May
2
Wonked (or Not?)
Posted by Clif Burns at 8:09 pm on May 2, 2007
Category: Arms Export • DDTC
Jeffrey Lewis, who works at a DC think tank and who blogs at Arms Control Wonk, took issue with our post on the Sudarshan indictment. Unfortunately, it doesn’t appear that either he or Scott Gearity, whom he quotes, bothered to read what we said very carefully:
Clif Burns at export law blog [sic] suggests one of the microprocessors—the i960—in the second half of the indictment isn’t controlled, noting that its out of production and obsolete.
I asked our old friend Scott Gearity if the i960 microprocessor was controlled. Scott pointed to “a couple red herrings in Burns’ analysis—(1) just because something is no longer being manufactured doesn’t mean its no longer … potentially subject to the ITAR (don’t export that surplus B-52 without asking State first) and (2) a term like “off-the-shelf†obfuscates the main issue, which is whether an item as been specially designed, developed, configured, adapted or modified for a military application.â€
To begin with, we never said (nor would we say) that something that is no longer being manufactured isn’t subject to the ITAR. What we said was simple. The i960 processor came in a military version — the i960MX — and non-military versions that were used in telecommunications and other applications, including slot machines. The i960MX would clearly be an ITAR component, but we didn’t think the i960MX was being exported. The fact that it wasn’t being manufactured suggested that it wasn’t being exported, not that it wasn’t on the USML.
Nor does “off-the-shelf” obfuscate anything here. Apparently Lewis and Gearity think that if you test an item in normal commercial use to military specifications, it may transform that off-the-shelf item into a USML item.
I’d say its an unsettled issue as to whether general purpose microprocessors tested to a military standard are subject to the ITAR. The definition of a “defense article†is silent on items tested to military standards.
The fact that the definition of defense article is silent on this point would more likely suggest that simple testing won’t transform a normal commercial item into a defense article.
Say you make 100 chips, all of identical design, materials, etc., but when you test them only 90 meet the military QA standards (for reliability or whatnot). Are those 90 defense articles? All 100? I think you could argue that none of them are, but that’s a more aggressive approach then I would recommend to a client without first obtaining a written opinion from State.
I don’t think the argument that none of them are defense articles is aggressive. Let’s do something that neither Gearity nor Lewis may have done. Let’s actually take a look at the relevant provision of the ITAR: subsection (c) of Category XI – Military Electronics. Subsection (c) states that the following items are included on the USML:
Components, parts, accessories, attachments and associated equipment specifically designed or modified for use with the equipment in paragraphs (a) and (b) of this category, except for such items as are in normal commercial use.
Simply put, testing a microprocessor isn’t designing it or modifying it for a military use. The item is the same thing both before and after the testing, and it either was or wasn’t designed or modified for military use. Furthermore, the explicit exception here of “such items as are in normal commercial use” underlines my point that an off-the-shelf item doesn’t become ITAR-controlled just because it’s been tested to see if it also meets some particular military specification.
Even if testing a normal commercial item won’t turn the item into an ITAR-controlled item, it may well pose another problem under the ITAR. Testing that component to a specification provided by a foreign military is almost certainly a defense service under ITAR § 120.9 if the item is to be integrated into a defense article, as was the case here. Accordingly, such testing would require DDTC authorization. That, however, wasn’t charged in the indictment.
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13 Comments:
Would Halloween face paint become “munition” once “performance test” shows it conforms to spec for military camouflage?
It would be “combat concealment technology”, no?
If the item was not designed, modified or configured for military usage, then it is a commercial item.
If the face paint was not designed, modified, or configured for military usage, it is commercial.
However, if the military requests that the manufacturer use different ingredients within the face paint to allow it to not fade, then the item will most likely become a munitions items subject to ITAR controls.
What happens when you look at the military request and realize that the non-fading ingredients are your next generation face paint in testing? Does the next generation face paint become USML because the military bought it first? What level of documentation are you going to have to obtain/maintain to keep an AUSA away?
Frank, re-read the first sentence of Troy’s comment.
So, would testing a commercial item (within the US) to a specification provided by a foreign military be considered a defense service if the item was INTENDED to be integrated into a defense article? If yes, is that true even if the item is integrated by a non-US person outside the US?
My answer is: 1) If the testing is such that it only reveals performance thresholds and statistics, etc., for the item – no. 2) If, however, it reveals or is intended to reveal a use for the commercial article not previously identified, or reveals other data relative to an unintended defense use for the item – yes. Unfortunately there is a VERY fine line between these, and (2) can be true in the performance of (1).
