State Proposes Rule for Defense Treaties with Australia & UK
The Department of State is proposing to amend the International Traffic in Arms Regulations (ITAR) to further implement the Defense Trade Cooperation Treaties between the U.S. and Australia and the U.S. and the United Kingdom, and to identify via a supplement the defense articles and defense services that may not be exported pursuant to the Treaties. Additionally, State proposes to amend the section pertaining to the existing Canadian exemption to reference the new supplement, and proposes to add Israel to the list of countries and entities that have a shorter Congressional certification time period and a higher dollar value reporting threshold.
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Comments are due by December 22, 2011. According to State Department sources, the final rule is expected to be issued in the first quarter of 2012 and effective upon publication.
Proposed Rule Pursuant to 2010 Act on the Treaties
The proposed rule is largely pursuant to the Security Cooperation Act of 2010 (Public Law 111-266), which State says implemented the 2007 Defense Trade Cooperation Treaties between the U.S. and Australia and the U.S. and the UK by allowing certain controlled defense exports without license and creating a new certification status for Israel. State Department sources explain that while the Security Cooperation Act implemented the Treaties, its provisions are designed to only go into effect once these implementing regulations are finalized. (See ITT’s Online Archives 10101311 for summary of the President signing the Security Cooperation Act into law.)
Highlights of Proposed Amendments
The following are highlights of the proposed rule’s amendments:
New sections on Treaties would allow defense exports w/out license, etc. The proposed rule would add new sections to the ITAR on the exemptions pursuant to the Defense Trade Cooperation Treaty between the U.S. and Australia (22 CFR 126.16) and the Defense Trade Cooperation Treaty between the U.S. and the United Kingdom (22 CFR 126.17).
Among other things, these sections would:
- define export, transfers, intermediate consignee, authorized exporter, etc. under the Treaties;
- state that those persons or entities exporting or transferring defense articles or defense services pursuant to the Treaties are exempt from the otherwise applicable licensing requirements if they comply with the requirements set forth in the sections;
- require that a non-governmental exporter be registered with the Directorate of Defense Trade Controls and be an authorized exporter;
- state that the defense article or service exported may not be one that is excluded from the Treaties, as identified in Supplement No. 1 to 22 CFR Part 126;
- require the export to be for an end-use specified in the Treaties1;
- require the exporter to maintain all required documentation;
- describe how to appropriately mark defense articles subject to the Treaties;
- describe a statement to be included in all shipping documentation that states the defense commodities are authorized for export to Australia or to the UK for use in approved projects; etc.
EEI filing. The proposed rule would add Australia and the United Kingdom to 22 CFR 123.16 (on exemptions of general applicability) to state that all shipments of defense articles, including but not limited to those to and from Australia, Canada, and the United Kingdom, require an Electronic Export Information (EEI) filing using the Automated Export System (AES) or notification letter. The proposed rule would also list certain codes to reference in the EEI filing for each such shipments, depending on the end-use.
Exclusions. State is proposing to identify via a separate supplement (Supplement No. 1 to 22 CFR Part 126), those defense articles and services that are excluded from the scope of its Treaties with Australia, the United Kingdom, and Canada (e.g., classified defense articles and services, defense articles listed in the Missile Technology Control Regime, etc.).
Israel certification. The proposed rule would require Congressional certification for transfers to Israel prior to granting any license or other approval for transactions of major defense equipment sold under a contract in the amount of $25,000,000 or more (from $14,000,000 or more) or for defense articles and defense services sold under a contract in the amount of $100,000,000 or more (from $50,000,000 or more), and provided the transfer does not include any other countries. The proposed rule would also shorten from 30 to 15 calendar days the Congressional certification time period during which approval may not be granted. This proposed amendment would affect 22 CFR parts 123, 124, and 129.
Clarifying amendments. State is also proposing various “clarifying” amendments throughout 22 CFR Parts 120, 123, 124, 126, 127, and 129. For example, it would replace references to the Shipper’s Export Declaration with Electronic Export Information; add references to the two treaties and the new supplement; etc.
1Under the Treaties, many U.S. defense articles can be exported into, and within, the UK and Australia without prior licenses or other authorizations pursuant to the ITAR as long as the exports are in support of certain: (i) U.S. Government end-uses; (ii) combined military or counter-terrorism operations; (iii) mutually determined security and defense research, development, production, and support programs; and (iv) mutually determined security and defense projects where the end-user is the Government of the UK or the Government of Australia is the end-user; (v) etc.
State Dept. contact - Sarah Heidema (202) 663-2809
(FR Pub 11/22/11, Public Notice: 7683)