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                 1ST DOCUMENT of Focus printed in FULL format.

                                FEDERAL REGISTER
                                VOL. 58, No. 139

                             Rules and Regulations

                              DEPARTMENT OF STATE
                       Bureau of Politico-Military Affairs

       22 CFR Parts 120, 121, 122, 123, 124, 125, 126, 127, 128, and 130

                              [Public Notice 1832]

          Amendments to the International Traffic in Arms Regulations

                                    Part II

                                  58 FR 39280

DATE: Thursday, July 22, 1993

ACTION: Final rule.

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SUMMARY: This rule amends the regulations implementing section 38 of the Arms
Export Control Act, which governs the import and export of defense articles and
services. The rule clarifies existing regulations and reduces the regulatory
burden on exporters of defense articles and services. Although this is a final
rule public comment is welcome and will be taken into account to the extent
possible.

EFFECTIVE DATE: This final rule is effective July 22, 1993.

FOR FURTHER INFORMATION CONTACT: Information regarding this notice may be
obtained from James Andrew Lewis, U.S. Department of State, Bureau of
Politico-Military Affairs (202-647-4231), Mal Zerden or Allan Suchinsky, U.S.
Department of State, Office of Defense Trade Controls (703-875-6644).

   SUPPLEMENTARY INFORMATION: The regulations implementing section 38 of the
Arms Export Control Act were last revised substantially in November 1984. A
proposed rule was published on May 7, 1992 (57 FR 19666), for public comment.
This Final Rule clarifies and simplifies the current regulations. Certain
sections are consolidated while others are revised in the interests of clarity
and consistency. To the extent possible, related sections are cross-referenced.
In amending the regulations, public comments and suggestions from industry and
other U.S. agencies have been considered and in many cases incorporated into the
regulations.

   The most significant changes are an increase in the validity period of a
license from three to four years and a revision of the policy used by the
Department for designating defense articles that takes into account civil
application and functional equivalence. Several new exemptions from licensing                                                                       PAGE    3
                                 58 FR 39280, *
                                                                          FOCUS

requirements are also established. These exemptions will cover exports under
approved manufacturing or technical assistance agreements; spare parts valued at
$ 500 or less; intra-company transfers of components being sent abroad for
assembly; temporary imports for repair and servicing; and items which were
previously licensed for temporary export to trade shows.

   Other changes include a clarification of the commodity jurisdiction process,
which establishes a review period and specifies the appeal process. The
definition of public domain is expanded and clarified. An exception allows for
the re-export of certain U.S.-origin components to the Governments of NATO
countries, and the Governments of Japan and Australia without prior U.S.
approval for components which are not significant military equipment or
controlled for purposes of the Missile Technology Control Regime and do not
require Congressional notification.

Specific Changes

   The Office of Munitions Control was renamed the Office of Defense Trade
Controls on January 8, 1990. All references to the Office of Munitions Control
are now referred to as the Office of Defense Trade Controls. For clarification,
all references to the Assistant Secretary for Politico-Military Affairs are
replaced by Assistant Secretary of State for Politico-Military Affairs. Due to a
change in office designation, all references to the Under Secretary of State for
Security Assistance, Science and Technology are replaced by Under Secretary of
State for International Security Affairs.

   There has been extensive renumbering due to the deletion, consolidation and
addition of sections in the regulations. Sections in which there are substantive
changes are noted below. These section designations refer to the new section
numbers.

Section 120.1 General

   Section 120.1(b) adds reference to retransfer approvals for clarification and
lists the Department officials authorized to exercise the authorities of the
subchapter. Section 120.1(c) adds a new section which specifies that exemptions
in this subchapter do not apply to exporters who have been convicted of
violating certain U.S. criminal statutes or are debarred.

Section 120.3 Policy for Designating and Determining Defense Articles and
Services

   The policy on designating defense articles and services in the future has
been amended to take into consideration civil application, functional
equivalence, and the significance of the military or intelligence applicability
of articles and services.

Section 120.4 Commodity Jurisdiction

   The title is changed from Commodity jurisdiction and redesignated @ 120.4
(previously @ 120.5). Establishes criteria used by State for determination of
export licensing jurisdiction. Establishes a review period and specifies the
appeal process, with a fixed review period, for commodity jurisdiction
determinations.                                                                       PAGE    4
                                 58 FR 39280, *
                                                                          FOCUS


Section 120.5 Relation to Regulations of Other Agencies

   Redesignates section number (previously 120.4). Clarifies the licensing roles
and responsibilities of other U.S. Government agencies.

Section 120.6 Defense Article

   Clarifies the definition to specify the inclusion of components, parts,
accessories, attachments and associated equipment. Clarifies the definition of
models and mockups.

Section 120.8 Major Defense Equipment

   This is a new section which defines major defense equipment.

Section 120.9 Defense Service

   Modifies the definition to be consistent with the revised definition of
technical data.

Section 120.10 Technical Data

   Modifies the definition to include certain types of software. Clarifies the
definition by explicitly identifying assembly and reconstruction of defense
articles.

Section 120.11 Public Domain

   Adds methods by which technical data may be considered to be in the public
domain and includes a definition of fundamental research.

Section 120.12 Office of Defense Trade Controls

   Identifies the name and address of the subject office.

Section 120.16 Foreign Person

   Modifies the definition to fit 8 U.S.C. 1324 (a)(3) and address the term
protected individual, consistent with the Immigration and Nationality Act, as
amended.

Section 120.17 Export

   Modifies the definition to include transfers in the United States of defense
articles to embassies or other agencies of foreign governments.

Section 120.18 Import-Temporary

   Changes title from In-transit shipment and clarifies the definition.
[*39281]

Section 120.19 Reexport or Retransfer                                                                       PAGE    5
                              58 FR 39280, *39281
                                                                          FOCUS

   This is a new section which defines reexport and retransfer as the transfer
to an end use or end user or destination not previously defined.

Section 120.20 License

   Changes wording referring to temporary import to agree with Section 120.18,
and specifies that licenses are for items controlled by this subchapter.

Section 120.22 Technical Assistance Agreement

   Clarifies the services covered under this type of agreement.

Section 120.23 Distribution Agreement

   Adds a definition of distribution agreement.

Section 120.28 Listing of Forms Referred to in This Subchapter

   Lists the specific office within each agency from which forms are available.

Section 120.29 Missile Technology Control Regime

   This is a new section which defines the Missile Technology Control Regime
consistent with section 71(a) of the Arms Export Control Act.

Part 121 The United States Munitions List

   Federal Register Notices modifying the U.S. munitions list have recently been
published. Under these proposals, technical data is included as a subcategory
under each munitions list category.

Section 121.12 Military Explosives

   Provides a definition of military explosives and more specifically indicates
the types of explosives covered under category V.

Section 121.15 Vessels of War and Special Naval Equipment

   Provides a definition of vessels of war and special naval equipment.

Section 121.16 Missile Technology Control Regime Annex

   This new section lists the defense articles on the MTCR annex.

Section 122.4 Notification of Changes in Information Furnished By Registrants

   Provides that mergers and acquisitions of registrants must be notified to the
Office of Defense Trade Controls.

Section 122.5 Maintenance of Records By Registrants

   Clarifies what records are to be maintained during the mandatory period for
record maintenance. Changes the maintenance period from seven to five years.
                                                                        PAGE    6
                              58 FR 39280, *39281
                                                                          FOCUS

Section 123.1 Requirement for Export or Temporary Import Licenses

   Enumerates licensing and documentation requirements including those
previously specified under @ 123.22.

Section 123.2 Import Jurisdiction

   Clarifies the regulatory authority over temporary and permanent import of
defense articles into the U.S.

Section 123.3 Temporary Import Licenses

   Clarifies the requirements for temporary import licenses and associated
exemptions.

Section 123.4 Temporary Import License Exemptions

   Establishes a licensing exemption for defense articles temporarily imported
into the U.S. for servicing and return to the country from which they were
imported. Establishes criteria and procedures for use of the exemption.

Section 123.5 Temporary Export Licenses

   Establishes criteria and procedures for temporary export of defense articles.
References the new four year validity period for licenses.

Section 123.6 Foreign Trade Zones and U.S. Customs Bonded Warehouses

   Clarifies the procedure for handling classified defense articles including
technical data.

Section 123.7 Exports to Warehouses or Distribution Points Outside the United
States

   Clarifies that certain exemptions may apply to exports under this subchapter.

Section 123.9 Country of Ultimate Destination and Approval of Reexports or
Retransfers

   Establishes procedures for obtaining approval for the reexport or retransfer
or change in end use of a defense article. Provides for an exemption for the
reexport of defense articles to the Governments of NATO countries, and the
Governments of Japan and Australia for the reexport of articles which are not
significant military equipment or controlled for purposes of the Missile
Technology Control Regime and which do not require Congressional notification.

Section 123.10 Non-transfer and Use Assurances

   Modifies the section to move congressional notification. A new section
(123.15) is created to address congressional notifications. Clarifies the
assurances requirement by explicitly addressing usage assurances.

Section 123.11 Movements of Vessels and Aircraft Covered By the U.S. Munitions
List Outside the United States                                                                       PAGE    7
                              58 FR 39280, *39281
                                                                          FOCUS

   Changes section title.

Section 123.12 Shipments Between U.S. Possessions

   Clarifies that licensing requirements under this section do not apply to
direct shipment of defense articles under this section.

Section 123.14 Import Certificate/Delivery Verification Procedure

   Eliminates specific identification of countries subject to this procedure.

Section 123.15 Congressional Notification for Licenses

   Previously covered by @ 123.10(e). Provides additional information to clarify
the Department's requirement.

Section 123.16 Exemptions of General Applicability

   Provides for additional licensing exemptions for the export of unclassified
defense articles and procedures for utilizing these exemptions. The exemption
for obsolete nonautomatic firearms (@ 123.16(a)) has been moved to @ 123.17.
This section creates exemptions for: The export of unclassified defense articles
in furtherance of approved agreements; spare parts valued at $ 500 or less;
components, tools or test equipment being sent abroad for assembly and return by
the same company; and unclassified defense articles being temporarily exported
to trade shows when the article has previously been licensed for this purpose.

Section 123.17 Exports of Firearms and Ammunition

   Moves @ 123.16(a) to @ 123.17(a).

Section 123.21 Duration, Renewal and Disposition of Licenses

   Modifies title to add the word duration. Changes the validity period for
licenses from three to four years. Clarifies that a license expires when the
total value authorized has been shipped.

Section 123.22 Filing of Export Licenses and Shipper's Export Declarations With
District Directors of Customs

   Modifies the title to omit the word and in-transit. Clarifies the procedures
for filing of export licenses and Shipper's Export Declarations with
[*39282]   District Directors of Customs. Explains procedures for
self-endorsement of licenses when appropriate. Establishes a new procedure for
exports of unclassified technical data.

Section 123.23 Monetary Value of Shipments

   New title. Section incorporates the provisions of previous @ 123.25(d) and
clarifies the dollar thresholds for Congressional Notification.

Section 123.24 Shipments by Mail                                                                       PAGE    8
                              58 FR 39280, *39282
                                                                          FOCUS

   Allows self-endorsement of license.

Section 123.25 Amendments to Licenses

   Creates new section to address the amendment process.

Section 124.1 Manufacturing License Agreements and Technical Assistance
Agreements

   Divides previous @ 124.1(b) into two sections, one addressing substantive
amendments, the other addressing minor amendments.

Section 124.7 Information Required in All Manufacturing License Agreements and
Technical Assistance Agreements

   New title combining previous titles of @@ 124.7 and 124.8. Consolidates
information in @ 124.7.

Section 124.10 Nontransfer and Use Assurances

   Eliminates reference to General Security of Information Agreements and other
foreign government security assurances.

Section 124.11 Congressional Notification for Agreements

   Creates a new section which explains the requirements under the Arms Export
Control Act that certain agreements are subject to Congressional notification
prior to approval.

Section 124.12 Required Information in Letters of Transmittal

   Revises the reporting requirement threshold pursuant to section 130 to $
500,000 or more. Adds a clause relating to sublicensing arrangements.

Section 124.13 Procurement by U.S. Persons (Offshore Procurement)

   Allows technical data which discloses details of design or production
necessary for bid purposes.

Section 124.14 Exports to Warehouses or Distribution Points Outside the United
States

   Specifies that the exemption under @ 123.16(b)(1) may be applicable for the
export of unclassified defense articles in furtherance of approved agreements.
Corrects misnumbered paragraphs.

Section 125.1 Exports Subject to This Part

   Clarifies that technical data authorized for export may not be retransferred
from the authorized end-user without prior approval.

Section 125.2 Exports of Unclassified Technical Data                                                                       PAGE    9
                              58 FR 39280, *39282
                                                                          FOCUS

   Clarifies the licensing procedure for export (and return to the U.S.) of
unclassified technical data. Specifies the number of copies of technical data
required for submission. Incorporates requirements previously contained in @
125.7(b).

Section 125.4 Exemptions of General Applicability

   Clarifies that if prior approval or prior notification are necessary, those
requirements must first be met before any exemption under this section may be
used.

Section 125.6 Exemptions-Certification Requirements

   Title change to include the word Exemptions. Specifies that certifications
must be in written form and retained by the exporter for a period of five years.
Clarifies the procedure for certification in the absence of Customs or Postal
officials.

Section 125.7 Procedures for the Export of Classified Technical Data and Other
Classified Defense Articles

   Title change and specifies that only one copy of data or descriptive
literature is required for license renewals.

Section 125.8 Filing of Licenses for Exports of Unclassified Technical Data

   Clarifies the procedure for self-endorsement of licenses.

Section 126.1 Prohibited Exports and Sales to Certain Countries

   Revises list of prohibited countries to reflect current policy and country
identifications.

Section 126.4 Shipments by or for United States Government Agencies

   Clarifies that this section also applies to temporary imports and temporary
exports and that certain transfers that result in incorporating U.S.-origin
defense articles into foreign-owned launches or satellites to be launched
overseas are permanent exports requiring the prior approval of the Department.

Section 126.5 Canadian Exemptions

   Clarifies that a license is not required for the permanent or temporary
import from Canada of certain defense articles.

Section 126.10 Disclosure of Information to the Public

   Reference to the Under Secretary for Security Assistance, Science, and
Technology is replaced by Under Secretary of State for International Security
Affairs.

Section 126.13 Required Information                                                                       PAGE   10
                              58 FR 39280, *39282
                                                                          FOCUS

   Advises the provision of a Technology Transfer Control Plan in cases when
foreign nationals are employed at or assigned to security cleared facilities.

Section 127.4 Authority of U.S. Customs Service Officers

   Specifies the authority of the Customs Service Officers.

Section 127.5 Authority of Defense Investigative Service

   Specifies the authority of the Defense Investigative Service in the case of
exports of classified defense articles, including technical data.

Section 127.10 Past Violations

   Clarifies the authority of the Office of Defense Trade Controls with respect
to making exceptions to cases that have been denied and addresses consultation
with other offices and agencies.

Section 127.12 Voluntary Disclosures

   Includes a provision encouraging exporters to voluntarily disclose in writing
information regarding possible violations.

Part 130 Political Contributions, Fees and Commissions

   The reporting requirement threshold is increased from $ 250,000 to $ 500,000.

   This amendment involves a foreign affairs function of the United States, and
thus is excluded from the major rule procedures of Executive Order 12291 (46 FR
13193) and the procedures of the Administrative Procedure Act (5 U.S.C. 553 and
554). In addition, this rule affects collection of information subject to the
Paperwork Reduction Act (44 U.S.C. 3501 et. seq.), and will serve to reduce the
burden on exporters in that respect. The relevant information collection is to
be reviewed by the Office of Management and Budget under control no. 1405-0013.


List of Subjects

22 CFR Parts 120 and 125

   Arms and munitions, Classified information, Exports.   [*39283]

22 CFR Part 121

   Arms and munitions, Exports, U.S. munitions list.

22 CFR Part 122

   Arms and munitions, Exports, Reporting and recordkeeping requirements.

22 CFR Parts 123 and 126

   Arms and munitions, Exports.
                                                                        PAGE   11
                              58 FR 39280, *39283
                                                                          FOCUS

22 CFR Part 124

   Arms and munitions, Exports, Technical assistance.

22 CFR Part 127

   Arms and munitions, Crime, Exports, Penalties, Seizures and forfeitures.

22 CFR Part 128

   Administrative procedures, Arms and munitions, Exports.

22 CFR Part 130

   Arms and munitions, Campaign funds, Confidential business information,
Exports, Reporting and recordkeeping requirements.

   Accordingly, for the reasons set forth in the preamble, 22 CFR subchapter M
is amended by revising parts 120, 121, 122, 123, 124, 125, 126, 127, 128 and 130
to read as follows:

SUBCHAPTER M-INTERNATIONAL TRAFFIC IN ARMS REGULATIONS



PART 120-PURPOSE AND DEFINITIONS

Sec.

120.1 General authorities and eligibility.

120.2 Designation of defense articles and defense services.

120.3 Policy on designating and determining defense articles and services.

120.4 Commodity jurisdiction.

120.5 Relation to regulations of other agencies.

120.6 Defense article.

120.7 Significant military equipment.

120.8 Major defense equipment.

120.9 Defense service.

120.10 Technical data.

120.11 Public domain.

120.12 Office of Defense Trade Controls.

120.13 United States.                                                                       PAGE   12
                              58 FR 39280, *39283
                                                                          FOCUS


120.14 Person.

120.15 U.S. person.

120.16 Foreign person.

120.17 Export.

120.18 Temporary import.

120.19 Reexport or retransfer.

120.20 License.

120.21 Manufacturing license agreement.

120.22 Technical assistance agreement.

120.23 Distribution agreement.

120.24 District Director of Customs.

120.25 Empowered Official.

120.26 Presiding Official.

120.27 U.S. criminal statutes.

120.28 Listing of forms referred to in this subchapter.

120.29 Missile Technology Control Regime.

   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.

@ 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 (42 FR 4311).
This subchapter implements that authority. By virtue of delegations of authority
by the Secretary of State, these regulations are primarily administered by the
Director of the Office of Defense Trade Controls, Bureau of Politico-Military
Affairs, Department of State.

   (b) Authorized Officials. All authorities conferred upon the Director of the
Office of Defense Trade Controls by this subchapter may be exercised at any time
by the Under Secretary of State for International Security Affairs, the
Assistant Secretary of State for Politico-Military Affairs, or the Deputy
Assistant Secretary of State for Politico-Military Affairs responsible for
supervising the Office of Defense Trade Controls unless the Legal Adviser or                                                                       PAGE   13
                              58 FR 39280, *39283
                                                                          FOCUS

the Assistant Legal Adviser for Politico-Military Affairs of the Department of
State determines that any specific exercise of this authority under this
subsection may be inappropriate.

   (c) Eligibility. Only U.S. persons (as defined in @ 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 @ 120.16) other than governments are not
eligible. U.S. persons who have been convicted of violating the criminal
statutes enumerated in @ 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 @ 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 @ 126.7 (a)(1)-(a)(7) of this subchapter, or
who are ineligible under @ 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 @ 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 @ 126.7(c) of
this subchapter.

@ 120.2 -- Designation of defense articles and defense services.

   The Arms Export Control Act (22 U.S.C. 2778(a) and 2794(7)) provides that the
President shall designate the articles and services deemed to be defense
articles and defense services for purposes of this subchapter. The items so
designated constitute the United States Munitions List and are specified in part
121 of this subchapter. Such designations are made by the Department of State
with the concurrence of the Department of Defense. For a determination on
whether a particular item is included on the U.S. Munitions List see @ 120.4(a).

@ 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 @ 120.6) or defense service (see @ 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                                                                       PAGE   14
                              58 FR 39280, *39283
                                                                          FOCUS

   (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   [*39284]   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).

@ 120.4 -- Commodity jurisdiction.

   (a) The commodity jurisdiction procedure is used with the U.S. Government if
doubt exists as to whether an article or service is covered by the U.S.
Munitions List. It may also be used for consideration of a redesignation of an
article or service currently covered by the U.S. Munitions List. The Department
must submit a report to Congress at least 30 days before any item is removed
from the U.S. Munitions List. Upon written request, the Office of Defense Trade
Controls shall provide a determination of whether a particular article or
service is covered by the U.S. Munitions List. The determination, consistent
with @@ 120.2, 120.3, and 120.4, entails consultation among the Departments of
State, Defense, Commerce and other U.S. Government agencies and industry in
appropriate cases.

   (b) Registration with the Office of Defense Trade Controls as defined in part
122 of this subchapter is not required prior to submission of a commodity
jurisdiction request. If it is determined that the commodity is a defense
article or service covered by the U.S. Munitions List, registration is required
for exporters, manufacturers, and furnishers of defense articles and defense
services (see part 122 of this subchapter).

   (c) Requests shall identify the article or service, and include a history of
the product's design, development and use. Brochures, specifications and any
other documentation related to the article or service shall be submitted in
seven collated sets.

   (d)(1) A determination that an article or service does not have predominant
civil applications shall be made by the Department of State, in accordance with
this subchapter, on a case-by-case basis, taking into account:

   (i) The number, variety and predominance of civil applications;

   (ii) The nature, function and capability of the civil applications; and

   (iii) The nature, function and capability of the military applications.

   (2) A determination that an article does not have the performance equivalent,
defined by form, fit and function, to those used for civil applications shall be
made by the Department of State, in accordance with this subchapter, on a
case-by-case basis, taking into account:                                                                       PAGE   15
                              58 FR 39280, *39284
                                                                          FOCUS

   (i) The nature, function, and capability of the article;

   (ii) Whether the components used in the defense article are identical to
those components originally developed for civil use.

   Note: The form of the item is its defined configuration, including the
geometrically measured configuration, density, and weight or other visual
parameters which uniquely characterize the item, component or assembly. For
software, form denotes language, language level and media. The fit of the item
is its ability to physically interface or interconnect with or become an
integral part of another item. The function of the item is the action or actions
it is designed to perform.

   (3) A determination that an article has significant military or intelligence
applications such that it is necessary to control its export as a defense
article shall be made, in accordance with this subchapter, on a case-by-case
basis, taking into account: (i) The nature, function, and capability of the
article;

   (ii) The nature of controls imposed by other nations on such items (including
COCOM and other multilateral controls), and

   (iii) That items described on the COCOM Industrial List shall not be
designated defense articles or defense services unless the failure to control
such items on the U.S. Munitions List would jeopardize significant national
security or foreign policy interests.

   (e) The Office of Defense Trade Controls will provide a preliminary response
within 10 working days of receipt of a complete request for commodity
jurisdiction. If after 45 days the Office of Defense Trade Controls has not
provided a final commodity jurisdiction determination, the applicant may request
in writing to the Director, Center for Defense Trade that this determination be
given expedited processing.

   (f) State, Defense and Commerce will resolve commodity jurisdiction disputes
in accordance with established procedures. State shall notify Defense and
Commerce of the initiation and conclusion of each case.

   (g) A person may appeal a commodity jurisdiction determination by submitting
a written request for reconsideration to the Director of the Center for Defense
Trade. The Center for Defense Trade will provide a written response of the
Director's determination within 30 days of receipt of the appeal. If desired, an
appeal of the Director's decision can then be made directly to the Assistant
Secretary for Politico-Military Affairs.

@ 120.5 -- Relation to regulations of other agencies.

   If an article or service is covered by the U.S. Munitions List, its export is
regulated by the Department of State, except as indicated otherwise in this
subchapter. For the relationship of this subchapter to regulations of the
Department of Commerce, the Department of Energy and the Nuclear Regulatory
Commission, see @ 123.20 of this subchapter. The Treasury Department controls
permanent imports of articles and services covered by the U.S. Munitions Import
List from foreign countries by persons subject to U.S. jurisdiction (31 CFR                                                                       PAGE   16
                              58 FR 39280, *39284
                                                                          FOCUS

part 505). The Department of Commerce regulates the export of items on the
Commerce Control List (CCL) under the Export Administration Regulations (15 CFR
parts 768-799).

@ 120.6 -- Defense article.

   Defense article means any item or technical data designated in @ 121.1 of
this subchapter. The policy described in @ 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 @ 121.1 of this subchapter. It does not
include basic marketing information on function or purpose or general system
descriptions.

@ 120.7 -- Significant military equipment.

   (a) Significant military equipment means articles for which special export
controls are warranted because of their capacity for substantial military
utility or capability. Section 47(6) of the Arms Export Control Act (22 U.S.C.
2794(6) note) refers to significant combat equipment on the U.S. Munitions List.
The terms significant military equipment and significant combat equipment are
equivalent for purposes of that section of the Arms Export Control Act and this
subchapter.

   (b) Significant military equipment includes:

   (1) Items in @ 121.1 of this subchapter which are preceded by an asterisk;
and

   (2) All classified articles enumerated in @ 121.1 of this subchapter.

@ 120.8 -- Major defense equipment.

   Pursuant to section 47(6) of the Arms Export Control Act (22 U.S.C. 2794(6)
note), major defense equipment means any item of significant military equipment
(as defined in @ 120.7) on the U.S. Munitions List having a nonrecurring
research and development cost of more than $ 50,000,000 or a total   [*39285]

production cost of more than $ 200,000,000.

@ 120.9 -- Defense service.

   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;
or

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

@ 120.10 -- Technical data.                                                                       PAGE   17
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   Technical data means, for purposes of this subchapter:

   (1) Information, other than software as defined in @ 120.10(d), 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 @ 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 @
120.11. It also does not include basic marketing information on function or
purpose or general system descriptions of defense articles.

@ 120.11 -- Public domain.

   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 @ 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:                                                                       PAGE   18
                              58 FR 39280, *39285
                                                                          FOCUS

   (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.

@ 120.12 -- Office of Defense Trade Controls.

   Office of Defense Trade Controls, Bureau of Politico-Military Affairs,
Department of State, Washington, D.C. 20522-0602.

@ 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.

@ 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 (@ 120.16) or U.S. person (@ 120.15), then
it refers to both.

@ 120.15 -- U.S. person.

   U.S. person means a person (as defined in @ 120.14 of this part) 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 @ 120.16 of this part.

@ 120.16 -- Foreign person.

   Foreign person means any natural person 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).

@ 120.17 -- Export.

   Export means:

   (1) Sending or taking a defense article out of the United States in any
manner, except by mere travel outside of the United States by a person whose                                                                       PAGE   19
                              58 FR 39280, *39285
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personal knowledge includes technical data; or

   (2) Transferring registration, control or ownership to a foreign person of
any aircraft, vessel, or satellite covered by the U.S. Munitions List, whether
in the United States or abroad; or

   (3) Disclosing (including oral or visual disclosure) or transferring in the
United States any defense article to an embassy, any agency or subdivision of a
foreign government (e.g., diplomatic missions); or

   (4) Disclosing (including oral or visual disclosure) or transferring
technical data to a foreign person, whether in the United States or abroad; or

   (5) Performing a defense service on behalf of, or for the benefit of, a
foreign person, whether in the United States or abroad.

   (6) A launch vehicle or payload shall not, by reason of the launching of such
vehicle, be considered an export for purposes of this subchapter. However, for
certain limited purposes (see @ 126.1 of this subchapter), the controls of this
subchapter may apply to any sale, transfer or proposal to sell or transfer
defense articles or defense services.

@ 120.18 -- Temporary import.

   Temporary import means bringing into the United States from a foreign country
any defense article that is to be returned to the country from which it was
shipped or taken, or any defense   [*39286]   article that is in transit to
another foreign destination. Temporary import includes withdrawal of a defense
article from a customs bonded warehouse or foreign trade zone for the purpose of
returning it to the country of origin or country from which it was shipped or
for shipment to another foreign destination. Permanent imports are regulated by
the Department of the Treasury (see 27 CFR parts 47, 178 and 179).

@ 120.19 -- Reexport or retransfer.

   Reexport or retransfer means the transfer of defense articles or defense
services to an end use, end user or destination not previously authorized.

@ 120.20 -- License.

   License means a document bearing the word license issued by the Director,
Office of Defense Trade Controls or his authorized designee which permits the
export or temporary import of a specific defense article or defense service
controlled by this subchapter.

@ 120.21 -- Manufacturing license agreement.

   An agreement (e.g., contract) whereby a U.S. person grants a foreign person
an authorization to manufacture defense articles abroad and which involves or
contemplates:

   (a) The export of technical data (as defined in @ 120.10) or defense articles
or the performance of a defense service; or                                                                       PAGE   20
                              58 FR 39280, *39286
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   (b) The use by the foreign person of technical data or defense articles
previously exported by the U.S. person. (See part 124 of this subchapter).

@ 120.22 -- Technical assistance agreement.

   An agreement (e.g., contract) for the performance of a defense service(s) or
the disclosure of technical data, as opposed to an agreement granting a right or
license to manufacture defense articles. Assembly of defense articles is
included under this section, provided production rights or manufacturing
know-how are not conveyed. Should such rights be transferred, @ 120.21 is
applicable. (See part 124 of this subchapter).

@ 120.23 -- Distribution agreement.

   An agreement (e.g., a contract) to establish a warehouse or distribution
point abroad for defense articles exported from the United States for subsequent
distribution to entities in an approved sales territory (see part 124 of this
subchapter).

@ 120.24 -- District Director of Customs.

   District Director of Customs means the District Directors of Customs at
Customs Headquarters Ports (other than the port of New York City, New York,
where it is the Area Director of Customs); the Regional Commissioners of
Customs, the Deputy and Assistant Regional Commissioners of Customs for Customs
Region II at the Port of New York, New York; and Port Directors at Customs ports
not designated as Headquarters Ports.

@ 120.25 -- Empowered official.

   Empowered Official means a U.S. person who:

   (1) Is directly employed by the applicant or a subsidiary in a position
having authority for policy or management within the applicant organization; and

   (2) Is legally empowered in writing by the applicant to sign license
applications or other requests for approval on behalf of the applicant; and

   (3) Understands the provisions and requirements of the various export control
statutes and regulations, and the criminal liability, civil liability and
administrative penalties for violating the Arms Export Control Act and the
International Traffic in Arms Regulations; and

   (4) Has the independent authority to:

   (i) Enquire into any aspect of a proposed export or temporary import by the
applicant, and

   (ii) Verify the legality of the transaction and the accuracy of the
information to be submitted; and

   (iii) Refuse to sign any license application or other request for approval
without prejudice or other adverse recourse.
                                                                        PAGE   21
                              58 FR 39280, *39286
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@ 120.26 -- Presiding official.

