First ITAR Reorganization Rule Needs Additional Clarifications, Revisions, Industry Says
The State Department’s Directorate of Defense Trade Controls should make several additional changes and clarifications to its first rule that reorganized its defense trade regulations, two commenters told the agency. The agency should include clearer definitions for end-use and end-user, a trade group said. An aerospace company urged DDTC to clarify sections of the International Traffic in Arms Regulations that could have “unintended consequences.”
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The commenters were responding to an interim final rule released by DDTC in March, the first in a series of rules to consolidate definitions, guidance and authorities in the ITAR (see [Ref:2203220013). The rule created three new subparts outlining ITAR general information, general policies and processes, and definitions, a new structure that officials have said will improve the organization of the regulations.
In comments released last week, the National Customs Brokers & Forwarders Association of America said DDTC should add the terms “end-use” and “end-user” to the ITAR’s new subpart on definitions to “provide a clear understanding of the ITAR sections that use either or both terms.” Understanding how the agency defines those terms is “imperative to complying with the ITAR’s requirements,” NCBFAA said, noting both terms include slightly different language under the Foreign Trade Regulations and the Export Administration Regulations.
NCBFAA also said DDTC should specifically mention that DDTC’s registration requirements exempt certain freight forwarders and customs brokers. The association said the changes to the ITAR “currently include language relating to the registration requirement for those who engage in brokering activities,” but it doesn’t mention the exemption. “The NCBFAA requests that the exemptions available in § 129.2 and § 129.3 be expressly mentioned in § 120.13(b) to make clearer and more apparent the potentially applicable exemption from registration for freight forwarders and customs brokers,” the association said.
DDTC should also define its term for “unfavorable finding,” Raytheon Technologies said. The company said the ITAR’s section on end-use monitoring is “problematic because it does not define an ‘unfavorable finding,’ creating a scenario where a significant consequence (denial, revocation, suspension, or amendment of a license or approval) depends on an undefined circumstance.”
The agency also should address the “impact” of making the definitions for “development” and “production” applicable to the entire ITAR, Raytheon said. The company said those terms were previously defined in the ITAR “only in the context of the definition of ‘specially designed,’" but they now apply throughout the ITAR.
“Although RTX supports this change,” Raytheon said, “we believe it may have, or appear to have, unintended consequences elsewhere in the regulations due to the frequency with which ‘development,’ ‘production,’ and subordinate terms like ‘manufacture,’ appear throughout the ITAR.”
Raytheon specifically said these revised definitions appear to “reduce the scope” of technical data that is considered Significant Military Equipment. “RTX recommends DDTC clarify these downstream impacts prior to publication to ensure ITAR readers understand the operational impacts,” the company said.
Raytheon made several other recommendations, including that DDTC should add the terms “executables,” “source code,” and “object code” to its definition for “software.” While these terms are “already captured by the definition,” Raytheon said the change “is intended only for the purposes of eliminating confusion.”
Overall, Raytheon said the changes in the interim final rule make the ITAR “noticeably more accessible to readers.” But the company also asked DDTC to give companies time to adapt. The agency should “provide reasonable accommodation for pre-consolidation and restructuring citations” so that the “existing authorizations affected by the changes do not immediately require an update; rather updates can be made at the next major revision.”
Companies should also be able to continue submitting forms and other documents with old citations for at least six months after the rule’s September effective date, Raytheon said -- as long as the “intent” of the references is clear. “We respectfully note that future updates may carry significantly higher implementation costs for registered parties,” the company added, “and request DDTC work with industry wherever possible to mitigate such impacts.”