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Breakout Session # 1207 Anthony J. Perfilio, Esq. Michael P. Foley, Esq. Christopher J. Aluotto, Esq. Rendigs, Fry, Kie

EXPORT CONTROL OF TECHNICAL DATA UNDER THE ITARS. Breakout Session # 1207 Anthony J. Perfilio, Esq. Michael P. Foley, Esq. Christopher J. Aluotto, Esq. Rendigs, Fry, Kiely & Dennis, LLP. Date: Tuesday, April 15, 2008 Time: 4:30 – 5:30 pm. ARMS EXPORT CONTROL.

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Breakout Session # 1207 Anthony J. Perfilio, Esq. Michael P. Foley, Esq. Christopher J. Aluotto, Esq. Rendigs, Fry, Kie

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  1. EXPORT CONTROL OF TECHNICAL DATA UNDER THE ITARS Breakout Session # 1207 Anthony J. Perfilio, Esq. Michael P. Foley, Esq. Christopher J. Aluotto, Esq. Rendigs, Fry, Kiely & Dennis, LLP. Date: Tuesday, April 15, 2008 Time: 4:30 – 5:30 pm

  2. ARMS EXPORT CONTROL • Arms Export Control Act (AECA) • 22 U.S.C. 2751, et. seq. • International Traffic In Arms Regulations (ITAR) – 22 C.F.R. 120-130 • U.S. Munitions List (USML) – 22 C.F.R. 121 • Defense Articles, Defense Services, Related Technical Data • 21 Categories Of Articles, Services, Data • Directorate Of Defense Trade Controls (DTC)

  3. CONROLLED EXPORTS • Three Categories of Exports Require License or Approval • Defense Articles: Subpart 123 • Defense Services: Subpart 124 • Technical Data & Classified Defense Articles: Subpart 125

  4. EXPORT CONTROL - DEFINITIONS • Export (§ 120.17) • Sending, taking defense article out of U.S. • Transferring registration, control, ownership of aircraft, vessel, satellite to foreign person • Disclosing (including oral or visual) or transferring in U.S. Defense article to foreign embassy, or subdivision of foreign government • Disclosing (including oral or visual) or transferring technical data to foreign person whether in U.S. or abroad • Performing defense service on behalf of or for benefit of foreign person whether in U.S. or abroad

  5. EXPORT CONTROL - DEFINITIONS • Foreign Person (§ 120.16) • Natural Person (Individual) Neither • Protected Person [8 USC § 1324b(a)(3)], NOR • Permanent U.S. Resident [8USC § 1101(a)(20)] • Foreign Corporation, Partnership, Trust, Society or Other Entity Not Incorporated or Organized to do Business in U.S. • International Organization, Foreign Government, Agency of Foreign Government

  6. EXPORT CONTROL - DEFINITIONS • Defense Articles (§ 120.6 & § 120.3 ) • Specifically designed, developed, configured, adapted, modified for military application & EITHER • No predominant civil applications & no performance equivalent to article for civil application or • Significant military or intelligence applicability with control under USML deemed necessary • Defense Services (§ 120.9) • Assistance (Including Training) • To foreign persons • In design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles

  7. EXPORT CONTROL – DEFINITIONS • Technical Data (§ 120.10) • All classified information relating to defense articles and defense services • Information covered by invention secrecy order • Software defined by § 121.8(f) Directly related to a defense article • Information, whether classified or unclassified, needed for design, development, production, manufacture, assembly, operation, repair, test, maintenance or modification of defense articles • Includes all forms: blueprints, drawings, photographs, plans, instructions, documentation however conveyed: written, visually, or orally

  8. EXPORT CONTROL – TECH DATA • Determining If Data Is Controlled • Is It Technical Data? • Some Data Excluded From Definition. • Is It Otherwise Uncontrolled? • In The Public Domain • General Scientific, Engineering Or Mathematical Principles • Basic Marketing Information • Is It Being Exported? (Remember, this may be oral, visual, or written) – if not, no control • Is There An Exemption? If so, license may not be required.

