ExportLawBlog

Archive for the ‘DDTC’ Category

Dec

19

DDTC Releases New Proposed Brokering Rules

Posted by Clif Burns at 11:58 pm on December 19, 2011

Sea Dragon Helicopter The Directorate of Defense Trade Controls (“DDTC”) finally released its much anticipated (or dreaded, depending on your point of view) new proposed rules on brokering of defense articles and defense services. Although I intend to look at these proposed rules in more detail in subsequent posts, I wanted to talk first about one issue of particular concern to me.

Naturally I first looked at how the new rules handled export lawyers who provide advice to defense manufacturers. The language of the old rules was broad enough that arguably all export lawyers were brokers and needed to register under part 129 of the International Traffic in Arms Regulations (the “ITAR”) because brokering was defined to include any action that facilitated the manufacture or export of defense articles. Notwithstanding the breadth of that language, lawyers and law firms have not been registering under Part 129, using the well-accepted principal of statutory construction: hic lex non comprehendo mihi. And DDTC had not been rattling any sabers about their not registering.

The proposed rule now specifically exempts “activities by an attorney that do not extend beyond providing legal advice to a broker.” This exemption would seem to require the conclusion that all export lawyers need to register unless they are only providing advice to brokers, although it’s hard to imagine this is what DDTC actually intends.

But it gets worse. Not only will law firms with export lawyers have to file a registration application and pay the annual registration fee, but they also will have to obtain prior approval from DDTC prior to providing many legal services to defense manufacturers. The new rules require prior approval for all brokering activities unless they are specifically exempted from that requirement in the new section 129.7, which exempts brokering (a) conducted for a government agency, (b) brokering of certain defense articles (excluding, for example, night vision) wholly within NATO countries, Japan, New Zealand, Australia or South Korea, or (c) brokering of defense articles that are not “Significant Military Equipment” (“SME”) for end use by foreign governments or international organizations. So, if a law firm provides advice to a defense manufacturer about exporting night vision to France, the law firm will need DDTC approval before providing that advice.

This, of course, is either pernicious policy or unbelievable sloppy drafting by DDTC. The agency takes great pains to exclude banks, insurance companies and freight forwarders from the scope of the new brokering rules but leaves them fully applicable to law firms and requires law firms to obtain agency permission to provide legal services. I cannot think of another instance (other than cases involving blocked parties) where federal agency permission is needed as a precondition to the provision of legal services to clients.

Comments are due on February 17, 2012.

Permalink

Comments (4)

Dec

6

Imaginary Numbers

Posted by Clif Burns at 9:17 pm on December 6, 2011

Category: DDTC

Although I am not a mathematician, I have recently discovered (with the help of a regular reader) some new imaginary numbers other than those well known imaginary numbers that are the square roots of negative numbers. The new imaginary number can be found on the list of final commodity jurisdiction determinations published by the Directorate of Defense Trade Controls (“DDTC”).

Three entries on the list, two for a high mobility electron transistor (“HMET”) and one for a microwave monolithic integrated circuit (“MMIC”), indicate that the correct classification for these items is ECCN 3A982. The problem is that there is no ECCN 3A982, and there has never been, at least that I could find.

I have an idea of what might have happened. I think this is a typo for ECCN 3A991 which covers “[e]lectronic devices and components not controlled by 3A001,” which is where some MMICs and HMETs are classified. ECCN 3A991 immediately follows ECCN 3A981, so somebody at DDTC more or less renumber 3A991 as 3A982. Anybody have a better theory about what happened?

And. although I love the new final determination list and applaud DDTC for putting it on line, please allow me one final quibble and I’ll never say another negative thing about the list. For some reason, the page that has the list will not open up in Chrome. On behalf of Chrome users everywhere (and we now are 18 percent of all browser users), it would be nice if this could be fixed.

