DDTC Issues Guidance on Registration, Authorization for Exports of Defense Services Subject to ITAR

The guidance clarifies that under certain circumstances, U.S. citizens and their employing companies may be subject to the International Traffic in Arms Regulations even if they work for or are a foreign entity that is physically located outside the U.S. In addition, the U.S. person may need to apply for an authorization from the DDTC if their work with the company is subject to the ITAR “regardless of whether that service is to be furnished within or outside the United States,” the DDTC said.

If the U.S. citizen provides “assistance” to a foreign entity in a foreign country and that assistance relates to the “design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use” of a defense article, then the activity would be subject to the ITAR, the DDTC said. ITAR-regulated activity also includes furnishing technical data or providing military training to “foreign units and forces,” the DDTC said. If there is a “job description” change for the person “such that the approval granted by DDTC no longer reflects the defense services to be furnished,” a new authorization is required, the DDTC said.

The agency clarified that the “mere presence or involvement” of a U.S. person during the design or development of the defense services that are authorized under a mechanism other than a Technical Assistance Agreement or a Manufacturing License Agreement do “not subject the resultant foreign-origin defense article” to the ITAR or to “reexport/retransfer requirements.” However, defense items “‘produced or manufactured from’ technical data or defense services” pursuant to a TAA or an MLA “cannot be transferred to a foreign person” without a State Department authorization.

The DDTC also clarified that U.S. people located outside the U.S. who are furnishing these defense services do not need to register with the DDTC. However, “if at any point you engage in the United States in the business of furnishing defense services, you would be required to register with the Department unless otherwise exempted,” the DDTC said. Authorizations last four years “unless otherwise described in the authorization,” the agency said.

In order to apply for an authorization to “furnish defense services” to a foreign employer, the U.S. person needs to submit a description of the “scope” of the request to DDTC, including a description of the “program or defense article that is the subject of the proposed defense service” and a description of the defense services that will be provided, the agency said. DDTC also requires details about the defense service provider’s “ties” to the U.S., including details about their employment or education in the U.S., a “full description” of previous “work activities or coursework” that related to items controlled under the U.S. Munitions List and information about previous work for U.S. government programs. Applicants should also provide a copy of their resume and a “detailed job description for the position for which the authorization is being requested.” Applicants should submit hard copies of their applications to the DDTC’s Licensing Division as “General Correspondence requests,” the agency said.

The DDTC said non-U.S. employers of the U.S. citizen may “help facilitate” the authorization request, but the agency clarified that authorizations will be issued to the U.S. person, not to their employer. “The U.S. person is responsible for ensuring compliance with the ITAR as the exporter of a defense service,” the DDTC said. Although the agency said the nationalities of the foreign employer's customers “do not affect the registration or authorization requirements,” the agency could weigh such factors “in determining whether to issue an authorization.”