  9. EXPORT CONTROL – TECH DATA • Public Domain Information (§ 120.11) – Information Published And Generally Accessible / Available To The Public • News Stands and Bookstores • Subscriptions Available Without Restriction • Through USG Second Class Mailing Privileges • Libraries Open To Public • Available At Patent Office • Unlimited Distribution • Conference, Meeting, Seminar, Trade Show or Exhibition, Generally Accessible to U.S. Public

  10. EXPORT CONTROL – TECH DATA • Public Domain Information Available (Cont’d) • Public Release • Unlimited Distribution In Any Form Approved By Cognizant USG Dept. / Agency • Fundamental Research in Science and Engineering at Accredited U.S. Institutions of Higher Learning • Where Resulting Information Ordinarily Published And Shared Broadly In The Scientific Community • “Basic and Applied” Research • Not Research For Proprietary Reasons • General Scientific, Mathematical, Engineering Principles • Commonly Taught in Schools, Colleges, Universities • Basic Marketing Information on Function, Purpose or General System Descriptions • What It Does, But Not How It Operates

  11. EXPORT CONTROL - DECISIONS • Commodity Jurisdiction (§ 120.4) • USML Coverage In Doubt or to Remove Item • No Need to be Registered • Must Identify Article, History, Design • Case-by-case Decision by DTC • Number, Variety, Predominance of Civil Applications • Nature, Function, Capability of Civil Applications, and • Nature, Function, Capability of Military Applications • Appeals to Asst Sec State (Pol.-Mil. Affairs)

  12. EXPORT CONTROL – LICENSING & APPROVAL • Licenses & Agreements • Temporary Export License: § 123.5; DSP-73 • Temporary Import (In-Transit) License: §§ 123.3/123.4; DSP-61 • Permanent Export License: § 123.1; DSP-5 • Agreement Approvals: § 124.1; • Technical Assistance Agreement (TAA) • Manufacturing License Agreement (MLA)

  13. EXPORT CONTROL - EMBARGOES • Proscribed (Embargoed) Destinations (§ 126.1) • Afghanistan (Except Afghan Interim Authority), Belarus, Burma, China, Cote D’lvoire, Cuba, Democratic Republic of The Congo (Except Non-Lethal Equipment & Training to Un Mission), Haiti (With Limited Exceptions to Gov’t of Haiti & Un Mission), Iran, Iraq (Except Reconstituted Iraqi Military or Police & Private Security), Lebanon, Liberia, Libya (with Limited Non-Lethal Exceptions), North Korea, Rwanda (Except for the Gov’t of Rwanda), Sierra Leone, Somalia, Sudan, Syria, Vietnam (with Limited Non-lethal Exceptions), And Venezuela • United Nations Security Council Embargoes • All Proposed Sales Prohibited • Exemptions Generally Not Applicable

  14. SPECIAL EXPORT CONTROL – SME • Significant Military Equipment (“SME”) (§ 120.7) • Special export controls warranted because of capacity for substantial military utility or capability • Includes all classified equipment & items identified by asterisk on munitions list • Special controls identified throughout ITAR • Includes prior approvals & prior notifications (E.G. “Proposal or presentation”)

  15. EXPORT CONTROL – SME PROPOSALS/PRESENTATIONS • “Proposal or Presentation” (§ 126.8) • Communication In Sufficient Detail That Person Knows OR Should Know Would Permit Intended Purchaser to Decide EITHER to • Acquire Particular Equipment in Question, OR • Enter Into Manufacturing License Agreement or Technical Assistance Agreement • A Series Of Communications Can Be A Proposal • If Related to SME, Require Prior Notice to or Approval by DTC (§ 126.8(a) & (C)) • Not A “Proposal” • General Circulation Advertising • Preliminary Discussions of Market Potential • Merely Calling Attention to Manufacture

  16. Prior Approval: Proposal For Sale Of SME > $14m Not Intended For: NATO Country Australia Japan New Zealand Export Of Defense Articles Or Defense Services Abroad Identical SME Has Not Been Licensed For Export Approved For FMS Prior Notification Proposal For Sale Of SME > $14 Million Not Intended For: NATO Country Australia Japan New Zealand Export Of Defense Articles Or Defense Services Abroad Identical SME Has Been Licensed For Export Approved For FMS EXPORT CONTROL – APPROVAL / NOTICE Sme Proposal: Prior Approval V. Prior Notification Under (§ 126.8(a)(1) &(2))

