As part of a flurry of recent proposed and final amendments to U.S. export controls regulations, on May 26, 2015, the Department of State’s Directorate of Defense Trade Controls (DDTC) issued a proposed rule clarifying the registration and licensing requirements under the International Traffic in Arms Regulations (ITAR) for U.S. persons employed by foreign companies.
U.S. persons, including those employed abroad by foreign corporations, are required to register with DDTC if they perform ITAR-controlled defense services. This includes furnishing many types of assistance (e.g., training, maintenance, or engineering) related to defense articles, regardless of the origin of such articles. DDTC’s proposed rule would add a provision to the ITAR clarifying that natural persons employed by affiliates and subsidiaries listed on a U.S. company’s ITAR registration statement will be “deemed” to be registered.
DDTC’s proposal would also add an exemption from the ITAR’s normal license requirement to permit a natural U.S. person employed by a foreign entity located in a NATO or EU country, Australia, Japan, New Zealand, or Switzerland to provide certain defense services to or on behalf of the foreign employer. Another new exemption will allow a natural U.S. person to furnish certain defense services if his/her foreign employer is engaged in activities related to a Foreign Military Sales (FMS) program. For non-exempt activities, a U.S. person employed by a foreign entity will be permitted to submit a DSP-5 export license to authorize defense services or may receive authorization via a DDTC-approved agreement between a registered U.S. company and the foreign subsidiary or affiliate that employs the individual.
Exporters are encouraged to submit comments on the proposed rule. Comments are due on July 27, 2015.