[Federal Register Volume 65, Number 141 (Friday, July 21, 2000)]
[Rules and Regulations]
[Pages 45282-45286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18530]
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DEPARTMENT OF STATE
Bureau of Political-Military Affairs
22 CFR Parts 124, 125 126
[Public Notice 3365]
Amendments to the International Traffic in Arms Regulation: NATO
Countries, Australia and Japan
AGENCY: Bureau of Political-Military Affairs, Department of State.
ACTION: Final rule.
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SUMMARY: This rule amends the International Traffic In Arms Regulations
to implement reforms announced by the Secretary of State at the NATO
Ministerial in Florence, Italy on May 24, 2000. The reforms of the U.S.
export controls system are available to NATO Allies, Japan and
Australia and are intended to streamline the U.S. defense export
control licensing process and forge closer industrial linkage between
the U.S. and allied defense suppliers. It is contemplated that it will
increase our mutual security by enhancing NATO member defense
capabilities, promoting interoperability with our allies and friends
and promoting trans-Atlantic defense industrial cooperation. Part 124
of the International Traffic In Arms Regulations is being amended to
permit U.S. companies to perform, using an exemption, certain
maintenance and maintenance training for NATO government, Australia and
Japan on US-origin inventoried defense articles. Part 125 is amended to
provide authorization, without a license, to transfer technical data to
support procurement of defense articles from defense firms in NATO
countries,
[[Page 45283]]
Australia and Japan for use in the United States. This amendment also
establishes four comprehensive export authorizations for use in
circumstances where the full parameters of a commercial export
endeavor, including the needed defense exports, can be well anticipated
and described in advance.
EFFECTIVE DATE: September 1, 2000.
FOR FURTHER INFORMATION CONTACT: Rose Biancaniello, Office of Defense
Trade Controls, Bureau of Political-Military Affairs, Department of
State ATTN: Regulatory Change NATO, Australia and Japan at (202) 663-
2862 or FAX (202) 261-8264.
SUPPLEMENTARY INFORMATION: In implementing the Secretary of State's
announcement at the NATO Ministerial, May 24, 2000, in Florence, Italy,
the International Traffic In Arms Regulations is being amended. Section
124.2 is amended to add a new paragraph (c) to permit U.S. companies to
provide, without a license, defense services necessary to perform
maintenance on and maintenance training for inventoried US-origin
equipment of NATO countries, Australia and Japan, provided the
maintenance and maintenance training does not result in any
modification, enhancement, upgrade or other form of alteration or
improvement that enhances the performance or capability of the defense
article. Also, the export must not include the transfer of certain
technologies; such as, design methodology, engineering analysis and
manufacturing know-how. Section 125.4 is amended to add a new paragraph
(c) to permit the transfer of technical data to NATO countries,
Australia and Japan of technical data necessary to support offshore
procurement of defense articles for use in the United States. In
addition, Part 126 is amended to add, in Sec. 126.9, a new paragraph
(b) and a new Sec. 126.14. These additions are being made to create
four new comprehensive authorizations developed to limit the number of
export approvals necessary to authorize the export of U.S. technology
to NATO countries, Australia and Japan that will encourage government-
to-government cooperative research and development, support joint
ventures and teaming arrangements and facilitate a U.S. company's role
in a cooperative project when covered by a government-to-government
Memorandum of Understanding (MOU).
In implementing these initiatives, Part 124, 125, and 126 are being
amended.
This amendment involves a foreign affairs function of the United
States and therefore, is not subject to the procedures required by 5
U.S.C. 553 and 554. It is exempt from review under Executive Order
12866 but has been reviewed internally by the Department of State to
ensure consistency with the purposes thereof. This rule does not
require analysis under the Regulatory Flexibility Act or the Unfunded
Mandates Reform Act. It has been found not to be a major rule within
the meaning of the Small Business Regulatory Enforcement Act of 1966.
It will not have substantial direct effects on the States, the
relationship between the National Government and the States, or on the
distribution of power and responsibilities among the various levels of
government. Therefore, in accordance with Sec. 6 of Executive Order
13132, it is determined that this rule does not have sufficient
federalism implications to warrant application of Executive Order Nos.
