State Department Final Rule on Mandatory AES Filing for USML Articles that Require Shippers Export Information, Etc. (Part IV)

The final rule also amended the ITAR to indicate that export information for USML technical data and defense services shall be reported electronically to the State Department's Directorate of Defense Trade Controls (DDTC), regardless of the type of ITAR authorization (e.g., license, agreement, or exemption). For such shipments exported using a U.S. port (e.g. hand-carried exports of technical data), a copy of that notification must be provided to CBP upon request.

This is Part IV of a multi-part series of summaries of this final rule and highlights the postponement (from January 18, 2004) of the requirement for electronic reporting to DDTC, as well as the final rule's regulatory text in 22 CFR Parts 123.22 (as it pertains to USML technical data and defense services and the return of DDTC licenses (for hardware, technical data, or defense services) to DDTC).

Electronic Reporting of Technical Data/Defense Services to DDTC Postponed

According to the DDTC Web site, the original target date of January 18, 2004 for the implementation of electronic reporting to DDTC for shipments of technical data and defense services has been postponed. DDTC states that the Federal Register should be consulted for future notices on this matter and that the DDTC Web site (www.pmdtc.org) should be consulted for updates. (Regulations concerning electronic DDTC reporting will still be covered in this series of BP summaries.)

USML defense article exports (including those transiting the U.S.). According to the State Department's final rule, any export, as defined in 22 CFR Subchapter M) of a defense article (i.e., hardware, technical data, or defense services) controlled by Subchapter M, including defense articles transiting the U.S., requires the electronic reporting of export information to the U.S. Customs and Border Protection (CBP) using AES (for hardware) or directly to DDTC (for technical data and defense services).

Licenses, etc. for permanent export of technical data and defense services. Licenses or other approvals for the permanent export of technical data and defense services shall be retained by the applicant who will send the export information directly to DDTC. (22 CFR 123.22(a))

DDTC reporting of export information for technical data and defense services. When an export is being made using a DDTC authorization (e.g., technical data license, agreement, or a technical data exemption provided in subchapter M), the DDTC registered exporter will retain the license or other approval and provide the export information electronically to DDTC as follows:

Technical data license. Prior to the permanent export of technical data licensed using a Form DSP-5, the applicant shall electronically provide export information using the system for direct electronic reporting to DDTC of export information and self validate the original of the license. When the initial export of all the technical data authorized on the license has been made, the license must be returned to DDTC. Exports of copies of the licensed technical data should be made in accordance with existing exemptions in subchapter M. However, should an exemption not apply, the applicant may request a new license. (22 CFR 123.22(b)(3)(i))

Manufacturing License and Technical Assistance Agreements (MLAs and TAAs). Prior to the initial export of any technical data and defense services authorized in an MLA or TAA, the U.S. MLA or TAA holder must electronically inform DDTC that exports have begun.

In accordance with subchapter M, all subsequent exports of technical data and services are not required to be filed electronically with DDTC except when the export is done using a U.S. port. Records of all subsequent exports of technical data shall be maintained by the exporter in accordance with subchapter M and shall be made immediately available to DDTC upon request.

Exports of technical data in furtherance of an MLA or TAA using a U.S. port shall be made in accordance with 22 CFR 125.4 and the procedures in 22 CFR 123.22(b)(3)(iii) - see below. (22 CFR 123.22(b)(3)(ii))

Technical data and defense service exemptions. In any instance when technical data is exported using an exemption in subchapter M (e.g., 22 CFR 125.4(b)(2), 125.4(b)(4), 126.5) from a U.S. port, the exporter is not required to report using AES, but must provide the export data electronically to DDTC. A copy of the electronic notification to DDTC must accompany the technical data shipment and be made available to U.S. Customs and Border Protection (CBP) upon request. (22 CFR 123.22(b)(3)(iii))

(The State Department notes that future changes to the electronic reporting procedure for technical data and defense service exemptions will be amended by publication of a rule in the Federal Register. Exporters are reminded to continue maintaining records of all export transactions, including exemption shipments, in accordance with subchapter M.)

Licenses issued by DDTC must be returned to DDTC. All licenses issued by DDTC (either for hardware, technical data, or defense services, as applicable) must be returned to DDTC in accordance with the following:

Licenses filed with CBP. CBP must return to DDTC any license when the total value or quantity authorized has been shipped or when the date of expiration is reached, whichever occurs first. (22 CFR 123.22(c)(1))

Licenses not filed with CBP. Any license that is not filed with CBP (e.g., oral or visual technical data releases or temporary import and export licenses retained in accordance with 22 CFR 123.22(a)(2)), must be returned by the applicant to DDTC no later than 60 days after the license has been expended (e.g., total value or quantity authorized has been shipped) or the date of expiration, whichever occurs first. (22 CFR 123.22(c)(2))

(See ITT's Online Archives or 10/28/03, 11/24/03, and 02/02/04 news, 03102805, 03112415, and 04020220, for Parts I, II, and III respectively.) See future issues of ITT for additional details on the regulatory text in 22 CFR 123.24, 124.3, 125.6, and 125.8.)

- written comments may be submitted

State Department contact - David Trimble (202) 663-2700

State Department final rule (FR Pub 10/27/03, Public Notice 4520) available at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-27039.pdf.