  17. EXPORT CONTROL – SME PROPOSALS/PRESENTATIONS • Proposal to Enter Into MLA or TAA For Production Or Assembly of SME Abroad Requires Prior DTC Approval (§126.8(a)(3)) • Regardless of Dollar Value • Regardless of Country • If Agreement Involves • Export of Defense Articles or Technical Data • Furnishing Defense Services Abroad • Subsequent Application For License Must • Reference Prior Approval or Notification OR • Certify No Proposal Requiring Approval or Notification Was Made

  18. EXPORT CONTROL - EXEMPTIONS • DOD / Agency-based Exemptions: • 126.4(a) – Temporary Import/Export by/for DOD • 126.4(c) – Permanent Export for Use Abroad Pursuant to Contract or Written Directive • 126.6 – FMS Program Permanent Export • 126.6(c) – Defense Services Under FMS Program • 125.5 – DOD Sponsored or Approved Plant Visits • 125.4(b)(1) – Data Pursuant to DOD Request/Directive • 125.4(c) – Services and Data Pursuant to DOD Request/Directive to Respond to RFP or RFQ • Extreme Care Required • FMS Case, Contract, Written Direction/approval • Required in All Cases

  19. EXPORT CONTROL - EXEMPTIONS • Plant Visit Technical Data Exemptions • Classified Plant Visit (§ 125.5(a)) • Oral & Visual Disclosure of Unclassified Technical Data • Classified Plant Visit (§ 125.5(b)) • Oral & Visual Disclosure of Classified Information • Classified or Unclassified Plant Visit (§ 125.5(c)) • Disclosure of Unclassified Technical Data

  20. EXPORT CONTROL - EXEMPTIONS • Technical Data General Exemptions (§ 125.4) • Disclosed Pursuant to Official Written Request / Directive From U.S. Department of Defense • In Furtherance of Approved MLA or TAA • In Furtherance of Contract with USG Agency • Basic Operation, Maintenance & Training Data for Defense Article Lawfully Exported to Same Party • Related to Firearms Not in Excess of .50 Caliber • Being Returned to Original Importer • Sent by U.S. Corporation to U.S. Person Employed by that Corporation Overseas or to USG Agency • Pursuant To Arrangement With DOD, DOE or NASA • Disclosed in U.S. to Bona Fide and Full Time Regular Employees of U.S. Institutions of Higher Learning • Specifically Exempt Under Part 126 (Canadian/FMS)

  21. EXPORT CONTROL - EXEMPTIONS • Canadian Exemption • Some, USML Items (Very Restricted Eligibility) May Be Exported To Canada • For End Use in Canada • By Specified Canadian End Users • Exemption is Extremely Narrow • Very Long List of Items & Related Data to Which Not Applicable

  22. EXPORT CONTROL - EXEMPTIONS • General Restrictions On Use Of Exemptions (§123.16(a)) • Cannot Be Used For: • Proscribed Destinations (§ 126.1) • Missile Technology Control Regime (MTCR) • Subject to Congressional Notification (§ 123.15) • Establish Offshore Procurement (OSP) • Cannot Be Used By: • Persons Ineligible To Export Defense Articles • Persons Not Registered With DTC

  23. EXPORT CONTROL – LICENSING & APPROVAL • Advisory Opinions [22C.F.R. § 126.9] • Prospective Exporter May Seek • DTC Advisory Opinion Whether Likely to Grant License, Approve Export • Application In Writing, Detailing: • Equipment • Intended Usage • Security Classification, and • Destination Country or Countries Involved • Not Binding On DOS; Revocable

  24. EXPORT CONTROL-ENFORCEMENT • Criminal And Civil Penalties • 22 USC 2778 • 22 CFR 127 • Criminal • $1M Fine, 10 Years Imprisonment • Per Violation • Civil • $500K Fine • Per Violation

  25. EXPORT CONTROL-ENFORCEMENT • Raytheon: 1999 - $550K • Unlicensed Export to Canada – Hardware & Data – 11 Violations Charged • Loral, Hughes, Boeing: 2001-2003 - $58M • Unlicensed Export Satellite Launch Services & Data – 123 Charged Violations • ITT Industries: 2004 - $8M • Improper Export Space Remote Sensing Data, Services & Night Vision Devices • General Motors: 2004 - $20M • Disclosure to Foreign National Employees • Lockheed Martin Sippican: 2006 - $3M • Unauthorized Export Services & Tech Data

  26. ?? QUESTIONS ?? DISCUSSION

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