Amendments to the International Traffic In Arms Regulations

DEPARTMENT OF STATE

22 CFR Parts 121, 123, 124 and 126

[Public Notice 3026]

Amendments to the International Traffic In Arms Regulations

AGENCY: Bureau of Political-Military Affairs, State.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The President of the United States at the 1998 Summit of the

Americas in Santiago, Chile, discussed with the Summit leaders the

importance of strengthening protections against the new transnational

threats facing the region, including the production, distribution, and

abuse of narcotics,

[[Page 17532]]

illegal arms trafficking and terrorism. To combat these threats and to

strengthen the hemisphere's common security, the President agreed to

implement model regulations on commercial arms transfers. In

furtherance of this objective, the Secretaries of State, Commerce and

Treasury are directed to implement the Model Regulations for the

Control of the International Movement of Firearms, Their Parts and

Components, and Ammunition (``Model Regulations''). In responding to

the President's directive, the ITAR was reviewed and it was determined

that the predominant sections requiring change are the US Munitions

List (USML), the Canadian exemption, and the personal use exemption for

firearms and ammunition. Review of the Canadian exemption resulted in

removal of the exemption for several USML items, including all Category

I firearms and Category III ammunition for the firearms in Category I.

It was also determined that the language should be revised to seek

better understanding and compliance by US exporters of the current

requirements of the ITAR and AECA when using the existing exemption:

specifically, those of Part 123 dealing with reexport or retransfer,

and congressional notifications, and of Part 124 that any production of

a USML article in Canada requires prior written approval in accordance

with Part 124 of the ITAR. In carrying out these initiatives,

Secs. 121.1, 121.9, 123.17, 124.13 and 126.5 of the International

Traffic in Arms Regulations (ITAR) are being amended.

EFFECTIVE DATE: April 12, 1999.

FOR FURTHER INFORMATION CONTACT: Rose Biancaniello, Deputy Director

Licensing, Office of Defense Trade Controls, Department of State, Phone

(703) 812-2568 or Fax (703) 875-6647.

SUPPLEMENTARY INFORMATION: This amendment, in addition to responding to

the President's directive on implementing the ``Model Regulations,''

requires a license for additional critical military technologies

identified on the USML and provides specific regulatory references to

ensure proper compliance is exercised over the export of all items

covered by the USML. The amendments also enhance State's ability to

more efficiently, accurately and factually respond to inquiries from

the Congress. In addition, compliance with the regulations will be

enhanced, since the amendment benefits U.S. Customs in its efforts to

carry out enforcement activities related to illegal exports. Recent

escalation in defense companies' voluntary disclosures, discussions

with the Canadian Government and the use of the Canadian exemption by

unregistered companies provides evidence that unauthorized exports are

taking place both from the US and by Canadian persons in possession of

US defense articles and defense services. Therefore, revising the

current ITAR language will assist in preventing future violations by

companies participating in the export, directly or indirectly, of U.S.

defense articles or defense services to unauthorized end-users and end-

uses. Also, the lack of a license for transactions currently authorized

under Sec. 126.5 has eliminated documentation, made impossible USG

review of significant transactions and increased the difficulty to

track, interdict or verify the end-use and end-user violations.

Therefore, Sec. 126.5 has been amended to assist U.S. industry by

providing a better understanding of when a license is required, when

the exemption can be utilized, and the criteria for use of the

exemption. These changes are being made in consultation with the

Government of Canada in order to reduce the risks of illegal

trafficking. To ensure the efficacy of this amendment in enhancing

compliance with the ITAR and the AECA, further review will be conducted

during the next several months to determine whether additional steps

are necessary to ensure that the USG is, in all instances, able to

enforce the defense export control mandates established in the law.

