Following initial announcements last year, on July 20, 2022, the US Department of State’s Directorate of Defense Trade Controls (“DDTC”) published two Open General Licenses (“OGLs”) permitting certain reexports and retransfers to certain parties under the International Trade in Arms Regulations (“ITAR”). The OGLs, which are part of a DDTC pilot program, will be valid for one year, effective from August 1, 2022 through July 31, 2023. The related DDTC fact sheet can be found here. DDTC also issued several Frequently Asked Questions (“FAQs”) on the new pilot program and the related OGLs.
Open General License (OGL) No. 1 authorizes retransfers (as defined in ITAR § 120.51) of unclassified defense articles to the Australian, Canadian, and UK governments; members of the Australian and UK communities (as defined in ITAR §§ 126.16(d) and 126.17(d), respectively, which include specified Australian and UK government and non-governmental entities authorized to use the existing country-specific exemptions in the ITAR); and Canadian-registered persons (as defined in the Canadian exemption at ITAR § 126.5).
Open General License (OGL) No. 2 authorizes reexports (as defined in ITAR § 120.19) of defense articles to, and among, the same recipients in Australia, Canada, and the United Kingdom as Open General License No. 1.
Both OGLs are limited to the specific transactions described within each authorization, and are subject to various conditions. For example:
- The OGLs explicitly do not authorize retransfers or reexports to support the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, or processing of (i) a missile, (ii) an unmanned aerial vehicle, (iii) a space-launch vehicle, or (iv) an item listed on the Missile Technology Control Regime Annex, or an item annotated with the parenthetical “(MT)” at the end of an entry on the United States Munitions List under the ITAR.
- These OGLs cannot be used to export defense articles. To that end, DDTC explains in its related fact sheet that these OGLs are “designed to support the mission readiness of our allies by facilitating defense trade activity related to the maintenance, repair, and storage of unclassified defense articles deployed or in-inventory rather than supporting new acquisitions or capabilities.” For potential exemptions available for export transactions, other provisions of the ITAR should be considered, including Section 125.4(b)(5) related to technical data related to a defense article already lawfully exported or authorized for export.
The full texts of the OGLs should be considered before relying on them to make a retransfer or reexport.
Both OGLs require users to maintain various records. These recordkeeping requirements include: a description of the defense article, including technical data; the name and address of the recipient and the end-user, and other available contact information (e.g., telephone number and email address); the name of the natural person responsible for the transaction; the stated end use of the defense article; the date of the transaction; and the method of transfer. Transferors are required to make these records available to DDTC upon request.
Shortly after the issuance of the OGLs, DDTC issued several related FAQs. Some highlights of these FAQs are below:
- The OGLs authorize certain “reexports” and “retransfers,” and not “exports” of unclassified defense articles to the end-users and for the end-uses specified in the OGLs.
- Only the legal entity enrolled in an approved community may receive, retransfer, or reexport defense articles under the OGLs. Other legal entities, including affiliates and parent entities, must enroll separately in the approved community to receive or reexport defense articles under the OGLs.
- Once a legal entity has one facility enrolled in either the UK or Australian approved community, that legal entity can receive, store, retransfer, or reexport defense articles as permitted pursuant to the OGLs at any location where it maintains operations within the same country (e.g., the UK or Australia, respectively).
- Technical data may only be retransferred or reexported under the OGLs for use in the direct provision of services for the maintenance, repair, or storage of a defense article.
- Provided the retransfer or reexport satisfies the requirements, limitations, and provisos of the OGLs, technical data can be retransferred or reexported for the purposes described in the OGLs even if it was originally exported under the authority of a Technical Assistance Agreement (“TAA”) that remains active. The TAA would qualify as an approval issued by DDTC pursuant to section 38 of the Arms Export Control Act for purposes of subparagraph (b)(2)(i) of the OGLs, and the OGLs would authorize the subsequent retransfer or reexport without amendment of the TAA.
- The Canadian exemption at ITAR § 126.5 qualify as “other approval” for purposes of the OGLs. ITAR § 120.20(b) defines “other approval” to include “use of an exemption to the license requirements as described” in the ITAR. Accordingly, a defense article that has been properly exported under the exemption at ITAR § 126.5 has been originally exported pursuant to “other approval” issued by DDTC pursuant to section 38 of the Arms Export Control Act.
The authors acknowledge the assistance of Ryan Orange with the preparation of this blog post.
