Federal Register / Vol. 69, No. 99 / Friday, May 21, 2004 / Rules and Regulations

The Full ITAR is on line click here.

Category IX—Military Training Equipment and Training

(a) Training equipment specifically designed, modified, configured or adapted for military purposes, including but not limited to weapons system

trainers, radar trainers, gunnery training devices, antisubmarine warfare trainers, target equipment, armament training units,

pilot-less aircraft trainers, navigation trainers and human-rated centrifuges.

(b) Simulation devices for the items covered by this subchapter.

(c) Tooling and equipment specifically designed or modified for the production of articles controlled by this category.

(d) Components, parts, accessories, attachments, and associated equipment specifically designed, modified, configured, or adapted for the articles in

paragraphs (a), (b) and (c) of this category.

(e) Technical data (as defined in § 120.10 of this subchapter) and defense services (as defined in § 120.9 of this subchapter)

directly related to the defense articles enumerated in paragraphs (a) through (d) of this category.

(f) The following interpretations explain and amplify terms used in this category and elsewhere in this subchapter:

(1) The weapons systems trainers in paragraph (a) of this category include individual crew stations and system specific trainers;

(2) The articles in this category include any end item, components, accessory, part, firmware, software or system that has been designed or

manufactured using technical data and defense services controlled by this category;

(3) The defense services and related technical data in paragraph (f) of this category include software and associated databases that can be

used to simulate trainers, battle management, test scenarios/models, and weapons effects. In any instance when the military training transferred

to a foreign person does not use articles controlled by the U.S. Munitions List, the training may nevertheless be a defense service that requires

authorization in accordance with this subchapter. See e.g., § 120.9 and § 124.1 of this subchapter for additional information on military training.

Sec. 120.1 General authorities and eligibility.

    (a) Section 38 of the Arms Export Control Act (22 U.S.C. 2778) authorizes the President to control the export and import of defense articles and defense services. The statutory authority of the President to promulgate regulations with respect to exports of defense articles and defense services was delegated to the Secretary of State by Executive Order 11958, as amended. This subchapter implements that authority. By virtue of delegations of authority by the Secretary of State, these regulations are primarily administered by the Deputy Assistant Secretary for Defense Trade Controls and Managing Director of Defense Trade Controls, Bureau of Political-Military Affairs.

    (b)(1) Authorized officials. All authorities conferred upon the Deputy Assistant Secretary for Defense Trade Controls or the Managing Director of Defense Trade Controls by this subchapter may be exercised at any time by the Under Secretary of State for Arms Control and International Security or the Assistant Secretary of State for Political-Military Affairs unless the Legal Adviser or the Assistant Legal Adviser for Political-Military Affairs of the Department of State determines that any specific exercise of this authority under this paragraph may be inappropriate.

    (2) In the Bureau of Political-Military Affairs, there is a Deputy Assistant Secretary for Defense Trade Controls (DAS--Defense Trade Controls) and a Managing Director of Defense Trade Controls (MD--Defense Trade Controls). The DAS--Defense Trade Controls and the MD--Defense Trade Controls are responsible for exercising the authorities conferred under this subchapter. The DAS--Defense Trade Controls is responsible for oversight of the defense trade controls function. The MD--Defense Trade Controls is responsible for the Directorate of Defense Trade Controls, which oversees the subordinate offices described in paragraph (b)(2)(i) of this section.

    (i) All references to the Office of Defense Trade Controls and the Director of the Office of Defense Trade Controls contained in the International Traffic in Arms Regulations (ITAR) shall be deemed to be

references to:

    (A) The Office of Defense Trade Controls Management and the Director, Office of Defense Trade Controls Management, respectively, insofar as such references relate to management of defense trade controls operations; to include the exercise of general authorities in this part 120 and the design, development, and refinement of processes, activities, and functional tools for the export licensing regime and to effect export compliance/enforcement activities;

    (B) The Office of Defense Trade Controls Licensing and the Director, Office of Defense Trade Controls Licensing, respectively, insofar as such references relate to licensing or other authorization of defense trade, including references under parts 123, 124, 125, 126, 129 and 130 of this subchapter, and the commodity jurisdiction procedure under this part 120;

    (C) The Office of Defense Trade Controls Compliance and the Director, Office of Defense Trade Controls Compliance, respectively, insofar as such references relate to violations of law or regulation and compliance therewith, including references contained in parts 127, 128 and 130, of this subchapter, and including references under part 122 of this subchapter, and that portion under part 129 of this subchapter pertaining to registration;

    (D) The Office of Defense Trade Controls Policy and the Director, Office of Defense Trade Controls Policy, respectively, insofar as such references relate to the general policies of defense trade, including references under this part 120 and part 126 of this subchapter.