To carry out the President's Directive, ITAR Sec. 121.1, Category

I, Firearms, is amended to move firearms spare parts and accessories

from paragraph (a) to paragraph (d) and to move technical data and

defense services currently in paragraph (d) to a new paragraph (e). In

addition, incorrect cites in paragraph (a) are being corrected. Also,

Sec. 121.9 is amended to exclude from the USML certain types of

accessories and attachments for firearms. Sec. 123.17 (a) is amended to

reduce the value of the parts and components that may be shipped

subject to this exemption from $500 to $100. This change maintains the

original intent behind the exemption, which was to provide an

expeditious manner for exporters to replace minor parts (e.g. springs,

nuts) damaged during the initial shipment, while maintaining controls

necessary to implement the ``Model Regulations.'' In addition, ITAR

Sec. 124.13 is amended to require a license for the export of all

technical data exported for use in the manufacture of defense articles.

Also being amended is Sec. 126.5 of the ITAR. The amendment expands the

defense articles and related technical data that are not exempt from

licensing to include all Category I firearms and Category III

ammunition for such firearms and certain defense articles and related

technical data defined in categories IV, XIII, XIV, and XV of the USML.

Therefore, the exemption does not apply to the following defense

articles, defense services and related technical data for the following

items:

(1) Category I--Firearms;

(2) Category III ammunition for the firearms in Category I; and

(3) Category IV (a), (b), (c), (d), (f) and (g)--Launch

Vehicles, Guided Missiles, Ballistic Missiles, and Rockets. (This

does not include bombs, grenades, torpedoes, depth charges, land and

naval mines in IV (a); components, parts, accessories and

attachments in IV(h); and related technical data for these items

covered by Part 125.); and

(4) Nuclear weapons strategic delivery systems and all

components, parts, accessories, attachments specifically designed

for such systems and associated equipment;

(5) Naval nuclear propulsion equipment listed in Category VI(e);

and

(6) Aircraft listed in Category VIII(a); and

(7) Category XIII(b) and XIII(j) (e.g. stealth); and

(8) Toxicological Agents and Equipment and Radiological

Equipment listed in Category XIV(a) through (d); and

(9) Spacecraft, Remote Sensing Satellites, and Military

Communications Satellites listed in Category XV(a), (b), and (c);

and

(10) Nuclear Weapons Design and Test Equipment listed in

Category XVI; and

(11) All Classified Articles, Technical Data and Defense

Services, including Category XVII; and

(12) Submersible and oceanographic vessels and related articles

listed in Category XX(a) through (d); and

(13) All USML items and related technical data identified on the

Missile Technology Control Regime (MTCR) Annex.

The amendment also states the regulatory sections of the ITAR that

must be complied with when using the exemption.

In addition to amending the ITAR, to fully implement the ``Model

Regulations,'' the Office of Defense Trade Controls has modified its

firearms licensing practices. All requests for a license or other

approval to export firearms and/or ammunition must be accompanied with

a firm order. A letter of intent will no longer be accepted for any

firearms and/or ammunition request. An import authorization or a

certification that the importing country does not issue import

authorizations must also accompany all requests. DTC will continue the

policy to require a Form DSP-83 (Nontransfer and Use Certificate) for

any application for a quantity of 50 or more firearms. Any request that

does not have the required documentation will be subject to being

Returned Without Action (RWA).

[[Page 17533]]

However, in implementing the ``Model Regulations,'' any request for

authorization to export to an OAS member country will be immediately

RWA'd if the request does not include an import authorization. Any

request for relief from this requirement will be denied. The current

OAS member states that have agreed to the ``Model Regulations'' are:

Antigua and Barbuda, Argentina, The Bahamas, Barbados, Belize, Bolivia,

Brazil, Canada, Chile, Colombia, Costa Rica, Dominica, Dominican

Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti,

Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint

Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines,

Suriname, Trinidad and Tobago, United States of America, Uruguay, and

Venezuela.

This change in licensing practices does not affect any change in

any country's status as an ITAR Sec. 126.1 proscribed destination.