   Presiding official means a person authorized by the U.S. Government to
conduct hearings in administrative proceedings.

@ 120.27 -- U.S. criminal statutes.

   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).

@ 120.28 -- Listing of forms referred to in this subchapter.

   The forms referred to in this subchapter are available from the following
government AGENCY:

   (a) Department of State, Bureau of Politico-Military Affairs, Office of
Defense Trade Controls, Washington, DC. 20522-0602.

   (1) Application/License for permanent export of unclassified defense articles
and related technical data (Form DSP-5).                                                                       PAGE   22
                              58 FR 39280, *39286
                                                                          FOCUS

   (2) Application for registration (Form DSP-9).

   (3) Application/License for temporary import of unclassified defense articles
(Form DSP-61).

   (4) Application/License for temporary export of unclassified defense articles
(Form DSP-73).

   (5) Non-transfer and use certificate (Form DSP-83).

   (6) Application/License for permanent/temporary export or temporary import of
classified defense articles and related classified technical data (Form DSP-85).

   (7) Authority to Export Defense Articles and Defense Services sold under the
Foreign Military Sales program (Form DSP-94).

   (b) Department of Commerce, Bureau of Export Administration:

   (1) International Import Certificate (Form BXA-645P/ATF-4522/DSP-53).

   (2) Shipper's Export Declaration (Form No. 7525-V).

   (3) Department of Defense, Defense Security Assistance Agency: Letter of
Offer and Acceptance (DD Form 1513).

@ 120.29 -- Missile technology control regime.

   (a) For purposes of this subchapter, Missile Technology Control Regime (MTCR)
means the policy statement   [*39287]   between the United States, the United
Kingdom, the Federal Republic of Germany, France, Italy, Canada, and Japan,
announced on April 16, 1987, to restrict sensitive missile-relevant transfers
based on the MTCR Annex, and any amendments thereto;

   (b) The term MTCR Annex means the Guidelines and Equipment and Technology
Annex of the MTCR, and any amendments thereto;

   (c) List of all items on the MTCR Annex. Section 71(a) of the Arms Export
Control Act (22 U.S.C. @ 2797) refers to the establishment as part of the U.S.
Munitions List of a list of all items on the MTCR Annex, the export of which is
not controlled under section 6(l) of the Export Administration Act of 1979 (50
U.S.C. App. 2405(l)), as amended. In accordance with this provision, the list of
MTCR Annex items shall constitute all items on the U.S. Munitions List in @
121.16 of this subchapter.



PART 121-THE UNITED STATES MUNITIONS LIST

Enumeration of Articles

Sec.

121.1 General. The United States Munitions List.
                                                                        PAGE   23
                              58 FR 39280, *39287
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121.2 Interpretations of the United States Munitions List and the Missile
Technology Control Regime Annex.

121.3 Aircraft and related articles.

121.4 Amphibious vehicles.

121.5 Apparatus and devices under Category IV(c).

121.6 Cartridge and shell casings.

121.7 Chemical agents.

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

121.9 Firearms.

121.10 Forgings, castings and machined bodies.

121.11 Military demolition blocks and blasting caps.

121.12 Military explosives.

121.13 Military fuel thickeners.

121.14 Propellants.

121.15 Vessels of war and special naval equipment.

121.16 Missile Technology Control Regime Annex.

   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. 2658.

Enumeration of Articles

@ 121.1 -- General. The United States munitions list.

   (a) The following articles, services and related technical data are
designated as defense articles and defense services pursuant to sections 38 and
47(7) of the Arms Export Control Act (22 U.S.C. 2778 and 2794(7)). Changes in
designations will be published in the Federal Register. Information and
clarifications on whether specific items are defense articles and services under
this subchapter may appear periodically in the Defense Trade News published by
the Center for Defense Trade.

   (b) Significant military equipment: An asterisk precedes certain defense
articles in the following list. The asterisk means that the article is deemed to
be "significant military equipment" to the extent specified in @ 120.19. The
asterisk is placed as a convenience to help identify such articles.

   (c) Certain items in the following list are placed in brackets. The brackets
mean that the item is (1) scheduled to be moved to the licensing jurisdiction                                                                       PAGE   24
                              58 FR 39280, *39287
                                                                          FOCUS

of the Department of Commerce upon establishment of a foreign policy control or
(2) in the case of spacecraft and related equipment, the item is under review by
an interagency space technical working group. The interagency review will result
in a recommendation as to whether an item should be moved to the jurisdiction of
the Department of Commerce or to USML category XV which was established for this
purpose.

   (d) Missile Technology Control Regime Annex (MTCR). Certain defense articles
and services are identified in @ 121.16 as being on the list of MTCR Annex items
on the United States Munitions List. These are articles as specified in @ 120.29
of this subchapter and appear on the list at @ 121.16.

Category I-Firearms

   *(a) Nonautomatic, semi-automatic and fully automatic firearms to caliber .50
inclusive, and all components and parts for such firearms. (See @ 121.9 and @@
123.16-123.19 of this subchapter.)

   (b) Riflescopes manufactured to military specifications, and specifically
designed or modified components therefor; firearm silencers and suppressors,
including flash suppressors.

   *(c) Insurgency-counterinsurgency type firearms or other weapons having a
special military application (e.g. close assault weapons systems) regardless of
caliber and all components and parts therefor.

   (d) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (c) of this category. (See
@ 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.

Category II-Artillery Projectors

   *(a) Guns over caliber .50, howitzers, mortars, and recoilless rifles.

   *(b) Military flamethrowers and projectors.

   (c) Components, parts, accessories and attachments for the articles in
paragraphs (a) and (b) of this category, including but not limited to mounts and
carriages for these articles.

   (d) Technical data (as defined in 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (c) of this category. (See
@ 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.

Category III-Ammunition                                                                       PAGE   25
                              58 FR 39280, *39287
                                                                          FOCUS

   *(a) Ammunition for the arms in Categories I and II of this section. (See @
121.6.)

   (b) Components, parts, accessories, and attachments for articles in paragraph
(a) of this category, including but not limited to cartridge cases, powder bags,
bullets, jackets, cores, shells (excluding shotgun shells), projectiles,
boosters, fuzes and components therefor, primers, and other detonating devices
for such ammunition. (See @ 121.6.)

   (c) Ammunition belting and linking machines.

   *(d) Ammunition manufacturing machines and ammunition loading machines
(except handloading ones).

   (e) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (d) of this category. (See
@ 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.

Category IV-Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets,
Torpedoes, Bombs and Mines

   *(a) Rockets (including but not limited to meteorological and other sounding
rockets), bombs, grenades, torpedoes, depth charges, land and naval mines, as
well as launchers for such defense articles, and demolition blocks and blasting
caps. (See @ 121.11.)

   *(b) Launch vehicles and missile and anti-missile systems including but not
limited to guided, tactical and strategic missiles, launchers, and systems.

   (c) Apparatus, devices, and materials for the handling, control, activation,
monitoring, detection, protection, discharge, or detonation of the articles in
paragraphs (a) and (b) of this category. (See @ 121.5.)

   *(d) Missile and space launch vehicle powerplants.

   *(e) Military explosive excavating devices.

   *(f) Ablative materials fabricated or semi-fabricated from advanced
composites (e.g., silica, graphite, carbon, carbon/carbon, and boron filaments)
for the articles in this category that are derived directly from or specifically
developed or modified for defense articles.   [*39288]

   *(g) Non/nuclear warheads for rockets and guided missiles.

   (h) All specifically designed or modified components, parts, accessories,
attachments, and associated equipment for the articles in this category.

   (i) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (h) of this category.                                                                       PAGE   26
                              58 FR 39280, *39288
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(See @ 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.

Category V-Explosives, Propellants, Incendiary Agents, and Their Constituents

   *(a) Military explosives. (See @ 121.12.)

   *(b) Military fuel thickeners. (See @ 121.13.)

   (c) Propellants for the articles in Categories III and IV of this section.
(See @ 121.14.)

   (d) Military pyrotechnics, except pyrotechnic materials having dual military
and commercial use.

   (e) All compounds specifically formulated for the articles in this category.

   (f) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (e) of this category. (See
@ 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.

Category VI-Vessels of War and Special Naval Equipment

   *(a) Warships, amphibious warfare vessels, landing craft, mine warfare
vessels, patrol vessels, auxiliary vessels and service craft, experimental types
of naval ships and any vessels specifically designed or modified for military
purposes. (See @ 121.15.)

   *(b) Turrets and gun mounts, arresting gear, special weapons systems,
protective systems, submarine storage batteries, catapults and other components,
parts, attachments, and accessories specifically designed or modified for
combatant vessels.

   (c) Mine sweeping equipment, components, parts, attachments and accessories
specifically designed or modified therefor.

   (d) Harbor entrance detection devices, (magnetic, pressure, and acoustic
ones) and controls and components therefor.

   *(e) Naval nuclear propulsion plants, their land prototypes, and special
facilities for their construction, support, and maintenance. This includes any
machinery, device, component, or equipment specifically developed, designed or
modified for use in such plants or facilities. (See @ 123.21 of this subchapter)

   (f) All specifically designed or modified components, parts, accessories,
attachments, and associated equipment for the articles in this category.                                                                       PAGE   27
                              58 FR 39280, *39288
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   (g) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8) directly related to the defense articles
enumerated in paragraphs (a) through (f) of this category. (See @ 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.

Category VII-Tanks and Military Vehicles

   *(a) Military type armed or armored vehicles, military railway trains, and
vehicles specifically designed or modified to accommodate mountings for arms or
other specialized military equipment or fitted with such items.

   *(b) Military tanks, combat engineer vehicles, bridge launching vehicles,
half-tracks and gun carriers.

   *(c) Self-propelled guns and howitzers.

   (d) Military trucks, trailers, hoists, and skids specifically designed,
modified, or equipped to mount or carry weapons of Categories I, II and IV or
for carrying and handling the articles in paragraph (a) of Categories III and
IV.

   *(e) Military recovery vehicles.

   *(f) Amphibious vehicles. (See @ 121.4)

   *(g) Engines specifically designed or modified for the vehicles in paragraphs
(a), (b), (c), and (f) of this category.

   (h) All specifically designed or modified components and parts, accessories,
attachments, and associated equipment for the articles in this category,
including but not limited to military bridging and deep water fording kits.

   (i) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (h) of this category. (See
@ 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.

Category VIII-Aircraft, [Spacecraft] and Associated Equipment

   *(a) Aircraft, including but not limited to helicopters, non-expansive
balloons, drones, and lighter-than-air aircraft, which are specifically
designed, modified, or equipped for military purposes. This includes but is not
limited to the following military purposes: Gunnery, bombing, rocket or missile
launching, electronic and other surveillance, reconnaissance, refueling, aerial
mapping, military liaison, cargo carrying or dropping, personnel dropping,
airborne warning and control, and military training. (See @ 121.3.)                                                                       PAGE   28
                              58 FR 39280, *39288
                                                                          FOCUS

   *(b) Military aircraft engines, except reciprocating engines, [and spacecraft
engines] specifically designed or modified for the aircraft in paragraph (a) of
this category.

   *(c) Cartridge-actuated devices utilized in emergency escape of personnel and
airborne equipment (including but not limited to airborne refueling equipment)
specifically designed or modified for use with the aircraft, [spacecraft] and
engines of the types in paragraphs (a), (b), [and (h)] of this category.

   (d) Launching and recovery equipment for the articles in paragraph (a) [and
(i)] of this category, if the equipment is specifically designed or modified for
military use [or for use with spacecraft]. Fixed land-based arresting gear is
not included in this category.

   *(e) Inertial navigation systems, aided or hybrid inertial navigation
systems, Inertial Measurement Units (IMUs), and Attitude and Heading Reference
Systems (AHRS) specifically designed, modified, or configured for military use
and all specifically designed components, parts and accessories. For other
inertial reference systems and related components refer to Category XII(d).

   *(f) Developmental aircraft and components thereof which have a significant
military applicability, excluding such aircraft and components that have been
certified by the Federal Aviation Administration and determined through the
commodity jurisdiction procedure specified in @ 120.4 of this subchapter, to be
subject to the export control jurisdiction of the Department of Commerce for
purposes of section 17(c) of the Export Administration Act, as amended.

   *(g) Ground effect machines (GEMS) specifically designed or modified for
military use, including but not limited to surface effect machines and other air
cushion vehicles, and all components, parts, and accessories, attachments, and
associated equipment specifically designed or modified for use with such
machines.

   (h) * Spacecraft, including manned and unmanned, active and passive
satellites (except those listed in Category XV).

   [(i) Power supplies and energy sources specially designed or modified for
spacecraft in paragraph (h).]

   (j) Components, parts, accessories, attachments, and associated equipment
(including ground support equipment) specifically designed or modified for the
articles in paragraphs (a) through (i) of this category, excluding aircraft
tires and propellors used with reciprocating engines.

   (k) Technical Data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (j) of this category. (See
@ 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.

   [(l) Non-military aircraft inertial navigation systems, except those systems
or components that are standard equipment in civil aircraft, including spare                                                                       PAGE   29
                              58 FR 39280, *39288
                                                                          FOCUS

parts and spare units to be used exclusively for the maintenance of inertial
navigation equipment incorporated in civil aircraft and that are certified by
the Federal Aviation Administration (FAA) as being an integral part of such
aircraft.]

   [(m) Technical data for the design, development, production or manufacture of
[*39289]   inertial navigation equipment or its related parts, components or
subsystems which are standard equipment in civil aircraft and which are
certified by the Federal Aviation Administration as being an integral part of
such aircraft. FAA certified inertial navigation systems and all other technical
data associated with such systems is under the licensing jurisdiction of the
Department of Commerce.]

Category IX-Military Training Equipment

   (a) Military training equipment including but not limited to attack trainers,
radar target trainers, radar target generators, gunnery training devices,
antisubmarine warfare trainers, target equipment, armament training units,
operational flight trainers, air combat training systems, radar trainers,
navigation trainers, and simulation devices related to defense articles.

   (b) Components, parts, accessories, attachments, and associated equipment
specifically designed or modified for the articles in paragraph (a) of this
category.

   (c) Technical Data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) and (b) of this category. (See @
125.4 for exemptions.).

Category X-Protective Personnel Equipment

   (a) Body armor specifically designed, modified or equipped for military use;
articles, including but not limited to clothing, designed, modified or equipped
to protect against or reduce detection by radar, infrared (IR) or other sensors;
military helmets equipped with communications hardware, optical sights, slewing
devices or mechanisms to protect against thermal flash or lasers, excluding
standard military helmets.

   (b) Partial pressure suits and liquid oxygen converters used in aircraft in
Category VIII(a).

   (c) Protective apparel and equipment specifically designed or modified for
use with the articles in paragraphs (a) through (d) in Category XIV.

   (d) Components, parts, accessories, attachments, and associated equipment
specifically designed or modified for use with the articles in paragraphs (a),
(b), and (c) of this category.

   (e) Technical Data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (d) of this category. (See
@ 125.4 of this subchapter for exemptions.)
                                                                        PAGE   30
                              58 FR 39280, *39289
                                                                          FOCUS

Category XI-Military [and Space] Electronics

   (a) Electronic equipment not included in Category XII of the U.S. Munitions
List which is specifically designed, modified or configured for military
application. This equipment includes but is not limited to:

   *(1) Underwater sound equipment to include active and passive detection,
identification, tracking, and weapons control equipment.

   *(2) Underwater acoustic active and passive countermeasures and
counter-countermeasures.

   (3) Radar systems, with capabilities such as:

   *(i) Search,

   *(ii) Acquisition,

   *(iii) Tracking,

   *(iv) Moving target indication,

   *(v) Imaging radar systems,

   (vi) Any ground air traffic control radar which is specifically designed or
modified for military application.

   *(4) Electronic combat equipment, such as:

   (i) Active and passive countermeasures,

   (ii) Active and passive counter-countermeasures, and

   (iii) Radios (including transceivers) specifically designed or modified to
interfere with other communication devices or transmissions.

   *(5) Command, control and communications systems to include radios
(transceivers), navigation, and identification equipment.

   (6) Computers specifically designed or developed for military application and
any computer specifically modified for use with any defense article in any
category of the U.S. Munitions List.

   (7) Any experimental or developmental electronic equipment specifically
designed or modified for military application or specifically designed or
modified for use with a military system.

   *(b) Electronic systems or equipment specifically designed, modified, or
configured for intelligence, security, or military purposes for use in search,
reconnaissance, collection, monitoring, direction-finding, display, analysis and
production of information from the electromagnetic spectrum and electronic
systems or equipment designed or modified to counteract electronic surveillance
or monitoring. A system meeting this definition is controlled under this
subchapter even in instances where any individual pieces of equipment                                                                       PAGE   31
                              58 FR 39280, *39289
                                                                          FOCUS

constituting the system may be subject to the controls of another U.S.
Government agency. Such systems or equipment described above include, but are
not limited to, those:

   (1) Designed or modified to use cryptographic techniques to generate the
spreading code for spread spectrum or hopping code for frequency agility. This
does not include fixed code techniques for spread spectrum.

   (2) Designed or modified using burst techniques (e.g., time compression
techniques) for intelligence, security or military purposes.

   (3) Designed or modified for the purpose of information security to suppress
the compromising emanations of information-bearing signals. This covers TEMPEST
suppression technology and equipment meeting or designed to meet government
TEMPEST standards. This definition is not intended to include equipment designed
to meet Federal Communications Commission (FCC) commercial electro-magnetic
interference standards or equipment designed for health and safety.

   [(c) Space electronics:

   *(1) Electronic equipment specifically designed or modified for spacecraft
and spaceflight, and

   (2) Electronic equipment specifically designed or modified for use with
non-military communications satellites.

   (3) Components, parts, accessories, attachments, and associated equipment
specifically designed or modified for use with the equipment in subparagraphs
(1) and (2).]

   (d) Components, parts, accessories, attachments, and associated equipment
specifically designed or modified for use with the equipment in paragraphs (a)
and (b) of this category, except for such items as are in normal commercial use.

   (e) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (d) of this category. (See
@ 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 as SME.

Category XII-Fire Control, Range Finder, Optical and Guidance and Control
Equipment

   *(a) Fire control systems; gun and missile tracking and guidance systems; gun
range, position, height finders, spotting instruments and laying equipment;
aiming devices (electronic, optic, and acoustic); bomb sights, bombing
computers, military television sighting and viewing units, and periscopes for
the articles of this section.

   *(b) Lasers specifically designed, modified or configured for military
application including those used in military communication devices, target
designators and range finders, target detection systems, and directed energy                                                                       PAGE   32
                              58 FR 39280, *39289
                                                                          FOCUS

weapons.

   *(c) Infrared focal plane array detectors specifically designed, modified or
configured for military use; image intensification and other night sighting
equipment or systems specifically designed, modified, or configured for military
use; second generation and above military image intensification tubes (defined
below) specifically designed, developed, modified, or configured for military
use, and, infrared, visible, and ultraviolet devices specifically designed,
developed, modified, or configured for military application.

   Note: Special Definition. For purposes of this subparagraph, second and third
generation image intensifier tubes are defined as having:

   A peak response within the 0.4 to 1.05 micron wavelength range and
incorporating a microchannel plate for electron image amplification having a
hole pitch (center-to-center spacing) of less than 25 microns, and having
either:

   (a) An S-20, S-25 or multialkali photocathode; or

   (b) A semiconductor photocathode;

   *(d) Inertial platforms and sensors for weapons or weapon systems; guidance,
control and stabilization systems except for those systems covered in category
VIII; astro-compasses and star trackers and military and [non-military]
accelerometers and gyros. For   [*39290]   aircraft inertial reference systems
and related components refer to Category VIII.

   [(e) Non-military second generation and above image intensification tubes,
non-military infrared focal plane arrays, and image intensification tubes
identified in paragraph (c) of this section when a part of a commercial system
(i.e. those systems originally designed for commercial use). This does not
include military systems comprised of non-military specification components.]

   (f) Components, parts, accessories, attachments and associated equipment
specifically designed or modified for the articles in paragraphs (a), (b), (c)
and (d) of this category, except for such items as are in normal commercial use.

   (g) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8) directly related to the defense articles
enumerated in paragraphs (a) through (f) of this category. (See @ 125.4 of this
subchapter for exemptions.) Technical data directly related to manufacture and
production of any defense articles enumerated elsewhere in this category that
are designated as Significant Military Equipment (SME) shall itself be
designated as SME.

Category XIII-Auxiliary Military Equipment

   (a) Cameras [including space cameras] and specialized processing equipment
therefor, photointerpretation, stereoscopic plotting, and photogrammetry
equipment which are specifically designed or modified for military purposes, and
components specifically designed or modified therefor;                                                                       PAGE   33
                              58 FR 39280, *39290
                                                                          FOCUS

   (b) Information Security Systems and equipment, cryptographic devices,
software, and components specifically designed or modified therefor, including:

   (1) Cryptographic (including key management) systems, equipment, assemblies,
modules, integrated circuits, components or software with the capability of
maintaining secrecy or confidentiality of information or information systems,
except cryptographic equipment and software as follows:

   (i) Restricted to decryption functions specifically designed to allow the
execution of copy protected software, provided the decryption functions are not
user-accessible.

   (ii) Specially designed, developed or modified for use in machines for
banking or money transactions, and restricted to use only in such transactions.
Machines for banking or money transactions include automatic teller machines,
self-service statement printers, point of sale terminals or equipment for the
encryption of interbanking transactions.

   (iii) Employing only analog techniques to provide the cryptographic
processing that ensures information security in the following applications:

   (A) Fixed (defined below) band scrambling not exceeding 8 bands and in which
the transpositions change not more frequently than once every second;

   (B) Fixed (defined below) band scrambling exceeding 8 bands and in which the
transpositions change not more frequently than once every ten seconds;

   (C) Fixed (defined below) frequency inversion and in which the transpositions
change not more frequently than once every second;

   (D) Facsimile equipment;

   (E) Restricted audience broadcast equipment;

   (F) Civil television equipment.

   Note: Special Definition. For purposes of this subparagraph, fixed means that
the coding or compression algorithm cannot accept externally supplied parameters
(e.g., cryptographic or key variables) and cannot be modified by the user.

   (iv) Personalized smart cards using cryptography restricted for use only in
equipment or systems exempted from the controls of the USML.

   (v) Limited to access control, such as automatic teller machines,
self-service statement printers or point of sale terminals, which protects
password or personal identification numbers (PIN) or similar data to prevent
unauthorized access to facilities but does not allow for encryption of files or
text, except as directly related to the password of PIN protection.

   (vi) Limited to data authentication which calculates a Message Authentication
Code (MAC) or similar result to ensure no alteration of text has taken place, or
to authenticate users, but does not allow for encryption of data, text or other
media other than that needed for the authentication.                                                                       PAGE   34
                              58 FR 39280, *39290
                                                                          FOCUS

   (vii) Restricted to fixed data compression or coding techniques.

   (viii) Limited to receiving for radio broadcast, pay television or similar
restricted audience television of the consumer type, without digital encryption
and where digital decryption is limited to the video, audio or management
functions.

   (ix) Software designed or modified to protect against malicious computer
damage, (e.g., viruses).

   Note: A procedure has been established to facilitate the expeditious transfer
to the Commodity Control List of mass market software products with encryption
that meet specified criteria regarding encryption for the privacy of data and
the associated key management. Requests to transfer commodity jurisdiction of
mass market software products designed to meet the specified criteria may be
submitted in accordance with the commodity jurisdiction provisions of @ 120.4.
Questions regarding the specified criteria or the commodity jurisdiction process
should be addressed to the Office of Defense Trade Controls. All mass market
software products with cryptography that were previously granted transfers of
commodity jurisdiction will remain under Department of Commerce control. Mass
market software governed by this note is software that is generally available to
the public by being sold from stock at retail selling points, without
restriction, by means of over the counter transactions, mail order transactions,
or telephone call transactions; and designed for installation by the user
without further substantial support by the supplier.

   (2) Cryptographic (including key management) systems, equipment, assemblies,
modules, integrated circuits, components or software which have the capability
of generating spreading or hopping codes for spread spectrum systems or
equipment.

   (3) Cryptanalytic systems, equipment, assemblies, modules, integrated
circuits, components or software.

   (4) Systems, equipment, assemblies, modules, integrated circuits, components
or software providing certified or certifiable multi-level security or user
isolation exceeding class B2 of the Trusted Computer System Evaluation Criteria
(TCSEC) and software to certify such systems, equipment or software.

   (5) Ancillary equipment specifically designed or modified for paragraphs (b)
(1), (2), (3), (4) and (5) of this category;

   (c) Self-contained diving and underwater breathing apparatus as follows:

   (1) Closed and semi-closed circuits (rebreathing) apparatus;

   (2) Specially designed components for use in the conversion of open-circuit
apparatus to military use; and

   (3) Articles exclusively designed for military use with self-contained diving
and underwater swimming apparatus.

   (d) Carbon/carbon billets and preforms which are reinforced with continuous
unidirectional tows, tapes, or woven cloths in three or more dimensional                                                                       PAGE   35
                              58 FR 39280, *39290
                                                                          FOCUS

planes (i.e. 3D, 4D, etc.). This is exclusive of carbon/carbon billets and
preforms where reinforcement in the third dimension is limited to interlocking
of adjacent layers only, and carbon/carbon 3D, 4D, etc. end items which have not
been specifically designed or modified for defense articles (e.g., brakes for
commercial aircraft or high speed trains). Armor (e.g., organic, ceramic,
metallic), and reactive armor which has been specifically designed or modified
for defense articles. Structural materials including carbon/carbon and metal
matrix composites, plate, forgings, castings, welding consumables and rolled and
extruded shapes which have been specifically designed or modified for defense
articles.

   (e) Concealment and deception equipment, including but not limited to special
paints, decoys, and simulators and components, parts and accessories
specifically designed or modified therefor.

   (f) Energy conversion devices for producing electrical energy from nuclear,
thermal, or solar energy, or from chemical reaction which are specifically
designed or modified for military application.

   (g) Chemiluminescent compounds and solid state devices specifically designed
or modified for military application.

   (h) Devices embodying particle beam and electromagnetic pulse technology and
associated components and subassemblies (e.g., ion beam current injectors,
particle accelerators for neutral or charged particles, beam handling and
projection equipment, beam steering, fire control, and pointing equipment, test
and diagnostic instruments, and targets) which are specifically designed or
modified for directed energy weapon applications.

   (i) Metal embrittling agents.

   *(j) Hardware and equipment, which has been specifically designed or modified
for military applications, that is associated with   [*39291]   the measurement
or modification of system signatures for detection of defense articles. This
includes but is not limited to signature measurement equipment; prediction
techniques and codes; signature materials and treatments; and signature control
design methodology.

   (k) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) related to the defense
articles listed in this category. (See @ 125.4 of this subchapter for
exemptions; see also @ 123.21 of this subchapter). 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 as SME.

Category XIV-Toxicological Agents and Equipment and Radiological Equipment

   *(a) Chemical agents, including but not limited to lung irritants, vesicants,
lachrymators, tear gases (except tear gas formulations containing 1% or less CN
or CS), sternutators and irritant smoke, and nerve gases and incapacitating
agents. (See @ 121.7.)                                                                       PAGE   36
                              58 FR 39280, *39291
                                                                          FOCUS

   *(b) Biological agents.

   *(c) Equipment for dissemination, detection, and identification of, and
defense against, the articles in paragraphs (a) and (b) of this category.

   *(d) Nuclear radiation detection and measuring devices, manufactured to
military specification.

   (e) Components, parts, accessories, attachments, and associated equipment
specifically designed or modified for the articles in paragraphs (c) and (d) of
this category.

   (f) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) related to the defense
articles enumerated in paragraphs (a) through (e) of this category. (See @ 125.4
of this subchapter for exemptions; see also @ 123.21 of this subchapter).
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 as SME.

Category XV-Spacecraft Systems and Associated Equipment

   *(a) Spacecraft and associated hardware, including ground support equipment,
specifically designed or modified for military use.

   (b)(1) [Reserved]

   (2) Communications satellites (excluding ground stations and their associated
equipment and technical data not enumerated elsewhere in @ 121.1 of this
subchapter; for controls on such ground stations, see the Commerce Control List)
with any of the following characteristics:

   (i) Anti-jam capability. Antennas and/or antenna systems with ability to
respond to incoming interference by adaptively reducing antenna gain in the
direction of the interference.

   (ii) Antennas:

   (A). With aperture (overall dimension of the radiating portions of the
antenna) greater than 30 feet; or

   (B). With sidelobes less than or equal to -35dB; or

   (C). Designed, modified, or configured to provide coverage area on the
surface of the earth less than 200 nm in diameter, where "coverage area" is
defined as that area on the surface of the earth that is illuminated by the main
beam width of the antenna (which is the angular distance between half power
points of the beam).

   (iii) Designed, modified or configured for intersatellite data relay links
that do not involve a ground relay terminal ("cross-links").

   (iv) Spaceborne baseband processing equipment that uses any technique other
than frequency translation which can be changed several times a day on a                                                                       PAGE   37
                              58 FR 39280, *39291
                                                                          FOCUS

channel by channel basis among previously assigned fixed frequencies.

   (v) Employing any of the cryptographic items controlled under Category XIII
(b) of this subchapter.

   (vi) Employing radiation-hardened devices controlled elsewhere in @ 121.1
that are not "embedded in the satellite in such a way as to deny physical
access. (Here "embedded" means that the device either cannot feasibly be removed
from the satellite or be used for other purposes.)

   (vii) Having propulsion systems which permit acceleration of the satellite
on-orbit (i.e., after mission orbit injection) at rates greater than 0.1g.

   (viii) Having attitude control and determination systems designed to provide
spacecraft pointing determination and control better than 0.02 degrees azimuth
and elevation.

   (ix) Having orbit transfer engines ("kick-motors") which remain permanently
with the spacecraft and are capable of being restarted after achievement of
mission orbit and providing acceleration greater than 1g. (Orbit transfer
engines which are not designed, built, and shipped as an integral part of the
satellite are controlled under Category IV of this subchapter.)

