My company is a build to print contract manufacturer. The ITAR controlled parts we manufacture are (1) assemblies, (2) are not the end item. We manufacture and assemble parts that consist of several sub-components. We manufacture some sub-components in house from raw materials; others, we sub-contract. We assemble all sub-components in house, and sell this final part to the customer. In the majority of transactions, the customer is not responsible for the end item. My question is: since my company manufactures, sub-contracts, and then assemble the sub-components to form the final 'part' (the 'part' is ITAR controlled), how does my company determine which sub-components are ITAR controlled?
There are no short cuts to the standard process of looking up every item in the USML to see if the USML controls it. If the USML does not control it, then you have to look it up in the EAR.
You should know the accurate export classification of everything you export. If you are not going to export small piece parts by themselves, for example, and you will only export them when they are part of a larger item that you will export, just classify the item you will export.
What is the process for scrapping ITAR material? Does the part/material need to be scrapped in a specific/special condition?
The ITAR does not impose requirements for scrapping. For an ITAR item to cease to be an ITAR item, you have to render it completely unusable, non-functional, non-recoverable and in a state so a recipient could not obtain technical data from it.
Is there any guidance on how to appropriately value technical data/technology when applying for an ITAR license? Or an EAR license for that matter.
The ITAR agreement guidelines offer a lot of guidance for valuation for agreements and that generally holds true for ITAR licenses. DDTC's biggest concern is making sure value is not understated, causing an application to incorrectly fall below Congressional notification guidelines.
For EAR licenses, BIS generally is not as concerned about value. There is some guidance in EAR 748 and the supplements thereto. For BIS, you may use an approach that you think is reasonable and explain your approach in your letter of explanation for your application and BIS will normally accept your approach.
One of the foreign signatories on a TAA of ours submitted a GC notice for a name change to DDTC. DDTC issued guidance which stated only a minor amendment required. Is there a timeframe in which we as the applicant must complete minor amendments? (Sometimes we do not get notice of a name change for months, or name changes yet again!)
There is no published time frame. Once DDTC posts the notice on its web site you should submit the minor amendment as soon as possible if you are using the agreement.
Are laptop letters still required? If not, are there any remaining requirements related to taking a laptop overseas (by US citizen)?
The regulations never have defined what a laptop letter is nor required such a thing. Some companies chose to implement compliance procedures to use laptop letters, which can mean different things to different people.
Before someone takes a laptop overseas, a full export compliance analysis of the laptop, the software and technical data/technology on the laptop should be done to determine what export licensing and documentation requirements apply. The regulations do not lend themselves to a simple sentence or two that describes the requirements in all possible circumstances.
Is the production of Category I upper and lower receiver forgings considered manufacturing? Thus requiring DDTC/ITAR registration? Also, based on the July 2016 DDTC Advisory, is it correct that the holder of an FFL07 is not absolutely mandated to be ITAR registered, but rather it depends upon whether or not he is truly engaged in manufacturing?
While I lack expertise in the manufacture of firearms, the DDTC advisory information does not exclude production of forgings from manufacturing activities. The DDTC advisory says the production of firearms parts is manufacturing and I assume that is what you are doing.
The ITAR registration requirements, the ITAR and the DDTC advisory do not explicitly base their respective rules on whether a party has a FFL07.
Are US Navy ships in international waters considered to be within the United States? For example, if a US employee is on board a ship in international waters and they access ITAR-controlled technical data (e.g. they use computers onboard the ship to access emails or download data stored on US servers) is this considered exporting data outside the US? If so, is there a statute or regulation to cite as the basis for considering the Navy ships to be part of the US?
The ITAR definition of export says an export occurs when something leaves the US, there is no exclusion from the definition of export for items destined to international waters or the US Navy. Fortunately, your activity might be authorized by the ITAR 125.4(b)(9) exemption which authorizes US companies to export ITAR technical data to their US person employees in certain cases.