Good lord, did that make any sense?
Export Boy, it’s true even if the item is to be integrated into the defense article by a non-US person outside the US. The definition of defense service is quite broad:
The furnishing of assistance . . . to foreign persons, whether in the United States or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles.
So it doesn’t matter what the testing reveals. If the testing helps the foreign person design, manufacture or use a defense article, it’s a defense service. In general, that rule is so broad that it really should read simply “no U.S. person should do anything for a foreign military.”
Does that mean I can’t, say, sell potatoes to the French Navy? You can argue, after all, that you can’t sail a ship on an empty stomach so the potatoes help foreign persons use the ship. I doubt that is what the definition had in mind, but still it does fit within the language of the definition.
Of course, the Sudarshan case isn’t really a hard one like my potato example, inasmuch as they were testing the microprocessors to make sure they’d work in the fighter jets.
Clif,
I would like to point out in the definition:
The furnishing of assistance . . . to foreign persons, whether in the United States or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles.
A defense article is any item designed, configured or modified for military usage and would need to fall in the US munitions list.
Was a potatoe designed for military usage? No. Is it covered in the US munitions list? No.
You would not need an ITAR Hardware license to ship potatoes to the French Navy since they are not defense articles.
A commercial item would only require a Technical Agreement or Technical Data License if you were offering any of the Technical Data:
Technical data means, for purposes of this subchapter:
Information, other than software as defined in §120.10(a)(4), which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation.
Classified information relating to defense articles and defense services;
Information covered by an invention secrecy order;
Software as defined in §121.8(f) of this subchapter directly related to defense articles;
This definition does not include information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities or information in the public domain as defined in §120.11. It also does not include basic marketing information on function or purpose or general system descriptions of defense articles
I hope that makes sense.
On the issue of defense services, remember that in several enforcement cases, the respondent was forced to agree to lanquage to the effect that a defense service includes the application of uncontrolled, public domain knowledge to defense articles. Thus testing, even using civilian standards (e.g., FAA safety of flight) to assure that a product meets spec can be a defense service if the product is intended for use on a military product. This has wide ramifications even for non-exporters, e.g., in the employment of foreign nationals and even in registration. I recently had DDTC tell a client that sold a testing machine to a defense contractor which machine differed from the normal product only in that the cables for the input devices had been lenghtened in order to fit the military item, that not only would the client have to get a license to employ the foreign engineer who designed the machine, but it would now have to register as well before it could apply for the license or sell any more modified products to domestic defense contractors. Of course, the client was a small business.
Troy,
My point wasn’t that potatoes were USML. My point was that supplying potatoes to the French navy assisted them in using their ships which are defense articles.
I admit that this example is far-fetched and probably outside what the definition intends; my point, however, is that the language of the definition is broad enough to cover the potato example.
Thanks Clif,
Where does it end?
If this is how we are to interpret ITAR, then why would need the Commerce Control List.
At some point, there needs to be a clear and definitive distinction between the 2 sectors. Right now everything is starting to become cloudy and grey.
The subjectivity inherent in these discussions is always frustrating. In the absence of clear guidance, there is an attempt to apply the “common sense” approach to the regulations, as in the potato example.
I agree that the ITAR, broadly written as it is, can be interpreted with just such an ultra-conservative view. However, since you yourself imply that you would not apply that conservative view towards the potatoes, where is the line crossed?
I still say it is crossed in the ways I mention in my previous post, or whenever the technical data that results from or is used to perform the test is itself controlled. Or if the item is modified, of course.
What I am waiting to see is how long will it take DDTC to cover irregular warfare under the ITAR. I could see some very interesting cases rising from that interpretation. Currently, unless I am mistaken, irregular warfare is only mentioned in the definition of defense services – training military forces, regular and irregular. Also, I am thinking of how the General Order imposing licensing requirements for all shipments to Mayrow came about. Current export control regime in the US is not well suited for regulation of exports to irregular (i.e. terrorist) forces, unless they are specifically named on the SDN or the export involves training.
I wish to know if the capacitor part M39014/01-xxxx series would come under the US Munitions List. It appears that the part is not under USML, since many big distributors export this part without any licenses. However, I wanted to confirm the same. Can anyone throw some light on the matter? Thanks for the help.
