relation to “specifically designed” for and most of these cases are post export enumerated on the USML
There has been a harmonization and clarification of ITAR/EAR Tech Data Definitions or Technical Data in ITAR § 120.10, which is that information required for a defense article is
- Development: including design, modifications & integration design
- Production: including manufacture, assembly, & integration design
- Operation, Installation, Maintenance, Repair, Overhaul or Refurbishment
- Forms: blueprints, drawings, photos, plans, instructions or documentation
A consequence of this clarification for Printed Circuit, is that if you are a foreign (non-US) defence company or deliver a product determined as a defence article according to USML, then the Printed Circuit will be subject to ITAR regulation if you decide to produce in the US. The article will become an ITAR article as production is considered as an export of Technical expertise in relation to manufacturing and defence and USML. It is consequently important to consider this aspect when deciding your partners and compliance regulations and program for your article. If it is deemed as an ITAR article, you will have to report and get approval for all re-export/sales from DDTC before they occur.
When dealing with ITAR regulations it is important to consider partnering up with companies in countries according to ITAR § 120.31, “NATO” and TAR § 120.32, “Major non-Nato ally”. However, this is no instant approval of any supplier, you still need to ensure aspects as people vetting, cybersecurity, dual nationals, compliance programs, etc.
One must also consider ITAR § 120.37 “Foreign ownership and foreign control” as this states that foreign control is presumed to exist where foreign people owns 25 % or more and do not forget about ITAR § 120.4 “Affiliate” definition, as this can easily group people in a way that one is over the 25% threshold. Finally, do not forget about ITAR or DFARS prohibited sources. The recent news coverage of the F-35 case and the English manufacturer Exception PCB, which was bought by a Chinese company, was discussed in relation to these regulations. It will be interesting to see how DDTC address this matter F-35 – Exception PCB
As the week came to an end we found our self with approximately 2000 pages of material, regulations, and cases, which we had read, discussed or debated. We summarized the class in one sentence “hard, interesting and glad we came”, now the journey is at its end and we shall start the long trip back to Norway.
I wish all those who have read this blog and hopefully learned a thing or two, a great summer vacation with relaxation, great food, quantity family time and some great laughs :)
Vol.1 from ITAR training.
Vol.2 from ITAR training.