    (ii) Further amendments to the ITAR will be promulgated to reflect the specific changes as a result of this realignment.

    (c) Eligibility. Only U.S. persons (as defined in Sec. 120.15) and foreign governmental entities in the United States may be granted licenses or other approvals (other than retransfer approvals sought pursuant to this subchapter). Foreign persons (as defined in Sec. 120.16) other than governments are not eligible. U.S. persons who have been convicted of violating the criminal statutes enumerated in Sec. 120.27, who have been debarred pursuant to part 127 or 128 of this subchapter, who are the subject of an indictment involving the criminal statutes enumerated in Sec. 120.27, who are ineligible to contract with, or to receive a license or other form of authorization to import defense articles or defense services from any agency of the U.S. Government, who are ineligible to receive export licenses (or other forms of authorization to export) from any agency of the U.S. Government, who are subject to Department of State Suspension/Revocation under Sec. 126.7 (a)(1)-(a)(7) of this subchapter, or who are ineligible under Sec. 127.6(c) of this subchapter are generally ineligible. Applications for licenses or other approvals will be considered only if the applicant has registered with the Office of Defense Trade Controls pursuant to part 122 of this subchapter. All applications and requests for approval must be signed by a U.S. person who has been empowered by the registrant to sign such documents.

    (d) The exemptions provided in this subchapter do not apply to transactions in which the exporter or any party to the export (as defined in Sec. 126.7(e) of this subchapter) is generally ineligible as set forth above in paragraph (c) of this section, unless an exception has been granted pursuant to Sec. 126.7(c) of this subchapter.

[58 FR 39283, July 22, 1993, as amended at 68 FR 7417, Feb. 14, 2003; 68 FR 51171, Aug. 26, 2003; 68 FR 57352, Oct. 3, 2003]

Sec. 120.3 Policy on designating and determining defense articles and services.

    An article or service may be designated or determined in the future to be a defense article (see Sec. 120.6) or defense service (see Sec. 120.9) if it:

    (a) Is specifically designed, developed, configured, adapted, or modified for a military application, and

    (i) Does not have predominant civil applications, and

    (ii) Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or

    (b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary.

    The intended use of the article or service after its export (i.e., for a military or civilian purpose) is not relevant in determining whether the article or service is subject to the controls of this subchapter. Any item covered by the U.S. Munitions List must be within the categories of the U.S. Munitions List. The scope of the U.S. Munitions List shall be changed only by amendments made pursuant to section 38 of the Arms Export Control Act (22 U.S.C. 2778).

Sec. 120.6  Defense article.

    Defense article means any item or technical data designated in Sec. 121.1 of this subchapter. The policy described in Sec. 120.3 is applicable to designations of additional items. This term includes technical data recorded or stored in any physical form, models, mockups or other items that reveal technical data directly relating to items designated in Sec. 121.1 of this subchapter. It does not include basic marketing information on function or purpose or general system descriptions.

Note: Section 121.1 Refers to this page. We are only considering Chapter IX not the entire USML. Should you require more information please  see Section 121.

Sec. 120.9  Defense service.

     (a) Defense service means:

    (1) The furnishing of assistance (including training) to foreign persons, whether in the United States or abroad in the design, development,

engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing

or use of defense articles;

    (2) The furnishing to foreign persons of any technical data controlled under this subchapter (see Sec. 120.10), whether in the United States or

abroad; or

    (3) Military training of foreign units and forces, regular and irregular, including formal or informal instruction of foreign persons in the United

States or abroad or by correspondence courses, technical, educational, or information publications and media of all kinds, training aid, orientation,

training exercise, and military advice. (See also Sec. 124.1.)

    (b) [Reserved]

 [62 FR 67275, Dec. 24, 1997]

Sec. 120.10  Technical data.

    (a) Technical data means, for purposes of this subchapter:

    (1) Information, other than software as defined in Sec. 120.10(4), which is required for the design, development, production, manufacture, assembly,

operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs,

plans, instructions and documentation.

    (2) Classified information relating to defense articles and defense services;

    (3) Information covered by an invention secrecy order;

    (4) Software as defined in Sec. 121.8(f) of this subchapter directly related to defense articles;

    (5) This definition does not include information concerning general scientific, mathematical or engineering principles commonly taught in schools,

colleges and universities or information in the public domain as defined in Sec. 120.11. It also does not include basic marketing information on function

or purpose or general system descriptions of defense articles.

