State Department Final Rule Makes Various Amendments to the ITAR

Definition of "brokering activities" clarified. The final rule amends 22 CFR 129.2 with respect to the definition of "brokering activities" in order to clarify that the "business of brokering activities'' includes participating in one or more actions as described in the definition. The State Department reasons that the potential harm to the security or foreign policy of the U.S. by even one unregulated brokering action warrants the need to subject such action or actions to regulation under this subchapter.

(For purposes of 22 CFR Part 129 (Registration and Licensing of Brokers), a "broker" means any person who acts as an agent for others in negotiating or arranging contracts, purchases, sales, or transfers of defense articles or defense services in return for a fee, commission, or other consideration.)

Foreign persons are not excluded from registering as brokers. The State Department is modifying 22 CFR 129.4 in order to add language to make it clear that the registration requirements for brokers are not meant to exclude foreign persons from registering as brokers. Where foreign persons cannot provide the same information that a U.S. person would provide, they still are required to submit information that is substantially similar in content to that which would be provided by a U.S. person.

Secretary of State can impose different conditions apart from those of the DoD. In this final rule, clarification has been made relating to the authority of the Secretary of State to impose different conditions on exports apart from those imposed by the Department of Defense (DoD).

Clarifications made to regulations concerning violations. 22 CFR 127.1(a) details activities that are unlawful under the regulations (e.g., certain violative exports and imports, attempts to export and import, conspiring to export, import or reexport, violation of licenses or approvals, etc.)

The final rule amends 22 CFR Part 127.1(a)(1) to clarify that the following activities are unlawful: reexporting or retransferring or attempting to reexport or retransfer from one foreign destination to another foreign destination by a U.S. Person of any defense article or technical data or by anyone of any U.S. origin defense article or technical data, or to furnish a defense service for which a license or written approval is required by the ITAR; engaging in the business of either manufacturing or exporting defense articles or furnishing defense services without complying with the registration requirements of the ITAR; and, engaging in the business of brokering activities without complying with the registration requirements of the ITAR or obtaining a license or written approval as required by the ITAR.

"Business of manufacturing or exporting defense articles or furnishing defense services" requires only one action. In addition, the State Department has clarified that the "business of manufacturing or exporting defense articles or furnishing defense services'' includes participating in one action and does not require more than one action (22 CFR 122.1(a) and 127.1(a)). According to the State Department, the potential harm to the security or foreign policy of the U.S. by even one unregulated action to facilitate the manufacture, export, or import of a defense article or defense service warrants the need to subject such actions to regulation under this subchapter.

No person may "knowingly" commit certain prohibited acts. 22 CFR 127.1(d) has been clarified by adding "knowingly" so that the paragraph now reads: "No person may knowingly or willfully cause, or aid, abet, counsel, demand, induce, procure or permit the commission of any act prohibited by, or the omission of any act prohibited by, or the omission of any act required by 22 USC 2778, 22 USC 2779, or any regulation, license, approval, or order issued thereunder.

Other

References to the "Office of Defense Trade Controls" have been amended to read "Directorate of Defense Trade Controls" in various paragraphs of 22 CFR Parts 120 -130;

"COCOM" has been amended to the "Wassenaar Arrangement" in 22 Parts 120 and 126.

References to the "Bureau of Politico-Military Affairs" have been amended to the "Bureau of Political-Military Affairs" in 22 Parts 120 and 127.

Certain references to the Treasury Department (Treasury) have been amended to the Attorney General, and other references to Treasury have been amended to the Department of Justice (DOJ), as appropriate, because the Bureau of Alcohol, Tobacco, and Firearms (ATF) was transferred to the DOJ and ATF's name was changed to the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

This final rule also amends the names of various government offices, bureaus, and departments. In addition, numerous typographical errors have been corrected in the U.S. Munitions List (USML), references to certain terms have been corrected, listed criminal statutes have been updated, references in the Arms Export Control Act have been updated, and other minor changes have been made in various sections to clarify the authority of particular offices and officials or to clarify the underlying purpose of the specific section. (See State Department's final rule for complete details.)

-written comments may be submitted at any time

State Department Contact - Mary Sweeney (202) 663-2865

State Department Final Rule (Public Notice 5345, FR Pub 04/21/06) available athttp://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-3500.pdf