Also, the validity period of any license for the export of firearms and

ammunition will be adjusted from the four-year period stated in

Sec. 123.21 of the ITAR to reflect a time period consistent with the

validity period of the import authorization. Applicants may continue to

use valid licenses or other approvals until all the authorized material

has been exported or until the license has expired, unless otherwise

advised by the Office of Defense Trade Controls. Any exporter that has

used an exemption that no longer exists in the ITAR, for an activity

that will continue following this publication, has 30 days from

publication of this notice to apply for a license or other approval.

Any previously exempted activity for which a license or other approval

has not been submitted within 30 days and assigned a DTC case number

must cease or the U.S. person will be considered to be in violation of

the AECA and the ITAR.

This amendment involves a foreign affairs function of the United

States and, thus, is excluded from the procedures of Executive Order

12866 (68 FR 51735) and 5 U.S.C. 533 and 554, but has been reviewed

internally by the Department to ensure consistency with the purposes

thereof. This amendment has been found to be a minor rule within the

meaning of the Small Business Regulatory Enforcement Fairness Act of

1996, Public Law 104-121 ( the ``Act''). Interested parties are invited

to submit written comments to the Department of State, Office of

Defense Trade Controls, ATTN: Regulatory Change, Room 200, SA-6,

Washington, D.C. 20520-0602.

List of Subjects in 22 CFR Part 121

Arms and munitions, Exports.

Accordingly, for the reasons set forth above, Title 22, Chapter I,

Subchapter M, Parts 121, 123, 124 and 126 are being amended as follows:

PART 121--THE UNITED STATES MUNITIONS LIST

1. The authority citation for part 121 continues to read as

follows:

Authority: Secs. 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 1077 Comp.,

p. 79; 22 U.S.C. 2658.

2. In Sec. 121.1 Category I--Firearms is revised to read as

follows:

Sec. 121.1 General. The United States Munitions List.

* * * * *

Category I--Firearms

*(a) Nonautomatic, semi-automatic and fully automatic firearms

to caliber .50 inclusive. (See Sec. 121.9 and Secs. 123.17 and

123.18 of this subchapter.)

(b) Riflescopes manufactured to military specifications; firearm

silencers and suppressers, including flash suppressors. (See

Category XII(c) for night sighting devices.)

*(c) Insurgency-counterinsurgency type firearms or other weapons

having a special military application (e.g. close assault weapons

systems) regardless of caliber.

*(d) Components, parts, accessories and attachments for the

articles in paragraphs (a) through (c) of this category. All the

components, parts, accessories and attachments covered by this

paragraph, except barrels, cylinders, receivers (frames) or complete

breach mechanisms, are non-SME (see Sec. 120.7).

(e) Technical data (as defined in Sec. 120.10 of this

subchapter) and defense services (as defined in Sec. 120.9 of this

subchapter) directly related to the defense articles enumerated in

paragraphs (a) through (d) of this category. (See Sec. 125.4 of this

subchapter for exemptions.) Technical data directly related to the

manufacture or production of any defense articles enumerated

elsewhere in this category that are designated as Significant

Military Equipment (SME) shall itself be designated SME.

* * * * *

3. Section 121.9 is amended by revising paragraph (a) to read as

follows:

Sec. 121.9 Firearms.

(a) Category I includes revolvers, pistols, rifles, carbines, fully

automatic rifles, submachine guns, machine pistols and machine guns to

.50 inclusive. It includes combat shotguns. It excludes other shotguns

with barrels 18'' or longer, BB, pellet, and muzzle loading (black

powder) firearms. It also excludes accessories and attachments for

firearms that do not enhance the usefulness, effectiveness, or

capabilities of the firearm, its components and parts (e.g. belts,

slings, after market rubber grips, cleaning kits).

* * * * *

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

4. The authority citation for part 123 continues to read as

follows:

Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22

U.S.C. 2752, 2778); 22 U.S.C. 2753; E.O. 11958, 42 FR 4311; 3 CFR

1977 Comp., p. 79; 22 U.S.C. 2658.

4a. Section 123.4 is amended by revising paragraph (a) to read as

follows:

Sec. 123.4 Temporary import license exemptions.