    (b) [Reserved]

 [58 FR 39283, July 22, 1993, as amended at 61 FR 48831, Sept. 17, 1996]

Sec. 120.11  Public domain.

    (a) Public domain means information which is published and which is generally accessible or available to the public:

    (1) Through sales at newsstands and bookstores;

    (2) Through subscriptions which are available without restriction to any individual who desires to obtain or purchase the published information;

    (3) Through second class mailing privileges granted by the U.S. Government;

    (4) At libraries open to the public or from which the public can obtain documents;

    (5) Through patents available at any patent office;

    (6) Through unlimited distribution at a conference, meeting, seminar, trade show or exhibition, generally accessible to the public, in the United States;

    (7) Through public release (i.e., unlimited distribution) in any form (e.g., not necessarily in published form) after approval by the cognizant U.S. government

department or agency (see also Sec. 125.4(b)(13) of this subchapter);

    (8) Through fundamental research in science and engineering at accredited institutions of higher learning in the U.S. where the resulting information is

ordinarily published and shared broadly in the scientific community. Fundamental research is defined to mean basic and applied research in science and

engineering where the resulting information is ordinarily published and shared broadly within the scientific community, as distinguished from research the

results of which are restricted for proprietary reasons or specific U.S. Government access and dissemination controls. University research will not be

considered fundamental research if:

    (i) The University or its researchers accept other restrictions on publication of scientific and technical information resulting from the project or activity, or

    (ii) The research is funded by the U.S. Government and specific access and dissemination controls protecting information resulting from the research are applicable.

    (b) [Reserved]

Sec. 120.13  United States.

     United States, when used in the geographical sense, includes the several states, the Commonwealth of Puerto Rico, the insular possessions of the United States, the District of Columbia, the Commonwealth of the Northern Mariana Islands, any territory or possession of the United States, and any territory or possession over which the United States exercises any powers of administration, legislation, and jurisdiction.

Sec. 120.14  Person.

     Person means a natural person as well as a corporation, business association, partnership, society, trust, or any other entity, organization or group, including governmental entities. If a provision in this subchapter does not refer exclusively to a foreign person (Sec. 120.16) or U.S. person (Sec. 120.15), then it refers to both.

Sec. 120.15  U.S. person.

     U.S. person means a person (as defined in section 120.14 of this part) who is lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, society, trust, or any other entity, organization or group that is incorporated to do business in the United States. It also includes any governmental (federal, state or local) entity. It does not include any foreign person as defined in section 120.16 of this part.

 [59 FR 25811, May 18, 1994]

Sec. 120.16  Foreign person.

     Foreign persons means any natural person who is not a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of foreign governments (e.g. diplomatic missions).

 [59 FR 25811, May 18, 1994]

Sec. 120.27  U.S. criminal statutes.

    (a) For purposes of this subchapter, the phrase U.S. criminal statutes means:

    (1) Section 38 of the Arms Export Control Act (22 U.S.C. 2778);

    (2) Section 11 of the Export Administration Act of 1979 (50 U.S.C. app. 2410);

    (3) Sections 793, 794, or 798 of title 18, United States Code (relating to espionage involving defense or classified information);

    (4) Section 16 of the Trading with the Enemy Act (50 U.S.C. app. 16);

    (5) Section 206 of the International Emergency Economic Powers Act (relating to foreign assets controls; 50 U.S.C. 1705);

    (6) Section 30A of the Securities Exchange Act of 1934 (15 U.S.C. 78dd-1) or section 104 of the Foreign Corrupt Practices Act (15 U.S.C. 78dd-2);

    (7) Chapter 105 of title 18, United States Code (relating to sabotage);

    (8) Section 4(b) of the Internal Security Act of 1950 (relating to communication of classified information; 50 U.S.C. 783(b));

    (9) Sections 57, 92, 101, 104, 222, 224, 225, or 226 of the Atomic Energy Act of 1954 (42 U.S.C. 2077, 2122, 2131, 2134, 2272, 2274, 2275, and 2276);

    (10) Section 601 of the National Security Act of 1947 (relating to intelligence identities protection; 50 U.S.C. 421);

    (11) Section 603(b) or (c) of the Comprehensive Anti-Apartheid Act of 1986 (22 U.S.C. 5113(b) and (c)); and

    (12) Section 371 of title 18, United States Code (when it involves conspiracy to violate any of the above statutes).

