[Federal Register Volume 75, Number 154 (Wednesday, August 11, 2010)]
[Proposed Rules]
[Pages 48625-48627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19833]
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DEPARTMENT OF STATE
22 CFR Parts 124 and 126
[Public Notice: 7116]
RIN 1400-AC68
Amendment to the International Traffic in Arms Regulations: Dual
Nationals and Third-Country Nationals Employed by End-Users
AGENCY: Department of State.
ACTION: Proposed rule.
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SUMMARY: The Department of State is proposing to amend the
International Traffic in Arms Regulations (ITAR) to update the policies
regarding end-user employment of dual nationals and third-country
nationals.
DATES: Comment Due Date: The Department of State will accept comments
on this proposed rule until September 10, 2010.
ADDRESSES: Interested parties may submit comments within 30 days of the
date of the publication by any of the following methods:
E-mail: [email protected] with an appropriate
subject line.
Mail: PM/DDTC, SA-1, 12th Floor, Directorate of Defense
Trade Controls, Office of Defense Trade Controls Policy, ATTN:
Regulatory Change--Nationals, Bureau of Political Military Affairs,
U.S. Department of State, Washington, DC 20522-0112.
Persons with access to the Internet may also view this
notice by searching for its RIN on the U.S. Government regulations Web
site at http://regulations.gov/index.cfm.
FOR FURTHER INFORMATION CONTACT: Director Charles B. Shotwell, Office
of Defense Trade Controls Policy, Department of State, Telephone (202)
663-1282 or Fax (202) 261-8199; E-mail [email protected].
ATTN: Regulatory Change, Nationals.
SUPPLEMENTARY INFORMATION: This is part of the President's Export
Control Reform effort. The Department of State is amending Parts 124
and 126 of the ITAR to reflect new policy regarding end-user employment
of dual-nationals and third-country nationals.
As a result of the President's Task Force on Export Control Reform,
the previous policy regarding the treatment of dual nationals and
foreign nationals was reconsidered. The current requirement for the
provision of additional information within a license to cover dual
national and third-country national foreign employees has created a
tremendous administrative burden on approved end-users and has evolved
into a human rights issue, which has become a focus of contention
between the U.S. and allies and friends without a commensurate gain in
national security. Based on available intelligence and law enforcement
information, and given the current licensing requirements regarding
access by dual or third country national employees, most diversions of
U.S. Munitions List (USML) items appears to occur outside the scope of
approved licenses, not within foreign companies or organizations
providing access to properly screened dual national or third country
national employees. This amendment will place the affirmative
responsibility upon the foreign company, government, or international
organization, with the understanding
[[Page 48626]]
that by accepting the USML defense article, they must comply with the
provisions of U.S. laws and regulations to prevent the possible
diversion of U.S. defense articles and technology. This change, by no
means, reduces the due diligence requirements of the applicant to
ensure, to the best of their ability, that the end-use and end-user are
consistent with the approved authorization. The Department views due
diligence as a requirement for security clearances or other effective
screening procedures as a condition for access to ITAR-controlled
defense articles and technology.
Regulatory Analysis and Notices
Administrative Procedure Act
This amendment involves a foreign affairs function of the United
States and, therefore, is not subject to the procedures contained in 5
U.S.C. 553 and 554.
Regulatory Flexibility Act
Since this amendment is not subject to the provisions of 5 U.S.C.
553(b), it does not require analysis under the Regulatory Flexibility
Act.
Unfunded Mandates Reform Act of 1995
This amendment does not involve a mandate that will result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Small Business Regulatory Enforcement Fairness Act of 1996
This amendment has been found not to be a major rule within the
meaning of the Small Business Regulatory Enforcement Fairness Act of
1996.
Executive Orders 12372 and 13132
This amendment will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this amendment does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this amendment.
Executive Order 12866
This amendment is exempt from review under Executive Order 12866,
but has been reviewed internally by the Department of State to ensure
consistency with the purposes thereof.
Executive Order 12988
The Department of State has reviewed the proposed amendment in
light of sections 3(a) and 3(b)(2) of Executive Order 12988 to
eliminate ambiguity, minimize litigation, establish clear legal
standards, and reduce burden.
Executive Order 13175
The Department of State has determined that this rulemaking will
not have tribal implications, will not impose substantial direct
compliance costs on Indian tribal governments, and will not pre-empt
tribal law. Accordingly, the requirement of Section 5 of Executive
Order 13175 does not apply to this rulemaking.