(a) District Directors of Customs shall permit the temporary import

(and subsequent export) without a license, for a period of up to 4

years, of unclassified U.S.-origin defense items (including any items

manufactured abroad pursuant to U.S. Government approval) if the item

temporarily imported:

(1) Is serviced (e.g., inspection, testing, calibration or repair,

including overhaul, reconditioning and one-to-one replacement of any

defective items, parts or components, but excluding any modifications,

enhancement, upgrade or other form of alteration or improvement that

changes the basic performance of the item), and is subsequently

returned to the country from which it was imported. Shipment may be

made by the U.S. importer or a foreign government representative of the

country from which the goods were imported; or

(2) Is to be enhanced, upgraded or incorporated into another item

which has already been authorized by the Office of Defense Trade

Controls for permanent export; or

(3) Is imported for the purpose of exhibition, demonstration or

marketing in the United States and is subsequently returned to the

country from which it was imported; or

(4) Has been rejected for permanent import by the Department of the

Treasury and is being returned to the country from which it was

shipped; or

(5) Is approved for such import under the U.S. Foreign Military

Sales (FMS) program pursuant to an executed U.S. Department of Defense

Letter of Offer and Acceptance (LOA).

* * * * *

5. Section 123.15 is amended by revising paragraph (b) to read as

follows:

Sec. 123.15 Congressional notification for licenses.

(a) * * *

(b) Persons who intend to export defense articles and defense

services

[[Page 17534]]

pursuant to any exemption in this subchapter under the circumstances

described in the first sentence of paragraph (a) of this section must

notify the Office of Defense Trade Controls by letter of the intended

export and, prior to transmittal to Congress, provide a signed contract

and a DSP-83 signed by the applicant, the foreign consignee and end-

user.

6. Section 123.17 is amended by revising paragraph (a) to read as

follows:

Sec. 123.17 Exports of firearms and ammunition.

(a) Except as provided in Sec. 126.1 of this subchapter, District

Directors of Customs shall permit the export without a license of

components and parts for Category I(a) firearms, except barrels,

cylinders, receivers (frames) or complete breech mechanisms when the

total value does not exceed $100 wholesale in any transaction.

* * * * *

PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT AND OTHER DEFENSE

SERVICES

7. The authority citation for part 124 continues to read as

follows:

Authority: Secs. 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. 2658.

9. Section 124.13 is amended by revising paragraph (e) to read as

follows:

Sec. 124.13 Procurement by United States persons in foreign countries

(offshore procurement).

* * * * *

(e) Licenses issued pursuant to this section must be renewed upon

their expiration if offshore procurement is to be extended beyond the

period of validity of the original approved license. In all instances a

license for offshore procurement must state as the purpose ``Offshore

procurement in accordance with the conditions established in the ITAR,

including Sec. 124.13. No other use will be made of the technical

data.'' If the technical data involved in an offshore procurement

arrangement is otherwise exempt from the licensing requirements of this

subchapter (e.g. Sec. 126.4), the DSP-5 referred to in the first

sentence of this section is not required. However, the exporter must

comply with the other requirements of this section and provide a

written certification to the Office of Defense Trade Controls annually

of the offshore procurement activity and cite the exemption under which

the technical data was exported. The exemptions under Sec. 125.4 of

this subchapter may not be used to establish offshore procurement

arrangements.

PART 126--GENERAL POLICIES AND PROVISIONS

10. 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. 22752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2778;

E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658; 22

U.S.C. 287c; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899.

11. Section 126.5 is revised to read as follows:

Sec. 126.5 Canadian exemptions.