    (b) [Reserved]

Sec. 121.8  End-items, components, accessories, attachments, parts, firmware, software and systems.

     (a) An end-item is an assembled article ready for its intended use. Only ammunition, fuel or another energy source is required to place it in an operating state.

    (b) A component is an item which is useful only when used in conjunction with an end-item. A major component includes any assembled element which

forms a portion of an end-item without which the end-item is inoperable. (Example: Airframes, tail sections, transmissions, tank treads, hulls, etc.) A minor

component includes any assembled element of a major component.

    (c) Accessories and attachments are associated equipment for any component, end-item or system, and which are not necessary for their operation,

but which enhance their usefulness or effectiveness. (Examples: Military riflescopes, special paints, etc.)

    (d) A part is any single unassembled element of a major or a minor component, accessory, or attachment which is not normally subject to disassembly

without the destruction or the impairment of design use. (Examples: Rivets, wire, bolts, etc.)

    (e) Firmware and any related unique support tools (such as computers, linkers, editors, test case generators, diagnostic checkers, library of functions

and system test diagnostics) specifically designed for equipment or systems covered under any category of the U.S. Munitions List are considered as part

of the end-item or component. Firmware includes but is not limited to circuits into which software has been programmed.

    (f) Software includes but is not limited to the system functional design, logic flow, algorithms, application programs, operating systems and support

software for design, implementation, test, operation, diagnosis and repair. A person who intends to export software only should, unless it is specifically

enumerated in Sec. 121.1 (e.g., XIII(b)), apply for a technical data license pursuant to part 125 of this subchapter.

    (g) A system is a combination of end-items, components, parts, accessories, attachments, firmware or software, specifically designed, modified or

adapted to operate together to perform a specialized military function.

Sec. 123.5  Temporary export licenses.

    (a) The Office of Defense Trade Controls may issue a license for the temporary export of unclassified defense articles (DSP-73). Such licenses are valid only if (1) the article will be exported for a period of less than 4 years and will be returned to the United States and (2) transfer of title will not occur during the period of temporary export. Accordingly, articles exported pursuant to a temporary export license may not be sold or otherwise permanently transferred to a foreign person while they are overseas under a temporary export license. A renewal of the license or other written approval must be obtained from the Office of Defense Trade Controls if the article is to remain outside the United States beyond the period for which the license is valid.

    (b) Requirements. Defense articles authorized for temporary export under this section may be shipped only from a port in the United States where a District Director of Customs is available, or from a U.S. Post Office (see 39 CFR part 20), as appropriate. The license for temporary export must be presented to the District Director of Customs who, upon verification, will endorse the exit column on the reverse side of the license. In some instances of the temporary export of technical data (e.g postal shipments), self-endorsement will be necessary (see Sec. 123.22(d)). The endorsed license for temporary export is to be retained by the licensee. In the case of a military aircraft or vessel exported under its own power, the endorsed license must be carried on board such vessel or aircraft as evidence that it has been duly authorized by the Department of State to leave the United States temporarily.

    (c) Any temporary export license for hardware that is used, regardless of whether the hardware was exported directly to the foreign destination or returned directly from the foreign destination, must be endorsed by the Bureau of Customs and Border Protection in accordance with the procedures in Sec. 123.22 of this subchapter.

Sec. 123.15  Congressional notification for licenses.

    (a) All exports of major defense equipment, as defined in Sec. 120.8 of this subchapter, sold under a contract in the amount of $14,000,000 or more, or exports of defense articles and defense services sold under a contract in the amount of $50,000,000 or more, may take place only after the Office of Defense Trade Controls notifies the exporter through issuance of a license or other approval that Congress has not enacted a joint resolution prohibiting the export and:

    (1) In the case of a license for an export to the North Atlantic Treaty Organization, any member country of that Organization, or Australia, Japan or New Zealand, 15 calendar days have elapsed since receipt by the Congress of the certification required by 22 U.S.C. 2776(c)(1); or

    (2) In the case of a license for an export to any other destination, 30 calendar days have elapsed since receipt by the Congress of the certification required by 22 U.S.C. 2776(c)(1).

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

Sec. 123.16  Exemptions of general applicability.

     (a) The following exemptions apply to exports of unclassified defense articles for which no approval is needed from the Office of Defense Trade Controls. These exemptions do not apply to: Proscribed destinations under Sec. 126.1 of this subchapter; exports for which Congressional notification is required (see Sec. 123.15 of this subchapter); MTCR articles; Significant Military Equipment (SME); and may not be used by persons who are generally ineligible as described in Sec. 120.1(c) of this subchapter. All shipments of defense articles, including those to and from Canada, require a Shipper's Export Declaration (SED) or notification letter. If the export of a defense article is exempt from licensing, the SED must cite the exemption. Refer to Sec. 123.22 for Shipper's Export Declaration and letter notification requirements.