   (c) Global Positioning System (GPS) receiving equipment specifically
designed, modified or configured for military use; or GPS receiving equipment
with any of the following characteristics:

   (1) Designed for encryption or decryption (e.g., Y-Code) of GPS precise
positioning service (PPS) signals;

   (2) Designed for producing navigation results above 60,000 feet altitude and
at 1,000 knots velocity or greater;

   (3) Specifically designed or modified for use with a null steering antenna or
including a null steering antenna designed to reduce or avoid jamming signals;

   (4) Designed or modified for use with unmanned air vehicle systems capable of
delivering at least a 500 kg payload to a range of at least 300 km.

   Note: GPS receivers designed or modified for use with military unmanned air
vehicle systems with less capability are considered to be specifically designed,
modified or configured for military use and therefore covered under this
subparagraph.

   Any GPS equipment not meeting this definition is subject to the jurisdiction
of the Department of Commerce (DOC). Manufacturers or exporters of equipment
under DOC jurisdiction are advised that the U.S. Government does not assure the
availability of the GPS P-Code for civil navigation. It is the policy of the
Department of Defense (DOD) that GPS receivers using P-Code without
clarification as to whether or not those receivers were designed or modified to
use Y-Code will be presumed to be Y-Code capable and covered under this
subparagraph. The DOD policy further requires that a notice be attached to all
P-Code receivers presented for export. The notice must state the following:
"ADVISORY NOTICE: This receiver uses the GPS P-Code signal, which by U.S.                                                                       PAGE   38
                              58 FR 39280, *39291
                                                                          FOCUS

policy, may be switched off without notice."

   (d) Components, parts, accessories, attachments, and associated equipment
(including ground support equipment) specifically designed, modified or
configure
for the articles in paragraphs (a) through (c) of this category, as
well as for any satellites under the export licensing jurisdiction of the
Department of Commerce, except as noted below.

Explanatory Note

   This language is not intended to preclude a license application of a complete
satellite that is under the jurisdiction of the Department of Commerce from
including in that license application any directly associated components, parts,
accessories, attachments and associated equipment (including ground support
equipment) unless such items are specifically identified for control in
paragraph (a) or (b) of this category or any other category of @ 121.1 of this
subchapter. It is understood that spares, replacement parts, ground support and
test equipment, payload adapter/interface hardware, etc. are typically provided
as part of a satellite launch campaign; however, such items are only exempt from
USML licensing when their intended use is directly related to supporting the
Commerce-licensed satellite launch campaign. Once the satellite has been
successfully launched, it is understood that such items remaining unlaunched
will be returned to the United States.

   (e) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (d) of this category. (See
@ 125.4 of this subchapter for exceptions.) 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. In addition, detailed design, development, production
or manufacturing data for all spacecraft systems and specifically designed or
modified components thereof, regardless of which U.S. Government agency has
jurisdiction for export of the hardware. (See @ 125.4 of this subchapter for
exceptions.) This restriction does not include that level of technical data
(including marketing data) necessary and reasonable for a purchaser to have
assurance   [*39292]   that a U.S.-built item intended to operate in space has
been designed, manufactured and tested in conformance with specified contract
requirements (e.g., operational performance, reliability, lifetime, product
quality, or delivery expectations) and data necessary to evaluate in-orbit
anomalies and to operate and maintain associated ground equipment.

Category XVI-Nuclear Weapons Design and Test Equipment

   *(a) Any article, material, equipment, or device which is specifically
designed or modified for use in the design, development, or fabrication of
nuclear weapons or nuclear explosive devices. (See @ 123.21 of this subchapter
and Department of Commerce Export Regulations, 15 CFR part 778).

   *(b) Any article, material, equipment, or device which is specifically
designed or modified for use in the devising, carrying out, or evaluating of
nuclear weapons tests or any other nuclear explosions, except such items as are
in normal commercial use for other purposes.                                                                       PAGE   39
                              58 FR 39280, *39292
                                                                          FOCUS

   (c) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (b) of this category. (See
@ 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.

Category XVII-Classified Articles, Technical Data and Defense Services Not
Otherwise Enumerated

   *(a) All articles, technical data (as defined in @ 120.21 of this subchapter)
and defense services (as defined in @ 120.8 of this subchapter) relating thereto
which are classified in the interests of national security and which are not
otherwise enumerated in the U.S. Munitions List.

Category XVIII-[Reserved]

Category XIX-[Reserved]

Category XX-Submersible Vessels, Oceanographic and Associated Equipment

   *(a) Submersible vessels, manned or unmanned, tethered or untethered,
designed or modified for military purposes, or powered by nuclear propulsion
plants.

   *(b) Swimmer delivery vehicles designed or modified for military purposes.

   (c) Equipment, components, parts, accessories, and attachments specifically
designed or modified for any of the articles in paragraphs (a) and (b) of this
category.

   (d) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) through (c) of this category. (See
@ 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 as SME.

Category XXI-Miscellaneous Articles

   (a) Any article not specifically enumerated in the other categories of the
U.S. Munitions List which has substantial military applicability and which has
been specifically designed or modified for military purposes. The decision on
whether any article may be included in this category shall be made by the
Directo
of the Office of Defense Trade Controls.

   (b) Technical data (as defined in @ 120.21 of this subchapter) and defense
services (as defined in @ 120.8 of this subchapter) directly related to the
defense articles enumerated in paragraphs (a) of this category.

@ 121.2 -- Interpretations of the U.S. Munitions List and the Missile Technology
Control Regime Annex.                                                                       PAGE   40
                              58 FR 39280, *39292
                                                                          FOCUS

   The following interpretations (listed alphabetically) explain and amplify the
terms used in @ 121.1. These interpretations have the same force as if they were
a part of the U.S. Munitions List (USML) category to which they refer. In
addition, all the items listed in @ 121.16 shall constitute all items on the
United States Munitions List which are Missile Technology Control Regime Annex
items in accordance with section 71(a) of the Arms Export Control Act.

@ 121.3 -- Aircraft and related articles.

   In Category VIII, "aircraft" means aircraft designed, modified, or equipped
for a military purpose, including aircraft described as "demilitarized." All
aircraft bearing an original military designation are included in Category VIII.
However, the following aircraft are not included so long as they have not been
specifically equipped, re-equipped, or modified for military operations:

   (a) Cargo aircraft bearing "C" designations and numbered C-45 through C-118
inclusive, C-121 through C-125 inclusive, and C-131, using reciprocating engines
only.

   (b) Trainer aircraft bearing "T" designations and using reciprocating engines
or turboprop engines with less than 600 horsepower (s.h.p.)

   (c) Utility aircraft bearing "U" designations and using reciprocating engines
only.

   (d) All liaison aircraft bearing an "L" designation.

   (e) All observation aircraft bearing "O" designations and using reciprocating
engines.

@ 121.4 -- Amphibious vehicles.

   An amphibious vehicle in Category VII(f) is an automotive vehicle or chassis
which embodies all-wheel drive, is equipped to meet special military
requirements, and which has sealed electrical systems or adaptation features for
deep water fording.

@ 121.5 -- Apparatus and devices under Category IV(c).

   Category IV includes but is not limited to the following: Fuzes and
components specifically designed, modified or configured for items listed in
that category, bomb racks and shackles, bomb shackle release units, bomb
ejectors, torpedo tubes, torpedo and guided missile boosters, guidance systems
equipment and parts, launching racks and projectors, pistols (exploders),
ignitors, fuze arming devices, intervalometers, thermal batteries, hardened
missile launching facilities, guided missile launchers and specialized handling
equipment, including transporters, cranes and lifts designed to handle articles
in paragraphs (a) and (b) of this category for preparation and launch from fixed
and mobile sites. The equipment in this category includes robots, robot
controllers and robot end-effectors specially designed or modified for military
applications.

@ 121.6 -- Cartridge and shell casings.                                                                       PAGE   41
                              58 FR 39280, *39292
                                                                          FOCUS

   Cartridge and shell casings are included in Category III unless, prior to
export, they have been rendered useless beyond the possibility of restoration
for use as a cartridge or shell casing by means of heating, flame treatment,
mangling, crushing, cutting, or popping.

@ 121.7 -- Chemical agents.

   A chemical agent in Category XIV(a) is a substance having military
application which by its ordinary and direct chemical action produces a powerful
physiological effect. The term "chemical agent" includes, but is not limited to,
the following chemical compounds:

   (a) Lung irritants:

   (1) Diphenylcyanoarsine (DC).

   (2) Fluorine (but not fluorene).

   (3) Trichloronitro methane (chloropicrin PS).

   (b) Vesicants:

   (1) B-Chlorovinyldichloroarsine (Lewisite, L).

   (2) Bis(dichloroethyl)sulphide (Mustard Gas, HD or H).

   (3) Ethyldichloroarsine (ED).

   (4) Methyldichloroarsine (MD).

   (c) Lachrymators and tear gases:

   (1) A-Bromobenzyl cyanide (BBC).

   (2) Chloroacetophenone (CN).

   (3) Dibromodimethyl ether.

   (4) Dichlorodimethyl ether (ClCi).

   (5) Ethyldibromoarsine.

   (6) Phenylcarbylamine chloride.

   (7) Tear gas solutions (CNB and CNS).

   (8) Tear gas orthochlorobenzalmalononitrile (CS).

   (d) Sternutators and irritant smokes:

   (1) Diphenylamine chloroarsine (Adamsite, DM).   [*39293]

   (2) Diphenylchloroarsine (BA).                                                                       PAGE   42
                              58 FR 39280, *39293
                                                                          FOCUS

   (3) Liquid pepper.

   (e) Nerve agents, gases and aerosols. These are toxic compounds which affect
the nervous system, such as:

   (1) Dimethylaminoethoxycyanophosphine oxide (GA).

   (2) Methylisopropoxyfluorophosphine oxide (GB).

   (3) Methylpinacolyloxyfluoriphosphine oxide (GD).

   (f) Antiplant chemicals, such as: Butyl 2-chloro-4-fluorophenoxyacetate
(LNF).

@ 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 @ 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.                                                                       PAGE   43
                              58 FR 39280, *39293
                                                                          FOCUS


@ 121.9 -- Firearms.

   (a) Category I includes revolvers, pistols, rifles, carbines, fully automatic
rifles, submachine guns, machine pistols and machine guns to caliber .50,
inclusive. It includes combat shotguns. It excludes other shotguns with barrels
18 seconds or longer, BB, pellet, and muzzle loading (black powder) firearms.

   (b) A firearm is a weapon not over .50 caliber which is designed to expel a
projectile by the action of an explosive or which may be readily converted to do
so.

   (c) A rifle is a shoulder firearm which can discharge a bullet through a
rifled barrel 16 inches or longer.

   (d) A carbine is a lightweight shoulder firearm with a barrel under 16 inches
in length.

   (e) A pistol is a hand-operated firearm having a chamber integral with or
permanently aligned with the bore.

   (f) A revolver is a hand-operated firearm with a revolving cylinder
containing chambers for individual cartridges.

   (g) A submachine gun, "machine pistol" or "machine gun" is a firearm
originally designed to fire, or capable of being fired, fully automatically by a
single pull of the trigger.

@ 121.10 -- Forgings, castings and machined bodies.

   Articles on the U.S. Munitions List include articles in a partially completed
state (such as forgings, castings, extrusions and machined bodies) which have
reached a stage in manufacture where they are clearly identifiable as defense
articles. If the end-item is an article on the U.S. Munitions List (including
components, accessories, attachments and parts as defined in @ 121.8), then the
particular forging, casting, extrusion, machined body, etc., is considered a
defense article subject to the controls of this subchapter, except for such
items as are in normal commercial use.

@ 121.11 -- Military demolition blocks and blasting caps.

   Military demolition blocks and blasting caps referred to in Category IV(a) do
not include the following articles:

   (a) Electric squibs.

   (b) No. 6 and No. 8 blasting caps, including electric ones.

   (c) Delay electric blasting caps (including No. 6 and No. 8 millisecond
ones).

   (d) Seismograph electric blasting caps (including SSS, Static-Master,
Vibrocap SR, and SEISMO SR).                                                                       PAGE   44
                              58 FR 39280, *39293
                                                                          FOCUS

   (e) Oil well perforating devices.

@ 121.12 -- Military explosives.

   (a) Military Explosives in Category V are military explosives or energetic
materials consisting of high explosives, propellants or low explosives,
pyrotechnics and high energy solid or liquid fuels, including aircraft fuels
specially formulated for military purposes. Military explosives are solid,
liquid or gaseous substances or mixtures of substances which, in their
application as primary, booster or main charges in warheads, demolition and
other military applications, are required to detonate. Military explosives,
military propellants and military pyrotechnics in Category V include substances
or mixtures containing any of the following:

   (1) Spherical aluminium powder of particle size 60 micrometres or less

manufactured from material with an aluminum content of 99% or more;

   (2) Metal fuels in particle sizes less than 60 micrometres whether spherical,
atomized, spheroidal, flaked or ground, consisting of 99% or more of any of the
following: Zirconium, boron, magnesium and alloys of these; beryllium; fine iron
powder with average particle size of 3 micrometres or less produced by reduction
of iron oxide with hydrogen;

   (3) Any of the foregoing metals or alloys listed in (a) (1) and (2) of this
section, whether or not encapsulated in aluminum, magnesium, zirconium or
beryllium;

   (4) Perchlorates, chlorates and chromates composited with powdered metal or
other high energy fuel components;

   (5) Nitroglycerin;

   (6) Trinitrophenylmenthylnitramine (TETRYL);

   (7) Trinitrotoluene (TNT);

   (8) Nitroguanidine (NQ);

   (9) With the exception of chlorinetrifluoride, compounds composed of fluorine
and one or more of the following: other halogens, oxygen, nitrogen;

   (10) Carboranes; decaborane; pentaborane and derivatives;

   (11) Cyclotetramethylenetetranitramine (HMX); octahydro-1,
3,5,7-tetranitro-1,3,5,7-tetrazine; 1,3,5,7-tetranitro-   [*39294]
1,3,5,7-tetraza-cyclooctane; (octogen, octogene);

   (12) Hexanitrostilbene (HNS);

   (13) Diaminotrinitrobenzene (DATB);

   (14) Triaminotrinitrobenzene (TATB);                                                                       PAGE   45
                              58 FR 39280, *39294
                                                                          FOCUS

   (15) Triaminoguanidinenitrate (TAGN);

   (16) Titanium subhydride of stiochiometry TiH sub 0.65-1.68;

   (17) Dinitroglycoluril (DNGU, DINGU); tetranitroglycoluril TNGU, SORGUYL);

   (18) Tetranitrobenzotriazolobenzotriazole (TACOT);

   (19) Diaminohexanitrobiphenyl (DIPAM);

   (20) Picrylaminodinitropyridine (PYX);

   (21) 3-nitro-1,2,4-triazol-5-one (NTO or ONTA);

   (22) Hydrazine in concentrations of 70% or more; hydrazine nitrate; hydrazine
perchlorates; unsymmetrical dimethyl hydrazine; monomethyl hydrazine;
symmetrical dimethyl hydrazine;

   (23) Ammonium perchlorate;

   (24) 2-(5-cyanotetrazolato) penta amminecobalt (III) perchlorate (CP);

   (25) cis-bis (5-nitrotetrazolato) penta amminecobalt (III) perchlorate (or
BNCP);

   (26) 7-amino 4,6-dinitrobenzofurazane-1-oxide (ADNBF); amino
dinitrobenzofuroxan;

   (27) 5,7-diamino-4,6-dinitrobenzofurazane-1-oxide, (CL-14 or
diaminodinitrobenzofuroxan);

   (28) 2,4,6-trinitro-2,4,6-triaza-cyclo-hexanone (K-6 or keto-RDX);

   (29) 2,4,6,8-tetranitro-2,4,6,8-tetraaza-bicyclo
(3,3,0)-octanone-3(tetranitrosemiglycoluril, K-55, or keto-bicyclic HMX);

   (30) 1,1,3-trinitroazetidine (TNAZ);

   (31) 1,4,5,8-tetranitro-1,4,5,8-tetraazadecalin (TNAD);

   (32) Hexanitrohexaazaisowurtzitane (CL-20 or HNIW; and clathrates of CL-20);

   (33) Polynitrocubane with more than four nitro groups;

   (34) Ammonium dinitramide (ADN or SR-12);

   (35) Cyclotrimethylentrinitramine (RDX); cyclonite; T4;
hexahydro-1,3,5-trinitro-1,3,5-triazine;
1,3,5-trinitro-1,3,5-triaza-cyclohexane; hexogen, hexogene;

   (36) Hydroxylammonium nitrate (HAN); hydroxylammonium perchlorate (HAP);

   (37) Pentaerythritol Tetranitrate (PETN);                                                                       PAGE   46
                              58 FR 39280, *39294
                                                                          FOCUS

   (38) Hydroxy terminated Polybutadiene (HTPB) with a hydroxyl functionality of
2.28, a hydroxyl value of less than 0.77 meq/g, and a viscosity at 30 degrees C
of less than 47 poise;

   (b) "Additives" include the following:

   (1) Glycidylazide Polymer (GAP) and its derivatives;

   (2) Polycyanodifluoroaminoethyleneoxide (PCDE);

   (3) Butanetrioltrinitrate (BTTN);

   (4) Bis-2-fluoro-2,2-dinitroethylformal (FEFO);

   (5) Catocene, N-butyl-ferrocene and other ferrocene derivatives;

   (6) Bis(2, 2-dinitropropyl) formal and acetal;

   (7) Energetic monomers, plasticisers and polymers containing nitro, azido,
nitrate, nitraza or difluroamino groups;

   (8) 1,2,3-Tris [1,2-bis(difluoroamino)ethoxy] propane; Tris vinoxy propane
adduct, (TVOPA);

   (9) Bisazidomethyloxetane (BAMO) and its polymers;

   (10) Nitratomethylmethyloxetane (NMMO) Azidomethylmethyloxetane (AMMO);

   (11) Tetraethylenepentamine- acrylonitrile (TEPAN); cyanoethylated polyamine
and its salts;

   (12) Tetraethylenepentamineacryloni-trileglycidol (TEPANOL); cyanoethylated
polyamine adducted with glycidol and its salts;

   (13) Polyfunctional aziridine amides with isophthalic, trimesic (BITA or
butylene imine trimesamide isoyanuric), or trimethyladipic backbone structures
and 2-methyl or 2-ethyl substitutions on the aziridine ring;

   (14) Basic copper salicylate; lead salicylate;

   (15) Lead beta resorcylate;

   (16) Lead stannate, lead maleate, lead citrate;

   (17) Tris-1-(2-methyl)aziridinyl phosphine oxide (MAPO) and its derivatives;

   (18) Organo-metallic coupling agents, specifically:

   (i) Neopentyl (diallyl) oxy, tri [dioctyl] phosphato titanate or titanium IV,
2,2[bis 2-propenolatomethyl, butanolato or tris [dioctyl] phosphato-O], or LICA
12;

   (ii) Titanium IV, [(2-propenolato-1)methyl, N-propanolatomethyl]
butanolato-1; or tris(dioctyl)pyrophosphato, or KR3538;                                                                       PAGE   47
                              58 FR 39280, *39294
                                                                          FOCUS

   (iii) Titanium IV, [(2-propenolato-1)methyl, N-propanolatomethyl]
butanolato-1; or tris(dioyctyl) phosphate;

   (19) FPF-1 (poly-[2,2,3,3,4,4-hexafluoro pentane-1,5-diolformal]);

   (20) FPF-3 (poly-[2,4,4,5,5,6,6-heptafluoro-2-
trifluoromethyl-3-oxaheptane-1,7-diolformal]);

   (21) Polyglycidylnitrate (PGN);

   (22) Lead-copper chelates of beta-resorcylate and/or salicylates;

   (23) Triphenyl bismuth (TPB);

   (24) bis-2-hydroxyethylglycolamide (BHEGA);

   (25) Superfine iron oxide with a specific surface area greater than 250 m sup
2 /g and an average particle size of 0.0003 micrometres or less;

   (c) "Precursors" include the following:

   (1) 1,2,4-trihydroxybutane (1,2,4-butanetriol);

   (2) 1,3,5-trichlorobenzene;

   (3) Bischloromethyloxetane (BCMO);

   (4) Low (less than 10,000) molecular weight, alcohol-functionalised,
poly(ephichlorohydrin); poly(ephichlorhydrindiol); diol and triol;

   (5) Propyleneimide, 2-methylaziridine;

   (6) 1,3,5,7,-tetraacetyl-1,3,5,7-tetraaza-cyclooctane (TAT);

   (7) Dinitroazetidine-t-butyl salt;

   (8) Hexabenzylhexaazaisowurtzitane (HBIW);

   (9) Tetraacetyldi- benzyl- hexaazaiso- wurtzitane (TAIW);

   (10) 1,4,5,8-tetraazadecaline.

   (d) Stabilisers include the following;

   (1) N-Methyl-p-nitroaniline;

   (2) Protech.

   (e) Any substance or mixture meeting the following performance requirements:

   (1) Any explosive with a detonation velocity greater than 8,700 m/s or a
detonation pressure greater than 340 kilobars;                                                                       PAGE   48
                              58 FR 39280, *39294
                                                                          FOCUS

   (2) Other organic high explosives yielding detonation pressures of 250
kilobars or greater that will remain stable at temperatures of 523 K (250
degrees C) or higher for periods of 5 minutes or longer;

   (3) Any other UN Class 1.1 solid propellant with a theoretical specific
impulse (under standard conditions) greater than 250 seconds for non-metallized,
or greater than 270 seconds for aluminized compositions;

   (4) Any UN Class 1.3 solid propellant with a theoretical specific impulse
greater than 230 seconds for non-halogenized, 250 seconds for non-metallized and
266 seconds for metallized compositions;

   (5) Any other explosive, propellant or pyrotechnic that can sustain a
steady-state burning rate greater than 38mm (1.5 in) per second under standard
conditions of 68.9 bar (1,000 PSI) pressure and 294K (21 degrees C);

   (6) Any other gun propellants having a force constant greater than 1,200
kJ/kg;

   (7) Elastomer modified cast double based propellants (EMCDB) with
extensibility at maximum stress greater than 5% at 233 K or (-40 degrees C).

   (f) Liquid oxidizers, as follows:

   (1) Enriched nitric acid (inhibited red fuming nitric acid (IRFNA));
[*39295]

   (2) Oxyfluoride.

@ 121.13 Military fuel thickeners.

   Military fuel thickeners in Category V include compounds (e.g., octal) or
mixtures of such compounds (e.g., napalm) specifically formulated for the
purpose of producing materials which, when added to petroleum products, provide
a gel-type incendiary material for use in bombs, projectiles, flame throwers, or
other defense articles.

@ 121.14 -- Propellants.

   Propellants in Category V include, but are not limited to, the following:

   (a) Propellant powders, including smokeless shotgun powder.

   (b) Hydrazine (including Monomethyl hydrazine and symmetrical dimethyl
hydrazine, but excluding hydrazine hydrate).

   (c) Unsymmetrical dimethyl hydrazine.

   (d) Hydrogen peroxide of over 85 percent concentration.

   (e) Nitroguanidine or picrite.

   (f) Nitrocellulose with nitrogen content of over 12.20 percent.                                                                       PAGE   49
                              58 FR 39280, *39295
                                                                          FOCUS

   (g) Nitrogen tetroxide (nitrogen dioxide, dinitrogen tetroxide).

   (h) Other solid propellant compositions, including but not limited to, the
following:

   (1) Single base (nitrocellulose).

   (2) Double base (nitrocellulose, nitroglycerin).

   (3) Triple base (nitrocellulose, nitroglycerin, nitroguanidine).

   (4) Composite of nitroglycerin, ammonium perchlorate, potassium perchlorate,
nitronium perchlorate, guanidine (guanidinium) perchlorate, nitrogen tetroxide,
ammonium nitrite or nitrocellulose with plastics, metal fuels, or rubbers added;
and compounds composed only of fluorine and halogens, oxygen, or nitrogen.

   (5) Special purpose high energy solid military fuels with a chemical base.

   (i) Other liquid propellant compositions, including but not limited to, the
following:

   (1) Monopropellants (hydrazine, hydrazine nitrate, and water).

   (2) Bipropellants (hydrazine, fuming nitric acid HNO(3)).

   (3) Special purpose chemical base high energy liquid military fuels and
oxidizers.

@ 121.15 -- Vessels of war and special naval equipment.

   Vessels of war means vessels, waterborne or submersible, designed, modified,
or equipped for military purposes, including vessels described as developmental,
"demilitarized" or decommissioned. Vessels of war in Category VI, whether
developmental, "demilitarized" and/or decommissioned or not, include, but are
not limited to, the following:

   (a) Combatant vessels.

   (1) Warships (including nuclear-powered versions):

   (i) Aircraft carriers.

   (ii) Battleships.

   (iii) Cruisers.

   (iv) Destroyers.

   (v) Frigates.

   (vi) Submarines.

   (2) Other Combatants.                                                                       PAGE   50
                              58 FR 39280, *39295
                                                                          FOCUS

   (i) Patrol Combatants (e.g., including but not limited to PHM).

   (ii) Amphibious Aircraft/Landing Craft Carriers.

   (iii) Amphibious Materiel/Landing Craft Carriers.

   (iv) Amphibious Command Ships.

   (v) Mine Warfare Ships.

   (vi) Coast Guard Cutters (i.e. WHEC's and WMEC's).

   (b) Auxiliaries.

   (1) Combat Logistics Support.

   (i) Underway Replenishment Ships.

   (ii) Surface Vessel and Submarine Tender/Repair Ships.

   (2) Support Ships.

   (i) Submarine Rescue Ships.

   (ii) Other Auxiliaries (e.g., including but not limited to: AGDS, AGF, AGM,
AGOR, AGOS, AGS, AH, AP, ARC, ARL, AVB, AVM, AVT).

   (c) Combatant Craft.

   (1) Patrol Craft.

   (i) Coastal Patrol Combatants.

   (ii) River, Roadstead Craft (including swimmer delivery craft).

   (iii) Coast Guard Patrol Craft.

   (2) Amphibious Warfare Craft.

   (i) Landing Craft (e.g., including but not limited to: LCAC, LCM, LCPL, LCU,
LWT, SLWT).

   (ii) Special Warfare Craft (e.g., including but not limited to: LSSC, MSSC,
SDV, SWCL, SWCM).

   (3) Mine Warfare Craft.

   (i) Mine Countermeasures Craft (e.g., including but not limited to: MCT,
MSB).

   (d) Support and Service Vessels.

   (1) Miscellaneous (e.g., including but not limited to: APL, DSRV, DSV, IX,
WIX, NR, YFRT, YHLC, YP, YR, YRB, YRDH, YRDM, YRR, YSD).                                                                       PAGE   51
                              58 FR 39280, *39295
                                                                          FOCUS


@ 121.16 -- Missile Technology Control Regime Annex.

   Some of the items on the Missile Technology Control Regime Annex are
controlled by both the Department of Commerce on the Commodity Control List and
by the Department of State on the United States Munitions List. To the extent an
article is on the United States Munitions List, a reference appears in
parentheses listing the U.S. Munitions List category in which it appears. The
following items constitute all items on the Missile Technology Control Regime
Annex which are covered by the U.S. Munitions List:

Item 1-Category I

   Complete rocket systems (including ballistic missile systems, space launch
vehicles, and sounding rockets (see @ 121.1, Cat. IV(a) and (b)) and unmanned
air vehicle systems (including cruise missile systems see @ 121.1, Cat. VIII
(a), target drones and reconnaisance drones (see @ 121.1, Cat. VIII (a)) capable
of delivering at least a 500 kg payload to a range of at least 300 km.

Item 2-Cateogry I

   Complete subsystems usable in the systems in Item 1 as follows:

   (a) Individual rocket stages (see @ 121.1, Cat. IV(h));

   (b) Reentry vehicles (see @ 121.1, Cat. IV(g)), and equipment designed or
modified therefor, as follows, except as provided in Note (1) below for those
designed for non-weapon payloads;

   (1) Heat shields and components thereof fabricated of ceramic or ablative
materials (see @ 121.1, Cat. IV(f));

   (2) Heat sinks and components thereof fabricated of light-weight, high heat
capacity materials;

   (3) Electronic equipment specially designed for reentry vehicles (see @
121.1, Cat. XI(a)(7));

   (c) Solid or liquid propellant rocket engines, having a total impulse
capacity of 1.1 x 10 N-sec (2.5 x 10 lb-sec) or greater (see @ 121.1, Cat. IV,
(h)).

   (d) "Guidance sets" capable of achieving system accuracy of 3.33 percent or
less of the range (e.g., a CEP of 1 j,. or less at a range of 300 km), except as
provided in Note (1) below for those designed for missiles with a range under
300 km or manned aircraft (see @ 121.1, Cat. XII(d));

   (e) Thrust vector control sub-systems, except as provided in Note (1) below
for those designed for rocket systems that do not exceed the range/payload
capability of Item 1 (see @ 121.1, Cat. IV);

   (f) Warhead safing, arming, fuzing, and firing mechanisms, except as provided
in Note (1) below for those designed for systems other than those in Item 1 (see
@ 121.1, Cat. IV(h)).                                                                       PAGE   52
                              58 FR 39280, *39295
                                                                          FOCUS


Notes to Item 2

   (1) The exceptions in (b), (d), (e), and (f) above may be treated as Category
II if the subsystem is exported subject to end use statements and quantity
limits appropriate for the excepted end use stated above.

   (2) CEP (circle of equal probability) is a measure of accuracy, and defined
as the radius of the circle centered at the target, at a specific range, in
which 50 percent of the payloads impact.

   (3) A "guidance set" integrates the process of measuring and computing a
vehicle's position and velocity (i.e. navigation) with that of computing and
sending commands to the vehicle's flight control systems to correct the
trajectory.   [*39296]

   (4) Examples of methods of achieving thrust vector control which are covered
by (e) include:

   (i) Flexible nozzle;

   (ii) Fluid or secondary gas injection;

   (iii) Movable engine or nozzle;

   (iv) Deflection of exhaust gas stream (jet vanes or probes); or

   (v) Use of thrust tabs.