Permalink

Comments Off

Dec

5

Don’t Go Giving BIS Any Ideas

Posted by Clif Burns at 6:04 pm on December 5, 2011

Category: BIS • DDTC

Department of Commerce Oh, the things you’ll learn when you read the documents that companies file with the Securities and Exchange Commission:

In March 2011, BlastGard’s management team officially assumed operational control of HighCom. Since this time we have accomplished a number of key compliance tasks and finalized manufacturing agreements with several key partners. As stated in the paragraph above, BlastGard has received official communication from the U.S. State Department that HighCom’s export authority has been reinstated. In addition to this, BlastGard has completed registration through both the Directorate of Defense Trade Controls as well as the Bureau of Industry and Security (“BSI”). The purpose of these registrations is to allow BlastGard control over the export management and compliance program moving forward.

Completing registration with the Bureau of Industry and Security is quite an accomplishment — considering the BIS (or is it BSI?) doesn’t have a registration process. Perhaps they mean that they’ve gotten a PIN for the SNAP-R system? And we’ll award the coveted “Reader of the Week” prize to anyone who can figure out what the last sentence in that quotation means.

All kidding aside, I still am somewhat surprised that BIS hasn’t gotten on the needless user fee gravy train yet along with DDTC. It’s probably only a matter of time before BIS realizes that there’s gold in them registration hills, and then companies will be able to boast in press releases that they’ve been certified as export-compliant and super cool by BIS in addition to having been certified by DDTC.

Permalink

Comments (6)

Nov

10

DDTC Publishes New Proposed Aircraft Rules

Posted by Clif Burns at 1:49 pm on November 10, 2011

Category: Arms Export • DDTC

Military UAV On November 7, the Directorate of Defense Trade Controls (“DDTC”) published its second iteration of the proposed rules on aircraft and aircraft components as part of the White House’s export control reform initiative. As with the first iteration, published back in December, this new version of the proposed rules continues to pursue the goal of making the USML, to the extent possible, a “positive” list and to eschew the “specifically designed” criterion which has been central to the current USML approach to determining what items are controlled by the list. And although the new rules are a laudable improvement they still fall short of these worthy aspirations.

First, for certain aircraft, such as the F-22, parts and components will still be controlled if they were “specially designed” for those aircraft. And DDTC concedes it hasn’t figured out a good way to define “specially designed,” conceding that the definition used in the December notice was being revised and would be the subject of a future notice.

Second, not all the covered aircraft are positively defined. Under the proposed revision of Category VIII, “armed unmanned aerial vehicles” are covered, which makes eminent sense, but so are “unarmed military unmanned aerial vehicles.” I can hear you asking now what makes an unarmed UAV a military UAV? DDTC concedes it has no earthly idea itself of the answer to this question, and asks for comments on this matter, sort of like the stumped contestant in “Who Wants To Be A Millionaire” using the audience lifeline.

Here’s a thought on an answer to that question. Unarmed UAVs are never military unless they are classified or contain classified systems or components. Because the proposed rule covers classified parts, the same principle should cover, by extension, classified aircraft or aircraft with classified components, in which case military unarmed UAVs do not need to be listed.

Permalink

Comments (2)

Nov

8

Skip to My Loo

Posted by Clif Burns at 6:43 pm on November 8, 2011

Category: DDTC • USML

Toilet My inbox this morning had several, er, heads up alerting me to news that the Directorate of Defense Trade Controls (“DDTC”) has removed toilets from the United States Munitions List (“USML”). Needless to say, this was a blogging opportunity that I could not let go to waste.

More specifically, DDTC removed chemical toilets manufactured by MAG Aerospace Industries for use in military aircraft. The toilet in question was initially manufactured for the Lockheed C-130 and was subsequently modified for other military aircraft.

In explaining why these specially configured military aircraft components are being removed from the USML, DDTC said this:

The core functionality of the toilet remains the same as a model used for commercial aircraft.

That may be my favorite example of bureaucrat-ese ever. It translates, of course, into plain English as this: “The purpose of both models is to …” I bet you are relieved I didn’t finish that sentence, aren’t you?

For those that may not be privy to all aspects of export law, the DDTC adds at the end of the notice that the removal of the toilets from the USML does not mean that they can now be exported to Iran or other embargoed countries. Those poor mullahs will simply have to settle for ordinary flush toilets, I guess.

Permalink

Comments (4)