    (b) The following exports are exempt from the licensing requirements of this subchapter.

    (1) District Directors of Customs shall permit the export without a license of defense hardware being exported in furtherance of a manufacturing license agreement, technical assistance agreement, distribution agreement or an arrangement for distribution of items identified in Category XIII(b)(1), approved in accordance with Part 124, provided that:

    (i) The defense hardware to be exported supports the activity and is identified by item, quantity and value in the agreement or arrangement; and

    (ii) Any provisos or limitations placed on the authorized agreement or arrangement are adhered to; and

    (iii) The exporter certifies on the Shipper's Export Declaration that the export is exempt from the licensing requirements of this subchapter. This is done by writing, ``22 CFR 123.16(b)(1) and the agreement or arrangement (identify/state number) applicable''; and

    (iv) The total value of all shipments does not exceed the value authorized in the agreement or arrangement.

    (v) In the case of a distribution agreement, export must be made directly to the approved foreign distributor.

    (2) District Directors of Customs shall permit the export of components or spare parts (for exemptions for firearms and ammunition see Sec. 123.17) without a license when the total value does not exceed $500 in a single transaction and:

    (i) The components or spare parts are being exported to support a defense article previously authorized for export; and

    (ii) The spare parts or components are not going to a distributor, but to a previously approved end-user of the defense articles; and

    (iii) The spare parts or components are not to be used to enhance the capability of the defense article;

    (iv) exporters shall not split orders so as not to exceed the dollar value of this exemption;

    (v) the exporter may not make more than 24 shipments per calendar year to the previously authorized end user;

    (vi) The exporter must certify on the Shipper's Export Declaration that the export is exempt from the licensing requirements of this subchapter. This is done by writing 22 CFR 123.16(b)(2) applicable.

    (3) District Directors of Customs shall permit the export without a license, of packing cases specially designed to carry defense articles.

    (4) District Directors of Customs shall permit the export without a license, of unclassified models or mock-ups of defense articles, provided that such models or mock-ups are nonoperable and do not reveal any technical data in excess of that which is exempted from the licensing requirements of Sec. 125.4(b) of this subchapter and do not contain components covered by the U.S. Munitions List (see Sec. 120.6(b) of this subchapter). Some models or mockups built to scale or constructed of original materials can reveal technical data. U.S. persons who avail themselves of this exemption must provide a written certification to the District Director of Customs that these conditions are met. This exemption does not imply that the Office of Defense Trade Controls will approve the export of any defense articles for which models or mocks-ups have been exported pursuant to this exemption.

    (5) District Directors of Customs shall permit the temporary export without a license of unclassified defense articles to any public exhibition, trade show, air show or related event if that article has previously been licensed for a public exhibition, trade show, air show or related event and the license is still valid. U.S. persons who avail themselves of this exemption must provide a written certification to the District Director of Customs that these conditions are met.

    (6) For exemptions for firearms and ammunition for personal use refer to Sec. 123.17.

    (7) For exemptions for firearms for personal use of members of the U.S. Armed Forces and civilian employees see Sec. 123.18.

    (8) For exports to Canada refer to Sec. 126.5 of this subchapter.

    (9) District Directors of Customs shall permit the temporary export without a license by a U.S. person of any unclassified component, part, tool or test equipment to a subsidiary, affiliate or facility owned or controlled by the U.S. person (see Sec. 122.2(c) of this subchapter) if the component, part, tool or test equipment is to be used for manufacture, assembly, testing, production, or modification provided:

    (i) The U.S. person is registered with the Office of Defense Trade Controls and complies with all requirements set forth in part 122 of this subchapter;

    (ii) No defense article exported under this exemption may be sold or transferred without the appropriate license or other approval from the Office of Defense Trade Controls.