Item 3-Category II

   Propulsion components and equipment usable in the systems in Item 1, as
follows:

   (a) Lightweight turbojet and turbofan engines (including) turbocompound
engines) that are small and fuel efficient (see @ 121.1, both Cat. IV(h) and
VIII(b));

   (b) Ramjet/Scramjet/pulse jet/combined cycle engines, including devices to
regulate combustion, and specially designed components therefor (see @ 121.1,
both Cat. IV(h) and Cat. VIII(b));

   (c) Rocket motor cases, "interior lining", "insulation" and nozzles therefor
(see @ 121.1, Cat. IV(h) and Cat. V(c));

   (d) Staging mechanisms, separation mechanisms, and interstages therefor (see
@ 121.1, Cat. IV(c) and (h));

   (e) Liquid and slurry propellant (including oxidizers) control systems, and
specially designed components therefor, designed or modified to operate in
vibration environments of more than 100 g RMS between 20 Hz and,000 Hz (see @
121.1, Cat. IV(c) and (h));                                                                       PAGE   53
                              58 FR 39280, *39296
                                                                          FOCUS

   (f) Hybrid rocket motors and specially designed components therefor (see @
121.1, Cat. IV(h)).

Notes to Item 3

   (1) Item 3(a) engines may be exported as part of a manned aircraft or in
quantities appropriate for replacement parts for manned aircraft.

   (2) In Item 3(C), "interior lining" suited for the bond interface between the
solid propellant and the case or insulating liner is usually a liquid polymer
based dispersion of refractory or insulating materials, e.g., carbon filled HTPB
or other polymer with added curing agents to be sprayed or screeded over a case
interior (see @ 121.1, Cat. V(c)).

   (3) In Item 3(c), "insulation" intended to be applied to the components of a
rocket motor, i.e., the case, nozzle inlets, case closures, includes cured or
semi-cured compounded rubber sheet stock containing an insulating or refractory
material. It may also be incorporated as stress relief boots or flaps.

   (4) The only servo valves and pumps covered in (e) above, are the following:

   (i) Servo valves designed for flow rates of 24 liters per minute or greater,
at an absolute pressure of 7,000 kPa (1,000 psi) or greater, that have an
actuator response time of less than 100 msec;

   (ii) Pumps, for liquid propellants, with shaft speeds equal to or greater
than 8,000 RPM or with discharge pressures equal to or greater than 7,000 kPa
(1,000 psi).

   (5) Item 3(e) systems and components may be exports as part of a satellite.

Item 4-Category II

   Propellants and constituent chemicals for propellants as follows: (see @
121.1, Cat. V(c) and @ 121.12 and @ 121.14).

   (a) Propulsive substances:

   (1) Hydrazine with a concentration of more than 70 percent and its
derivatives including monomethylhydrazine (MMH) (see @ 121.12(a)(22));

   (2) Unsymmetric dimethylhydrazine (UDHM) (see @ 121.12(a)(22));

   (3) Ammonium perchlorate (see @ 121.12(a)(23));

   (4) Spherical aluminum powder with particle of uniform diameter of less than
500 x 10-m (500 micrometer) and an aluminum content of 97 percent or greater
(see @ 121.12(a)(1));

   (5) Metal fuels in particle sizes less than 500 x 10-m (500 Microns), whether
spherical, atomized, spheroidal, flaked or ground, consisting of 97 percent or
more of any of the following: zirconium, beryllium, boron, magnesium, zinc, and
alloys of these (see @ 121.12(a)(2));                                                                       PAGE   54
                              58 FR 39280, *39296
                                                                          FOCUS

   (6) Nitro-amines (cyclotetramethylene-tetranitramene (HMX) (see @
121.12(a)(11)), cyclotrimethylene-trinitramine (RDX)) (see 121.12(a)(35));

   (7) Perchlorates, chlorates or chromates mixed with powdered metals or other
high energy fuel components (see @ 121.12(a)(4);

   (8) Carboranes, decaboranes, pentaboranes and derivatives thereof (see @
121.12(a)(10);

   (9) Liquid oxidizers, as follows:

   (i) Nitrogen dioxide/dinitrogen tetroxide (see @ 121.14.(g));

   (ii) Inhibited Red Fuming Nitric Acid (IRFNA) (see @ 121.12(f)(1);

   (iii) Compounds composed of flourine and one or more of other halogens,
oxygen or nitrogen (see @ 121.12(a)(9).

   (b) Polymeric substances:

   (2) Hydroxy-terminated polybutadiene (HTPB) (see @ 121.12(a)(38);

   (3) Glycidyl azide polymer (GAP) (see @ 121.12(b)(1)).

   (c) Other high energy density propellants such as, Boron Slurry, having an
energy density of 40 x 10 joules/kg or greater (see @ 121.12(a)(3)).

   (d) Other propellant additives and agents:

   (1) Bonding agents as follows:

   (i) tris(1-(2-methyl)aziridinyl phosphine oxide (MAPO) (see @ 121.12(b)(17));

   (ii) trimesol-1(2-ethyl)aziridine (HX-868, BITA) (see @ 121.12(b)(13));

   (iii) "Tepanol" (HX-878), reaction product of tetraethylenepentamine,
acrylonitrile and glycidol (see @ 121.12.(b)(11));

   (iv) "Tepan" (HX-879), Reaction product of tet enepentamine and acrylonitrile
(see @ 121.12(b)(11));

   (v) Polyfunctional aziridene amides with isophthalic, trimesic, isocyanuric,
or trimethyladipic backbone also having a 2-methyl or 2-ethyl aziridine group
(HX-752, HX-872 and HX-877). (see @ 121.12(b)(13)).

   (2) Curing agents and catalysts as follows:

   (i) Triphenyl bismuth (TPB) (see @ 121.12(b)(23));

   (3) Burning rate modifiers as follows:

   (i) Catocene (see @ 121.12(b)(5));
                                                                       PAGE   55
                              58 FR 39280, *39296
                                                                          FOCUS

   (ii) N-butyl-ferrocene (see @ 121.12(b)(5));

   (iii) Other ferrocene derivatives (see @ 121.12(b)).

   (4) Nitrate esters and nitrato plasticizers as follows:

   (i) 1,2,4-butanetriol trinitrate (BTTN) (see @ 121.12(b)(3));

   (5) Stabilizers as follows:

   (i) N-methyl-p-nitroaniline (see @ 121.12(d)(1)).

Item 8-Category II

   Structural materials usable in the systems in Item 1, as follows:

   (a) Composite structures, laminates, and manufactures thereof, including
resin impregnated fibre prepregs and metal coated fibre preforms therefor,
specially designed for use in the systems in Item 1 and the subsystems in Item 2
made either with organix matrix or metal matrix utilizing fibrous or filamentary
reinforcements having a specific tensile strength greater than 7.62 x 10 4 m (3
x 10 6 inches) and a specific modules greater than 3.18 x 10 6 m (1.25 x 10 8
inches), (see @ 121.1, Category IV (f), and Category XIII (d));

   (b) Resaturated pyrolized (i.e. carbon-carbon) materials designed for rocket
systems, (see @ 121.1 Category IV (f));

   (c) Fine grain recrystallized bulk graphites (with a bulk density of at least
1.72 g/cc measured at 15 degrees C), pyrolytic, or fibrous reinforced graphites
useable for rocket nozzles and reentry vehicle nose tips (see @ 121.1, Category
IV (f) and Category XIII;

   (d) Ceramic composites materials (dielectric constant less than 6 at
frequencies from 100 Hz to 10,000 MHz) for use in missile radomes, and bulk
machinable silicon-carbide reinforced unfired ceramic useable for nose tips (see
@ 121.1, Category IV (f));

Item 9-Category II

   Instrumentation, navigation and direction finding equipment and systems, and
associated production and test equipment as follows; and specially designed
components and software therefor:

   (a) Integrated flight instrument systems, which include gyrostabilizers or
automatic pilots and integration software therefor; designed or modified for use
in the systems in Item 1 (See @ 121.1, Category XII(d));

   (b) Gyro-astro compasses and other devices which derive position or
orientation by means of automatically tracking celestrial bodies or satellites
(see @ 121.1, Category XV(d));

   (c) Accelerometers with a threshold of 0.05 g or less, or a linearity error
within 0.25 percent of full scale output, or both, which are designed for use in
inertial navigation systems or in guidance systems of all types (see @ 121.1,                                                                       PAGE   56
                              58 FR 39280, *39296
                                                                          FOCUS

Category VIII(e) and Category XII (d));

   (d) All types of gyros usable in the systems in Item 1, with a rated drift
rate stability of less than 0.5 degree (1 sigma or rms) per hour in a 1 q
environment (see @ 121.1, Category VIII(e) and Category XII(d));

   (e) Continuous output accelerometers or gyros of any type, specified to
function at acceleration levels greater than 100 g (see @ 121.1, Category
XII(d));

   (f) Inertial or other equipment using accelerometers described by subitems
(c) and (e) above, and systems incorporating such equipment, and specially
designed integration software therefor (see @ 121.1, Category VIII (e) and
Category XII(d));   [*39297]

Notes to Item 9

   (1) Items (a) through (f) may be exported as part of a manned aircraft or
satellite or in quantities appropriate for replacement parts for manned
aircraft.

   (2) In subitem (d):

   (i) Drift rate is defined as the time rate of output deviation from the
desired output. It consists of random and systematic components and is expressed
as an equivalent angular displacement per unit time with respect to inertial
space.

   (ii) Stability is defined as standard deviation (1 sigma) of the variation of
a particular parameter from its calibrated value measured under stable
temperature conditions. This can be expressed as a function of time.

Item 10-Category II

   Flight control systems and "technology" as follows; designed or modified for
the systems in Item 1.

   (a) Hydraulic, mechanical, electro-optical, or electro-mechanical flight
control systems (including fly-by-wire systems), (see @ 121.1, Category IV (h));

   (b) Attitude control equipment, (see @ 121.1, Category IV, (c) and (h));

   (c) Design technology for integration of air vehicle fuselage, propulsion
system and lifting control surfaces to optimize aerodynamic performance
throughout the flight regime of an unmanned air vehicle, (see @ 121.1, Category
VIII (k));

   (d) Design technology for integration of the flight control, guidance, and
propulsion data into a flight management system for optimization of rocket
system trajectory, (see @ 121.1, Category IV (i)).

Note to Item 10                                                                       PAGE   57
                              58 FR 39280, *39297
                                                                          FOCUS

   Items (a) and (b) may be exported as part of a manned aircraft or satellite
or in quantities appropriate for replacement parts for manned aircraft.

Item 11-Category II

   Avionics equipment, "technology" and components as follows; designed or
modified for use in the systems in Item 1, and specially designed software
therefor:

   (a) Radar and laser radar systems, including altimeters (see @ 121.1,
Category XI(a)(3));

   (b) Passive sensors for determining bearings to specific electromagnetic
sources (direction finding equipment) or terrain characteristics (see @ 121.1,
Category XI(b) and (d));

   (c) Global Positioning System (GPS) or similar satellite receivers;

   (1) Capable of providing navigation information under the following
operational conditions:

   (i) At speeds in excess of 515 m/sec (1,000 nautical miles/hours); and

   (ii) At altitudes in excess of 18 km (60,000 feet), (see @ 121.1, Category
XV(d)(2); or

   (2) Designed or modified for use with unmanned air vehicles covered by Item 1
(see @ 121.1, Category XV(d)(4)).

   (d) Electronic assemblies and components specifically designed for military
use and operation at temperatures in excess of 125 degrees C, (see @ 121.1,
Category XI(a)(7)).

   (e) Design technology for protection of avionics and electrical subsystems
against electromagnetic pulse (EMP) and electromagnetic interference (EMI)
hazards from external sources, as follows, (see @ 121.1, Category XI (b)).

   (1) Design technology for shielding systems;

   (2) Design technology for the configuration of hardened electrical circuits
and subsystems;

   (3) Determination of hardening criteria for the above.

Notes to Item 11

   (1) Item 11 equipment may be exported as part of a manned aircraft or
satellite or in quantities appropriate for replacement parts for manned
aircraft.

   (2) Examples of equipment included in this Item:

   (i) Terrain contour mapping equipment;                                                                       PAGE   58
                              58 FR 39280, *39297
                                                                          FOCUS

   (ii) Scene mapping and correlation (both digital and analog) equipment;

   (iii) Doppler navigation radar equipment;

   (iv) Passive interferometer equipment;

   (v) Imaging sensor equipment (both active and passive);

   (3) In subitem (a), laser radar systems embody specialized transmission,
scanning, receiving and signal processing techniques for utilization of lasers
for echo ranging, direction finding and discrimination of targets by location,
radial speed and body reflection characteristics.

Item 12-Category II

   Launch support equipment, facilities and software for the systems in Item 1,
as follows:

   (a) Apparatus and devices designed or modified for the handling, control,
activation and launching of the systems in Item 1, (see @ 121.1, Category
IV(c));

   (b) Vehicles designed or modified for the transport, handling, control,
activation and launching of the systems in Item 1, (see @ 121.1, Category
VII(d));

   (c) Telemetering and telecontrol equipment usable for unmanned air vehicles
or rocket systems, (see @ 121.1, Category XI(a));

   (d) Precision tracking systems:

   (1) Tracking systems which use a translb nv installed on the rocket system or
unmanned air vehicle in conjunction with either surface or airborne references
or navigation satellite systems to provide real-time measurements of in-flight
position and velocity, (see @ 121.1, Category XI(a));

   (2) Range instrumention radars including associated optical/infrared trackers
and the specially designed software therefor with all of the following
capabilities (see @ 121.1, Category XI(a)(3)):

   (i) angular resolution better than 3 milli-radians (0.5 mils);

   (ii) range of 30 km or greater with a range resolution better than 10 meters
RMS;

   (iii) velocity resolution better than 3 meters per second.

   (3) Software which processes post-flight, recorded data, enabling
determination of vehicle position throughout its flight path (see @ 121.1,
Category IV(i)).

Item 13-Category II                                                                       PAGE   59
                              58 FR 39280, *39297
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   Analog computers, digital computers, or digital differential analyzers
designed or modified for use in the systems in Item 1 (see @ 121.1, Category XI
(a)(6), having either of the following characteristics:

   (a) Rated for continuous operation at temperature from below minus 45 degrees
C to above plus 55 degrees C; or

   (b) Designed as ruggedized or "radiation hardened".

Note to Item 13

   Item 13 equipment may be exported as part of a manned aircraft or satellite
or in quantities appropriate for replacement parts for manned aircraft.

Item 14-Category II

   Analog-to-digital converters, usable in the system in Item 1, having either
of the following characteristics:

   (a) Designed to meet military specifications for ruggedized equipment (see @
121.1, Category XI(d)); or,

   (b) Designed or modified for military use (see @ 121.1, Category XI(d)); and
being one of the following types:

   (1) Analog-to-digital converter "microcircuits," which are "radiation
hardened" or have all of the following characteristics:

   (i) Having a resolution of 8 bits or more;

   (ii) Rated for operation in the temperature range from below minus 54 degrees
C to above plus 125 degrees C; and

   (iii) Hermetically sealed.

   (2) Electrical input type analog-to-digital converter printed circuit boards
or modules, with all of the following characteristics:

   (i) Having a resolution of 8 bits or more;

   (ii) Rated for operation in the temperature range from below minus 45 degrees
C to above plus 55 degrees C; and

   (iii) Incorporated "microcircuits" listed in (1), above.

Item 16-Category II

   Specially designed software, or specially designed software with related
specially designed hybrid (combined analog/digital) computers, for modeling,
simulation, or design integration of the systems in Item 1 and Item 2 (see @
121.1, Category IV(i) and Category XI(a)(6)).

Note to Item 16                                                                       PAGE   60
                              58 FR 39280, *39297
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   The modelling includes in particular the aerodynamic and thermodynamic
analysis of the system.

Item 17-Category II

   Materials, devices, and specially designed software for reduced observables
such as radar reflectivity, ultraviolet/infrared signatures on acoustic
signatures (i.e. stealth technology), for applications usable for the systems in
Item 1 or Item 2 (see @ 121.1, Category XIII (e) and (k)), for example:

   (a) Structural material and coatings specially designed for reduced radar
reflectivity;

   (b) Coatings, including paints, specially designed for reduced or tailored
reflectivity or emissivity in the microwave, infrared or ultraviolet spectra,
except when specially used for thermal control of satellites.

   (c) Specially designed software or databases for analysis of signature
reduction.   [*39298]

   (d) Specially designed radar cross section measurement systems (see @ 121.1,
Category XI(a)(3)).

Item 18-Category II

   Devices for use in protecting rocket systems and unmanned air vehicles
against nuclear effects (e.g. Electromagnetic Pulse (EMP), X-rays, combined
blast and thermal effects), and usable for the systems in Item 1, as follows
(see @ 121.1, Category IV (c) and (h)):

   (a) "Radiation Hardened" "microcircuits" and detectors (see @ 121.1, Category
XI(c)(3) Note: This commodity has been formally proposed for movement to
category XV(e)(2) in the near future).

   (b) Radomes designed to withstand a combined thermal shock greater than 1000
cal/sq cm accompanied by a peak over pressure of greater than 50 kPa (7 pounds
per square inch) (see @ 121.1, Category IV(h)).

Note to Item 18(a)

   A detector is defined as a mechanical, electrical, optical or chemical device
that automatically identifies and records, or registers a stimulus such as an
environmental change in pressure or temperature, an electrical or
electromagnetic signal or radiation from a radioactive material. The following
pages were removed from the final  itar  for replacement by DTC's updated
version section 6(l) of the Export Administration Act of 1979 (50 U.S.C. App.
2405(l)), as amended. In accordance with this provision, the list of MTCR Annex
items shall constitute all items on the U.S. Munitions List in @ 121.16.



PART 122-REGISTRATION OF MANUFACTURERS AND EXPORTERS

Sec.                                                                       PAGE   61
                              58 FR 39280, *39298
                                                                          FOCUS


122.1 Registration requirements.

122.2 Submission of registration statement.

122.3 Registration fees.

122.4 Notification of changes in information furnished by registrants.

122.5 Maintenance of records by registrants.

   Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752,
2778); E.O. 11958, 42 FR 4311, 1977 Comp. p. 79; 22 U.S.C. 2658.

@ 122.1 -- Registration requirements.

   (a) Any person who engages in the United States in the business of either
manufacturing or exporting defense articles or furnishing defense services is
required to register with the Office of Defense Trade Controls. Manufacturers
who do not engage in exporting must nevertheless register.

   (b) Exemptions. Registration is not required for:

   (1) Officers and employees of the United States Government acting in an
official capacity.

   (2) Persons whose pertinent business activity is confined to the production
of unclassified technical data only.

   (3) Persons all of whose manufacturing and export activities are licensed
under the Atomic Energy Act of 1954, as amended.

   (4) Persons who engage only in the fabrication of articles for experimental
or scientific purpose, including research and development.

   (c) Purpose. Registration is primarily a means to provide the U.S. Government
with necessary information on who is involved in certain manufacturing and
exporting activities. Registration does not confer any export rights or
privileges. It is generally a precondition to the issuance of any license or
other approval under this subchapter.

@ 122.2 -- Submission of registration statement.

   (a) General. The Department of State Form DSP-9 (Registration Statement) and
the transmittal letter required by paragraph (b) of this section must be
submitted by an intended registrant with a payment by check or money order
payable to the Department of State of one of the fees prescribed in @ 122.3(a)
of this subchapter. The Registration Statement and transmittal letter must be
signed by a senior officer who has been empowered by the intended registrant to
sign such documents. The intended registrant shall also submit documentation
that demonstrates that it is incorporated or otherwise authorized to do business
in the United States. The Office of Defense Trade Controls will return to the
sender any Registration Statement that is incomplete, or that is not accompanied
by the required letter or payment of the proper registration fee.                                                                       PAGE   62
                              58 FR 39280, *39298
                                                                          FOCUS

   (b) Transmittal letter. A letter of transmittal, signed by an authorized
senior officer of the intended registrant, shall accompany each Registration
Statement.

   (1) The letter shall state whether the intended registrant, chief executive
officer, president, vice-presidents, other senior officers or officials (e.g.
comptroller, treasurer, general counsel) or any member of the board of
directors:

   (i) Has ever been indicted for or convicted of violating any of the U.S.
criminal statutes enumerated in @ 120.27 of this subchapter; or

   (ii) Is ineligible to contract with, or to receive a license or other
approval to import defense articles or defense services from, or to receive an
export license or other approval from, any agency of the U.S. Government.

   (2) The letter shall also declare whether the intended registrant is owned or
controlled by foreign persons (as defined in @ 120.16 of this subchapter). If
the intended registrant is owned or controlled by foreign persons, the letter
shall also state whether the intended registrant is incorporated or otherwise
authorized to engage in business in the United States.

   (c) Definition. For purposes of this section, ownership means that more than
50 percent of the outstanding voting securities of the firm are owned by one or
more foreign persons. Control means that one or more foreign persons have the
authority or ability to establish or direct the general policies or day-to-day
operations of the firm. Control is presumed to exist where foreign persons own
25 percent or more of the outstanding voting securities if no U.S. persons
control an equal or larger percentage. The standards for control specified in 22
CFR 60.2(c) also provide guidance in determining whether control in fact exists.

@ 122.3 -- Registration fees.

   (a) A person who is required to register may do so for a period up to 5 years
upon submission of a completed form DSP-9, transmittal letter, and payment of a
fee as follows:

1 year -- $ 250

2 years -- 500

3 years -- 700

4 years -- 850

5 years -- 1,000

   (b) Lapse in registration. A registrant who fails to renew a registration
and, after an intervening period, seeks to register again must pay registration
fees for any part of such intervening period during which the registrant engaged
in the business of manufacturing or exporting defense articles or defense
services.                                                                       PAGE   63
                              58 FR 39280, *39298
                                                                          FOCUS

   (c) Refund of fee. Fees paid in advance for future years of a multiple year
registration will be refunded upon request if the registrant ceases to engage in
the manufacture or export of defense articles and defense services. A request
for a refund must be submitted to the Office of Defense Trade Controls prior to
the beginning of any year for which a refund is claimed.

@ 122.4 -- Notification of changes in information furnished by registrants.

   (a) A registrant must, within five days of the event, notify the Office of
Defense Trade Controls by registered mail if:

   (1) Any of the persons referred to in @ 122.2(b) are indicted for or
convicted of violating any of the U.S. criminal statutes enumerated in @ 120.27
of this subchapter, or become ineligible to contract with, or to receive a
license or other approval to export or temporarily import defense articles or
defense services from any agency of the U.S. government; or

   (2) There is a material change in the information contained in the
[*39299]   Registration Statement, including a change in the senior officers;
the establishment, acquisition or divestment of a subsidiary or foreign
affiliate; a merger; a change of location; or the dealing in an additional
category of defense articles or defense services.

   (b) A registrant must notify the Office of Defense Trade Controls by
registered mail at least 60 days in advance of any intended sale or transfer to
a foreign person of ownership or control of the registrant or any entity
thereof. Such notice does not relieve the registrant from obtaining the approval
required under this subchapter for the export of defense articles or defense
services to a foreign person, including the approval required prior to
disclosing technical data. Such notice provides the Office of Defense Trade
Controls with the information necessary to determine whether the authority of
section 38(g)(6) of the Arms Export Control Act regarding licenses or other
approvals for certain sales or transfers of articles or data should be invoked
(see @@ 120.10 and 126.1(e) of this subchapter).

   (c) The new entity formed when a registrant merges with another company or
acquires, or is acquired by, another company or a subsidiary or division of
another company shall advise the Office of Defense Trade Controls of the
following:

   (1) The new firm name and all previous firm names being disclosed;

   (2) The registration number that will survive and those that are to be
discontinued (if any);

   (3) The license numbers of all approvals on which unshipped balances will be
shipped under the surviving registration number, since any license not the
subject of notification will be considered invalid; and

   (4) Amendments to agreements approved by the Office of Defense Trade Controls
to change the name of a party to those agreements. The registrant must, within
60 days of this notification, provide to the Office of Defense Trade Controls a
signed copy of an amendment to each agreement signed by the new U.S. entity, the
former U.S. licensor and the foreign licensee. Any agreements not so amended                                                                       PAGE   64
                              58 FR 39280, *39299
                                                                          FOCUS

will be considered invalid.

   (d) Prior approval by the Office of Defense Trade Controls is required for
any amendment making a substantive change.

@ 122.5 -- Maintenance of records by registrants.

   (a) A person who is required to register must maintain records concerning the
manufacture, acquisition and disposition of defense articles; the provision of
defense services; and information on political contributions, fees, or
commissions furnished or obtained, as required by part 130 of this subchapter.
All such records must be maintained for a period of five years from the
expiration of the license or other approval. The Director, Office of Defense
Trade Controls, may prescribe a longer or shorter period in individual cases.

   (b) Records maintained under this section shall be available at all times for
inspection and copying by the Director, Office of Defense Trade Controls or a
person designated by the Director (the Director of the Diplomatic Security
Service or a person designated by the Director of the Diplomatic Security
Service or another designee), or the Commissioner of the U.S. Customs Service or
a person designated by the Commissioner.



PART 123-LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

Sec.

123.1 Requirement for export or temporary import licenses.

123.2 Import jurisdiction.

123.3 Temporary import licenses.

123.4 Temporary import license exemptions.

123.5 Temporary export licenses.

123.6 Foreign trade zones and U.S. Customs bonded warehouses.

123.7 Exports to warehouses or distribution points outside the United States.

123.8 Special controls on vessels, aircraft and satellites covered by the U.S.
Munitions List.

123.9 Country of ultimate destination and approval of reexports or retransfers.

123.10 Non-transfer and use assurances.

123.11 Movements of vessels and aircraft covered by the U.S. Munitions List
outside the United States.

123.12 Shipments between U.S. possessions.
                                                                        PAGE   65
                              58 FR 39280, *39299
                                                                          FOCUS

123.13 Domestic aircraft shipments via a foreign country.

123.14 Import certificate/delivery verification procedure.

123.15 Congressional notification for licenses.

123.16 Exemptions of general applicability.

123.17 Exports of firearms and ammunition.

123.18 Firearms for personal use of members of the U.S. Armed Forces and
civilian employees of the U.S. Government.

123.19 Canadian and Mexican border shipments.

123.20 Nuclear materials.

123.21 Duration, renewal and disposition of licenses.

123.22 Filing of export licenses and Shipper's Export Declarations with District
Directors of Customs.

123.23 Monetary value of shipments.

123.24 Shipments by mail.

123.25 Amendments to licenses.

123.26 Recordkeeping requirement for exemptions.

   Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752,
2778); E.O. 11958, 42 FR 4311, 3 CFR 1977 Comp. 79; 22 U.S.C. 2658.

@ 123.1 -- Requirement for export or temporary import licenses.

   (a) Any person who intends to export or to import temporarily a defense
article must obtain the approval of the Office of Defense Trade Controls prior
to the export or temporary import, unless the export or temporary import
qualifies for an exemption under the provisions of this subchapter. Applications
for export or temporary import must be made as follows:

   (1) Applications for licenses for permanent export must be made on Form DSP-5
(unclassified);

   (2) Applications for licenses for temporary export must be made on Form
DSP-73 (unclassified);

   (3) Applications for licenses for temporary import must be made on Form
DSP-61 (unclassified); and

   (4) Applications for the export or temporary import of classified defense
articles or classified technical data must be made on Form DSP-85.                                                                       PAGE   66
                              58 FR 39280, *39299
                                                                          FOCUS

   (b) Applications for Department of State export licenses must be confined to
proposed exports of defense articles including technical data.

   (c) As a condition to the issuance of a license or other approval, the Office
of Defense Trade Controls may require all pertinent documentary information
regarding the proposed transaction and proper completion of the application form
as follows:

   (1) Form DSP-5, DSP-61, DSP-73, and DSP-85 applications must have an entry in
each block where space is provided for an entry. All requested information must
be provided.

   (2) Attachments and supporting technical data or brochures should be
submitted in seven collated copies. Two copies of any freight forwarder lists
must be submitted. If the request is limited to renewal of a previous license or
for the export of spare parts, only two sets of any attachment (including
freight forwarder lists) and one copy of the previous license should be
submitted.

   (3) A certification letter signed by an empowered official must accompany all
application submissions (see @ 126.13 of this subchapter).

   (4) An application for a license under this part for the permanent export of
defense articles sold commercially must be accompanied by a copy of a purchase
order, letter of intent or other appropriate documentation. In cases involving
the U.S. Foreign Military Sales program, three copies of the relevant Department
of Defense Form   [*39300]   1513 are required, unless the procedures of @
126.4(c) or @ 126.6 of this subchapter are followed.

   (5) Form DSP-83, duly executed, must accompany all license applications for
the permanent export of significant military equipment, including classified
hardware or classified technical data (see @@ 123.10 and 125.3 of this
subchapter).

   (6) A statement concerning the payment of political contributions, fees and
commissions must accompany a permanent export application if the export involves
defense articles or defense services valued in an amount of $ 500,000 or more
and is being sold commercially to or for the use of the armed forces of a
foreign country or international organization (see part 130 of this subchapter).

   (d) Provisions for furnishing the type of defense services described in @
120.9(a) of this subchapter are contained in part 124 of this subchapter.
Provisions for the export or temporary import of technical data and classified
defense articles are contained in part 125 of this subchapter.

   (e) A request for a license for the export of unclassified technical data
(DSP-5) related to a classified defense article should specify any classified
technical data or material that subsequently will be required for export in the
event of a sale.

@ 123.2 -- Import jurisdiction.

   The Department of State regulates the temporary import of defense articles.
Permanent imports of defense articles into the United States are regulated by                                                                       PAGE   67
                              58 FR 39280, *39300
                                                                          FOCUS

the Department of the Treasury (see 27 CFR parts 47, 178 and 179).

@ 123.3 -- Temporary import licenses.

