On February 2, 2022, the US Department of State (DOS) proposed several amendments to the International Traffic in Arms Regulations (ITAR), including a change to the scope of the deemed export rule. The DOS is now accepting comments on these proposed changes, outlined below, until April 4, 2022.
Under the proposal the definitions of export, found in 22 CFR 120.17, and reexport found in 22 CFR 120.19, would be revised to clarify that any release of technical data to a foreign person within the US is considered a release only to any countries in which that person currently holds citizenship or permanent residency. Under the current regulations, any release in the US of technical data to a foreign person represents an export to all countries in which the foreign person has formerly held or currently holds citizenship or permanent residency. The scenario presented above implicates what is known as the “deemed export rule.”
While under the proposed changes entities and individuals will still need utilize extreme care when storing and disseminating ITAR controlled “technical data,” as defined by 22 CFR 120.10, as any deemed export represents an export to all countries a person currently holds citizenship or permanent residency, any analysis of potential licensing requirements associated with the dissemination of ITAR controlled technical data would become noticeably simpler when involving individuals with varied citizenship and residency backgrounds. According to DOS, this change has been proposed to better align the regulations with DOS policy and to provide greater opportunities for foreign persons who are no longer citizens or permanent residents of certain countries to participate in ITAR regulated activities.
Under the proposal 22 CFR 120.17 and 22 CFR 120.19 would be amended as follows:
22 CFR 120.17 Export
(b) Any release in the United States of technical data to a foreign person is deemed to be an export to all countries in which the foreign person holds citizenship or permanent residency.
22 CFR 120.19 Reexport
(b) Any release outside the United States of technical data to a foreign person is deemed to be a reexport to all countries in which the foreign person holds citizenship or permanent residency.
DOS is also proposing to replace the term ‘‘national’’ with the ITAR-defined term ‘‘person’’ in 126.5(b), as it relates to the “Canadian exemption,” which in part allows for both the temporary and permanent export of unclassified defense articles and defense services identified on the U.S. Munitions List, in certain instances, when destined for end-use in Canada by a Canadian-registered person. The aim of this change appears to be increased consistency with how foreign persons are defined throughout the ITAR. Finally, DOS is proposing to revise the exemption for intra-company, intra-organization, and intra-governmental transfers to dual nationals or third-country nationals, and to amend administrative errors in the regulations relating to voluntary disclosures.
Interested parties may submit comments via the e-filing portal at www.regulations.gov under Docket DOS-2021-0031, or via email to DDTCPublicComments@state.gov with the subject line, “Regulatory Change: ITAR Sections 120, 126 and 127.”
If you have questions regarding any of these proposed changes or ITAR compliance in general do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.