    (10) District Directors shall permit, without a license, the permanent export, and temporary export and return to the United States, by accredited U.S. institutions of higher learning of articles fabricated only for fundamental research purposes otherwise controlled by Category XV (a) or (e) in Sec. 121.1 of this subchapter when all of the following conditions are met:

    (i) The export is to an accredited institution of higher learning, a governmental research center or an established government funded private research center located within countries of the North Atlantic Treaty Organization (NATO) or countries which have been designated in accordance with section 517 of the Foreign Assistance Act of 1961 as a major non-NATO ally (and as defined further in section 644(q) of that Act) for purposes of that Act and the Arms Export Control Act, or countries that are members of the European Space Agency or the European Union and involves exclusively nationals of such countries;

    (ii) All of the information about the article(s), including its design, and all of the resulting information obtained through fundamental research involving the article will be published and shared broadly within the scientific community, and is not restricted for proprietary reasons or specific U.S. government access and dissemination controls or other restrictions accepted by the institution or its researchers on publication of scientific and technical information resulting from the project or activity (See Sec. 120.11 of this subchapter); and

    (iii) If the article(s) is for permanent export, the platform or system in which the article(s) may be incorporated must be a satellite covered by Sec. 125.4(d)(1)(iii) of this subchapter and be exclusively concerned with fundamental research and only be launched into space from countries and by nationals of countries identified in this section.

Sec. 123.22  Filing, retention, and return of export licenses and filing of export information.

    (a) Any export, as defined in this subchapter, of a defense article controlled by this subchapter, to include defense articles transiting the United States, requires the electronic reporting of export information. The reporting of the export information shall be to the Bureau of Customs and Border Protection using the Automated Export System (AES) or directly to the Directorate of Defense Trade Controls (DDTC). Any license or other approval authorizing the permanent export of hardware must be filed at a U.S. Port before any export. Licenses or other approvals for the permanent export of technical data and defense services shall be retained by the applicant who will send the export information directly to DDTC. Temporary export or temporary import licenses for such items need not be filed with the Bureau of Customs and Border Protection, but must be presented to the Bureau of Customs and Border Protection for decrementing of the shipment prior to departure and at the time of entry. The Bureau of Customs and Border Protection will only decrement a shipment after the export information has been filed correctly using the AES. Before the export of any hardware using an exemption in this subchapter, the DDTC registered applicant/exporter, or an agent acting on the filer's behalf, must electronically provide export information using the AES (see paragraph (b) of this section). In addition to electronically providing the export information to the Bureau of Customs and Border Protection before export, all the mandatory documentation must be presented to the port authorities (e.g., attachments, certifications, proof of AES filing; such as the External Transaction Number (XTN) or Internal Transaction Number (ITN)). Export authorizations shall be filed, retained, decremented or returned to DDTC as follows:

    (1) Filing of licenses and documentation for the permanent export of hardware. For any permanent export of hardware using a license (e.g., DSP-5, DSP-94) or an exemption in this subchapter, the exporter must, prior to an AES filing, deposit the license and provide any required documentation for the license or the exemption with the Bureau of Customs and Border Protection, unless otherwise directed in this subchapter (e.g., Sec. 125.9). If necessary, an export may be made through a port other than the one designated on the license if the exporter complies with the procedures established by the Bureau of Customs and Border Protection.

    (2) Presentation and retention by the applicant of temporary licenses and related documentation for the export of unclassified defense articles. Licenses for the temporary export or temporary import of unclassified defense articles need not be filed with the Bureau of Customs and Border Protection, but must be retained by the applicant and presented to the Bureau of Customs and Border Protection at the time of temporary import and temporary export. When a defense article is temporarily exported from the United States and moved from one destination authorized on a license to another destination authorized on the same or another temporary license, the applicant, or an agent acting on the applicant's behalf, must ensure that the Bureau of Customs and Border Protection decrements both temporary licenses to show the exit and entry of the hardware.

    (b) Filing and reporting of export information--(1) Filing of export information with the Bureau of Customs and Border Protection. Before exporting any hardware controlled by this subchapter, using a license or exemption, the DDTC registered applicant/exporter, or an agent acting on the filer's behalf, must electronically file the export information with the Bureau of Customs and Border Protection using the Automated Export System (AES) in accordance with the following timelines:

    (i) Air or truck shipments. The export information must be electronically filed at least 8 hours prior to departure.

    (ii) Sea or rail Shipments. The export information must be electronically filed at least 24 hours prior to departure.