12372 and 13123. However, interested parties are invited to submit
written comments to the Department of State, Office of Defense Trade
Controls, ATTN: Regulatory Change, NATO, Australia and Japan, 13th
Floor, H1304, 2401 E Street, NW., Washington, DC 20037. Such persons
must be so registered with the Department of State's Office of Defense
Trade Controls (DTC) pursuant to the registration requirements of
Sec. 38 of the Arms Export Control Act.
List of Subjects
22 CFR Part 124
Arms and munitions, Exports, Technical assistance.
22 CFR Part 125
Arms and munitions, Exports.
22 CFR Part 126
Arms and munitions, Exports.
Accordingly, for the reasons set forth above, Title 22, Chapter I,
Subchapter M, Part 124, 125 and 126, are being amended as follows:
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT AND OTHER DEFENSE
SERVICES
1. The authority citation for part 124 continues to read as
follows:
Authority: Sec. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); E.O. 11958, 42 FR 4311, 3 CFR 1977 Comp.
p. 79; 22 U.S.C. 2658; Pub L. 105-261.
2. Section 124.2 is amended by adding paragraph (c) to read as
follows:
Sec. 124.2 Exemptions for training and military service.
* * * * *
(c) NATO countries, Australia and Japan, in addition to the basic
maintenance training exemption provided in Sec. 124.2(a) and basic
maintenance information exemption in Sec. 125.4(b)(5), no technical
assistance agreement is required for maintenance training or the
performance of maintenance, including the export of supporting
technical data, when the following criteria can be met:
(1) Defense services are for unclassified U.S.-origin defense
articles lawfully exported or authorized for export and owned or
operated by and in the inventory of NATO or the Federal Governments of
NATO countries, Australia or Japan;
(2) This defense service exemption does not apply to any
transaction involving defense services for which congressional
notification is required in accordance with Sec. 123.15 and Sec. 124.11
of this subchapter.
(3) Maintenance training or the performance of maintenance must be
limited to inspection, testing, calibration or repair, including
overhaul, reconditioning and one-to-one replacement of any defective
items, parts or components; and excluding any modification,
enhancement, upgrade or other form of alteration or improvement that
enhances the performance or capability of the defense article. This
does not preclude maintenance training or the performance of
maintenance that would result in enhancements or improvements only in
the reliability or maintainability of the defense article, such as an
increased mean time between failure (MTBF).
(4) Supporting technical data must be unclassified and must not
include software documentation on the design or details of the computer
software, software source code, design methodology, engineering
analysis or manufacturing know-how such as that described in paragraphs
(c)4)(i) through (c)(4)(iii) as follows:
(i) Design Methodology, such as: The underlying engineering methods
and design philosophy utilized (i.e., the ``why'' or information that
explains the rationale for particular design decision, engineering
feature, or performance requirement); engineering experience (e.g.
lessons learned); and the rationale and associated databases (e.g.
design allowables, factors of safety, component life predictions,
failure analysis criteria) that establish the operational requirements
(e.g., performance, mechanical, electrical, electronic, reliability and
maintainability) of a defense article.
(ii) Engineering Analysis, such as: Analytical methods and tools
used to design or evaluate a defense article's performance against the
operational requirements. Analytical methods and
[[Page 45284]]
tools include the development and/or use of mockups, computer models
and simulations, and test facilities.
(iii) Manufacturing Know-how, such as: Information that provides
detailed manufacturing processes and techniques needed to translate a
detailed design into a qualified, finished defense article.
(5) This defense service exemption does not apply to maintenance
training or the performance of maintenance and service or the transfer
of supporting technical data for the following defense articles:
(i) All Missile Technology Control Regime Annex Items;
(ii) Firearms listed in Category I; and ammunition listed in
Category III for the firearms in Category I;
(iii) Nuclear weapons strategic delivery systems and all
components, parts, accessories and attachments specifically designed
for such systems and associated equipment;
(iv) Naval nuclear propulsion equipment listed in Category VI(e);
(v) Gas turbine engine hot sections covered by Categories VI(f) and
VIII(b);
(vi) Category VIII(f);
(vii) Category XII(c);
(viii) Chemical agents listed in Category XIV (a), biological
agents in Category XIV (b), and equipment listed in Category XIV (c)
for dissemination of the chemical agents and biological agents listed
in Categories XIV (a) and (b);
(ix) Nuclear radiation measuring devices manufactured to military
specifications listed in Category XIV(d);
(x) Category XV;
(xi) Nuclear weapons design and test equipment listed in Category
XVI;
(xii) Submersible and oceanographic vessels and related articles
listed in Category XX(a) through (d);
(xiii) Miscellaneous articles covered by Category XXI.