   (a) A license (DSP-61) issued by the Office of Defense Trade Controls is
required for the temporary import and subsequent export of unclassified defense
articles, unless exempted from this requirement pursuant to @ 123.4. This
requirement applies to:

   (1) Temporary imports of unclassified defense articles that are to be
returned directly to the country from which they were shipped to the United
States;

   (2) Temporary imports of unclassified defense articles in transit to a third
country;

   (b) A bond may be required as appropriate (see part 125 of this subchapter
for license requirements for technical data and classified defense articles.)

@ 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 articles (including any article manufactured
abroad pursuant to U.S. Government approval) if the article temporarily
imported:

   (1) Is serviced (e.g., inspection, testing, calibration or repair, including
overhaul, reconditioning and one-to-one replacement of any defective articles,
parts or components, but excluding any modification, enhancement, upgrade or
other form of alteration or improvement that changes the basic performance of
the article), 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 article 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 (DD Form 1513).

   Note: These Exceptions do not apply to shipments that transit the U.S. to or
from Canada (see @ 123.19 and @ 126.5 of this subchapter for exceptions).                                                                       PAGE   68
                              58 FR 39280, *39300
                                                                          FOCUS

   (b) District Directors of Customs shall permit the temporary import (but not
the subsequent export) without a license of unclassified defense articles that
are to be incorporated into another article, or modified, enhanced, upgraded,
altered, improved or serviced in any other manner that changes the basic
performance or productivity of the article prior to being returned to the
country from which they were shipped or prior to being shipped to a third
country. A DSP-5 is required for the reexport of such unclassified defense
articles after incorporation into another article, modification, enhancement,
upgrading, alteration or improvement.

   (c) Requirements. To use an exemption under @ 123.4 (a) or (b), the following
criteria must be met:

   (1) The importer must meet the eligibility requirements set forth in @
120.1(b) of this subchapter;

   (2) At the time of export, the ultimate consignee named on the Shipper's
Export Declaration (SED) must be the same as the foreign consignee or end-user
of record named at the time of import; and

   (3) As stated in @ 126.1 of this subchapter, the temporary import must not be
from or on behalf of a proscribed country listed in that section unless an
exception has been granted in accordance with @ 126.3 of this subchapter.

   (d) Procedures. To the satisfaction of the District Director of Customs, the
importer and exporter must comply with the following procedures:

   (1) At the time of temporary import-

   (i) File and annotate the applicable U.S. Customs document (e.g., Form CF
3461, 7512, 7501, 7523 or 3311) to read: "This shipment is being imported in
accordance with and under the authority of 22 CFR 123.4(a) (identify
subsection)," and

   (ii) Include, on the invoice or other appropriate documentation, a complete
list and description of the defense article(s) being imported, including
quantity and U.S. dollar value; and

   (2) At the time of export, file with the District Director of Customs at the
port of exit a Shipper's Export Declaration (Department of Commerce Form 7525-V)
and include on the SED or as an attachment the following information:

   (i) the U.S. Customs entry document number or a copy of the U.S. Customs
documentation under which the article was imported;

   (ii) the following statement: "22 CFR (identify section) and 22 CFR 120.1(b)
applicable."

@ 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                                                                       PAGE   69
                              58 FR 39280, *39300
                                                                          FOCUS

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   [*39301]   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 @ 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) Upon the return to the United States of defense articles covered by a
license for temporary export, the license will be endorsed in the entry column
by the District Director of Customs. This procedure shall be followed for all
exits and entries made during the period for which the license is valid. The
licensee must send the license to the Office of Defense Trade Controls
immediately upon expiration or after the final return of the defense articles
approved for export, whichever occurs first.

@ 123.6 -- Foreign trade zones and U.S. Customs bonded warehouses.

   Foreign trade zones and U.S. Customs bonded warehouses are considered
integral parts of the United States for the purpose of this subchapter. An
export license is therefore not required for shipment between the United States
and a foreign trade zone or a Customs bonded warehouse. In the case of
classified defense articles, the provisions of the Department of Defense
Industrial Security Manual will apply. An export license is required for all
shipments of articles on the U.S. Munitions List from foreign trade zones and
U.S. Customs bonded warehouses to foreign countries, regardless of how the
articles reached the zone or warehouse.

@ 123.7 -- Exports to warehouses or distribution points outside the United
States.

   Unless the exemption under @ 123.16(b)(1) is used, a license is required to
export defense articles to a warehouse or distribution point outside the United
States for subsequent resale and will normally be granted only if an agreement
has been approved pursuant to @ 124.14 of this subchapter.

@ 123.8 -- Special controls on vessels, aircraft and satellites covered by the
U.S. Munitions List.

   (a) Transferring registration or control to a foreign person of any aircraft,
vessel, or satellite on the U.S. Munitions List is an export for purposes of
this subchapter and requires a license or written approval from the Office of                                                                       PAGE   70
                              58 FR 39280, *39301
                                                                          FOCUS

Defense Trade Controls. This requirement applies whether the aircraft, vessel,
or satellite is physically located in the United States or abroad.

   (b) The registration in a foreign country of any aircraft, vessel or
satellite covered by the U.S. Munitions List which is not registered in the
United States but which is located in the United States constitutes an export. A
license or written approval from the Office of Defense Trade Controls is
therefore required. Such transactions may also require the prior approval of the
Maritime Administration, the Federal Aviation Administration or other agencies
of the U.S. Government.

@ 123.9 -- Country of ultimate destination and approval of reexports or
retransfers.

   (a) The country designated as the country of ultimate destination on an
application for an export license, or on a Shipper's Export Declaration where an
exemption is claimed under this subchapter, must be the country of ultimate
end-use. The written approval of the Office of Defense Trade Controls must be
obtained before reselling, transferring, transshipping, or disposing of a
defense article to any end user, end use or destination other than as stated on
the export license, or on the Shipper's Export Declaration in cases where an
exemption is claimed under this subchapter. Exporters must ascertain the
specific end-user and end-use prior to submitting an application to the Office
of Defense Trade Controls or claiming an exemption under this subchapter.

   (b) The exporter shall incorporate the following statement as an integral
part of the bill of lading, and the invoice whenever defense articles on the
U.S. Munitions List are to be exported:

   These commodities are authorized by the U.S. Government for export only to
[country of ultimate destination] for use by [end-user]. They may not be
transferred, transshipped on a non-continuous voyage, or otherwise be disposed
of in any other country, either in their original form or after being
incorporated into other end-items, without the prior written approval of the
U.S. Department of State."

   (c) A U.S. person or a foreign person requesting approval for the reexport or
retransfer, or change in end-use, of a defense article shall submit a written
request which shall be subject to all the documentation required for a permanent
export license (see @ 123.1) and shall contain the following:

   (1) The license number under which the defense article was previously
authorized for export from the United States;

   (2) A precise description, quantity and value of the defense article;

   (3) A description of the new end-use; and

   (4) Identification of the new end-user.

   (d) The written approval of the Office of Defense Trade Controls must be
obtained before reselling, transferring, transshipping on a non-continuous
voyage, or disposing of a defense article in any country other than the country
of ultimate destination, or anyone other than the authorized end-user, as                                                                       PAGE   71
                              58 FR 39280, *39301
                                                                          FOCUS

stated on the Shipper's Export Declaration in cases where an exemption is
claimed under this subchapter.


   (e) Reexports or retransfers of U.S.-origin components incorporated into a
foreign defense article to a government of a NATO country, or the governments of
Australia or Japan, are authorized without the prior written approval of the
Office of Defense Trade Controls, provided:

   (1) The U.S.-origin components were previously authorized for export from the
United States, either by a license or an exemption;

   (2) The U.S.-origin components are not significant military equipment, the
items are not major defense equipment sold under a contract in the amount of $
14,000,000 ($ 14 million) or more; the articles are not defense articles or
defense services sold under a contract in the amount of $ 50,000,000 ($ 50
million) or more; and are not identified in part 121 of this subchapter as
Missile Technology Control Regime (MTCR) items; and

   (3) The person reexporting the defense article must provide written
notification to the Office of Defense Trade Controls of the retransfer not later
than 30 days following the reexport. The notification must state the articles
being reexported and the recipient government.

   (4) In certain cases, the Director, Office of Defense Trade Controls, may
place retransfer restrictions on a license prohibiting use of this exemption.

@ 123.10 -- Non-transfer and use assurances.

   (a) A nontransfer and use certificate (Form DSP-83) is required for the
export of significant military equipment and classified articles including
classified technical data. A license will   [*39302]   not be issued until a
completed Form DSP-83 has been received by the Office of Defense Trade Controls.
This form is to be executed by the foreign consignee, foreign end-user, and the
applicant. The certificate stipulates that, except as specifically authorized by
prior written approval of the Department of State, the foreign consignee and
foreign end-user will not reexport, resell or otherwise dispose of the
significant military equipment enumerated in the application outside the country
named as the location of the foreign end-use or to any other person.

   (b) The Office of Defense Trade Controls may also require a DSP-83 for the
export of any other defense articles or defense services.

   (c) When a DSP-83 is required for an export of any defense article or defense
service to a non-governmental foreign end-user, the Office of Defense Trade
Controls may require as a condition of issuing the license that the appropriate
authority of the government of the country of ultimate destination also execute
the certificate.

@ 123.11 -- Movements of vessels and aircraft covered by the U.S. Munitions List
outside the United States.

   (a) A license issued by the Office of Defense Trade Controls is required
whenever a privately-owned aircraft or vessel on the U.S. Munitions List makes a
voyage outside the United States.                                                                       PAGE   72
                              58 FR 39280, *39302
                                                                          FOCUS

   (b) Exemption. An export license is not required when a vessel or aircraft
referred to in paragraph (a) of this section departs from the United States and
does not enter the territorial waters or airspace of a foreign country if no
defense articles are carried as cargo. Such a vessel or aircraft may not enter
the territorial waters or airspace of a foreign country before returning to the
United States, or carry as cargo any defense article, without a temporary export
license (Form DSP-73) from the Department of State. (See @ 123.5.)

@ 123.12 -- Shipments between U.S. possessions.

   An export license is not required for the shipment of defense articles
between the United States, the Commonwealth of Puerto Rico, and U.S.
possessions. A license is required, however, for the export of defense articles
from these areas to foreign countries.

@ 123.13 -- Domestic aircraft shipments via a foreign country.

   A license is not required for the shipment by air of a defense article from
one location in the United States to another location in the United States via a
foreign country. The pilot of the aircraft must, however, file a written
statement with the District Director of Customs at the port of exit in the
United States. The original statement must be filed at the time of exit with the
District Director of Customs. A duplicate must be filed at the port of reentry
with the District Director of Customs, who will duly endorse it and transmit it
to the District Director of Customs at the port of exit. The statement will be
as follows:

Domestic Shipment Via a Foreign Country of Articles on the U.S. Munitions List

   Under penalty according to Federal law, the undersigned certifies and
warrants that all the information in this document is true and correct, and that
the equipment listed below is being shipped from (U.S. port of exit) via
(foreign country) to (U.S. port of entry), which is the final destination in the
United States.

Description of Equipment
__________
Quantity:
__________
Equipment:
__________
Value:
__________
Signed:

   Endorsement: Customs Inspector.
__________
Port of Exit
__________
Date:
__________
Signed:                                                                       PAGE   73
                              58 FR 39280, *39302
                                                                          FOCUS

   Endorsement: Customs Inspector.
__________
Port of Entry:
__________
Date:

@ 123.14 -- Import certificate/delivery verification procedure.

   (a) The Import Certificate/Delivery Verification Procedure is designed to
assure that a commodity imported into the territory of those countries
participating in IC/DV procedures will not be diverted, transshipped, or
reexported to another destination except in accordance with export control
regulations of the importing country.

   (b) Exports. The Office of Defense Trade Controls may require the IC/DV
procedure on proposed exports of defense articles to non-government entities in
those countries participating in IC/DV procedures. In such cases, U.S. exporters
must submit both an export license application (the completed Form DSP-5) and
the original Import Certificate, which must be provided and authenticated by the
government of the importing country. This document verifies that the foreign
importer complied with the import regulations of the government of the importing
country and that the importer declared the intention not to divert, transship or
reexport the material described therein without the prior approval of that
government. After delivery of the commodities to the foreign consignee, the
Department of State may also require U.S. exporters to furnish Delivery
Verification documentation from the government of the importing country. This
documentation verifies that the delivery was in accordance with the terms of the
approved export license. Both the Import Certificate and the Delivery
Verification must be furnished to the U.S. exporter by the foreign importer.

   (c) Triangular transactions. When a transaction involves three or more
countries that have adopted the IC/DV procedure, the governments of these
countries may stamp a triangular symbol on the Import Certificate. This symbol
is usually placed on the Import Certificate when the applicant for the Import
Certificate (the importer) states either (1) that there is uncertainty whether
the items covered by the Import Certificate will be imported into the country
issuing the Import Certificate; (2) that he or she knows that the items will not
be imported into the country issuing the Import Certificate; or (3) that, if the
items are to be imported into the country issuing the Import Certificate, they
will subsequently be reexported to another destination. All parties, including
the ultimate consignee in the country of ultimate destination, must be shown on
the completed Import Certificate.

@ 123.15 -- Congressional notification for licenses.

   All exports of major defense equipment, as defined in @ 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 30 calendar days have elapsed since receipt by the Congress of the
certification required by 22 U.S.C. 2776(c)(1) and that Congress has not enacted
a joint resolution prohibiting the export. Persons who intend to export defense
articles and defense services pursuant to any exemption in this subchapter                                                                       PAGE   74
                              58 FR 39280, *39302
                                                                          FOCUS

(e.g., @ 126.5 of this subchapter) under the circumstances described in the
first sentence of this subsection 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.

@ 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.   [*39303]   These exemptions do not apply to: Proscribed destinations
under @ 126.1 of this subchapter; exports for which Congressional notification
is required; MTCR articles; and may not be used by persons who are generally
ineligible as described in @ 120.1(c) of this subchapter. All shipments of
defense articles, including those to and from Canada, require a Shippers Export
Declaration (SED). If the defense article is exempt from licensing, the SED must
cite the exemption. Refer to @ 123.22(c) for Shipper's Export Declaration
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 articles being exported in furtherance of an approved manufacturing
license agreement, technical assistance agreement or distribution agreement
provided that:

   (i) The defense articles to be exported support the activity and must be
identified by item, quantity and value in the agreement; and

   (ii) Any provisos or limitations placed on the authorized agreement 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 AG [identify agreement number]
applicable and

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

   (v) In the case of distribution agreements, 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 @ 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                                                                       PAGE   75
                              58 FR 39280, *39303
                                                                          FOCUS

   (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 calender 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 @ 125.4(b)
of this subchapter and do not contain components covered by the U.S. Munitions
List (see @ 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 @
123.17.

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

   (8) For exports to Canada refer to @ 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 @ 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;                                                                       PAGE   76
                              58 FR 39280, *39303
                                                                          FOCUS

   (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.

@ 123.17 -- Exports of firearms and ammunition.

   (a) Except as provided in @ 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 breach mechanisms when the total value does not exceed $ 500 wholesale
in any transaction.

   (b) District Directors of Customs shall permit the export without a license
of nonautomatic firearms covered by Category I(a) of @ 121.1 of this subchapter
if they were manufactured in or before 1898, or are replicas of such firearms.

   (c) District Directors of Customs shall permit U.S. persons to export
temporarily from the United States without a license not more than three
nonautomatic firearms in Category I(a) of @ 121.1 of this subchapter and not
more than 1,000 cartridges therefor, provided that:

   (1) A declaration by the U.S. person and an inspection by a customs officer
is made;

   (2) The firearms and accompanying ammunition must be with the U.S. person's
baggage or effects, whether accompanied or unaccompanied (but not mailed); and

   (3) They must be for that person's exclusive use and not for reexport or
other transfer of ownership. The foregoing exemption is not applicable to a
crew-member of a vessel or aircraft unless the crew-member declares the firearms
to a Customs officer upon each departure from the United States, and declares
that it is his or her intention to return the article(s) on each return to the
United States. It is also not applicable to the personnel referred to in @
123.18.

   (d) District Directors of Customs shall permit a foreign person to export
without a license such firearms in Category I(a) of @ 121.1 of this subchapter
and ammunition therefor as the foreign person brought into the United States
under the provisions of 27 CFR 178.115(d). (The latter provision specifically
excludes from the definition of importation the bringing into the United States
of firearms and ammunition by certain foreign persons for specified purposes).

   (e) District Directors of Customs shall permit U.S. persons to export without
a   [*39304]   license ammunition for nonautomatic firearms referred to in
paragraph (a) of this section if the quantity does not exceed 1,000 cartridges
(or rounds) in any shipment. The ammunition must also be for personal use and
not for resale or other transfer of ownership. The foregoing exemption is also
not applicable to the personnel referred to in @ 123.18.

@ 123.18 -- Firearms for personal use of members of the U.S. Armed Forces and
civilian employees of the U.S. Government.

   The following exemptions apply to members of the U.S. Armed Forces and
civilian employees of the U.S. Government who are U.S. persons (both referred                                                                       PAGE   77
                              58 FR 39280, *39304
                                                                          FOCUS

to herein as personnel). The exemptions apply only to such personnel if they are
assigned abroad for extended duty. These exemptions do not apply to dependents.

   (a) Firearms. District Directors of Customs shall permit nonautomatic
firearms in Category I(a) of @ 121.1 of this subchapter and parts therefor to be
exported, except by mail, from the United States without a license if:

   (1) They are consigned to servicemen's clubs abroad for uniformed members of
the U.S. Armed Forces; or,

   (2) In the case of a uniformed member of the U.S. Armed Forces or a civilian
employee of the Department of Defense, they are for personal use and not for
resale or other transfer of ownership, and if the firearms are accompanied by a
written authorization from the commanding officer concerned; or

   (3) In the case of other U.S. Government employees, they are for personal use
and not for resale or other transfer of ownership, and the Chief of the U.S.
Diplomatic Mission or his designee in the country of destination has approved in
writing to Department of State the import of the specific types and quantities
of firearms into that country. The exporter shall provide a copy of this written
statement to the District Director of Customs.

   (b) Ammunition. District Directors of Customs shall permit not more than
1,000 cartridges (or rounds) of ammunition for the firearms referred to in
paragraph (a) of this section to be exported (but not mailed) from the United
States without a license when the firearms are on the person of the owner or
with his baggage or effects, whether accompanied or unaccompanied (but not
mailed).

@ 123.19 -- Canadian and Mexican border shipments.

   A shipment originating in Canada or Mexico which incidentally transits the
United States en route to a delivery point in the same country that originated
the shipment is exempt from the requirement for an in transit license.

@ 123.20 -- Nuclear materials.

   (a) The provisions of this subchapter do not apply to equipment in Category
VI(e) and Category XVI of @ 121.1 of this subchapter to the extent such
equipment is under the export control of the Department of Energy or the Nuclear
Regulatory Commission pursuant to the Atomic Energy Act of 1954, as amended, and
the Nuclear Non-Proliferation Act of 1978.

   (b) A license for the export of any machinery, device, component, equipment,
or technical data relating to equipment referred to in Category VI(e) will not
be granted unless the proposed export comes within the scope of an existing
Agreement for Cooperation for Mutual Defense Purposes concluded pursuant to the
Atomic Energy Act of 1954, as amended, with the government of the country to
which the article is to be exported. Licenses may be granted in the absence of
such an agreement only (1) if the proposed export involves an article which is
identical to that in use in an unclassified civilian nuclear power plant, (2) if
the proposed export has no relationship to naval nuclear propulsion, and (3) if
it is not for use in a naval propulsion plant.
                                                                        PAGE   78
                              58 FR 39280, *39304
                                                                          FOCUS

@ 123.21 -- Duration, renewal and disposition of licenses.

   (a) A license is valid for four years. The license expires when the total
value or quantity authorized has been shipped or when the date of expiration has
been reached, whichever occurs first. Defense articles to be shipped thereafter
require a new application and license. The new application should refer to the
expired license. It should not include references to any defense articles other
than those of the unshipped balance of the expired license.

   (b) Unused, expired, expended, suspended, or revoked licenses must be
returned immediately to the Department of State.

@ 123.22 -- Filing of export licenses and Shipper's Export Declarations with
District Directors of Customs.

   (a) The exporter must deposit the license with the District Director of
Customs at the port of exit before shipment, unless paragraph (d) of this
section or @ 125.9 applies (for exports by mail, see @ 123.24). Licenses for
temporary export or temporary import are to be retained by the exporter and
presented to the District Director of Customs at the time of import or export
for endorsement. If necessary, the 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 U.S. Customs Service. Every license will be returned to the
Office of Defense Trade Controls by the District Director of Customs when the
total value or quantity authorized has been shipped or when the date of
expiration is reached, whichever occurs first.

   (b) Before shipping any defense article, the exporter must also file a
Shipper's Export Declaration with the District Director of Customs at the port
of exit (unless otherwise exempt from filing a Shipper's Export Declaration).
The District Director of Customs at the port of exit must authenticate the
Shipper's Export Declaration, and endorse the license to show the shipments
actually made. The District Director of Customs will return a copy of each
authenticated Shipper's Export Declaration to the Office of Defense Trade
Controls.

   (c) Except for the export of unclassified technical data, an exporter must
file a Shipper's Export Declaration with District Directors of Customs or
Postmasters in those cases in which no export license is required because of an
exemption under this subchapter. The exporter must certify that the export is
exempt from the licensing requirements of this subchapter by writing 22 CFR
(identify section) and 22 CFR 120.1(b) applicable on the Shipper's Export
Declaration, and by identifying the section under which an exemption is claimed.
A copy of each such declaration must be mailed immediately by the exporter to
the Office of Defense Trade Controls.

   (d) A Shipper's Export Declaration is not required for exports of
unclassified technical data. Exporters shall notify the Office of Defense Trade
Controls of the initial export of the data by either returning the license after
self endorsement or by sending a letter to the Office of Defense Trade Controls.
The letter shall provide the method, date, license number and airway bill number
(if applicable) of the shipment. The letter must be signed by an empowered
official of the company and provided to the Office of Defense Trade Controls
within thirty days of the initial export. Additionally, similar notification                                                                       PAGE   79
                              58 FR 39280, *39304
                                                                          FOCUS

must be provided to the Office of Defense Trade Controls for any subsequent
exports.

   (e) If a license for the export of unclassified defense articles, including
technical data, is used but not endorsed by U.S. Customs or a Postmaster for
whatever reason (e.g., electronic transmission, unavailability of Customs
[*39305]   officer or Postmaster, etc.), the person exporting the article must
self-endorse the license, showing when and how the export took place. Every
license shall also be returned by the exporter to the Office of Defense Trade
Controls when the total value or quantity authorized has been shipped or when
the date of expiration is reached, whichever occurs first.

@ 123.23 -- Monetary value of shipments.

   District Directors of Customs shall permit the shipment of defense articles
identified on any license when the total value of the export does not exceed the
aggregate monetary value (not quantity) stated on the license by more than ten
percent, provided that the additional monetary value does not make the total
value of the license or other approval for the export of any major defense
equipment sold under a contract reach $ 14,000,000 or more, and provided that
the additional monetary value does not make defense articles or defense services
sold under a contract reach the amount of $ 50,000,000 or more.

@ 123.24 -- Shipments by mail.

   A Shipper's Export Declaration must be authenticated before an article is
actually sent abroad by mail (see @ 123.22(d)). The postmaster or exporter will
endorse each license to show the shipments made. Every license must be returned
by the exporter to the Office of Defense Trade Controls upon completion of the
mailings.

@ 123.25 -- Amendments to licenses.

   (a) The Office of Defense Trade Controls may approve an amendment to a
license for permanent export, temporary export and temporary import of
unclassified defense articles. A suggested format is available from the Office
of Defense Trade Controls.

   (b) The following types of amendments to a license that will be considered:
Addition of U.S. freight forwarder or U.S. consignor; change due to an obvious
typographical error; change in source of commodity; and change of foreign
intermediate consignee if that party is only transporting the equipment and will
not process (e.g., integrate, modify) the equipment. For changes in U.S. dollar
value see @ 123.23.

   (c) The following types of amendments to a license will not be approved:
Additional quantity, changes in commodity, country of ultimate destination,
end-use or end-user, foreign consignee and/or extension of duration. The foreign
intermediate consignee may only be amended if that party is acting as freight
forwarder and the export does not involve technical data. A new license is
required for these changes. Any new license submission must reflect only the
unshipped balance of quantity and dollar value.

@ 123.26 -- Recordkeeping requirement for exemptions.
                                                                       PAGE   80
                              58 FR 39280, *39305
                                                                          FOCUS

   When an exemption is claimed for the export of unclassified technical data,
the exporter must maintain a record of each such export. The business record
should include the following information: A description of the unclassified
technical data, the name of the recipient end-user, the date and time of the
export, and the method of transmission.



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

Sec.

124.1 Manufacturing license agreements and technical assistance agreements.

124.2 Exemptions for training and military service.

124.3 Exports of technical data in furtherance of an agreement.

124.4 Deposit of signed agreements with the Office of Defense Trade Controls.

124.5 Proposed agreements that are not concluded.

124.6 Termination of manufacturing license agreements and technical assistance
agreements.

124.7 Information required in all manufacturing license agreements and technical
assistance agreements.

124.8 Clauses required both in manufacturing license agreements and technical
assistance agreements.

124.9 Additional clauses required only in manufacturing license agreements.

124.10 Nontransfer and use assurances.

124.11 Certification to Congress for agreements.

124.12 Required information in letters of transmittal.

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

124.14 Exports to warehouses or distribution points outside the United States.

   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. 2658.

@ 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 @ 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                                                                       PAGE   81
                              58 FR 39280, *39305
                                                                          FOCUS

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 @@ 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 @ 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 @ 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 @ 120.9(a) of this
subchapter by granting a license under part 125 of this subchapter. Also, see @
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.

@ 124.2 -- Exemptions for training and military service.

   (a) Technical assistance agreements are not required for the provision of
[*39306]   training in the basic operation and maintenance of defense articles
lawfully exported or authorized for export to the same recipient. This does not
include training in intermediate and depot level maintenance.

   (b) Services performed as a member of the regular military forces of a
foreign nation by U.S. persons who have been drafted into such forces are not
deemed to be defense services for purposes of @ 120.9 of this subchapter.

@ 124.3 -- Exports of technical data in furtherance of an agreement.

   (a) Unclassified technical data. District Directors of Customs or 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 Office of Defense
Trade Controls and the technical data being exported does not exceed the scope                                                                       PAGE   82
                              58 FR 39280, *39306
                                                                          FOCUS

or limitations of the relevant agreement. The U.S. party to the agreement must
certify on the Shippers Export Declaration that the export does not exceed the
scope of the agreement and any limitations imposed pursuant to this part. The
approval of the Office of Defense Trade Controls must be obtained for the export
of any unclassified technical data which 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.

@ 124.4 -- Deposit of signed agreements with the Office of Defense Trade
Controls.

   The United States party to a manufacturing license or a technical assistance
agreement must file one copy of the concluded agreement with the Office of
Defense Trade Controls not later than 30 days after it enters into force.

@ 124.5 -- Proposed agreements that are not concluded.

   The United States party to any proposed manufacturing license agreement or
technical assistance agreement must inform the Office of Defense Trade Controls
if a decision is made not to conclude the agreement. The information must be
provided within 60 days of the date of the decision. These requirements apply
only if the approval of the Office of Defense Trade Controls was obtained for
the agreement to be concluded (with or without any provisos).

@ 124.6 -- Termination of manufacturing license agreements and technical
assistance agreements.

   The U. S. party to a manufacturing license or a technical assistance
agreement must inform the Office of Defense Trade Controls in writing of the
impending termination of the agreement not less than 30 days prior to the
expiration date of such agreement.

@ 124.7 -- Information required in all manufacturing license agreements and
technical assistance agreements.

   The following information must be included in all proposed manufacturing
license agreements and technical assistance agreements. The information should
be provided in terms which are as precise as possible. If the applicant believes
that a clause or that required information is not relevant or necessary, the
applicant may request the omission of the clause or information. The transmittal
letter accompanying the agreement must state the reasons for any proposed
variation in the clauses or required information.                                                                       PAGE   83
                              58 FR 39280, *39306
                                                                          FOCUS

   (1) The agreement must describe the defense article to be manufactured and
all defense articles to be exported, including any test and support equipment or
advanced materials. They should be described by military nomenclature, contract
number, National Stock Number, nameplate data, or other specific information.
Supporting technical data or brochures should be submitted in seven copies. Only
defense articles listed in the agreement will be eligible for export under the
exemption in @ 123.16(b)(1) of this subchapter.

   (2) The agreement must specifically describe the assistance and technical
data, including the design and manufacturing know-how involved, to be furnished
and any manufacturing rights to be granted;

   (3) The agreement must specify its duration; and

   (4) The agreement must specifically identify the countries or areas in which
manufacturing, production, processing, sale or other form of transfer is to be
licensed.

@ 124.8 -- Clauses required both in manufacturing license agreements and
technical assistance agreements.

   The following statements must be included both in manufacturing license
agreements and in technical assistance agreements:

   (1) "This agreement shall not enter into force, and shall not be amended or
extended, without the prior written approval of the Department of State of the
U.S. Government."

   (2) "This agreement is subject to all United States laws and regulations
relating to exports and to all administrative acts of the U.S. Government
pursuant to such laws and regulations."

   (3) "The parties to this agreement agree that the obligations contained in
this agreement shall not affect the performance of any obligations created by
prior contracts or subcontracts which the parties may have individually or
collectively with the U.S. Government."

   (4) "No liability will be incurred by or attributed to the U.S. Government in
connection with any possible infringement of privately owned patent or
proprietary rights, either domestic or foreign, by reason of the U.S.
Government's approval of this agreement."

   (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 person in a third country or to a national of a third country except as
specifically authorized in this agreement unless the prior written approval of
the Department of State has been obtained."

   (6) "All provisions in this agreement which refer to the United States
Government and the Department of State will remain binding on the parties after
the termination of the agreement."

@ 124.9 -- Additional clauses required only in manufacturing license                                                                       PAGE   84
                              58 FR 39280, *39306
                                                                          FOCUS

agreements.

