DDTC Updates Guidelines, Issues FAQ on Licenses "In Furtherance of" Agreements
The State Department's Directorate of Defense Trade Controls has issued a frequently asked question (FAQ) document on its updated Section 9.4 guidelines on licenses for exporting hardware "in furtherance of" agreements under Part 124 of the International Traffic in Arms Regulations (22 CFR Part 124)1.
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(DDTC defines hardware exported in furtherance of an agreement as the export by the agreement holder or another U.S. signatory of the agreement of defense articles identified with the scope of the agreement.)
Replacement Guidelines for Exporting Hardware in Furtherance of an Agreement
According to the Society for International Affairs (SIA), DDTC recently revised Section 9.4 of its "Guidelines for Preparing Agreements" for exporting hardware via separate license in furtherance of an agreement as part of the move towards implementation of D-Trade 2. The updated Section 9.4 also transfers the audit responsibility back to the applicant for verification of whether they meet all of the requirements.
Under revised Section 9.4, an applicant will not be able to submit a license request in furtherance of an agreement until the agreement is approved. Also, the system will not accept a license request that exceeds the hardware value authorized by the agreement.
DDTC sources confirm that submissions not meeting the updated requirements may be Returned Without Action.
FAQ Addresses Processes for Applicants, First Foreign Consignee, Etc.
In its FAQ document, DDTC addresses the following issues on its updated requirements for licenses in furtherance of agreements (partial list):
Requirement of copies by applicant to shorten review time. DDTC requires copies of the entire agreement to be filed by the applicant when processing a license in furtherance of an agreement. DDTC states that this requirement was implemented to facilitate the review by the licensing officer of the license application. Previously, the licensing officer would have had to retrieve and audit voluminous files to compile the necessary information to confirm hardware authorization. DDTC has reduced this requirement to copies of the agreement/ amendments and pertinent sections which relate to and authorize exports of hardware, which requires a little more effort on the part of the applicant but significantly shortens the review time.
1st foreign consignee must be licensee/end-user on the agreement. Under Section 9.4, the first foreign consignee to receive the requested hardware has to be a foreign licensee or end-user on the subject agreement. DDTC states that the intent of this requirement is to clearly place the exported hardware under the umbrella of the identified agreement before moving it on to other consignees. The foreign licensees as signatories to the terms and clauses of the agreement must fulfill their responsibilities of control and tracking of the hardware exported from the U.S. under the agreement.
Execution of agreement not required for application. DDTC clarifies that the agreement/amendment authorizing the hardware requested for export does not have to be executed in order to submit a license application. The agreement/amendment does have to be approved by DDTC prior to submission. Proviso 3 of an agreement approval letter prohibits the shipment of the approved hardware prior to the execution of the authorizing agreement/amendment.
1Manufacturing license agreements and technical assistance agreements
DDTC FAQ document (updated 04/22/08) available at http://www.pmddtc.state.gov/docs/FAQs_licenses_furtherance_agreements.pdf
DDTC's replacement Section 9.4 (last updated 04/22/08) available at http://www.pmddtc.state.gov/docs/AG_Section_9.4_Replacement.doc
SIA press release on revised Section 9.4 (dated 01/02/08) available at http://www.siaed.org/en/art/?124
SIA press release on FAQs (dated 04/23/08) available at http://www.siaed.org/en/art/?175