(6) Eligibility Criteria for Foreign Persons. Foreign persons
eligible to receive technical data or maintenance training under this
exemption are limited to nationals of the NATO countries, Australia or
Japan.
PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSFIED
DEFENSE ARTICLES
3. The authority citation for part 125 continues to read as
follows:
Authority: Sections 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp. p. 79;
22 U.S.C. 2658.
4. Section 125.4 is amended by revising paragraph (a) and by adding
paragraph (c) to read as follows:
Sec. 125.4 Exemptions of general applicability.
(a) The following exemptions apply to exports of technical data for
which approval is not needed from the Office of Defense Trade Controls.
These exemptions, except for paragraph (b)(13) of this section, do not
apply to exports to proscribed destinations under Sec. 126.1 of this
subchapter or for persons considered generally ineligible under
Sec. 120.1(c) of this subchapter. The exemptions are also not
applicable for purposes of establishing offshore procurement
arrangements or producing defense articles offshore (see Sec. 124.13),
except as authorized under Sec. 125.4 (c). If Sec. 126.8 of this
subchapter requirements are applicable, they must be met before an
exemption under this section may be used. Transmission of classified
information must comply with the requirements of the National
Industrial Security Program Operating Manual and the exporter must
certify to the transmittal authority that the technical data does not
exceed the technical limitation of the authorized export.
(b) * * *
(c) Defense services and related unclassified technical data are
exempt from the licensing requirements of this subchapter, to nationals
of NATO countries, Australia and Japan, for the purposes of responding
to a written request from the Department of Defense for a quote or bid
proposal. Such exports must be pursuant to an official written request
or directive from an authorized official of the U.S. Department of
Defense. The defense services and technical data are limited to those
listed in paragraphs (c)(1), (c)(2), and (c)(3) and must not include
those listed in paragraphs (c)(4), (c)(5), and (c)(6) which follow:
(1) Build-to-Print. ``Build-to-Print'' means that a foreign
consignee can produce a defense article from engineering drawings
without any technical assistance from a U.S. exporter. This transaction
is based strictly on a ``hands-off'' approach since the foreign
consignee is understood to have the inherent capability to produce the
defense article and only lacks the necessary drawings. Supporting
documentation such as acceptance criteria, and specifications, may be
released on an as-required basis (i.e. ``must have'') such that the
foreign consignee would not be able to produce an acceptable defense
article without this additional supporting documentation. Documentation
which is not absolutely necessary to permit manufacture of an
acceptable defense article (i.e. ``nice to have'') is not considered
within the boundaries of a ``Build-to-Print'' data package;
(2) Build/Design-to-Specification. ``Build/Design-to-
Specification'' means that a foreign consignee can design and produce a
defense article from requirement specifications without any technical
assistance from the U.S. exporter. This transaction is based strictly
on a ``hands-off'' approach since the foreign consignee is understood
to have the inherent capability to both design and produce the defense
article and only lacks the necessary requirement information;
(3) Basic Research. ``Basic Research'' means a systemic study
directed toward greater knowledge or understanding of the fundamental
aspects of phenomena and observable facts without specific applications
towards processes or products in mind. It does not include ``Applied
Research'' (i.e. a systemic study to gain knowledge or understanding
necessary to determine the means by which a recognized and specific
need may be met. It is a systematic application of knowledge toward the
production of useful materials, devices, and systems or methods,
including design, development, and improvement of prototypes and new
processes to meet specific requirements.);
(4) Design Methodology, such as: The underlying engineering methods
and design philosophy utilized (i.e., the ``why'' or information that
explains the rationale for particular design decision, engineering
feature, or performance requirement); engineering experience (e.g.
lessons learned); and the rationale and associated databases (e.g.
design allowables, factors of safety, component life predictions,
failure analysis criteria) that establish the operational requirements
(e.g., performance, mechanical, electrical, electronic, reliability and
maintainability) of a defense article. (Final analytical results and
the initial conditions and parameters may be provided.)
(5) Engineering Analysis, such as: Analytical methods and tools
used to design or evaluate a defense article's performance against the
operational requirements. Analytical methods and tools include the
development and/or use of mockups, computer models and simulations, and
test facilities. (Final analytical results and the initial conditions
and parameters may be provided.)