   (a) Clauses for all manufacturing license agreements. The following clauses
must be included only in manufacturing license agreements:

   (1) "No export, sale, transfer, or other disposition of the licensed article
is authorized to any country outside the territory wherein manufacture or sale
is herein licensed without the prior written approval of the U.S. Government
unless otherwise exempted by the U.S. Government. Sales or other   [*39307]
transfers of the licensed article shall be limited to governments of countries
wherein manufacture or sale is hereby licensed and to private entities seeking
to procure the licensed article pursuant to a contract with any such government
unless the prior written approval of the U.S. Government is obtained."

   (2) "It is agreed that sales by licensee or its sub-licensees under contracts
made through the U.S. Government will not include either charges for patent
rights in which the U.S. Government holds a royalty-free license, or charges for
data which the U.S. Government has a right to use and disclose to others, which
are in the public domain, or which the U.S. Government has acquired or is
entitled to acquire without restrictions upon their use and disclosure to
others."

   (3) "If the U.S. Government is obligated or becomes obligated to pay to the
licensor royalties, fees, or other charges for the use of technical data or
patents which are involved in the manufacture, use, or sale of any licensed
article, any royalties, fees or other charges in connection with purchases of
such licensed article from licensee or its sub-licensees with funds derived
through the U.S. Government may not exceed the total amount the U.S. Government
would have been obligated to pay the licensor directly."

   (4) "If the U.S. Government has made financial or other contributions to the
design and development of any licensed article, any charges for technical
assistance or know-how relating to the item in connection with purchases of such
articles from licensee or sub-licensees with funds derived through the U.S.
Government must be proportionately reduced to reflect the U.S. Government
contributions, and subject to the provisions of paragraphs (a) (2) and (3) of
this section, no other royalties, or fees or other charges may be assessed
against U.S. Government funded purchases of such articles. However, charges may
be made for reasonable reproduction, handling, mailing, or similar
administrative costs incident to the furnishing of such data."

   (5) "The parties to this agreement agree that an annual report of sales or
other transfers pursuant to this agreement of the licensed articles, by
quantity, type, U.S. dollar value, and purchaser or recipient, shall be provided
by (applicant or licensee) to the Department of State." This clause must specify
which party is obligated to provide the annual report. Such reports may be
submitted either directly by the licensee or indirectly through the licensor,
and may cover calendar or fiscal years. Reports shall be deemed proprietary
information by the Department of State and will not be disclosed to unauthorized
persons. See @ 126.10(b) of this subchapter.

   (6) (Licensee) agrees to incorporate the following statement as an integral
provision of a contract, invoice or other appropriate document whenever the
licensed articles are sold or otherwise transferred:                                                                       PAGE   85
                              58 FR 39280, *39307
                                                                          FOCUS

   These commodities are authorized for export by the U.S. Government only to
(country of ultimate destination or approved sales territory). They may not be
resold, diverted, transferred, transshipped, or otherwise be disposed of in any
other country, either in their original form or after being incorporated through
an intermediate process into other end-items, without the prior written approval
of the U.S. Department of State.

   (b) Special clause for agreements relating to significant military equipment.
With respect to an agreement for the production of significant military
equipment, the following additional provisions must be included in the
agreement:

   (1) "A completed nontransfer and use certificate (DSP-83) must be executed by
the foreign end-user and submitted to the Department of State of the United
States before any transfer may take place."

   (2) "The prior written approval of the U.S. Government must be obtained
before entering into a commitment for the transfer of the licensed article by
sale or otherwise to any person or government outside of the approved sales
territory."

@ 124.10 -- Nontransfer and use assurances.

   A nontransfer and use certificate (Form DSP-83) (see @ 123.10 of this
subchapter) signed by the applicant and the foreign party to a manufacturing
license agreement or technical assistance agreement is required as a condition
to the approval of any such agreement which relates to significant military
equipment, classified articles or classified technical data. The Office of
Defense Trade Controls may in some cases require that this certificate or a
comparable undertaking be provided before approving an agreement that does not
relate to significant military equipment. The Office of Defense Trade Controls
may also require as a condition of approval that an appropriate authority of the
foreign party's government also execute the certificate or provide undertakings
comparable to those contained in the Form DSP-83 (e.g., in a diplomatic note).
Agreements involving classified articles or classified technical data should be
accompanied by a nontransfer and use certificate signed by an authorized
representative of the foreign government concerned unless the Office of Defense
Trade Controls has granted an exception to this requirement.

@ 124.11 -- Certification to Congress for agreements.

   Regardless of dollar value, a Technical Assistance Agreement or a
Manufacturing License Agreement for or in a country not a member of NATO that
involves the manufacture abroad of any item of significant military equipment
(as defined in @ 120.7 of this subchapter) shall be certified to Congress by the
Department as required by 22 U.S.C. 2776(d). Additionally, any technical
assistance agreement or manufacturing license agreement providing for the export
of major defense equipment, as defined in @ 120.8, sold under a contract in the
amount of $ 14 million or more, or of defense articles or defense services sold
under a contract in the amount of $ 50 million or more, shall be certified to
Congress by the Department as required by 22 U.S.C. 2776(c)(1). The Office of
Defense Trade Controls will not approve agreements requiring Congressional
notification until 30 calendar days have elapsed since receipt by the Congress
of the required certification without the Congress having enacted a joint                                                                       PAGE   86
                              58 FR 39280, *39307
                                                                          FOCUS

resolution prohibiting the agreement.

@ 124.12 -- Required information in letters of transmittal.

   (a) An application for the approval of a manufacturing license or technical
assistance agreement with a foreign person must be accompanied by an explanatory
letter. The original letter and seven copies of the letter and eight copies of
the proposed agreement shall be submitted to the Office of Defense Trade
Controls. The explanatory letter shall contain:

   (1) A statement giving the applicant's Defense Trade Controls registration
number.

   (2) A statement identifying the licensee and the scope of the agreement.

   (3) A statement identifying the U.S. Government contract under which the
equipment or technical data was generated, improved, or developed and supplied
to the U.S. Government, and whether the equipment or technical data was derived
from any bid or other proposal to the U.S. Government.

   (4) A statement giving the military security classification of the equipment
or technical data.

   (5) A statement identifying any patent application which discloses any of the
subject matter of the equipment or technical data covered by an invention
[*39308]   secrecy order issued by the U.S. Patent and Trademark Office.

   (6) A statement of the actual or estimated value of the agreement, including
the estimated value of all defense articles to be exported in furtherance of the
agreement or amendments thereto. If the value is $ 500,000 or more, an
additional statement must be made regarding the payment of political
contributions, fees or commissions, pursuant to part 130 of this subchapter.

   (7) A statement indicating whether any foreign military sales credits or loan
guarantees are or will be involved in financing the agreement.

   (8) The agreement must describe any classified information involved and
identify, from Department of Defense form DD254, the address and telephone
number of the U.S. Government office that classified the information.

   (9) For agreements that may require the export of classified information, the
Defense Investigative Service cognizant security offices that have
responsibility for the facilities of the U.S. parties to the agreement shall be
identified. The facility security clearance codes of the U.S. parties shall also
be provided.

   (b) The following statements must be made in the letter of transmittal:

   (1) "If the agreement is approved by the Department of State, such approval
will not be construed by (the applicant) as passing on the legality of the
agreement from the standpoint of antitrust laws or other applicable statutes,
nor will (the applicant) construe the Department's approval as constituting
either approval or disapproval of any of the business terms or conditions
between the parties to the agreement."                                                                       PAGE   87
                              58 FR 39280, *39308
                                                                          FOCUS

   (2) "The (applicant) will not permit the proposed agreement to enter into
force until it has been approved by the Department of State."

   (3) "The (applicant) will furnish the Department of State with one copy of
the signed agreement (or amendment) within 30 days from the date that the
agreement is concluded and will inform the Department of its termination not
less than 30 days prior to expiration and provide information on the
continuation of any foreign rights or the flow of technical data to the foreign
party. If a decision is made not to conclude the proposed agreement, the
applicant will so inform the Department within 60 days."

   (4) "If this agreement grants any rights to sub-license, it will be amended
to require that all sub-licensing arrangements incorporate all the provisions of
the basic agreement that refer to the U.S. Government and the Department of
State (i.e., 22 CFR 124.9 and 124.10)."

@ 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                                                                       PAGE   88
                              58 FR 39280, *39308
                                                                          FOCUS

   (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 extend beyond the period of validity of
the license. If the technical data involved in an offshore procurement
arrangement is otherwise exempt from the licensing requirements pursuant to @
126.4 or @ 126.5 of this subchapter, 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. The exemptions under @ 125.4 of this
subchapter may not be used to establish offshore procurement arrangements.

@ 124.14 -- Exports to warehouses or distribution points outside the United
States.

   (a) Agreements (e.g., contracts) between U.S. persons and foreign persons for
the warehousing and distribution of defense articles must be approved by the
Office of Defense Trade Controls before they enter into force. Such agreements
will be limited to unclassified defense articles and must contain conditions for
special distribution, end-use and reporting. Licenses for exports pursuant to
such agreements must be obtained prior to exports of the defense articles unless
an exemption under @ 123.16(b)(1) of this subchapter is applicable.

   (b) Required Information. Proposed warehousing and distribution agreements
(and amendments thereto) shall be submitted to the Office of Defense Trade
Controls for approval. The following information must be included in all such
agreements:

   (1) A description of the defense articles involved including test and support
equipment covered by the U.S. Munitions List. This shall include when applicable
the military nomenclature, the Federal stock number, nameplate data, and any
control numbers under which the defense articles were developed or procured by
the U.S. Government. Only those defense articles specifically listed in the
agreement will be eligible for export under the exemption in @ 123.16(b)(1) of
this subchapter.   [*39309]

   (2) A detailed statement of the terms and conditions under which the defense
articles will be exported and distributed;

   (3) The duration of the proposed agreement;

   (4) Specific identification of the country or countries that comprise the
distribution territory. Distribution must be specifically limited to the                                                                       PAGE   89
                              58 FR 39280, *39309
                                                                          FOCUS

governments of such countries or to private entities seeking to procure defense
articles pursuant to a contract with a government within the distribution
territory or to other eligible entities as specified by the Office of Defense
Trade Controls. Consequently, any deviation from this condition must be fully
explained and justified. A nontransfer and use certificate (DSP-83) will be
required to the same extent required in licensing agreements under @ 124.9(b).

   (c) Required statements. The following statements must be included in all
warehousing and distribution agreements:

   (1) "This agreement shall not enter into force, and may not be amended or
extended, without the prior written approval of the Department of State of U.S.
Government."

   (2) "This agreement is subject to all United States laws and regulations
related to exports and to all administrative acts of the United States
Government pursuant to such laws and regulations.

   (3) "The parties to this agreement agree that the obligations contained in
this agreement shall not affect the performance of any obligations created by
prior contracts or subcontracts which the parties may have individually or
collectively with the U.S. Government."

   (4) "No liability will be incurred by or attributed to the U.S. Government in
connection with any possible infringement of privately owned patent or
proprietary rights, either domestic or foreign by reason of the U.S.
Government's approval of this agreement."

   (5) "No export, sale, transfer, or other disposition of the defense articles
covered by this agreement is authorized to any country outside the distribution
territory without the prior written approval of the Office of Defense Trade
Controls of the U.S. Department of State."

   (6) "The parties to this agreement agree that an annual report of sales or
other transfers pursuant to this agreement of the licensed articles, by
quantity, type, U.S. dollar value, and purchaser or recipient shall be provided
by (applicant or licensee) to the Department of State." This clause must specify
which party is obligated to provide the annual report. Such reports may be
submitted either directly by the licensee or indirectly through the licensor,
and may cover calendar or fiscal years. Reports shall be deemed proprietary
information by the Department of State and will not be disclosed to unauthorized
persons. (See @ 126.10(b) of this subchapter.)

   (7) (Licensee) agrees to incorporate the following statement as an integral
provision of a contract, invoice or other appropriate document whenever the
articles covered by this agreement are sold or otherwise transferred:

   These commodities are authorized for export by the U.S. Government only to
(country of ultimate destination or approved sales territory). They may not be
resold, diverted, transferred, transshipped, or otherwise be disposed of in any
other country, either in their original form or after being incorporated through
an intermediate process into other end-items, without the prior written approval
of the U.S. Department of State.                                                                       PAGE   90
                              58 FR 39280, *39309
                                                                          FOCUS

   (8) "All provisions in this agreement which refer to the United States
Government and the Department of State will remain binding on the parties after
the termination of the agreement."

   (9) Additional clause. Unless the articles covered by the agreement are in
fact intended to be distributed to private persons or entities (e.g., sporting
firearms for commercial resale, cryptographic devices and software for financial
and business applications), the following clause must be included in all
warehousing and distribution agreements: "Sales or other transfers of the
licensed article shall be limited to governments of the countries in the
distribution territory and to private entities seeking to procure the licensed
article pursuant to a contract with a government within the distribution
territory, unless the prior written approval of the U.S. Department of State is
obtained."

   (d) Special clauses for agreements relating to significant military
equipment. With respect to agreements for the warehousing and distribution of
significant military equipment, the following additional provisions must be
included in the agreement:

   (1) A completed nontransfer and use certificate (DSP-83) must be executed by
the foreign end-user and submitted to the U.S. Department of State before any
transfer may take place.

   (2) The prior written approval of the U.S. Department of State must be
obtained before entering into a commitment for the transfer of the licensed
article by sale or otherwise to any person or government outside the approved
distribution territory.

   (e) Transmittal Letters. Requests for approval of warehousing and
distribution agreements with foreign persons must be made by letter. The
original letter and seven copies of the letter and seven copies of the proposed
agreement shall be submitted to the Office of Defense Trade Controls. The letter
shall contain:

   (1) A statement giving the applicant's Defense Trade Controls registration
number.

   (2) A statement identifying the foreign party to the agreement.

   (3) A statement identifying the defense articles to be distributed under the
agreement.

   (4) A statement identifying any U.S. Government contract under which the
equipment may have been generated, improved, developed or supplied to the U.S.
Government, and whether the equipment was derived from any bid or other proposal
to the U.S. Government.

   (5) A statement that no classified defense articles or classified technical
data are involved.

   (6) A statement identifying any patent application which discloses any of the
subject matter of the equipment or related technical data covered by an
invention secrecy order issued by the U.S. Patent and Trademark Office.                                                                       PAGE   91
                              58 FR 39280, *39309
                                                                          FOCUS

   (f) Required clauses. The following statements must be made in the letter of
transmittal:

   (1) "If the agreement is approved by the Department of State, such approval
will not be construed by (applicant) as passing on the legality of the agreement
from the standpoint of antitrust laws or other applicable statutes, nor will
(the applicant) construe the Department's approval as constituting either
approval or disapproval of any of the business terms or conditions between the
parties to the agreement."

   (2) "The (applicant) will not permit the proposed agreement to enter into
force until it has been approved by the Department of State."

   (3) "(Applicant) will furnish the Department of State with one copy of the
signed agreement (or amendment thereto) within 30 days from the date that the
agreement is concluded, and will inform the Department of its termination not
less than 30 days prior to expiration. If a decision is made not to conclude the
proposed agreement, (applicant) will so inform the Department within 60 days."
[*39310]



PART 125-LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED DEFENSE
ARTICLES

Sec.

125.1 Exports subject to this part.

125.2 Exports of unclassified technical data.

125.3 Exports of classified technical data and classified defense articles.

125.4 Exemptions of general applicability.

125.5 Exemptions for plant visits.

125.6 Certification requirements for exemptions.

125.7 Procedures for the export of classified technical data and other
classified defense articles.

125.8 Filing of licenses for exports of unclassified technical data.

125.9 Filing of licenses and other authorizations for exports of classified
technical data and classified defense articles.

   Authority: Sections 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752,
2778); E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp. p.79; 22 U.S.C. 2658.

@ 125.1 -- Exports subject to this part.

   (a) The controls of this part apply to the export of technical data and the
export of classified defense articles. Information which is in the public                                                                       PAGE   92
                              58 FR 39280, *39310
                                                                          FOCUS

domain (see @ 120.11 of this subchapter and @ 125.4(b)(13)) is not subject to
the controls of this subchapter.

   (b) A license for the export of technical data and the exemptions in @ 125.4
may not be used for foreign production purposes or for technical assistance
unless the approval of the Office of Defense Trade Controls has been obtained.
Such approval is generally provided only pursuant to the procedures specified in
part 124 of this subchapter.

   (c) Technical data authorized for export may not be reexported, transferred
or diverted from the country of ultimate end-use or from the authorized foreign
end-user (as designated in the license or approval for export) or disclosed to a
national of another country without the prior written approval of the Office of
Defense Trade Controls.

   (d) The controls of this part apply to the exports referred to in paragraph
(a) of this section regardless of whether the person who intends to export the
technical data produces or manufactures defense articles if the technical data
is determined by the Office of Defense Trade Controls to be subject to the
controls of this subchapter.

   (e) The provisions of this subchapter do not apply to technical data related
to articles in Category VI(e) and Category XVI. The export of such data is
controlled by the Department of Energy and the Nuclear Regulatory Commission
pursuant to the Atomic Energy Act of 1954, as amended, and the Nuclear
Non-Proliferation Act of 1978.

@ 125.2 -- Exports of unclassified technical data.

   (a) A license (DSP-5) is required for the export of unclassified technical
data unless the export is exempt from the licensing requirements of this
subchapter. In the case of a plant visit, details of the proposed discussions
must be transmitted to the Office of Defense Trade Controls for an appraisal of
the technical data. Seven copies of the technical data or the details of the
discussion must be provided.

   (b) Patents. A license issued by the Office of Defense Trade Controls is
required for the export of technical data whenever the data exceeds that which
is used to support a domestic filing of a patent application or to support a
foreign filing of a patent application whenever no domestic application has been
filed. Requests for the filing of patent applications in a foreign country, and
requests for the filing of amendments, modifications or supplements to such
patents, should follow the regulations of the U.S. Patent and Trademark Office
in accordance with 37 CFR part 5. The export of technical data to support the
filing and processing of patent applications in foreign countries is subject to
regulations issued by the U.S. Patent and Trademark Office pursuant to 35 U.S.C.
184.

   (c) Disclosures. Unless otherwise expressly exempted in this subchapter, a
license is required for the oral, visual or documentary disclosure of technical
data by U.S. persons to foreign persons. A license is required regardless of the
manner in which the technical data is transmitted (e.g., in person, by
telephone, correspondence, electronic means, etc.). A license is required for
such disclosures by U.S. persons in connection with visits to foreign                                                                       PAGE   93
                              58 FR 39280, *39310
                                                                          FOCUS

diplomatic missions and consular offices.

@ 125.3 -- Exports of classified technical data and classified defense articles.

   (a) A request for authority to export defense articles, including technical
data, classified by a foreign government or pursuant to Executive Order 12356,
successor orders, or other legal authority must be submitted to the Office of
Defense Trade Controls for approval. The application must contain full details
of the proposed transaction. It should also list the facility security clearance
code of all U.S. parties on the license and include the Defense Investigative
Service cognizant security office of the party responsible for packaging the
commodity for shipment. A nontransfer and use certificate (Form DSP-83) executed
by the applicant, foreign consignee, end-user and an authorized representative
of the foreign government involved will be required.

   (b) Classified technical data which is approved by the Office of Defense
Trade Controls either for export or reexport after a temporary import will be
transferred or disclosed only in accordance with the requirements in the
Department of Defense Industrial Security Manual. Any other requirements imposed
by cognizant U.S. departments and agencies must also be satisfied.

   (c) The approval of the Office of Defense Trade Controls must be obtained for
the export of technical data by a U.S. person to a foreign person in the U.S. or
in a foreign country unless the proposed export is exempt under the provisions
of this subchapter.

   (d) All communications relating to a patent application covered by an
invention secrecy order are to be addressed to the U.S. Patent and Trademark
Office (see 37 CFR 5.11).

@ 125.4 -- Exemptions of general applicability.

   (a) The following exemptions apply to exports of unclassified technical data
for which approval is not needed from the Office of Defense Trade Controls.
These exemptions, except for paragraph (b)(13) of this section, do not apply to
exports to proscribed destinations under @ 126.1 of this subchapter or for
persons considered generally ineligible under @ 120.1(c) of this subchapter. The
exemptions are also not applicable for purposes of establishing offshore
procurement arrangements. If @ 126.8 of this subchapter requirements are
applicable, they must be met before an exemption under this section may be used.
Transmission of classified information must comply with the requirements of the
Department of Defense Industrial Security Manual and the exporter must certify
to the transmittal authority that the technical data does not exceed the
technical limitation of the authorized export.

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

   (1) Technical data, including classified information, to be disclosed
pursuant to an official written request or directive from the U.S. Department of
Defense;

   (2) Technical data, including classified information, in furtherance of a
manufacturing license or technical assistance agreement approved by the                                                                       PAGE   94
                              58 FR 39280, *39310
                                                                          FOCUS

Department of State under part 124 of   [*39311]   this subchapter and which
meet the requirements of @ 124.3 of this subchapter;

   (3) Technical data, including classified information, in furtherance of a
contract between the exporter and an agency of the U.S. Government, if the
contract provides for the export of the data and such data does not disclose the
details of design, development, production, or manufacture of any defense
article;

   (4) Copies of technical data, including classified information, previously
authorized for export to the same recipient. Revised copies of such technical
data are also exempt if they pertain to the identical defense article, and if
the revisions are solely editorial and do not add to the content of technology
previously exported or authorized for export to the same recipient;

   (5) Technical data, including classified information, in the form of basic
operations, maintenance, and training information relating to a defense article
lawfully exported or authorized for export to the same recipient. Intermediate
or depot-level repair and maintenance information may be exported only under a
license or agreement approved specifically for that purpose;

   (6) Technical data, including classified information, related to firearms not
in excess of caliber .50 and ammunition for such weapons, except detailed
design, development, production or manufacturing information;

   (7) Technical data, including classified information, being returned to the
original source of import;

   (8) Technical data directly related to classified information which has been
previously exported or authorized for export in accordance with this part to the
same recipient, and which does not disclose the details of the design,
development, production, or manufacture of any defense article;

   (9) Technical data, including classified information, sent by a U.S.
corporation to a U.S. person employed by that corporation overseas or to a U.S.
Government agency. This exemption is subject to the limitations of @ 125.1(b)
and may be used only if:

   (i) The technical data is to be used overseas solely by U.S. persons;

   (ii) If the U.S. person overseas is an employee of the U.S. Government or is
directly employed by the U.S. corporation and not by a foreign subsidiary; and

   (iii) The classified information is sent overseas in accordance with the
requirements of the Department of Defense Industrial Security Manual.

   (10) Disclosures of unclassified technical data in the U.S. by U.S.
institutions of higher learning to foreign persons who are their bona fide and
full time regular employees. This exemption is available only if:

   (i) The employee's permanent abode throughout the period of employment is in
the United States;                                                                       PAGE   95
                              58 FR 39280, *39311
                                                                          FOCUS

   (ii) The employee is not a national of a country to which exports are
prohibited pursuant to @ 126.1 of this subchapter; and

   (iii) The institution informs the individual in writing that the technical
data may not be transferred to other foreign persons without the prior written
approval of the Office of Defense Trade Controls;

   (11) Technical data, including classified information, for which the
exporter, pursuant to an arrangement with the Department of Defense, Department
of Energy or NASA which requires such exports, has been granted an exemption in
writing from the licensing provisions of this part by the Office of Defense
Trade Controls. Such an exemption will normally be granted only if the
arrangement directly implements an international agreement to which the United
States is a party and if multiple exports are contemplated. The Office of
Defense Trade Controls, in consultation with the relevant U.S. Government
agencies, will determine whether the interests of the United States Government
are best served by expediting exports under an arrangement through an exemption
(see also paragraph (b)(3) of this section for a related exemption);

   (12) Technical data which is specifically exempt under part 126 of this
subchapter; or

   (13) Technical data approved for public release (i.e., unlimited
distribution) by the cognizant U.S. Government department or agency or
Directorate for Freedom of Information and Security Review. This exemption is
applicable to information approved by the cognizant U.S. Government department
or agency for public release in any form. It does not require that the
information be published in order to qualify for the exemption.

@ 125.5 -- Exemptions for plant visits.

   (a) A license is not required for the oral and visual disclosure of
unclassified technical data during the course of a classified plant visit by a
foreign person, provided (1) the classified visit has itself been authorized
pursuant to a license issued by the Office of Defense Trade Controls; or (2) the
classified visit was approved in connection with an actual or potential
government-to-government program or project by a U.S. Government agency having
classification jurisdiction over the classified defense article or classified
technical data involved under Executive Order 12356 or other applicable
Executive Order; and (3) the unclassified information to be released is directly
related to the classified defense article or technical data for which approval
was obtained and does not disclose the details of the design, development,
production or manufacture of any other defense articles. In the case of visits
involving classified information, the requirements of the Defense Industrial
Security Manual (Department of Defense Manual 5220.22M) must be met.

   (b) The approval of the Office of Defense Trade Controls is not required for
the disclosure of oral and visual classified information to a foreign person
during the course of a plant visit approved by the appropriate U.S. Government
agency if (1) the requirements of the Defense Industrial Security Manual have
been met, (2) the classified information is directly related to that which was
approved by the U.S. Government agency, (3) it does not exceed that for which
approval was obtained, and (4) it does not disclose the details of the design,
development, production or manufacture of any defense articles.                                                                       PAGE   96
                              58 FR 39280, *39311
                                                                          FOCUS

   (c) A license is not required for the disclosure to a foreign person of
unclassified technical data during the course of a plant visit (either
classified or unclassified) approved by the Office of Defense Trade Controls or
a cognizant U.S. Government agency provided the technical data does not contain
information in excess of that approved for disclosure. This exemption does not
apply to technical data which could be used for design, development, production
or manufacture of a defense article.

@ 125.6 -- Certification requirements for exemptions.

   (a) To claim an exemption for the export of technical data under the
provisions of @@ 125.4 and 125.5, an exporter must certify that the proposed
export is covered by a relevant paragraph of that section. For @ 125.4,
certification consists of marking the package or letter containing the technical
data: "22 CFR 125.4 (identify subsection) applicable." This certification must
be made in written form and retained in the exporter's files for a period of
five years. A Shippers Export Declaration is not required for   [*39312]
exports of unclassified technical data (see @ 123.22 (d) of this subchapter.

   (b) If a District Director of Customs or Postmaster is unavailable at the
time of export, or if the export is via oral, visual, or electronic means, the
exporter must also complete a written certification as indicated in paragraph
(a) of this section.

@ 125.7 -- Procedures for the export of classified technical data and other
classified defense articles.

   (a) All applications for the export or temporary import of classified
technical data or other classified defense articles must be submitted to the
Office of Defense Trade Controls on Form DSP-85.

   (b) An application for the export of classified technical data or other
classified defense articles must be accompanied by seven copies of the data and
a completed Form DSP-83 (see @ 123.10 of this subchapter). Only one copy of the
data or descriptive literature must be provided if a renewal of the license is
requested. All classified materials accompanying an application must be
transmitted to the Office of Defense Trade Controls in accordance with the
requirements of the Defense Industrial Security Manual (Department of Defense
Manual Number 5220.22-M).

@ 125.8 -- Filing of licenses for exports of unclassified technical data.

   (a) Licenses for the export of unclassified technical data must be presented
to the appropriate District Director of Customs or Postmaster at the time of
shipment or mailing. The District Director of Customs or Postmaster will endorse
and transmit the licenses to the Office of Defense Trade Controls in accordance
with the instructions contained on the reverse side of the license.

   (b) If a license for the export of unclassified technical data is used but
not endorsed by U.S. Customs or a Postmaster for whatever reason (e.g.,
electronic transmission, unavailability of Customs officer or Postmaster, etc.),
the person exporting the data must self-endorse the license, showing when and
how the export took place. Every license must be returned to the Office of
Defense Trade Controls when the total value authorized has been shipped or                                                                       PAGE   97
                              58 FR 39280, *39312
                                                                          FOCUS

when the date of expiration has been reached, whichever occurs first.

@ 125.9 -- Filing of licenses and other authorizations for exports of classified
technical data and classified defense articles.

   Licenses and other authorizations for the export of classified technical data
or classified defense articles will be forwarded by the Office of Defense Trade
Controls to the Defense Investigative Service of the Department of Defense in
accordance with the provisions of the Department of Defense Industrial Security
Manual. The Office of Defense Trade Controls will forward a copy of the license
to the applicant for the applicant's information. The Defense Investigative
Service will return the endorsed license to the Office of Defense Trade Controls
upon completion of the authorized export or expiration of the license, whichever
occurs first.



PART 126-GENERAL POLICIES AND PROVISIONS

Sec.

126.1 Prohibited exports and sales to certain countries.

126.2 Temporary suspension or modification of this subchapter.

126.3 Exceptions.

126.4 Shipments by or for United States Government agencies.

126.5 Canadian exemptions.

126.6 Foreign-owned military aircraft and naval vessels, and the Foreign
Military Sales program.

126.7 Denial, revocation, suspension or amendment of licenses and other
approvals.

126.8 Proposals to foreign persons relating to significant military equipment.

126.9 Advisory opinions.

126.10 Disclosure of information.

126.11 Relation to other provisions of law.

126.12 Continuation in force.

126.13 Required information.

   Authority: Secs. 2, 38, 40, 42, and 71, Arms Export Control Act, Pub. L.
90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, and 2791, and 2797); E.O.
11958, 42 FR 4311, E.O. 11322, 32 FR 119; 22 U.S.C. 2658.

@ 126.1 -- Prohibited exports and sales to certain countries.                                                                       PAGE   98
                              58 FR 39280, *39312
                                                                          FOCUS

   (a) It is the policy of the United States to deny licenses, other approvals,
exports and imports of defense articles and defense services, destined for or
originating in certain countries. This policy applies to: Albania, Armenia,
Azerbaijan, Bulgaria, Byelarus, Cambodia, Cuba, Estonia, Georgia, Iran, Iraq,
Libya, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, North
Korea, Romania, Russia, South Africa, Syria, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan and Vietnam. This policy also applies to countries with respect to
which the United States maintains an arms embargo (e.g., Burma, China, Liberia,
Somalia, the Sudan, the former Yugoslavia, and Zaire) or for whenever an export
would not otherwise be in furtherance of world peace and the security and
foreign policy of the United States. Comprehensive arms embargoes are normally
the subject of a State Department notice published in the Federal Register. The
exemptions provided in the regulations in this subchapter, except @@ 123.17 and
125.4(b)(13) of this subchapter, do not apply with respect to articles
originating in or for export to any proscribed countries or areas.