My wife is in the process of getting ITAR training through “an unnamed training vendor”. The professor seems to believe the following:
The exporter must make sure all manufacturers are registered through DDTC, otherwise the “manufacturer” cannot be on the DSP-5 and their material cannot be included in the export. As you might or might not know a lot a 07 FFL Holders that manufacture (and some Ammo manufacturers) are not registered with the DDTC.
My thought on the exporter acting as the DDTC police with manufacturers is it doesn’t seem to be our job. All 07 FFL holders are required to register as well as ITAR manufacturers. I don’t understand how it is our job to police them. The professor cited 22 CFR 130.12 but back peddled saying it must have been removed. I just want to make sure I’m operating correctly.
You are supposed to identify the manufacturers of the items on your application. Once you identify them, DDTC will "police" them.
Are there restrictions on how to transmit ITAR controlled documents? Can ITAR controlled documents be transmitted by email?
The current ITAR does not address that issue; therefore it does not prohibit you from emailing ITAR tech data and does not require that you do anything special when you email ITAR technical data. Please go to the DDTC website and read the June 3, 2016 Federal Register notice to find out about the upcoming rules requiring specific security measures for electronic transmission of ITAR data that will enter into force in September 2016.
We were notified by our Greek customer that their US END USER has requested a delivery back to the United States be changed to a delivery to their plant overseas which was not listed on their End User statement. Our DSP-5 license states any change of delivery be approved by the Department of State. The parts we shipped to Greece were consumed by the manufacturing in support of a higher assembly. The parts were originally shipped January 2016 to Greece. Do we need a new End User statement and how would this affect the current license we hold?
DDTC approval of a General Correspondence retransfer fee request must be obtained prior to sending the items to a party outside of the United States that was not explicitly authorized on the DSP5.
We exported hardware out to a foreign MoD under a DSP-5 IFO at TAA. That hardware is now coming back in for repair under the repair exemption, not from the MoD but from a third party entity (maintenance facility) that was not on the TAA or DSP-5. There is no evidence that the foreign MoD obtained re-transfer authorization for the in-country re-transfer of the hardware to that third party. Can we still accept the hardware back under the repair exemption (even though it doesn't appear that the third party is an authorized recipient) or do we need to insist that the hardware be returned by the MoD?
The ITAR is not clear on your question. As a practical matter, it may be prudent to inquire as to the authorization that was used to transfer the items to the maintenance entity. If there was no authorization obtained, you do not want to ship the item to the unauthorized party.
Working in the UK, I purchase a material (part A) from a U.S. supplier, classified as ECCN 9A610.x (manufactured to a UK drawing). Part A is a forging which is then machined in the UK (without adding any other components) to produce an item (Part B) which is then further machined and processed with other components to form Part C.
My question is: How should I assess whether U.S. export controls apply to Part B (and thus part C)? If I apply de minimis then the value added to part B as a result of the machining process will result in part B being below 25% with respect to the value of part A, but is it correct to apply de minimis to an item which is being machined rather than "incorporated"? If not de minimis, how do I apply the EAR to part B?
Yes, in your situation, I would apply the de minimis rule to the item you happen to be exporting/reexporting/sending to a new recipient at the time. Even though you are not incorporating Part A into a different, larger item Part B, I would apply the de minimis rule the same way as if you were doing an incorporation.
If you are sending Part C, then use the de minimis calculation for all US controlled content, including Part A, in Part C. If you are sending Part B, take the same approach.
We currently have a TAA in place until 2023. Can we use exemption 123.4(a)1)) for repair and overhaul of items previously exported under a DSP5? There will be no enhancements or replacement, just repairs.
Unless your TAA says you may not use the exemption, you may use the temporary import exemption but make sure you comply with all of the requirements of the exemption.