(6) Manufacturing Know-how, such as: information that provides
detailed manufacturing processes and techniques needed to translate a
detailed design into a qualified, finished defense article.
(Information may be provided in a
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build-to-print package that is necessary in order to produce an
acceptable defense article.)
PART 126--GENERAL POLICIES AND PROVISIONS
5. The authority citation for Part 126 continues to read as
follows:
Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 Stat.
744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2778;
E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp., p.79; 22 U.S.C. 2658; 22
U.S.C. 287c; E.O. 12918, 59 FR 28205, 3 CFR 1994 Comp., p 899.
6. Section 126.9 is revised to read as follows:
Sec. 126.9 Advisory opinions and related authorizations.
(a) Any person desiring information as to whether the Office of
Defense Trade controls would be likely to grant a license or other
approval for the export or approval of a particular defense article or
defense service to a particular country may request an advisory opinion
from the Office of Defense Trade Controls. These opinions are not
binding on the Department of State and are revocable. A request for an
advisory opinion must be made in writing and must outline in detail the
equipment, its usage, the security classification (if any) of the
articles or related technical data, and the country or countries
involved. An original and seven copies of the letter must be provided
along with seven copies of suitable descriptive information concerning
the defense article or defense service
(b) Related authorizations. The Office of Defense Trade Controls
may, as appropriate, in accordance with the procedures set forth in
paragraph (a) of this section, provide export authorization, subject to
all other relevant requirements of this subchapter, both for
transactions that have been the subject of advisory opinions requested
by prospective U.S. exporters, or for the Office's own initiatives.
Such initiatives may cover pilot programs, or specifically anticipated
circumstances for which the Office considers special authorizations
appropriate.
7. Section 126.14 is added to read as follows:
Sec. 126.14. Special comprehensive export authorizations for NATO,
Australia, and Japan.
(a) With respect to NATO members, Australia, and Japan, the Office
of Defense Trade Controls may provide the comprehensive authorizations
described below for circumstances where the full parameters of a
commercial export endeavor including the needed defense exports can be
well anticipated and described in advance, thereby making use of such
comprehensive authorizations appropriate.
(1) Major Project Authorization. With respect to NATO members,
Australia, and Japan, the Office of Defense Trade Controls may provide
comprehensive authorizations for well circumscribed commercially
developed ``major projects'', where a principal registered U.S.
exporter/prime contractor identifies in advance the broad parameters of
a commercial project including defense exports needed, other
participants (e.g., exporters with whom they have ``teamed up'',
subcontractors), and foreign government end users. Projects eligible
for such authorization may include a commercial export of a major
weapons system for a foreign government involving, for example,
multiple U.S. suppliers under a commercial teaming agreement to design,
develop and manufacture defense articles to meet a foreign government's
requirements. U.S. exporters seeking such authorization must provide
detailed information concerning the scope of the project, including
other exporters, U.S. subcontractors, and planned exports (including
re-exports) of defense articles, defense services, and technical data,
and meet the other requirements set forth in paragraph (b) of this
section.
(2) Major Program Authorization. With respect to NATO members,
Australia, and Japan, the Office of Defense Trade Controls may provide
comprehensive authorizations for well circumscribed commercially
developed ``major program''. This variant would be available where a
single registered U.S. exporter defines in advance the parameters of a
broad commercial program for which the registrant will be providing all
phases of the necessary support (including the needed hardware, tech
data, defense services, development, manufacturing, and logistic
support). U.S. exporters seeking such authorization must provide
detailed information concerning the scope of the program, including
planned exports (including re-exports) of defense articles, defense
services, and technical data, and meet the other requirements set forth
below in paragraph (b) of this section.
(3)(i) Global Project Authorization. With respect to NATO members,
Australia and Japan, the Office of Defense Trade Controls may provide a
comprehensive ``Global Project Authorization'' to registered U.S.
exporters for exports of defense articles, technical data or defense
services in support of government to government cooperative projects
(covering research and development or production) with one of these
countries undertaken pursuant to an agreement between the USG and the
government of such country, or a memorandum of understanding between
the Department of Defense and the country's Ministry of Defense.
(ii) A set of standard terms and conditions derived from and
corresponding to the breadth of the activities and phases covered in
such a cooperative MOU will provide the basis for this comprehensive
authorization for all U.S. exporters (and foreign end users) identified
by DoD as participating in such cooperative project. Such
authorizations may cover a broad range of defined activities in support
of such programs including multiple shipments of defense articles and
technical data and performance of defense services for extended
periods, and re-exports to approved end users.