   (b) Shipments. A defense article licensed for export under this subchapter
may not be shipped on a vessel, aircraft or other means of conveyance which is
owned or operated by, or leased to or from, any of the proscribed countries or
areas.

   (c) South Africa. South Africa is subject to an arms embargo and thus to the
policy specified in paragraph (a) of this section. Exceptions may be made to
this policy only if the Assistant Secretary for Politico-Military Affairs
determines that:

   (1) The item is not covered by United Nations Security Council Resolution 418
of November 4, 1977; and

   (2) The item is to be exported solely for commercial purposes and not for use
by the armed forces, police, or other security forces of South Africa or for any
other similar purpose.

   (d) Terrorism. Exports to countries which the Secretary of State has
determined to have repeatedly provided support for acts of international
terrorism are contrary to the foreign policy of the United States and are thus
subject to the policy specified in paragraph (a) of this section and the
requirements of section 40 of the Arms Export Control Act (22 U.S.C. 2780) and
the Omnibus Diplomatic Security and Anti-Terrorism Act of 1986 (22 U.S.C. 4801,
note). The countries in this category are: Cuba, Iran, Iraq, Libya, North Korea
and Syria. The same countries are identified pursuant to section 6(j) of the
Export Administration Act, as amended (50 U.S.C. App. 2405(j)).

   (e) Proposed sales. No sale or transfer and no proposal to sell or transfer
any defense articles, defense services or technical data subject to this
subchapter may be made to any country referred to in this section (including the
embassies or consulates of such a country), or to any person acting on its
behalf, whether in the United States or abroad, without first obtaining a
license or written approval of the Office of Defense Trade Controls. However, in
accordance with paragraph (a) of this section, it is the policy of the
Department of State to deny licenses and approvals in such cases. Any person who
knows or has reason to know of such a proposed or actual sale, or transfer, of
such articles, services or data must immediately   [*39313]   inform the Office
of Defense Trade Controls.                                                                       PAGE   99
                              58 FR 39280, *39313
                                                                          FOCUS


@ 126.2 -- Temporary suspension or modification of this subchapter.

   The Director, Office of Defense Trade Controls, may order the temporary
suspension or modification of any or all of the regulations of this subchapter
in the interest of the security and foreign policy of the United States.

@ 126.3 -- Exceptions.

   In a case of exceptional or undue hardship, or when it is otherwise in the
interest of the United States Government, the Director, Office of Defense Trade
Controls may make an exception to the provisions of this subchapter.

@ 126.4 -- Shipments by or for United States Government agencies.

   (a) A license is not required for the temporary import, or temporary export,
of any defense article, including technical data or the performance of a defense
service, by or for any agency of the U.S. Government (1) for official use by
such an agency, or (2) for carrying out any foreign assistance, cooperative
project or sales program authorized by law and subject to control by the
President by other means. This exemption applies only when all aspects of a
transaction (export, carriage, and delivery abroad) are effected by a United
States Government agency or when the export is covered by a United States
Government Bill of Lading. This exemption, however, does not apply when a U.S.
Government agency acts as a transmittal agent on behalf of a private individual
or firm, either as a convenience or in satisfaction of security requirements.
The approval of the Office of Defense Trade Controls must be obtained before
defense articles previously exported pursuant to this exemption are permanently
transferred (e.g., property disposal of surplus defense articles overseas)
unless (i) the transfer is pursuant to a grant, sale, lease, loan or cooperative
project under the Arms Export Control Act or a sale, lease or loan under the
Foreign Assistance Act of 1961, as amended, or (ii) the defense articles have
been rendered useless for military purposes beyond the possibility of
restoration.

   Note: Special definition. For purposes of this section, defense articles
exported abroad for incorporation into a foreign launch vehicle or for use on a
foreign launch vehicle or satellite that is to be launched from a foreign
country shall be considered a permanent export.

   (b) This section does not authorize any department or agency of the U.S.
Government to make any export which is otherwise prohibited by virtue of other
administrative provisions or by any statute.

   (c) A license is not required for the temporary import, or temporary or
permanent export, of any classified or unclassified defense articles, including
technical data or the performance of a defense service, for end-use by a U.S.
Government Agency in a foreign country under the following circumstances:

   (1) The export or temporary import is pursuant to a contract with, or written
direction by, an agency of the U.S. Government; and

   (2) The end-user in the foreign country is a U.S. Government agency or
facility, and the defense articles or technical data will not be transferred                                                                       PAGE  100
                              58 FR 39280, *39313
                                                                          FOCUS

to any foreign person; and

   (3) The urgency of the U.S. Government requirement is such that the
appropriate export license or U.S. Government Bill of Lading could not have been
obtained in a timely manner.

   (d) A Shipper's Export Declaration (SED), required under @ 123.22(c) of this
subchapter, and a written statement by the exporter certifying that these
requirements have been met must be presented at the time of export to the
appropriate District Director of Customs or Department of Defense transmittal
authority. A copy of the SED and the written certification statement shall be
provided to the Office of Defense Trade Controls immediately following the
export.

@ 126.5 -- Canadian exemptions.

   (a) District Directors of Customs and postmasters shall permit the export or
temporary import without a license of any unclassified defense article or any
unclassified technical data to Canada for end-use in Canada by Canadian citizens
or return to the United States, or from Canada for end-use in the United States
or return to a Canadian citizen in Canada, with the exception of the articles or
related technical data listed in paragraph (b) of this section.

   (b) Exceptions. The exemptions of this section do not apply to the following
articles and related technical data:

   (1) Fully automatic firearms in Category I(a) which are not for end-use by
the Federal Government, or a Provincial or Municipal Government of Canada;

   (2) Nuclear weapons strategic delivery systems and all components, parts,
accessories, attachments specifically designed for such systems and associated
equipment;

   (3) Nuclear weapon design and test equipment listed in Category XVI;

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

   (5) Aircraft listed in Category VIII(a);

   (6) Submersible and oceanographic vessels and related articles listed in
Category XX (a) through (d).

   (7) Technical data for use by a foreign national other than a Canadian.

   (8) Unclassified technical data directly related to a classified defense
article.

   (c) Related requirements. The foregoing exemption from obtaining an export
license does not exempt an exporter from complying with the requirements set
forth in @ 123.15 of this subchapter or from filing the Shipper's Export
Declaration required by @ 123.22 of this subchapter.

   (d) Part 124 agreements. The requirements of part 124 of this subchapter must
be complied with in the situations contemplated in that part. For example, the                                                                       PAGE  101
                              58 FR 39280, *39313
                                                                          FOCUS

exemptions of this section may not be used for the provision of defense services
except pursuant to an approved manufacturing license agreement or technical
assistance agreement.

@ 126.6 -- Foreign-owned military aircraft and naval vessels, and the Foreign
Military Sales program.

   (a) A license from the Office of Defense Trade Controls is not required if:

   (1)(i) The article or technical data to be exported was sold, leased, or
loaned by the Department of Defense to a foreign country or international
organization pursuant to the Arms Export Control Act or the Foreign Assistance
Act of 1961, as amended, and

   (ii) The article or technical data was delivered to representatives of such a
country or organization in the United States; and

   (iii) The article or technical data is to be exported from the United States
on a military aircraft or naval vessel of that government or organization or via
the Defense Transportation Service (DTS).

   (b) Foreign military aircraft and naval vessels. A license is not required
for the entry into the United States of military aircraft or naval vessels of
any foreign state if no overhaul, repair, or modification of the aircraft or
naval vessel is to be performed. However, Department of State approval for
overflight (pursuant to the 49 U.S.C. 1508) and naval visits must be obtained
from the Bureau of Politico-Military Affairs, Office of International Security
Operations.

   (c) Procedures for the Foreign Military Sales Program. (1) District Directors
of Customs are authorized to permit the   [*39314]   export and temporary import
of classified and unclassified defense articles, defense services and technical
data without a license if the articles or technical data were sold, leased or
loaned by the U.S. Department of Defense to foreign governments or international
organizations under the Foreign Military Sales (FMS) program of the Arms Export
Control Act. This procedure may be used only if a proposed export is:

   (i) Pursuant to an executed U.S. Department of Defense Letter of Offer and
Acceptance (DD Form 1513); and

   (ii) Accompanied by a properly executed DSP-94, or in the case of a
classified shipment, an approved Letter of Offer and Acceptance; and

   (iii) Made by the relevant foreign diplomatic mission of the purchasing
country or its authorized freight forwarder, provided that the freight forwarder
is registered with the Office of Defense Trade Controls pursuant to part 122 of
this subchapter, and, if classified defense articles or technical data are
involved, has the requisite U.S. Government security clearance and a
transportation plan has been approved as in @ 126.6(a)(1), above and the defense
articles or technical data are shipped in compliance with the Department of
Defense Industrial Security Manual.

   (2) Filing and documents.                                                                       PAGE  102
                              58 FR 39280, *39314
                                                                          FOCUS

   (i) The original copy of completed Form DSP-94, together with one copy of the
corresponding authenticated DD Form 1513 and a Shipper's Export Declaration,
must be filed with the District Director of Customs at the port of exit prior to
actual shipment. An executed DD Form 1513 is one which has been signed by:

   (A) an authorized Department of Defense representative and countersigned by
the Comptroller, Defense Security Assistance Agency (DSAA); and

   (B) by an authorized representative of the foreign government.

   (ii) SED or Outbound Manifest. The Shipper's Export Declaration or, if
authorized, the outbound manifest, must be annotated as follows:

   This shipment is being exported under the authority of Department of State
Form DSP-94. It covers FMS Case (case identification), expiration date
__________. 22 CFR 126.6 applicable. The U.S. Government point of contact is
__________, telephone number __________.

@ 126.7 -- Denial, revocation, suspension, or amendment of licenses and other
approvals.

   (a) Policy. Licenses or approvals shall be denied or revoked whenever
required by any statute of the United States (see @@ 127.6 and 127.10 of this
subchapter). Any application for an export license or other approval under this
subchapter may be disapproved, and any license or other approval or exemption
granted under this subchapter may be revoked, suspended, or amended without
prior notice whenever:

   (1) The Department of State deems such action to be in furtherance of world
peace, the national security or the foreign policy of the United States, or is
otherwise advisable; or

   (2) The Department of State believes that 22 U.S.C. 2778, any regulation
contained in this subchapter, or the terms of any U.S. Government export
authorization (including the terms of a manufacturing license or technical
assistance agreement, or export authorization granted pursuant to the Export
Administration Act, as amended) has been violated by any party to the export or
other person having significant interest in the transaction; or

   (3) An applicant is the subject of an indictment for a violation of any of
the U.S. criminal statutes enumerated in @ 120.27 of this subchapter; or

   (4) An applicant or any party to the export or the agreement has been
convicted of violating any of the U.S. criminal statutes enumerated in @ 120.27
of this subchapter; or

   (5) An applicant is ineligible to contract with, or to receive a license or
other authorization to import defense articles or defense services from, any
agency of the U.S. Government; or

   (6) An applicant, any party to the export or agreement, any source or
manufacturer of the defense article or defense service or any person who has a
significant interest in the transaction has been debarred, suspended, or
otherwise is ineligible to receive an export license or other authorization                                                                       PAGE  103
                              58 FR 39280, *39314
                                                                          FOCUS

from any agency of the U.S. government (e.g., pursuant to debarment by the
Department of Commerce under 15 CFR part 388 or by the Department of State under
part 127 or 128 of this subchapter); or

   (7) An applicant has failed to include any of the information or
documentation expressly required to support a license application or other
request for approval under this subchapter or as required in the instructions in
the applicable Department of State form; or

   (8) An applicant is subject to sanctions under other relevant U.S. laws
(e.g., the Missile Technology Controls title of the National Defense
Authorization Act for FY 1991 (Pub. L. 101-510); the Chemical and Biological
Weapons Control and Warfare Elimination Act of 1991 (Pub. L. 102-182); or the
Iran-Iraq Arms Non-Proliferation Act of 1992 (Pub. L. 102-484)).

   (b) Notification. The Office of Defense Trade Controls will notify applicants
or licensees or other appropriate United States persons of actions taken
pursuant to paragraph (a) of this section. The reasons for the action will be
stated as specifically as security and foreign policy considerations permit.

   (c) Reconsideration. If a written request for reconsideration of an adverse
decision is made within 30 days after a person has been informed of the
decision, the U.S. person will be accorded an opportunity to present additional
information. The case will then be reviewed by the Office of Defense Trade
Controls.

   (d) Reconsideration of certain applications. Applications for licenses or
other requests for approval denied for repeated failure to provide information
or documentation expressly required will normally not be reconsidered during the
thirty day period following denial. They will be reconsidered after this period
only after a final decision is made on whether the applicant will be subject to
an administrative penalty imposed pursuant to this subchapter. Any request for
reconsideration shall be accompanied by a letter explaining the steps that have
been taken to correct the failure and to ensure compliance with the requirements
of this subchapter.

   (e) Special definition. For purposes of this section, the term party to the
export means:

   (1) The chief executive officer, president, vice-presidents, other senior
officers and officials (e.g., comptroller, treasurer, general counsel) and any
member of the board of directors of the applicant;


   (2) The freight forwarders or designated exporting agent of the applicant;
and

   (3) Any consignee or end-user of any item to be exported.

@ 126.8 -- Proposals to foreign persons relating to significant military
equipment.

   (a) Certain proposals to foreign persons for the sale or manufacture abroad
of significant military equipment require either the prior approval of, or prior
notification to, the Office of Defense Trade Controls.                                                                       PAGE  104
                              58 FR 39280, *39314
                                                                          FOCUS

   (1) Sale of significant military equipment: Prior approval requirement. The
approval of the Office of Defense Trade Controls is required before a U.S.
person may make a proposal or presentation designed to constitute a basis for a
decision on the part of any foreign person to purchase significant   [*39315]
military equipment on the U.S. Munitions List whenever all the following
conditions are met:

   (i) The value of the significant military equipment to be sold is $
14,000,000 or more; and

   (ii) The equipment is intended for use by the armed forces of any foreign
country other than a member of the North Atlantic Treaty Organization,
Australia, New Zealand, or Japan; and

   (iii) The sale would involve the export from the United States of any defense
article or the furnishing abroad of any defense service including technical
data; and

   (iv) The identical significant military equipment has not been previously
licensed for permanent export or approved for sale under the Foreign Military
Sales Program of the Department of Defense, to any foreign country.

   (2) Sale of significant military equipment: Prior notification requirement.
The Office Defense Trade Controls must be notified in writing at least thirty
days in advance of any proposal or presentation concerning the sale of
significant military equipment whenever the conditions specified in paragraphs
(a)(1) (i) through (iii) of this section are met and the identical equipment has
been previously licensed for permanent export or approved for sale under the FMS
Program to any foreign country.

   (3) Manufacture abroad of significant military equipment: Prior approval
requirement. The approval of the Office of Defense Trade Controls is required
before a U.S. person may make a proposal or presentation designed to constitute
a basis for a decision on the part of any foreign person to enter into any
manufacturing license agreement or technical assistance agreement for the
production or assembly of significant military equipment, regardless of dollar
value, in any foreign country, whenever:

   (i) The equipment is intended for use by the armed forces of any foreign
country; and

   (ii) The agreement would involve the export from the United States of any
defense article or the furnishing abroad of any defense service including
technical data.

   (b) Definition of proposal or presentation. The terms proposal or
presentation (designed to constitute a basis for a decision to purchase and to
enter into any agreement) mean the communication of information in sufficient
detail that the person communicating that information knows or should know that
it would permit an intended purchaser to decide either to acquire the particular
equipment in question or to enter into the manufacturing license agreement or
technical assistance agreement. For example, a presentation which describes the
equipment's performance characteristics, price, and probable availability for
delivery would require prior notification or approval, as appropriate, where                                                                       PAGE  105
                              58 FR 39280, *39315
                                                                          FOCUS

the conditions specified in paragraph (a) of this section are met. By contrast,
the following would not require prior notification or approval: Advertising or
other reporting in a publication of general circulation; preliminary discussions
to ascertain market potential; or merely calling attention to the fact that a
company manufactures a particular item of significant military equipment.

   (c) Satisfaction of requirements. (1) The requirement of this section for
prior approval is met by any of the following:

   (i) A written statement from the Office of Defense Trade Controls approving
the proposed sale or agreement or approving the making of a proposal or
presentation.

   (ii) A license issued under @ 125.2 or @ 125.3 of this subchapter for the
export of technical data relating to the proposed sale or agreement to the
country concerned.

   (iii) A temporary export license issued under @ 123.5 of this subchapter
relating to the proposed sale or agreement for a demonstration to the armed
forces of the country of export.

   (iv) With respect to manufacturing license agreements or technical assistance
agreements, the application for export licenses pursuant to the two preceding
subparagraphs must state that they are related to possible agreements of this
kind.

   (2) The requirement of this section for prior notification is met by
informing the Office of Defense Trade Controls by letter at least 30 days before
making the proposal or presentation. The letter must comply with the procedures
set forth in paragraph (d) of this section and must identify the relevant
license, approval, or FMS case by which the identical equipment had previously
been authorized for permanent export or sale. The Office of Defense Trade
Controls will provide written acknowledgement of such prior notification to
confirm compliance with this requirement and the commencement of the 30-day
notification period.

   (d) Procedures. Unless a license has been obtained pursuant to @ 126.8(c)(1)
(ii) or (iii), a request for prior approval to make a proposal or presentation
with respect to significant military equipment, or a 30-day prior notification
regarding the sale of such equipment, must be made by letter to the Office of
Defense Trade Controls. The letter must outline in detail the intended
transaction, including usage of the equipment involved and the country (or
countries) involved. Seven copies of the letter should be provided as well as
seven copies of suitable descriptive information concerning the equipment.

   (e) Statement to accompany licensing requests. (1) Every application for an
export license or other approval to implement a sale or agreement which meets
the criteria specified in paragraph (a) of this section must be accompanied by a
statement from the applicant which either:

   (i) Refers to a specific notification made or approval previously granted
with respect to the transaction; or                                                                       PAGE  106
                              58 FR 39280, *39315
                                                                          FOCUS

   (ii) Certifies that no proposal or presentation requiring prior notification
or approval has been made.

   (2) The Department of State may require a similar statement from the Foreign
Military Sales contractor concerned in any case where the United States
Government receives a request for a letter of offer for a sale which meets the
criteria specified in paragraph (a) of this section.

   (f) Penalties. In addition to other remedies and penalties prescribed by law
or this subchapter, a failure to satisfy the prior approval or prior
notification requirements of this section may be considered to be a reason for
disapproval of a license, agreement or sale under the FMS program.

   (g) License for technical data. Nothing in this section constitutes or is to
be construed as an exemption from the licensing requirement for the export of
technical data that is embodied in any proposal or presentation made to any
foreign persons.

@ 126.9 -- Advisory opinions.

   Any person desiring information as to whether the Office of Defense Trade
Controls would be likely to grant a license or other approval for the export of
a particular defense article or defense service to a particular country may
request an advisory opinion from the Office of Defense Trade Controls. These
opinions are not binding on the Department of State and are revocable. A request
for an advisory opinion must be made in writing and must outline in detail the
equipment, its usage, the security classification (if any) of the articles or
related technical data, and the country or countries involved. An original and
seven copies of the letter must be provided along with seven copies of suitable
descriptive information concerning the defense article or defense service.
[*39316]

@ 126.10 -- Disclosure of information.

   (a) Freedom of Information. Subchapter R of this title contains regulations
on the availability to the public of information and records of the Department
of State. The provisions of subchapter R apply to such disclosures by the Office
of Defense Trade Controls.

   (b) Determinations required by law. Section 38 of the Arms Export Control Act
(22 U.S.C. 2778) provides that certain information required by the Department of
State in connection with the licensing process may generally not be disclosed to
the public unless certain determinations relating to the national interest are
made in accordance with the procedures specified by that provision.
Determinations required by section 38(e) shall be made by the Assistant
Secretary of State for Politico-Military Affairs.

   (c) Information required under part 130. Part 130 of this subchapter contains
specific provisions on the disclosure of information described in that part.

   (d) National Interest Determinations. In accordance with section 38(e) of the
Arms Export Control Act (22 U.S.C. 2778(e)), the Secretary of State has
determined that the following disclosures are in the national interest of the
United States:                                                                       PAGE  107
                              58 FR 39280, *39316
                                                                          FOCUS

   (1) Furnishing information to foreign governments for law enforcement or
regulatory purposes; and

   (2) Furnishing information to foreign governments and other agencies of the
U.S. Government in the context of multilateral or bilateral export regimes
(e.g., the Missile Technology Control Regime, the Australia Group, and CoCoM).

@ 126.11 -- Relations to other provisions of law.

   The provisions in this subchapter are in addition to, and are not in lieu of,
any other provisions of law or regulations. The sale of firearms in the United
States, for example, remains subject to the provisions of the Gun Control Act of
1968 and regulations administered by the Department of the Treasury. The
performance of defense services on behalf of foreign governments by retired
military personnel continues to require consent pursuant to Part 3a of this
title. Persons who intend to export defense articles or furnish defense services
should consequently not assume that satisfying the requirements of this
subchapter relieves one of other requirements of law.

@ 126.12 -- Continuation in force.

   All determinations, authorizations, licenses, approvals of contracts and
agreements and other action issued, authorized, undertaken, or entered into by
the Department of State pursuant to section 414 of the Mutual Security Act of
1954, as amended, or under the previous provisions of this subchapter, continue
in full force and effect until or unless modified, revoked or superseded by the
Department of State.

@ 126.13 -- Required information.

   (a) All applications for licenses (DSP-5, DSP-61, DSP-73, and DSP-85), all
requests for approval of agreements and amendments thereto under part 124 of
this subchapter, all requests for other written authorizations, and all 30-day
prior notifications of sales of significant military equipment under @ 126.8(c)
must include a letter signed by a responsible official empowered by the
applicant and addressed to the Director, Office of Defense Trade Controls,
stating whether:

   (1) The applicant or the chief executive officer, president, vice-presidents,
other senior officers or officials (e.g., comptroller, treasurer, general
counsel) or any member of the board of directors is the subject of an indictment
for or has been convicted of violating any of the U.S. criminal statutes
enumerated in @ 120.27 of this subchapter since the effective date of the Arms
Export Control Act, Public Law 94-329, 90 Stat. 729 (June 30, 1976);

   (2) The applicant or the chief executive officer, president, vice-presidents,
other senior officers or officials (e.g., comptroller, treasurer, general
counsel) or any member of the board of directors is ineligible to contract with,
or to receive a license or other approval to import defense articles or defense
services from, or to receive an export license or other approval from, any
agency of the U.S. Government;

   (3) To the best of the applicant's knowledge, any party to the export as
defined in @ 126.7(e) has been convicted of violating any of the U.S. criminal                                                                       PAGE  108
                              58 FR 39280, *39316
                                                                          FOCUS

statutes enumerated in @ 120.27 of this subchapter since the effective date of
the Arms Export Control Act, Public Law 94-329, 90 Stat. 729 (June 30, 1976), or
is ineligible to contract with, or to receive a license or other approval to
import defense articles or defense services from, or to receive an export
license or other approval from any agency of the U.S. government; and

   (4) The natural person signing the application, notification or other request
for approval (including the statement required by this subsection) is a citizen
or national of the United States, has been lawfully admitted to the United
States for permanent residence (and maintains such a residence) under the
Immigration and Nationality Act, as amended (8 U.S.C. 1101(a), section 101(a)20,
60 Stat. 163), or is an official of a foreign government entity in the United
States.

   (b) In addition, all applications for licenses must include, on the
application or an addendum sheet, the complete names and addresses of all U.S.
consignors and freight forwarders, and all foreign consignees and foreign
intermediate consignees involved in the transaction. If there are multiple
consignors, consignees or freight forwarders, and all the required information
cannot be included on the application form, an addendum sheet and seven copies
containing this information must be provided. The addendum sheet must be marked
at the top as follows: "Attachment to Department of State License From (insert
DSP-5, 61, 73, or 85, as appropriate) for Export of (insert commodity) valued at
(insert U.S. dollar amount) to (insert country of ultimate destination)." The
Office of Defense Trade Controls will impress one copy of the addendum sheet
with the Department of State seal and return it to the applicant with each
license. The sealed addendum sheet must remain attached to the license as an
integral part thereof. District Directors of Customs and Department of Defense
transmittal authorities will permit only those U.S. consignors or freight
forwarders listed on the license or sealed addendum sheet to make shipments
under the license, and only to those foreign consignees named on the documents.
Applicants should list all freight forwarders who may be involved with shipments
under the license to ensure that the list is complete and to avoid the need for
amendments to the list after the license has been approved. If there are unusual
or extraordinary circumstances that preclude the specific identification of all
the U.S. consignors and freight forwarders and all foreign consignees, the
applicant must provide a letter of explanation with each application.

   (c) In cases when foreign nationals are employed at or assigned to
security-cleared facilities, provision by the applicant of a Technology Control
Plan (available from the Defense Investigative Service) will facilitate
processing.



PART 127-VIOLATIONS AND PENALTIES

Sec.

127.1 Violations.

127.2 Misrepresentation and omission of facts.

127.3 Penalties for violations.   [*39317]                                                                       PAGE  109
                              58 FR 39280, *39317
                                                                          FOCUS


127.4 Authority of U.S. Customs Service officers.

127.5 Authority of Defense Investigative Service.

126.6 Seizure and forfeiture in attempts at illegal exports.

127.7 Debarment.

127.8 Interim suspension.

127.9 Applicability of orders.

127.10 Civil penalty.

127.11 Past violations.

127.12 Voluntary Disclosure.

   Authority: Secs. 2, 38 and 42, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752,
2778, 2791); E.O. 11958, 42 FR 4311, 22 U.S.C. 401; 22 U.S.C. 2658.

@ 127.1 -- Violations.

   (a) It is unlawful:

   (1) To export or attempt to export from the United States any defense article
or technical data or to furnish any defense service for which a license or
written approval is required by this subchapter without first obtaining the
required license or written approval from the Office of Defense Trade Controls;

   (2) To import or attempt to import any defense article whenever a license is
required by this subchapter without first obtaining the required license or
written approval from the Office of Defense Trade Controls;

   (3) To conspire to export, import, reexport or cause to be exported, imported
or reexported, any defense article or to furnish any defense service for which a
license or written approval is required by this subchapter without first
obtaining the required license or written approval from the Office of Defense
Trade Controls; or

   (4) To violate any of the terms or conditions of licenses or approvals
granted pursuant to this subchapter.

   (b) Any person who is granted a license or other approval under this
subchapter is responsible for the acts of employees, agents, and all authorized
persons to whom possession of the licensed defense article or technical data has
been entrusted regarding the operation, use, possession, transportation, and
handling of such defense article or technical data abroad. All persons abroad
subject to U.S. jurisdiction who obtain temporary custody of a defense article
exported from the United States or produced under an agreement described in part
124 of this subchapter, and irrespective of the number of intermediate
transfers, are bound by the regulations of this subchapter in the same manner
and to the same extent as the original owner or transferer.                                                                       PAGE  110
                              58 FR 39280, *39317
                                                                          FOCUS

   (c) A person with knowledge that another person is then ineligible pursuant
to @@ 120.1(c) of this subchapter or 126.7 of this chapter, is then subject to
an order of debarment, or interim suspension, may not, directly or indirectly,
in any manner or capacity, without prior disclosure of the facts to, and written
authorization from, the Office of Defense Trade Controls:

   (1) Apply for, obtain, or use any export control document as defined in @
127.2(b) for such debarred, suspended, or ineligible person; or

   (2) Order, buy, receive, use, sell, deliver, store, dispose of, forward,
transport, finance, or otherwise service or participate in any transaction which
may involve any defense article or the furnishing of any defense service for
which a license or approval is required by this subchapter for export, where
such debarred, suspended, or ineligible person may obtain any benefit therefrom
or have any direct or indirect interest therein.

   (d) No person may willfully cause, or aid, abet, counsel, demand, induce,
procure or permit the commission of any act prohibited by, or the omission of
any act required by 22 U.S.C. 2778, 22 U.S.C. 2779, or any regulation, license,
approval, or order issued thereunder.

@ 127.2 -- Misrepresentation and omission of facts.

   (a) It is unlawful to use any export or temporary import control document
containing a false statement or misrepresenting or omitting a material fact for
the purpose of exporting any defense article or technical data or the furnishing
of any defense service for which a license or approval is required by this
subchapter. Any false statement, misrepresentation, or omission of material fact
in an export or temporary import control document will be considered as made in
a matter within the jurisdiction of a department or agency of the United States
for the purposes of 18 U.S.C. 1001, 22 U.S.C. 2778 and 22 U.S.C. 2779.

   (b) For the purpose of this section, export or temporary import control
documents include the following:

   (1) An application for a permanent export or a temporary import license and
supporting documents.

   (2) Shipper's Export Declaration.

   (3) Invoice.

   (4) Declaration of destination.

   (5) Delivery verification.

   (6) Application for temporary export.

   (7) Application for registration.

   (8) Purchase order.

   (9) Foreign import certificate.                                                                       PAGE  111
                              58 FR 39280, *39317
                                                                          FOCUS

   (10) Bill-of-lading.

   (11) Airway bill.

   (12) Nontransfer and use certificate.

   (13) Any other document used in the regulation or control of a defense
article, defense service or technical data for which a license or approval is
required by this subchapter.

@ 127.3 -- Penalties for violations.

   Any person who willfully:

   (a) Violates any provision of section 38 or section 39 of the Arms Export
Control Act (22 U.S.C. 2778 and 2779), or any undertaking specifically required
by part 124 of this subchapter; or

   (b) In a registration, license application or report required by section 38
or section 39 of the Arms Export Control Act (22 U.S.C. 2278 and 2779) or by any
rule or regulation issued under either section, makes any untrue statement of a
material fact or omits a material fact required to be stated therein or
necessary to make the statements therein not misleading, shall, upon conviction,
be subject to a fine or imprisonment, or both, as prescribed by 22 U.S.C.
2778(c).

