Details of DDTC's Dual/3rd Country National Transfer Policy Guidance, FAQs, Etc.
The Directorate of Defense Trade Controls has posted three new guidance documents related to its May 2011 final rule, effective August 15, 2011, that will exempt from approval requirements, under certain conditions, intra-company, intra-government, and intra-organization transfers of defense articles to dual or third-country national employees. Among other things, DDTC says that applicants may begin submitting TAAs and MLAs incorporating the new policy on August 1; however, DDTC will not start approving these agreements until August 15.
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(See ITT’s Online Archives or 05/16/11 news, 11051619, for BP summary of DDTC final rule amending 22 CFR Parts 124 and 126 on DN/TCN intra-company, intra-government, and intra-organization transfers. See ITT’s Online Archives or 07/18/11 news, 11071510, for BP reminder on the August 15, 2011 effective date of DDTC’s final rule.)
DDTC has posted (i) "Guidelines for Implementing New Dual National/Third-Country National Policy for Agreements;" (ii) Frequently Asked Questions; and (iii) "Implementation Considerations: Dual/Third National Rule." The following are highlights of each of these three documents.
Guidelines for Implementing New DN/TCN Policy for Agreements
The Dual National/Third-Country National (DN/TCN) final rule provides an option for foreign parties identified in an export agreement or license to vet their own DN and TCN employees concerning the risk of diversion of U.S. Munitions List defense articles/technology. Agreements, specifically technical assistance agreements (TAAs) and manufacturing license agreements (MLAs), have traditionally been the vehicle for identifying and vetting DN/TCNs through DDTC, and are the focus of these guidelines.
(DDTC notes that separate guidelines will be posted on the applicability of the DN/TCN final rule to other export licenses.)
Applicants may begin submitting agreements w/new policy on Aug 1. DDTC notes that while the effective date of its final rule is August 15, 2011, applicants may begin submitting agreements incorporating the new policy on August 1, 2011; however, DDTC will not start approving these agreements until August 15, 2011.
Options for vetting DN/TCNs. According to DDTC, with the final rule, there will be three options for vetting DNs/TCNs: Option 1 (Foreign vetting), Option 2 ( DDTC vetting), and Option 3 (Foreign party requests approval directly with DDTC via a General Correspondence letter).
DDTC’s guidelines provide details on how to exercise each of the three options listed above. According to DDTC, a single foreign party may choose to exercise multiple options under a single agreement. The guidelines provide a DC/TCN Option Decision Tree (a diagram of approving DC/TCNs via the various options).
Instructions for amending currently approved agreements, etc. The guidelines also provide instructions for:
- Amending currently approved agreements to use Option 1;
- Classified transfers;
- Country specific exception clauses for Australia, Canada, and the Netherlands;
- Contact labor and regular employee clarification; and
- Agreements pending approval.
Frequently Asked Questions
DDTC has also posted a list of answers to frequently asked questions regarding the new DN/TCN exemption in 22 CFR 126.18.
The FAQS are divided into two sections, General Questions and Agreement Specific Questions, and address topics such as (i) whether U.S. exporters have an obligation to verify that foreign companies have technology security/clearance plans in place, (ii) what level of security clearance is acceptable to meet the requirements of 22 CFR 126.18(c)(1), (iii) whether there is a preferred format for the technology security/clearance plan, (iv) whether a foreign party can choose to use 22 CFR 126.18 for an individual that qualified for 22 CFR 124.16, (v) etc.
Implementation Considerations
In addition, DDTC has posted a document on implementation considerations for the DN/TCN final rule. According to DDTC, consideration should be given to several matters to prevent diversion of ITAR-controlled defense articles, including technical data, to unauthorized end-users and end-uses, including an ITAR compliance program, employee training and education, employee screening, non-disclosure agreements (NDAs), etc.
In this document, DDTC also provides guidance on terms such as substantive contacts and bona-fide, full-time regular employee.
Sample questionnaire, NDA. The document also includes a sample employee questionnaire and a sample NDA.
Guidelines for Implementing New Policy for Agreements available here
FAQs available here
Implementation considerations available here