    (2) Emergency shipments of hardware that cannot meet the pre-departure filing requirements. Bureau of Customs and Boarder Protection may permit an emergency export of hardware by truck (e.g., departures to Mexico or Canada) or air, by a U.S. registered person, when the exporter is unable to comply with the SED filing timeline in paragraph (b)(1)(i) of this section. The applicant, or an agent acting on the applicant's behalf, in addition to providing the export information electronically using the AES, must provide documentation required by the Bureau of Customs and Border Protection and this subchapter. The documentation provided to the Bureau of Customs and Border Protection at the port of exit must include the External Transaction Number (XTN) or Internal Transaction Number (ITN) for the shipment and a copy of a notification to DDTC stating that the shipment is urgent and why. The original of the notification must be immediately provided to DDTC. The AES filing of the export information when the export is by air must be at least two hours prior to any departure from the United States; and, when a truck shipment, at the time when the exporter provides the articles to the carrier or at least one hour prior to departure from the United States, when the permanent export of the hardware has been authorized for export:

    (i) In accordance with Sec. 126.4 of this subchapter, or

    (ii) On a valid license (i.e., DSP-5, DSP-94) and the ultimate recipient and ultimate end user identified on the license is a foreign government.

    (3) Reporting of export information on technical data and defense service. When an export is being made using a DDTC authorization (e.g., technical data license, agreement or a technical data exemption provided in this subchapter), the DDTC registered exporter will retain the license or other approval and provide the export information electronically to DDTC as follows:

    (i) Technical data license. Prior to the permanent export of technical data licensed using a Form DSP-5, the applicant shall electronically provide export information using the system for direct electronic reporting to DDTC of export information and self validate the original of the license. When the initial export of all the technical data authorized on the license has been made, the license must be returned to DDTC. Exports of copies of the licensed technical data should be made in accordance with existing exemptions in this subchapter. Should an exemption not apply, the applicant may request a new license.

    (ii) Manufacturing license and technical assistance agreements. Prior to the initial export of any technical data and defense services authorized in an agreement the U.S. agreement holder must electronically inform DDTC that exports have begun. In accordance with this subchapter, all subsequent exports of technical data and services are not required to be filed electronically with DDTC except when the export is done using a U.S. Port. Records of all subsequent exports of technical data shall be maintained by the exporter in accordance with this subchapter and shall be made immediately available to DDTC upon request. Exports of technical data in furtherance of an agreement using a U.S. Port shall be made in accordance with Sec. 125.4 of this subchapter and made in accordance with the procedures in paragraph (b)(3)(iii) of this section.

    (iii) Technical data and defense service exemptions. In any instance when technical data is exported using an exemption in this subchapter (e.g., Sec. Sec. 125.4(b)(2), 125.4(b)(4), 126.5 [126.5 refers to Canadian Exemptions] ) from a U.S. port, the exporter is not required to report using AES, but must, effective January 18, 2004, provide the export data electronically to DDTC. A copy of the electronic notification to DDTC must accompany the technical data shipment and be made available to the Bureau of Customs and Border Protection upon request.

     Note to paragraph (b)(3)(iii): Future changes to the electronic reporting procedure will be amended by publication of a rule in the Federal Register. Exporters are reminded to continue maintaining records of all export transactions, including exemption shipments, in accordance with this subchapter.

    (c) Return of licenses. All licenses issued by the Directorate of Defense Trade Controls (DDTC) must be returned to the DDTC in accordance with the following:

    (1) License filed with the Bureau of Customs and Border Protection. The Bureau of Customs and Border Protection must return to the DDTC any license when the total value or quantity authorized has been shipped or when the date of expiration is reached, whichever occurs first.

    (2) Licenses not filed with the Bureau of Customs and Border Protection. Any license that is not filed with the Bureau of Customs and Border Protection (e.g., oral or visual technical data releases or temporary import and export licenses retained in accordance with paragraph (a)(2) of this section), must be returned by the applicant to the DDTC no later than 60 days after the license has been expended (e.g., total value or quantity authorized has been shipped) or the date of expiration, whichever occurs first.

Sec. 124.1  Manufacturing license agreements and technical assistance agreements.

    (a) The approval of the Office of Defense Trade Controls must be obtained before the defense services described in Sec. 120.9(a) of this subchapter

may be furnished. In order to obtain such approval, the U.S. person must submit a proposed agreement to the Office of Defense Trade Controls. Such

agreements are generally characterized as either Manufacturing license agreements, technical assistance agreements, distribution agreements or off-shore

procurement agreements, and may not enter into force without the prior written approval of the Office of Defense Trade Controls. Once approved, the

defense services described in the agreements may generally be provided without further licensing in accordance with Sec. Sec. 124.3 and 125.4(b)(2)

of this subchapter. The requirements of this section apply whether or not technical data is to be disclosed or used in the performance of the defense

services described in Sec. 120.9(a) of this subchapter (e.g., all the information relied upon by the U.S. person in performing the defense service is in the

public domain or is otherwise exempt from the licensing requirements of this subchapter pursuant to Sec. 125.4 of this subchapter). This requirement

also applies to the training of any foreign military forces, regular and irregular, in the use of defense articles. Technical assistance agreements must be

submitted in such cases. In exceptional cases, The Office of Defense Trade Controls, upon written request, will consider approving the provision of

defense services described in Sec. 120.9(a) of this subchapter by granting a license under part 125 of this subchapter. Also, see Sec. 126.8 of this

subchapter for the requirements for prior approval of proposals relating to significant military equipment.

