On July 29, 2024, the US Department of State’s Directorate of Defense Trade Controls (“DDTC”) issued a proposed rule (“Proposed Rule”) that would revise the definition of “defense service” and the scope of related controls in the International Traffic in Arms Regulations (“ITAR”). The Proposed Rule was issued following a review by DDTC that identified certain military, cyber, and intelligence services furnished to foreign persons that are not currently controlled or are controlled but for which the applicable control language could benefit from additional clarity.
This DDTC proposal parallels a proposed rule issued by the US Department of Commerce’s Bureau of Industry and Security on the same day to expand controls on US persons’ activities in connection with non-US military, security, and intelligence end users and end uses. Our blog post about that proposal is available here.
The proposed amendments under the Proposed Rule include the following:
- Definition of “Defense Service” under ITAR § 120.32: The Proposed Rule would revise the list of regulated activities currently found in ITAR § 120.32(a)(1) to include “assistance, including training or consulting, to foreign persons in the development (including, e.g., design), production (including, e.g., engineering and manufacture), assembly, testing, repair, maintenance, modification, disabling, degradation, destruction, operation, processing, use, or demilitarization of a defense article.” This proposed definition includes new references to “disabling” and “degradation” to make clear activities that disable or degrade defense articles, but fall short of total destruction or demilitarization, remain controlled. It also clarifies that “assistance” includes not just training (i.e., direct instructional activity), but also consulting (i.e., assistance in the development of such training).
- Proposed Controls over Defense Services related to Military Assistance: The Proposed Rule would add a new paragraph (s)(3) to Category IX in the United States Munitions List (“USML”) to control defense services related to military assistance that do not necessarily involve defense articles, with specific carve-outs. In particular, it would control (i) assistance that creates, supports, or improves the organization or formation of foreign military or paramilitary forces; and (ii) assistance that creates, supports, or improves military or paramilitary operations by planning, leading, or evaluating all aspects of such operations, including, e.g., logistical support. The proposed controls over military assistance would provide three specific carve-outs, such as training and advice entirely composed of general scientific, mathematical, or engineering principles commonly taught in schools.
- Proposed Controls over Defense Services related to Intelligence Assistance: The Proposed Rule would also add a new paragraph (s)(2) to USML Category IX to control defense services related to intelligence assistance that do not necessarily involve defense articles, with specific carve-outs. In particular, proposed paragraph (s)(2) would control the provision of intelligence assistance (e.g., by providing intelligence analysis) for a foreign government/unit/force, or their proxy or agent, as well as training that enables a foreign government/unit/force, or their proxy or agent, to conduct intelligence activities themselves. Further, the intelligence assistance activities identified are only controlled if they are “for compensation” (whether financial or non-financial), thus limiting the control to those services that are provided commercially or in a professional capacity. The proposed controls over intelligence assistance would provide six specific carve-outs, such as IT services that support ordinary business activities not specific to a particular business sector, and otherwise lawful activity of a US local or federal law enforcement or intelligence agency.
Comments on the Proposed Rule will be accepted through September 27, 2024.
