On August 15, 2024, the US Department of State’s Directorate of Defense Trade Controls (“DDTC”) published the long-awaited final rule (“Final Rule“), effective September 16, 2024, expanding the definition of “activities that are not exports, reexports, retransfers, or temporary imports” pursuant to Section 120.54 of the International Traffic in Arms Regulations (“ITAR”). Please see our previous blog here when DDTC issued a proposed rule (“Proposed Rule“) to make these changes.
The Final Rule adds paragraphs (a)(6) and (7) to ITAR Section 120.54. The two additional activities that would not constitute controlled events are:
- The taking of a defense article subject to the ITAR reexport or retransfer requirements on a deployment or training exercise outside a previously approved country, provided (i) there is no change in the end-use or end-user with respect to the defense article; (ii) the defense article is transported by and remains in the possession of the previously authorized armed forces of a foreign government or United Nations military personnel; and (iii) the defense article is not being exported from or temporarily imported into the United States. DDTC noted that it mainly made clarification edits to paragraph (a)(6) to make sure the scope of this carve-out is clear. In particular, in response to comments received on the Proposed Rule, DDTC included new paragraph (a)(6)(iii) so that it is clear that this carve-out remains within the intent, “which is to clarify policy regarding reexports and retransfers of defense articles previously authorized for export from the United States and in the possession of the armed forces of a foreign government or United Nations military personnel.” Paragraph (a)(6) makes explicit in the ITAR the agency’s long-standing practice since 2013.
- The transfer of a foreign defense article previously imported into the United States that has since been exported from the United States pursuant to a license or other approval under the ITAR, provided: (i) the foreign defense article was not modified, enhanced, upgraded, or otherwise altered or improved in a manner that changed the basic performance of the item prior to its return to the country from which it was imported or a third country; (ii) a US-origin defense article was not incorporated into the foreign defense article; and (iii) the defense article is not being exported from or temporarily imported into the United States. The new paragraph (a)(7)(iii) was similarly added for clarification purposes and reinforces that the transfer of a wholly foreign defense article outside of the United States and not otherwise subject to the ITAR does not require authorization.
Please contact any member of our Outbound Trade Compliance team if you have any questions or would like more information.
The authors acknowledge the assistance of William Logsdon with the preparation of this blog post.
