International Traffic in Arms Regulations: Exemption for Defense Trade and Cooperation Among Australia, the United Kingdom, and the United States

<RULE> DEPARTMENT OF STATE <CFR>22 CFR Parts 123, 124, and 126</CFR> <DEPDOC>[Public Notice: 12468]</DEPDOC> <RIN>RIN 1400-AF84</RIN> <SUBJECT>International Traffic in Arms Regulations: Exemption for Defense Trade and Cooperation Among Australia, the United Kingdom, and the United States</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of State. <HD SOURCE="HED">ACTION:</HD> Interim final rule; request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of State (the Department) is amending the International Traffic in Arms Regulations (ITAR) to facilitate defense trade and cooperation among Australia, the United Kingdom, and the United States through a new exemption, pursuant to section 38(l) of the Arms Export Control Act; adding an expedited licensing process for certain defense article and defense service exports to Australia, the United Kingdom, and Canada; adding a list of defense articles and defense services excluded from eligibility for transfer under the new exemption for Australia, the United Kingdom, and the United States; and adding to the scope of the exemption for intra-company, intra-organization, and intra-governmental transfers to allow for the transfer of classified defense articles to certain dual nationals who are authorized users within the United Kingdom and Australia. The Department also seeks further public comment on these changes and whether they support the stated goals of this rulemaking. This interim final rule adopts the proposed rule published on May 1, 2024, with additional changes described below and implemented herein. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> The rule is effective on September 1, 2024. <E T="03">Comments due date:</E> Comments due on or before November 18, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Interested parties may submit comments by one of the following methods: • <E T="03">Email: DDTCPublicComments@state.gov,</E> with the subject line “Australia, the United Kingdom, and the United States ITAR Exemption” • <E T="03">Internet:</E> At <E T="03">www.regulations.gov,</E> search for this notice using Docket DOS-2024-0024. Those submitting comments should not include any personally identifiable information they do not desire to be made public or information for which a claim of confidentiality is asserted. Comments and/or transmittal emails will be made available for public inspection and copying after the close of the comment period via the Directorate of Defense Trade Controls (DDTC) website at <E T="03">www.pmddtc.state.gov</E> . Parties who wish to comment anonymously may submit comments via <E T="03">www.regulations.gov,</E> leaving identifying fields blank. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Ms. Engda Wubneh, Foreign Affairs Officer, Office of Defense Trade Controls Policy, U.S. Department of State, telephone (771) 205-9566; email <E T="03">DDTCCustomerService@state.gov,</E> ATTN: Regulatory Change, ITAR Section 126.7 Australia, the United Kingdom, and the United States Exemption. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> On May 1, 2024, the Department of State (the Department) published a proposed rule with request for comments (89 FR 35028) to create an exemption designed to implement the provisions of section 38(l) of the Arms Export Control Act (AECA) (22 U.S.C. 2778(l)), as added by section 1343 of the National Defense Authorization Act (NDAA) for Fiscal Year 2024 (Pub. L. 118-31). The proposed rule at § 126.7 stated that no license or other approval would be required for the export, reexport, retransfer, or temporary import of defense articles; the performance of defense services; or engagement in brokering activities between or among authorized users within Australia, the United Kingdom, and the United States provided certain requirements and limitations are met. The rule also proposed a new supplement no. 2 to part 126, which is an Excluded Technology List (ETL) designed to limit certain defense articles and defense services from being eligible for the provisions of § 126.7. Further, the Department proposed § 126.18(e) for transfers of classified defense articles to dual nationals, who are citizens of Australia and the United Kingdom and another country, provided all other criteria are met in this exemption. Lastly, the proposed § 126.15(c) and (d) aimed to implement a separate provision, section 1344 of the NDAA for Fiscal Year 2024, for expedited licensing for exports of defense articles and defense services to Australia, the United Kingdom, and Canada. The Department acknowledges and appreciates the comments submitted in response to the proposed rule identified as 89 FR 35028 (herein “proposed rule”) and is now publishing this interim final rule, which contains revisions to certain provisions of the proposed rule and additions to certain ITAR sections. The