We design items that are categorized under 9A515. Our designs include everything from mechanical piece parts to electrical and electronic designs. We often subcontract out piece parts for fabrication (machining, plating, printed circuit board fabrication and assembly, etc). We use multiple vendors, so the manufacturing of piece parts never comes close to providing the design as a whole to any single vendor, and the manufacturing processes include nothing exotic or export controlled. The manufacturing also includes the full life cycle from prototypes to spaceflight. Our items are no longer on the USML. Do we need to mark our drawings as being under export control IF they are being manufactured in the US (but we don't control whether they employ only US persons)?
The EAR does not require that you mark you EAR controlled technical data/technology. It is a prudent practice to make EAR controlled tech data with its ECCN such as 9E515 in your case in order to help prevent inadvertent violations by other US parties. In the event another US party commits a violation with the data you gave it, it is nice to be able to show the government that you marked the documents even though you did not have to.
What is the best practice for exporting technical data under a license? ITAR 125 does not explain the process. ITAR 123 for hardware speaks to tech data export but says to electronically provide export information using the "system for direct electronic reporting to DDTC" (which I understand does not exist?). We send a letter of initial transfer to DDTC to satisfy. But it also says to return the license to the State when done. Does this mean a scanned copy of the electronic license should be initialed and downloaded back to the license on the DDTC database at the end of the term?
I believe you are on the right track. First notify DDTC of your initial export by uploading a letter into DTrade and then upload the decrement end license to DTrade when it is exhausted or expired.
We intend to export XI(d) technical data loaded onto a COTS computer (classified as 4A994). Should the computer be classified as 3A611.x because it has been modified by the ITAR-controlled data?
If the technical data is merely loaded onto a standard computer that has not otherwise been modified, the computer does not become 3A611.x. The computer retains its original EAR99, 4A994 or 4A003 classification. The ITAR technical data retains its XI(d) classification.
Are there any specific instructions on scrapping ITAR controlled items in the ITAR regulations? Like, "must not be recognizable as the original item?" In our case, our scrap company is in New Hampshire; they grind it up and sell as scrap. I was wondering if there was an ITAR reference that could be incorporated into procedures.
There are no ITAR issues if there are no exports. The ITAR does not address your issue directly.
The ITAR does not control something that is not on the USML. So, I assume you are looking at what needs to be done so an item on the USML becomes something that is no longer an item on the USML. First, I will say it depends on the item. While I do not know the exact details of the grinding process, many USML items (examples, pump, printed circuit board, electronic component, radio, rifle, night vision goggles) that are ground up into tiny pieces cease to be USML items. On the other hand, if a certain powder or propellant is USML controlled based on its chemical nature/performance/properties, then I do not think grinding it up would cause it to cease to be a USML item.
I want to establish a transit stock in Germany for my potential customers. I will export software and IT accessories and keep it on my transit stock, until it's delivered to the end customer in former soviet countries. From an export compliance perspective, I do not know my end user when exporting to Germany and just making stock building. No BIS authorization is required when the "ship to" is Germany. But do I still need to report CCL items when they go to other countries from Germany?
Generally speaking, the same US requirements apply to shipping a US item from Germany to X as would apply when shipping the same item from the US to the same X. So, for example, if I need an export license to export my item from the US to the Crimea region in Ukraine, I need a reexport license to send the same item from Germany to the Crimea region of Ukraine.
I am the owner of a small, contract machine shop located in the US. All my employees are US citizens. We build to customer drawings, many of which fall under ITAR restrictions. My customer assembles my components, along with others we do not supply, into complicated hydraulic valves and then sells them to a “Prime” defense contractor. A local businessman, who is a US citizen, approached me and offered to buy my business. He is a minority shareholder in a local corporation, the majority shareholder is a resident of India, and is not a US citizen. The non-US citizen would not have any responsibilities at the shop, he is basically an investor. My company is not currently ITAR registered. What steps would I have to take to sell my business and ensure ITAR compliance?
If you build ITAR controlled items to customer's ITAR documents and specs, you must register with DDTC per ITAR Part 122. Once registered, ITAR 122 requires that you notify DDTC prior to selling your business to a foreign person.