(iii) Eligible end users will be limited to ministries of defense
of MOU signatory countries and foreign companies serving as contractors
of such countries.
(iv) Any requirement for non-transfer and use assurances from a
foreign government may be deemed satisfied by the signature by such
government of a cooperative agreement or by its ministry of defense of
a cooperative MOU where the agreement or MOU contains assurances that
are comparable to that required by a DSP-83 with respect to foreign
governments and that clarifies that the government is undertaking
responsibility for all its participating companies. The authorized non-
government participants or end users (e.g., the participating
government's contractors) will still be required to execute DSP-83's.
(4) Technical Data Supporting an Acquisition, Teaming Arrangement,
Merger, Joint Venture Authorization. With respect to NATO member
countries, Australia and Japan, the Office of Defense Trade Controls
may provide a registered U.S. defense company a comprehensive
authorization to export technical data in support of the U.S.
exporter's consideration of entering into a teaming arrangement, joint
venture, merger, acquisition, or similar arrangement with prospective
foreign partners. Specifically the authorization is designed to permit
the export of a broadly defined set of technical data to qualifying
well established foreign defense firms in NATO countries, Australia or
Japan in order to better facilitate a sufficiently in depth
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assessment of the benefits, opportunities and other relevant
considerations presented by such prospective arrangements. U.S
exporters seeking such authorization must provide detailed information
concerning the arrangement, joint venture, merger or acquisition,
including any planned exports of defense articles, defense services,
and technical data, and meet the other requirements set forth in
paragraph (b) of this section.
(b) Provisions and Requirements for Comprehensive Authorizations.
Requests for the special comprehensive authorizations set forth in
paragraph (a) of this section should be by letter addressed to the
Office of Defense Trade Control. With regard to a commercial major
program or project authorization, or technical data supporting a
teaming arrangement, merger, joint venture or acquisition, registered
U.S. exporters may consult the Director of the Office of Defense Trade
Controls about eligibility for and obtaining available comprehensive
authorizations set forth in paragraph (a) of this section or pursuant
to Sec. 126.9(b).
(1) Requests for consideration of all such authorizations should be
formulated to correspond to one of the authorizations set out in
paragraph (a) of this section, and should include:
(i) A description of the proposed program or project, including
where appropriate a comprehensive description of all phases or stages;
and
(ii) Its value; and
(iii) Types of exports needed in support of the program or project;
and
(iv) Projected duration of same, within permissible limits; and
(v) Description of the exporter's plan for record keeping and
auditing of all phases of the program or project; and
(vi) In the case of authorizations for exports in support of
government to government cooperative projects, identification of the
cooperative project.
(2) Amendments to the requested authorization may be requested in
writing as appropriate, and should include a detailed description of
the aspects of the activities being proposed for amendment.
(3) The comprehensive authorizations set forth in paragraph (a) of
this section may be made valid for the duration of the major commercial
program or project, or cooperative project, not to exceed 10 years.
(4) Included among the criteria required for such authorizations
are those set out in Part 124, e.g., Secs. 124.7, 124.8 and 124.9, as
well as Secs. 125.4 (technical data exported in furtherance of an
agreement) and 123.16 (hardware being included in an agreement).
Provisions required will also take into account the congressional
notification requirements in Secs. 123.15 and 124.11 of the ITAR.
Specifically, comprehensive congressional notifications corresponding
to the comprehensive parameters for the major program or project or
cooperative project should be possible, with additional notifications
such as those required by law for changes in value or other significant
modifications.
(5) All authorizations will be consistent with all other applicable
requirements of the ITAR, including requirements for non-transfer and
use assurances (see Secs. 123.10 and 124.10), congressional
notifications (e.g., Secs. 123.15 and 124.11), and other documentation
(e.g., Secs. 123.9 and 126.13).
(6) Special auditing and reporting requirements will also be
required for these authorizations. Exporters using special
authorizations are required to establish an electronic system for
keeping records of all defense articles, defense services and technical
data exported and comply with all applicable requirements for
submitting shipping or export information within the allotted time.
Dated: July 14, 2000.
Pamela L. Frazier,
Acting Assistant Secretary, Bureau of Political-Military Affairs,
Department of State.
[FR Doc. 00-18530 Filed 7-20-00; 8:45 am]
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