(a) District Directors of Customs and postmasters shall permit the

permanent or temporary export without a license of any unclassified

equipment or unclassified technical data to Canada for end-use in

Canada by Canadian citizens or return to the United States, or

temporary import of Canadian-origin items from Canada for end-use in

the United States or return to Canada for a Canadian citizen, with the

exception of the defense articles, defense services and related

technical data listed in paragraphs (b), (c), and (d) of this section.

(b) The exemption provided in paragraph (a) of this section does

not apply to the following ITAR part 121, Sec. 121.1 defense articles,

defense services, or related technical data:

(1) Category I--Firearms;

(2) Category III ammunition for the firearms in Category I;

(3) Category IV (a), (b), (c), (d), (f) and (g)--Launch Vehicles,

Guided Missiles, Ballistic Missiles and Rockets. (This does not include

bombs, grenades, torpedoes, depth charges, land and naval mines in IV

(a); components, parts, accessories and attachments in IV(h); and

related technical data for these items covered by part 125 of this

subchapter.)

(4) Nuclear weapons strategic delivery systems and all components,

parts, accessories, attachments specifically designed for such systems

and associated equipment;

(5) Naval nuclear propulsion equipment listed in Category VI(e);

(6) Aircraft Listed in Category VIII(a));

(7) Category XIII (b) (e.g. military information security systems,

cyptrographic devices, software, and components) and XIII (j) (e.g.

stealth);

(8) Toxicological Agents and Equipment and Radiological Equipment

listed in Category XIV(a) through (d);

(9) Spacecraft, Remote Sensing Satellites, and Military

Communications Satellites listed in Category XV(a), (b), and (c);

(10) Nuclear Weapons Design and Test Equipment listed in Category

XVI;

(11) All Classified Articles, Technical Data and Defense Services,

including Category XVII;

(12) Submersible and oceanographic vessels and related articles

listed in Category XX(a) through (d);

(13) All USML items and related technical data on the Missile

Technology Control Regime (MTCR) Annex.

(c) Defense articles, defense services, or related technical data

for use by a foreign national other than a Canadian citizen.

(d) Any defense service covered by part 124 of this subchapter.

(e) Any export involving defenses articles and defense services for

which congressional notification is required in accordance with

Sec. 123.15 and 124.11 of this subchapter.

(f) Related requirements. The exemption provided in this section

from requiring a license for export does not exempt the exporter from

the following:

(1) Registration as an exporter as required by the Arms Export

Control Act and part 122 of this subchapter;

(2) The exporter, or any party to the transaction must be eligible

as described in Sec. 120.1 (c) and (d) of this subchapter;

(3) The requirement for filing a Shippers' Export Declaration or

notification letter required by Sec. 123.22 of this subchapter;

(4) Written documentation that the defense article is:

(i) For end-use in Canada by a Canadian citizen, and

(ii) For use by non-Canadians, in Canada, or export from Canada to

another foreign destination, requires prior written approval of the US

Government;

(5) Obtaining a completed DSP-83 for all significant military

equipment;

(6) Maintenance of records as required by Sec. 122.5 of this

subchapter.

Note: It is the responsibility of the exporter of record to

determine in writing the Canadian end-use and end-user. In any

instance when such written documentation is not available, this

exemption may not be used. Further, in any instance when the

exporter has knowledge that the defense article exempt from

licensing is being exported for use by a non-Canadian citizen or for

export to another foreign destination, other than the United States,

an export license must be obtained prior to the transfer to Canada.

The request should state the ultimate foreign end-user and end-use

with Canada as an intermediate destination. The role of the Canadian

parties should be defined. Should an instance exist when a defense

article or related technical data was

[[Page 17535]]

properly exported, either using a license or an exemption, and there

is a reason to change either the end-use or the end-user, the

requirements of Sec. 123.9 of this subchapter apply.

Dated: March 25, 1999.

John D. Holum,

Acting Under Secretary of State for Arms Control and International

Security Affairs and Director, U.S. Arms Control and Disarmament

Agency.

[FR Doc. 99-9033 Filed 4-9-99; 8:45 am]

BILLING CODE 4710-25-U