    (b) Classified Articles. Copies of approved agreements involving the release of classified defense articles will be forwarded by the Office of Defense

Trade Controls to the Defense Investigative Service of the Department of Defense.

    (c) Amendments. Changes to the scope of approved agreements, including modifications, upgrades, or extensions must be submitted for approval. The

amendments may not enter into force until approved by the Office of Defense Trade Controls.

    (d) Minor Amendments. Amendments which only alter delivery or performance schedules, or other minor administrative amendments which do not affect

in any manner the duration of the agreement or the clauses or information which must be included in such agreements because of the requirements of this

part, do not have to be submitted for approval. One copy of all such minor amendments must be submitted to the Office of Defense Trade Controls within

thirty days after they are concluded.

Sec. 124.3  Exports of technical data in furtherance of an agreement.

     (a) Unclassified technical data. The Bureau of Customs and Border Protection or U.S. Postal authorities shall permit the export without a license of

unclassified technical data if the export is in furtherance of a manufacturing license or technical assistance agreement which has been approved in writing

by the Directorate of Defense Trade Controls (DDTC) and the technical data does not exceed the scope or limitations of the relevant agreement. The

approval of the DDTC must be obtained for the export of any unclassified technical data that may exceed the terms of the agreement.

    (b) Classified technical data. The export of classified information in furtherance of an approved manufacturing license or technical assistance agreement

which provides for the transmittal of classified information does not require further approval from the Office of Defense Trade Controls when:

    (1) The United States party certifies to the Department of Defense transmittal authority that the classified information does not exceed the technical or

product limitations in the agreement; and

    (2) The U.S. party complies with the requirements of the Department of Defense Industrial Security Manual concerning the transmission of classified

information and any other requirements of cognizant U.S. departments or agencies.

 [58 FR 39305, July 22, 1993, as amended at 68 FR 61102, Oct. 27, 2003]

Sec. 124.13  Procurement by United States persons in foreign countries (offshore procurement).

    Notwithstanding the other provisions in part 124 of this subchapter, the Office of Defense Trade Controls may authorize by means of a license (DSP-5)

the export of unclassified technical data to foreign persons for offshore procurement of defense articles, provided that:

    (a) The contract or purchase order for offshore procurement limits delivery of the defense articles to be produced only to the person in the United States

or to an agency of the U.S. Government; and

    (b) The technical data of U.S.-origin to be used in the foreign manufacture of defense articles does not exceed that required for bid purposes on a build-to-print

basis (build-to-print means producing an end-item (i.e., system, subsystem or component) from technical drawings and specifications (which contain no process or

know-how information) without the need for additional technical assistance). Release of supporting documentation (e.g., acceptance criteria, object code software

 for numerically controlled machines) is permissible. Build-to-print does not include the release of any information which discloses design methodology, engineering

analysis, detailed process information or manufacturing know-how); and

    (c) The contract or purchase order between the person in the United States and the foreign person:

    (1) Limits the use of the technical data to the manufacture of the defense articles required by the contract or purchase order only; and

    (2) Prohibits the disclosure of the data to any other person except subcontractors within the same country; and

    (3) Prohibits the acquisition of any rights in the data by any foreign person; and

    (4) Provides that any subcontracts between foreign persons in the approved country for manufacture of equipment for delivery pursuant to the contract or

purchase order contain all the limitations of this paragraph (c); and

    (5) Requires the foreign person, including subcontractors, to destroy or return to the person in the United States all of the technical data exported pursuant

to the contract or purchase order upon fulfillment of their terms; and

    (6) Requires delivery of the defense articles manufactured abroad only to the person in the United States or to an agency of the U.S. Government; and

    (d) The person in the United States provides the Office of Defense Trade Controls with a copy of each contract, purchase order or subcontract for offshore

procurement at the time it is accepted. Each such contract, purchase order or subcontract must clearly identify the article to be produced and must identify the

license number or exemption under which the technical data was exported; and

    (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.

 [58 FR 39305, July 22, 1993, as amended at 64 FR 17534, Apr. 12, 1999]