Paperwork Reduction Act
This rule does not impose any new reporting or recordkeeping
requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter
35.
List of Subjects in 22 CFR Parts 124 and Part 126
Arms and munitions, Exports.
For the reasons set out in the preamble, the Department of State,
proposes to amend 22 CFR parts 124 and 126 as follows:
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT AND OTHER DEFENSE
SERVICES
1. The authority citation for part 124 continues to read as
follows:
Authority: Sec. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); E.O. 11958, 42 FR 4311; 3 CFR 1977 Comp.
p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-261
2. In Sec. 124.8, paragraph (5) is revised to read as follows:
Sec. 124.8 Clauses required both in manufacturing license agreements
and technical assistance agreements.
* * * * *
(5) The technical data or defense service exported from the United
States in furtherance of this agreement and any defense article which
may be produced or manufactured from such technical data or defense
service may not be transferred to a foreign person except pursuant to
Sec. 126.18 or as specifically authorized in this agreement unless the
prior written approval of the Department of State has been obtained.
* * * * *
Sec. 126.16 [Removed]
3. Section 124.16 is removed.
PART 126--LICENSE FOR THE EXPORT OF DEFENSE ARTICLES
4. The authority citation for part 126 continues to read as
follows:
Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 Stat.
744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); E.O. 11958, 42 FR
4311; 3 CFR, 1977 Comp., p.79; 22 U.S.C. 2651a; 22 U.S.C. 287c; E.O.
12918; 59 FR 28205, 3 CFR, 1994 Comp. p. 899; Sec. 1225, Pub. L.
108-375.
Sec. Sec. 126.16 and 126.17 [Reserved]
5. Sections 126.16 and 126.17 are reserved.
6. Section 126.18 is added to read as follows:
Sec. 126.18 Exemptions Regarding Intra-company Transfers to Employees
who are Dual Nationals or Third-Country Nationals.
(a) Subject to the requirements of paragraphs (b) and (c) of this
section, no approval is needed from the Directorate of Defense Trade
Controls (DDTC) for the transfer of defense articles, including
technical data, within a foreign business entity, foreign governmental
entity, or international organization that is an approved end-user or
consignee for those defense articles (including technical data),
including the transfer to dual nationals or third country nationals who
are bona fide, regular employees, directly employed by the foreign
business entity, foreign governmental entity, or international
organization. The transfer of defense articles pursuant to this section
must take place completely within the physical territories of the
country where the end-user is located or the consignee operates, and be
within the scope of an approved export license, other export
authorization, or license exemption.
(b) The provisions of Sec. 127.1(b) are applicable to any transfer
under this section. As a prerequisite to receiving any defense article,
any foreign business entity, foreign governmental entity, or
international organization, as a ``foreign person'' within the meaning
of Sec. 120.16, that receives a defense article, including technical
data, is responsible for implementing effective procedures to prevent
diversion to destinations, entities, or for purposes other than those
authorized by the applicable export license or other authorization
(e.g., written approval or exemption) and
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must comply with U.S. laws and regulations (including the ITAR).
(c) (1)Pursuant to paragraph (b) of this section, the end-users or
consignees can meet the above conditions, prior to access to defense
articles, by requiring:
(i) A security clearance approved by the host nation government for
its employees, or
(ii) The end-user or consignee have in place a process to screen
its employees and to have executed a Non-Disclosure Agreement that
provides assurances that the employee will not transfer any information
to persons or entities unless specifically authorized by the consignee
or end-user.
(2) The end-user or consignee must screen its employees for
substantive contacts with restricted or prohibited countries listed in
Sec. 126.1. Substantive contacts include, but are not limited to,
recent or regular travel to such countries, recent or continuing
contact with agents and nationals of such countries, continued
allegiance to such countries, or acts otherwise indicating a risk of
diversion. Though nationality does not, in and of itself, prohibit
access to defense articles or defense services, an employee that has
substantive contacts with persons from countries listed in Sec.
126.1(a) shall be presumed to raise a risk of diversion, unless DDTC
determines otherwise. End-users and consignees must maintain a
technology security/clearance plan that details its procedures for
screening employees for such substantive contacts and maintain records
of such screening. The technology security/clearance plan and screening
records will be available to DDTC or its agents upon request.
Dated: July 8, 2010.
Ellen O. Tauscher,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2010-19833 Filed 8-10-10; 8:45 am]
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