On January 6, 2020, the US Department of State’s US Directorate of Defense Trade Controls (“DDTC”) published a set of Frequently Asked Questions (“FAQs”) (available here), which provide long-awaited clarifications regarding the registration and authorization requirements of the International Traffic in Arms Regulations (“ITAR”) applicable to the provision of defense services abroad by natural US persons employed by foreign persons. The main points are summarized below:
- The FAQs clarify that no registration with DDTC is required for a natural US person to provide defense services abroad, as long as the US person is physically located outside the United States. However, such a US person would need to obtain authorization from DDTC before any defense services may be provided, regardless of whether the services are to be provided within or outside the United States. This is also the case for a US person employee who provides defense services to or for a foreign entity. In most cases, DDTC will authorize defense services provided by natural US persons to foreign employers via general correspondence and pursuant to ITAR Section 126.9(b). The authorization will be valid for four years unless otherwise set forth within the terms of the authorization issued by DDTC. Although a foreign entity, including a foreign employer of the US person, can help facilitate the submission of the authorization request, the FAQs make it clear that the relevant ITAR compliance obligations are ultimately placed on the natural US person, rather than on the foreign entity to or for which the defense services are to be provided by the natural US person.
- Although the practical application of the guidance in the FAQs could potentially raise non-US, local privacy law concerns, the FAQs explicitly state that foreign regulatory compliance requirements, including the European Union General Data Protection Regulation, “arise independently from the ITAR and do not modify its requirements.”
- The FAQs also clarify that to the extent exporters or foreign entities were in good faith following the framework proposed by the 2015 proposed rule regarding US persons’ provision of defense services abroad (80 FR 30001, May 26, 2015), which among other things provided an authorization exemption for a US person employee of a foreign person subject to certain conditions, DDTC will “generally view any controlled activity in that light.” The 2015 proposed rule on US persons’ provision of defense services abroad has never been adopted as a final rule, and thus has no regulatory effect.
Please see the entire text of the FAQs for more details regarding, among other things, specific information required for the authorization request and factors to consider before the authorization request is submitted.