Department welcomes further public comment on the regulatory text of this interim final rule. The main changes to regulatory text in this rule, compared to the proposed rule, are as follows: • In § 123.10(a), the phrase “pursuant to a license or other authorization, except for the exemptions in §§ 126.5 and 126.7” is added to the statement that a nontransfer and use certificate ( <E T="03">i.e.,</E> Form DSP-83) generally is required for the export of significant military equipment and classified articles regardless of the form of the applicable export authorization while simultaneously clarifying that no nontransfer and use certificate is required for exports pursuant to the specified exemptions. • In § 124.8(a)(5), § 126.7 was added to clarify that the exemption may be used to retransfer and reexport defense articles pursuant to this exemption that were originally exported via an agreement. • In § 126.1(a), § 126.18(e) was added to the list of excepted exemptions from the section's country-based prohibitions. • In § 126.7(b)(1), the term “activity” replaced the term “transfer” in order to more clearly express the inclusion of defense services and brokering activities under this exemption. • In § 126.7(b)(2), the term “broker” was added to clarify that depending on the activity, the transferor, recipient, or broker all would need to register with DDTC, as appropriate. Further, language was added to clarify that a U.S. Government department or agency are authorized users of this exemption. • For § 126.7(b)(4), the recordkeeping requirements in proposed § 126.7(b)(4) are removed in this interim final rule. The Departments notes recordkeeping requirements in § 120.15(e) apply to this exemption as they do for all other ITAR exemptions. • For § 126.7(b)(6), this proposed provision was removed in this interim final rule. The proposed text was redundant and simply listed a number of ITAR requirements to which users are already subject. Further the proposed text to obtain nontransfer and use assurances was removed from the § 126.7 exemption, as these assurances are incorporated into the authorized user process. • In § 126.7(b)(8), the reference to Restricted Data and the Atomic Energy Act of 1954, as amended, was removed as it is duplicative and is already referenced in § 120.5(c). • In § 126.7(b)(8), the requirements for handling classified were changed to a note to § 126.7(b), and the industrial security requirement reference was updated for Australia. • In § 126.15(c), the ITAR defined term “person” replaced the phrase “corporate entities” to clarify that individuals and entities are included in this provision. • In § 126.15(d), the phrase “To the extent practicable . . .” was added to align with the NDAA for Fiscal Year 2024. • In, § 126.18(e), the phrase “retransfer or reexport” replaces the term “transfer” in this provision to clarify more explicitly the types of transfers that are allowed. • In supplement no. 2 to part 126, the Excluded Technologies List (ETL), is clarified and adjusted to better address the necessary and intended scope of exclusions: ○ The Missile Technology Control Regime (MTCR) exclusion no longer applies to unmanned aerial vehicle (UAV) flight control systems and vehicle management systems described in United States Munitions List (USML) Category VIII(h)(12). ○ The anti-tamper exclusion is clarified. ○ The exclusion specific to source code is removed in its entirety. ○ The exclusion of classified manufacturing know-how for certain articles described in USML Categories XI and XII is removed in its entirety. ○ The entry for articles in USML Categories IV(a)(3), (9), (10), and (11), (b)(2), (h)(5), and (i) was refined to exclude launchers for man-portable air defense systems (MANPADS), but not other articles described in paragraph (b)(2). ○ Excluded articles described in USML Categories XI and XIII are now described across multiple entries to better implement the intent of that entry, as follows: All articles described in USML Category XI(a)(1)(i) and (ii) are excluded, as are articles described in paragraph (c) or (d) of USML Category XI that are specially designed for the excluded paragraph (a)(1) articles, and directly related technical data and defense services. The exclusion of classified countermeasures and counter- countermeasures is refined and split into multiple entries as follows: • Classified articles described in USML Category XI(a)(2), other than underwater acoustic decoy countermeasures; classified articles described in paragraphs (c)(1) through (3) or paragraph (d) of USML Category XI specially designed therefor; and classified, directly related technical data and defense services are excluded. • Classified articles described in USML Category XI(a)(3)(xviii), classified countermeasures and counter-countermeasures described in Category XI(a)(4)(iii), and classified articles described in ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 163k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━