@ 127.4 -- Authority of U.S. Customs Service officers.

   (a) U.S. Customs Service officers may take appropriate action to ensure
observance of this subchapter as to the export or the attempted export of any
defense article or technical data, including the inspection of loading or
unloading of any vessel, vehicle, or aircraft. This applies whether the export
is authorized by license or by written approval issued under this subchapter.

   (b) U.S. Customs Service officers have the authority to investigate, detain
or seize any export or attempted export of defense articles or technical data
contrary to this subchapter.

   (c) Upon the presentation to a Customs Officer of a license or written
approval authorizing the export of any defense article, the customs officer may
require the production of other relevant documents and information relating to
the proposed export. This includes an invoice, order, packing list, shipping
document, correspondence, instructions, and the documents otherwise required by
the U.S. Customs Service.

@ 127.5 -- Authority of the Defense Investigative Service.

   In the case of exports involving classified technical data or defense
articles, the Defense Investigative Service may take appropriate action to
ensure compliance with the Department of Defense Industrial Security Manual.
Upon a request to the Defense Investigative Service regarding the export of any
classified defense article or technical data, the Defense   [*39318]
Investigative Service official or a designated government transmittal authority
may require the production of other relevant documents and information                                                                       PAGE  112
                              58 FR 39280, *39318
                                                                          FOCUS

relating to the proposed export.

@ 127.6 Seizure and forfeiture in attempts at illegal exports.

   (a) An attempt to export from the United States any defense articles in
violation of the provisions of this subchapter constitutes an offense punishable
under section 401 of title 22 of the United States Code. Whenever it is known or
there is probable cause to believe that any defense article is intended to be or
is being or has been exported or removed from the United States in violation of
law, such article and any vessel, vehicle or aircraft involved in such attempt
is subject to seizure, forfeiture and disposition as provided in section 401 of
title 22 of the United States Code.

   (b) Similarly, an attempt to violate any of the conditions under which a
temporary export or temporary import license was issued pursuant to this
subchapter or to violate the requirements of @ 123.2 of this subchapter also
constitutes an offense punishable under section 401 of Title 22 of the United
States Code, and such article, together with any vessel, vehicle or aircraft
involved in any such attempt is subject to seizure, forfeiture, and disposition
as provided in section 401 of title 22 of the United States Code.

@ 127.7 -- Debarment.

   (a) In implementing section 38 of the Arms Export Control Act, the Assistant
Secretary of State for Politico-Military Affairs may prohibit any person from
participating directly or indirectly in the export of defense articles,
including technical data or in the furnishing of defense services for which a
license or approval is required by this subchapter for any of the reasons listed
below. Any such prohibition is referred to as a debarment for purposes of this
subchapter. The Assistant Secretary of State for Politico-Military Affairs shall
determine the appropriate period of time for debarment, which shall generally be
for a period of three years.

   (b) Grounds. (1) The basis for a statutory debarment, as described in
paragraph (c) of this section, is any conviction for violating the Arms Export
Control Act (see @ 127.3 of this subchapter) or any conspiracy to violate the
Arms Export Control Act.

   (2) The basis for administrative debarment, described in part 128 of this
subchapter, is any violation of 22 U.S.C. 2778 or any rule or regulation issued
thereunder when such a violation is of such a character as to provide a
reasonable basis for the Office of Defense Trade Controls to believe that the
violator cannot be relied upon to comply with the statute or these rules or
regulations in the future, and when such violation is established in accordance
with part 128 of this subchapter.

   (c) Statutory Debarment. Section 38(g)(4) of the Arms Export Control Act
prohibits the issuance of licenses to persons who have been convicted of
violating the U.S. criminal statutes enumerated in @ 120.27 of this subchapter.
Discretionary authority to issue licenses is provided, but only if certain
statutory requirements are met. It is the policy of the Department of State not
to consider applications for licenses or requests for approvals involving any
person who has been convicted of violating the Arms Export Control Act or
convicted of conspiracy to violate that Act for a three year period following                                                                       PAGE  113
                              58 FR 39280, *39318
                                                                          FOCUS

conviction. Such individuals shall be notified in writing that they are debarred
pursuant to this policy. A list of persons who have been convicted of such
offenses and debarred for this reason shall be published periodically in the
Federal Register. Debarment in such cases is based solely upon the outcome of a
criminal proceeding, conducted by a court of the United States, that established
guilt beyond a reasonable doubt in accordance with due process. The procedures
of part 128 of this subchapter are not applicable in such cases.

   (d) Appeals. Any person who is ineligible pursuant to paragraph (c) of this
section may appeal to the Under Secretary of State for International Security
Affairs for reconsideration of the ineligibility determination. The procedures
specified in @ 128.13 of this subchapter are applicable in such appeals.

@ 127.8 -- Interim suspension.

   (a) The Director of the Office of Defense Trade Controls is authorized to
order the interim suspension of any person when the Director believes that
grounds for debarment (as defined in @ 127.6 of this part) exist and where and
to the extent the Director finds that interim suspension is reasonably necessary
to protect world peace or the security or foreign policy of the United States.
The interim suspension orders prohibit that person from participating directly
or indirectly in the export of any defense article or defense service for which
a license or approval is required by this subchapter. The suspended person shall
be notified in writing as provided in @ 127.6(c) of this part (statutory
debarment) or @ 128.3 of this subchapter (administrative debarment), whichever
is appropriate. In both cases, a copy of the interim suspension order will be
served upon that person in the same manner as provided in @ 128.3 of this
subchapter. The interim suspension order may be made immediately effective,
without prior notice. The order will state the relevant facts, the grounds for
issuance of the order, and describe the nature and duration of the interim
suspension. No person may be suspended for a period exceeding 60 days unless
proceedings under @ 127.6(c) of this part or under part 128 of this subchapter,
or criminal proceedings, are initiated before the expiration of that period.

   (b) A motion or petition to vacate or modify an interim suspension order may
be filed at any time with the Under Secretary of State for International
Security Affairs. After a final decision is reached, the Director of the Office
of Defense Trade Controls will issue an appropriate order disposing of the
motion or petition and will promptly inform the respondent accordingly.

@ 127.9 -- Applicability of orders.

   For the purpose of preventing evasion, orders of the Assistant Secretary of
State for Politico-Military Affairs, debarring a person under @ 127.6 and orders
of the Director, Office of Defense Trade Controls, suspending a person under @
127.7 may be made applicable to any other person who may then or thereafter
(during the term of the order) be related to the debarred person by affiliation,
ownership, control, position of responsibility, or other commercial connection.
Appropriate notice and opportunity to respond to charges will be given.

@ 127.10 -- Civil penalty.

   (a) The Assistant Secretary of State for Politico-Military Affairs,
Department of State, is authorized to impose a civil penalty in an amount not                                                                       PAGE  114
                              58 FR 39280, *39318
                                                                          FOCUS

to exceed that authorized by 50 U.S.C. App. 2410(c) for each violation of 22
U.S.C. 2778, or any regulation, order, license or approval issued thereunder.
This civil penalty may be either in addition to, or in lieu of, any other
liability or penalty which may be imposed.

   (b) The Office of Defense Trade Controls may make:

   (1) The payment of a civil penalty under this section or

   (2) The completion of any administrative action pursuant to this part 127 or
128 of this subchapter a prior condition for the issuance, restoration, or
continuing validity of any export license or other approval.   [*39319]

@ 127.11 -- Past violations.

   (a) Pursuant to section 38 of the Arms Export Control Act, licenses or other
approvals may not be granted to persons who have been convicted of violating any
of the U.S. criminal statutes enumerated in @ 120.27 of this subchapter or who
are ineligible to receive any export licenses from any agency of the U.S.
government, subject to a narrowly defined statutory exception. This provision
establishes a presumption of denial for licenses or other approvals involving
such persons. This presumption is applied by the Office of Defense Trade
Controls to all persons convicted or deemed ineligible in this manner since the
effective date of the Arms Export Control Act (Pub. L. 94-329; 90 Stat. 729)
(June 30, 1976).

   (b) Policy. An exception to the policy of the Department of State to deny
applications for licenses or other approvals that involve persons described in
paragraph (a) of this section shall not be considered unless there are
extraordinary circumstances surrounding the conviction or ineligibility to
export, and only if the applicant demonstrates, to the satisfaction of the
Bureau of Politico-Military Affairs, that the applicant has taken appropriate
steps to mitigate any law enforcement and other legitimate concerns, and to deal
with the causes that resulted in the conviction, ineligibility, or debarment.
Any person described in paragraph (a) of this section who wishes to request
consideration of any application must explain, in a letter to the Director,
Office of Defense Trade Controls, the reasons why the application should be
considered. If the Bureau of Politico-Military Affairs concludes that the
application and written explanation have sufficient merit, it shall consult with
the Office of the Legal Adviser and the Department of the Treasury regarding law
enforcement concerns, and may also request the views of other departments,
including the Department of Justice. If the Office of Defense Trade Controls
does grant the license or other approval, subsequent applications from the same
person need not repeat the information previously provided but should instead
refer to the favorable decision.

   (c) Debarred persons. Persons debarred pursuant to @ 127.6(c) (statutory
debarment) may not utilize the procedures provided by this section while the
debarment is in force. Such persons may utilize only the procedures provided by
@ 127.7(d) of this part.

@ 127.12 -- Voluntary Disclosures.                                                                       PAGE  115
                              58 FR 39280, *39319
                                                                          FOCUS

   (a) General policy. The Department strongly encourages the disclosure of
information to the Office of Defense Trade Controls by persons, firms or any
organization that believe they may have violated any export control provision of
the Arms Export Control Act, or any regulations, order, license, or other
authorization issued under the Arms Export Control Act. Voluntary
self-disclosure may be considered a mitigating factor in determining the
administrative penalties, if any, that should be imposed by the Department.
Failure to report such violation(s) may result in circumstances detrimental to
U.S. national security and foreign policy interests.

   (b) Limitations. (1) The provisions of this section apply only when
information is provided to the Office of Defense Trade Controls for its review
in determining whether to take administrative action under part 128 of this
subchapter concerning violation(s) of the export control provisions of the Arms
Export Control Act and these regulations.

   (2) The provisions of this section apply only when information is received by
the Office of Defense Trade Controls for review prior to such time that either
the Department of State or any other agency, bureau or department of the United
States Government obtains knowledge of either the same or substantially similar
information from another source and commenced an investigation or inquiry that
involves that information, and that is intended to determine whether the Arms
Export Control Act or these regulations, or any other license, order or other
authorization issued under the Arms Export Control Act has been violated.

   (3) It is possible that the activity in question-despite voluntary
disclosure-might merit penalties, administrative actions, sanctions, or
referrals to the Department of Justice for consideration as to whether criminal
prosecution is warranted. In the latter case, the Office of Defense Trade
Controls will notify the Department of Justice of the voluntary nature of the
disclosure although the Department of Justice is not required to give that fact
any weight. The Office of Defense Trade Controls has the sole discretion to
consider whether "voluntary disclosure," in context with other relevant
information in a particular case, should be a mitigating factor in determining
what, if any, administrative action will be imposed. Some of the mitigating
factors the Office of Defense Trade Controls may consider are:

   (i) Whether the transaction would have been authorized had proper application
been made;

   (ii) Why the violation(s) occurred;

   (iii) The degree of cooperation with the ensuing investigation;

   (iv) Whether the person or firm has instituted or improved an internal
compliance program to reduce the likelihood of future violation(s);

   (v) Whether the person making the disclosure did so with the full knowledge
and authorization of the firm's senior management. (If not, then a firm will not
be deemed to have made a disclosure as covered in this section.)

   (4) The provisions of this section do not, nor should they be relied on, to
create, confer, or grant any rights, benefits, privileges, or protection
enforceable at law or in equity by any person, business, or entity in any                                                                       PAGE  116
                              58 FR 39280, *39319
                                                                          FOCUS

civil, criminal, administrative, or other matter.

   (c) Notification. (1) Any person or firm wanting to disclose information that
constitutes a voluntary self-disclosure should, in the manner outlined below,
initially notify the Office of Defense Trade Controls as soon as possible after
violation(s) are discovered and then conduct a thorough review of all
export-related transactions where violation(s) are suspected.

   (2) Notification of violation(s) must be in writing and should include the
following information:

   (i) A precise description of the nature and extent of the violation(s) (e.g.,
an unauthorized shipment, doing business with a party denied U.S. export
privileges, etc.);

   (ii) The exact circumstances surrounding the violation(s) (a thorough
explanation of why, when, where, and how the violation(s) occurred);

   (iii) The complete identities and addresses of all individuals and
organizations, whether foreign or domestic, involved in the activities giving
rise to the violation(s);

   (iv) Export license numbers, if applicable;

   (v) U.S. Munitions List category and subcategory, product descriptions,
quantities, and characteristics of the commodities or technical data involved;

   (vi) A description of any corrective actions already undertaken;

   (vii) The name and address of the person(s) making the disclosure and a point
of contact, if different, should further information be needed.

   (3) Factors to be considered include, for example, whether the violation(s)
were intentional or inadvertent; the degree to which the person or firm
responsible for the violation(s) making the disclosure was familiar with the
[*39320]   laws and regulations; and whether the violator was the subject of
prior administrative or criminal action under the AECA. In addition to
immediately providing written notification, persons, firms, companies and
organizations are strongly urged to conduct a thorough review of all
export-related transactions where possible violation(s) are suspected.

   (d) Documentation. (1) The written disclosure should be accompanied by copies
of those documents that substantiate it. Where appropriate, the documentation
should include, but is not limited to:

   (i) Licensing documents (e.g., license applications, export licenses and
end-user statements);

   (ii) Shipping documents (e.g., shipper's export declarations, airway bills
and bills of lading);

   (iii) Any other relevant documents must be retained by the person making the
disclosure until the Office of Defense Trade Controls requests them or until a
final decision on the disclosed information has been made.                                                                       PAGE  117
                              58 FR 39280, *39320
                                                                          FOCUS

   (e) Certification. A certification must be submitted stating that all of the
representations made in connection with the voluntary self-disclosure are true
and correct to the best of that person's knowledge and belief. Certifications
made by a firm, corporation or any other organization should be executed by
someone with the authority to do so.

   (f) Oral presentations. It is generally not necessary to augment the written
presentation with an oral presentation. However, if the person making the
disclosure believes a meeting is desirable, a request for one should be included
with the written presentation.

   (g) Voluntary disclosures should be sent to:

   Compliance Analysis Division, PM/DTC, SA-6, room 200, Office of Defense Trade
Controls, Bureau of Politico-Military Affairs, U.S. Department of State,
Washington, DC 20522-0602.



PART 128-ADMINISTRATIVE PROCEDURES

Sec.

128.1 Exclusion of functions from the Administrative Procedure Act.

128.2 Presiding Official.

128.3 Institution of administrative proceedings.

128.4 Default.

128.5 Answer and demand for oral hearing.

128.6 Discovery.

128.7 Prehearing conference.

128.8 Hearings.

128.9 Proceedings before and report of Presiding Official.

128.10 Disposition of proceedings.

128.11 Consent agreements.

128.12 Rehearings.

128.13 Appeals.

128.14 Confidentiality of proceedings.

128.15 Orders containing probationary periods.

128.16 Extension of time.                                                                       PAGE  118
                              58 FR 39280, *39320
                                                                          FOCUS


128.17 Availability of orders.

   Authority: Secs. 2, 38, 40, 42, and 71, Arms Export Control Act. 90 Stat. 744
(22 U.S.C. 2752, 2778, 2780, 2791, and 2797); E.O. 11958, 42 FR 4311: 22 U.S.C.
2658; E.O. 12291, 46 FR 1981.

@ 128.1 -- Exclusion of functions from the Administrative Procedure Act.

   The Arms Export Control Act authorizes the President to control the import
and export of defense articles and services in furtherance of world peace and
the security and foreign policy of the United States. It authorizes the
Secretary of State to make decisions on whether licenses shall be granted, as
well as to revoke, suspend or amend licenses whenever the Secretary deems such
action to be advisable. The administration of the Arms Export Control Act is a
foreign affairs function and is thus encompassed within the meaning of the
military and foreign affairs exclusion of the Administrative Procedure Act and
is thereby expressly exempt from various provisions of that Act. Because the
exercising of the foreign affairs function, including the decisions required to
implement the Arms Export Control Act, is highly discretionary, it is excluded
from review under the Administrative Procedure Act.

@ 128.2 -- Presiding Official.

   The Presiding Official referred to in this part is the Presiding Official of
the International Trade Administration of the Department of Commerce, as
provided in 15 CFR 388.2. The Presiding Official is authorized to exercise the
powers and perform the duties provided for in @@ 127.6, 127.7 of this subchapter
and @@ 128.3 through 128.16.

@ 128.3 -- Institution of administrative proceedings.

   (a) Charging letters. The Director, Office of Munitions Control, with the
concurrence of the Office of the Legal Adviser, Department of State, may
initiate debarment proceedings in accordance with @ 127.6 of this subchapter or
civil penalties in accordance with @ 127.9 of this subchapter. Administrative
proceedings shall be initiated by means of a charging letter. The charging
letter will state the essential facts constituting the alleged violation and
refer to the regulatory or other provisions involved. It will give notice that
if the respondent to answer the charges with 30 days, as provided in @ 128.5(a),
and indicate that a failure to answer will be taken as an admission of the truth
of the charges. It will inform the respondent that he or she is entitled to an
oral hearing if a written demand for one is filed with the answer or within 7
days after service of the answer. The respondent will also be informed that he
or she may, if so desired, be represented by counsel of his or her choosing.
Charging letters may be amended from time to time, upon reasonable notice.

   (b) Service. A charging letter is served upon a respondent:

   (1) If the respondent is a resident of the United States, when it is mailed
postage prepaid in a wrapper addressed to the respondent at his or her last
known address; or when left with the respondent or the agent or employee of the
respondent; or when left at the respondent's dwelling with some person of
suitable age and discretion then residing herein; or                                                                       PAGE  119
                              58 FR 39280, *39320
                                                                          FOCUS

   (2) If the respondent is a non-resident of the United States, when served
upon the respondent by any of the foregoing means. If such methods of service
are not practicable or appropriate, the charging letter may be tendered for
service on the respondent to an official of the government of the country
wherein the respondent resides, provided that there is an agreement or
understanding between the United States Government and the government of the
country wherein the respondent resident permitting this action.

@ 128.4 -- Default.

   (a) Failure to answer. If the respondent fails to answer the charging letter,
the respondent may be held in default. The case shall then be referred to the
Presiding Official for consideration in a manner as the Presiding Official may
consider appropriate. Any order issued shall have the same effect as an order
issued following the disposition of contested charges.

   (b) Petition to set aside defaults. Upon showing good cause, any respondent
against whom a default order has been issued may apply to set aside the default
and vacate the order entered thereon. The petition shall be submitted in
duplicate to the Assistant Secretary for Politico-Military Affairs, U.S.
Department of State, 2201 C Street, NW., Washington, DC 20520. The Director will
refer the petition to the Presiding Official for consideration and a
recommendation. The Presiding Official will consider the application and may
order a hearing and require the respondent to submit further evidence
[*39321]   in support of his or her petition. The filing of a petition to set
aside a default does not in any manner affect an order entered upon default and
such order continues in full force and effect unless a further order is made
modifying or terminating it.

@ 128.5 -- Answer and Demand for oral hearing.

   (a) When to answer. The respondent is required to answer the charging letter

within 30 days after service.

   (b) Contents of answer. An answer must be responsive to the charging letter.
It must fully set forth the nature of the respondent's defense or defenses. In
the answer, the respondent must admit or deny specifically each separate
allegation of the charging letter, unless the respondent is without knowledge,
in which case the respondent's answer shall so state and the statement shall
operate as a denial. Failure to deny or controvert any particular allegation
will be deemed an admission thereof. The answer may set forth such additional or
new matter as the respondent believes supports a defense or claim of mitigation.
Any defense or partial defense not specifically set forth in an answer shall be
deemed waived. Evidence offered thereon by the respondent at a hearing may be
refused except upon good cause being shown. If the respondent does not demand an
oral hearing, he or she shall transmit, within 7 days after the service of his
or her answer, original or photocopies of all correspondence, papers, records,
affidavits, and other documentary or written evidence having any bearing upon or
connection with the matters in issue. If any such materials are in language
other than English, translations into English shall be submitted at the same
time.

   (c) Submission of answer. The answer, written demand for oral hearing (if
any) and supporting evidence required by @ 128.5(b) shall be in duplicate and                                                                       PAGE  120
                              58 FR 39280, *39321
                                                                          FOCUS

mailed or delivered to the Office of EAR Administration Proceedings, United
States Department of Commerce, room 3810, 14th Street and Constitution Avenue,
NW., Washington, DC 20230. A copy shall be simultaneously mailed or delivered to
the Director, Office of Munitions Control, Department of State, Washington, DC
20520.

@ 128.6 -- Discovery.

   (a) Discovery by the respondent. The respondent, through the Presiding
Official, may request from the Office of Munitions Control any relevant
information, not privileged, that may be necessary or helpful in preparing a
defense. The Office of Munitions Control any relevant information, not
privileged, that may be necessary or helpful in preparing a defense. The Office
of Munitions Control may supply summaries in place of original documents and may
withhold information from discovery if necessary to comply with any statute,
executive order or regulation requiring that the information not be disclosed.
The respondent may request the Presiding Officer to request any relevant
information, books, records, or other evidence, from any other person or
government agency so long as the request is reasonable in scope and not unduly
burdensome.

   (b) Discovery by the Office of Munitions Control. The Office of Munitions
Control or the Presiding Official may request from the respondent admissions of
facts, answers to interrogatories, the production of books, records, or other
relevant evidence, so long as the request is relevant and material, reasonable
in scope, and not unduly burdensome.

   (c) Subpoenas. At the request of any party, the Presiding Official may issue
subpoenas, returnable before him, requiring the attendance of witnesses and the
production of books, records, and other documentary or physical evidence
determined by the Presiding Official to be relevant and material to the
proceedings, reasonable in scope, and not unduly burdensome.

   (d) Enforcement of discovery rights. If the Office of Munitions Control fails
to provide the respondent with information in its possession which is not
otherwi
 available and which is necessary to the respondent's defense, the
Presiding Official may dismiss the charges on her or his own motion or on a
motion of the respondent. If the respondent fails to respond with reasonable
diligence to the requests for discovery by the Office of Munitions Control or
the Presiding Official, on her or his own motion or motion of the Office of
Munitions Control, and upon such notice to the respondent as the Presiding
Official may direct, may strike respondent's answer and declare the respondent
in default, or make any other ruling which the Presiding Official deems
necessary and just under the circumstances. If a third party fails to respond to
the request for information, the Presiding Official shall consider whether the
evidence sought is necessary to a fair hearing, and if it is so necessary that a
fair hearing may not be held without it, the Presiding Official shall dismiss
the charges.

@ 128.7 -- Prehearing conference.

   (a) The Presiding Official may, upon his own motion or upon motion of any
party, request the parties or their counsel to a prehearing conference to
consider (1) simplification of issues; (2) the necessity or desirability of                                                                       PAGE  121
                              58 FR 39280, *39321
                                                                          FOCUS

amendments to pleadings; (3) obtaining stipulations of fact and of documents to
avoid unnecessary proof; or (4) such other matter as may expedite the
disposition of the proceeding. The Presiding Official will prepare a summary of
the action agreed upon or taken at the conference, and will incorporate therein
any written stipulations or agreements made by the parties. The conference
proceedings may be recorded magnetically or taken by a reporter and transcribed,
and filed with the Presiding Official.

   (b) If a conference is impracticable, the Presiding Official may request the
parties to correspond with him or her to achieve the purposes of a conference.
The Presiding Official shall prepare a summary of action taken as in the case of
a conference.

@ 128.8 -- Hearings.

   (a) A respondent who had not filed a timely written answer is not entitled to
a hearing, and the case may be considered by the Presiding Official as provided
in @ 128.4(a). If any answer is filed, but no oral hearing demanded, the
Presiding Official may proceed to consider the case upon the written pleadings
and evidence available. The Presiding Official may provide for the making of the
record in such manner as the Presiding Official deems appropriate. If respondent
answers and demands an oral hearing, the Presiding Official, upon due notice,
shall set the case for hearing, unless a respondent has raised in his answer no
issues of material fact to be determined. If respondent fails to appear at a
scheduled hearing, the hearing nevertheless may proceed in respondent's absence.
The respondent's failure to appear will not affect the validity of the hearing
or any proceedings or action thereafter.

   (b) The Presiding Official may administer oaths and affirmations. Respondent
may be represented by counsel. Unless otherwise agreed by the parties and the
Presiding Official, the proceeding will be taken by a reporter or by magnetic
recording, transcribed, and filed with the Presiding Official. Respondent may
examine the transcript and may obtain a copy upon payment of proper costs.
[*39322]

@ 128.9 -- Proceedings before and report of Presiding Official.

   (a) The Presiding Official may conform any part of the proceedings before him
or her to the Federal Rules of Civil Procedure. The record may be made available
in any other administrative or other proceeding involving the same respondent.

   (b) The Presiding Official, after considering the record, will prepare a
written report. The report will include findings of fact, findings of law, a
finding whether a law or regulation has been violated, and the Presiding
Official's recommendations. It shall be transmitted to the Assistant Secretary
for Politico-Military Affairs, Department of State.

@ 128.10 -- Disposition of proceedings.

   Where the evidence is not sufficient to support the charges, the Director,
Office of Munitions Control or the Presiding Official will dismiss the charges.
Where the Presiding Official finds that a violation has been committed, the
Presiding Official's recommendation shall be advisory only. The Assistant
Secretary for Politico-Military Affairs will review the record, consider the                                                                       PAGE  122
                              58 FR 39280, *39322
                                                                          FOCUS

report of the Presiding Official, and make an appropriate disposition of the
case. The Director may issue an order debarring the respondent from
participating in the export of defense articles or technical data or the
furnishing of defense services as provided in @ 127.6 of this subchapter, impose
a civil penalty as provided in @ 127.9 of this subchapter or take such other
action as the presiding Official deems appropriate. Any debarment order will be
effective for the period of time specified therein and may contain such
additional terms and conditions as are deemed appropriate. A copy of the order
together with a copy of the Presiding Official's report will be served upon the
respondent.

@ 128.11 -- Consent agreements.

   (a) The Office of Munitions Control and the respondent may, by agreement,
submit to the Presiding Official a proposal for the issuance of a consent order.
The Presiding Official will review the facts of the case and the proposal and
may conduct conferences with the parties and may require the presentation of
evidence in the case. If the Presiding Official does not approve the proposal,
the Presiding Official will notify the parties and the case will proceed as
though no consent proposal had been made. If the proposal is approved, the
Presiding Official will report the facts of the case along with recommendations
to the Assistant Secretary for Politico-Military Affairs. If the Director does
not approve the proposal, the case will proceed as though no consent proposal
has been made. If the Director approves the proposal, an appropriate order may
be issued.

   (b) Cases may also be settled prior to service of a charging letter. In such
an event, a proposed charging letter shall be prepared, and a consent agreement
and order shall be submitted for the approval and signature of the Assistant
Secretary for Politico-Military Affairs, and no action by the Presiding Official
shall be required. Cases which are settled may not be reopened or appealed.

@ 128.12 -- Rehearings.

   The Presiding Official may grant a rehearing or reopen a proceeding at any
time for the purpose of hearing any relevant and material evidence which was not
known or obtainable at the time of the original hearing. A report for rehearing
or reopening must contain a summary of such evidence, and must explain the
reasons why it could not have been presented at the original hearing. The
Presiding Official will inform the parties of any further hearing, and will
conduct such hearing and submit a report and recommendations in the same manner
as provided for the original proceeding (described in @ 128.10).

@ 128.13 -- Appeals.

   (a) Filing of appeals. An appeal must be in writing, and be addressed to and
filed with the Under Secretary of State for Security Assistance, Science and
Technology, Department of State, Washington, DC 20520. An appeal from a final
order denying export privileges or imposing civil penalties must be filed within
30 days after receipt of a copy of the order. If the Under Secretary cannot for
any reason act on the appeal, he or she may designate another Department of
State official to receive and act on the appeal.                                                                       PAGE  123
                              58 FR 39280, *39322
                                                                          FOCUS

   (b) Grounds and conditions for appeal. The respondent may appeal from the
debarment or from the imposition of a civil penalty (except the imposition of
civil penalties pursuant to a consent order pursuant to @ 128.11) upon the
ground: (1) That the findings of a violation are not supported by any
substantial evidence; (2) that a prejudicial error of law was committed: or (3)
that the provisions of the order are arbitrary, capricious, or an abuse of
discretion. The appeal must specify upon which of these grounds the appeal is
based and must indicate from which provisions of the order the appeal is taken.
An appeal from an order issued upon default will not be entertained if the
respondent has failed to seek relief as provided in @ 128.4(b).

   (c) Matters considered on appeal. An appeal will be considered upon the basis
of the assembled record. This record consists of (but is not limited to) the
charging letter, the respondent's answer, the transcript or magnetic recording
of the hearing before the Presiding Official, the report of the Presiding
Official, the order of the Assistant Secretary for Politico-Military Affairs,
and any other relevant documents involved in the proceedings before the
Presiding Official. The Under Secretary for Security Assistance, Science and
Technology may direct a rehearing and reopening before the Presiding Official if
he or she finds that the record is insufficient or that new evidence is relevant
and material to the issues and was not known and was not available to the
respondent at the time of the original hearings.

   (d) Effect of appeals. The taking of an appeal will not stay the operation of
any order.

   (e) Preparation of appeals.-(1) General requirements. An appeal shall be in
letter form. The appeal and accompanying material should be filed in duplicate,
unless otherwise indicated, and a copy simultaneously mailed or delivered to the
Director, Office of Munitions Control, Department of State, Washington, DC
20520.

   (2) Oral presentation. The Under Secretary for Security Assistance, Science
and Technology may grant the appellant an opportunity for oral argument and will
set the time and place for oral argument and will notify the parties, ordinarily
at least 10 days before the date set.

   (f) Decisions. All appeals will be considered and decided within a reasonable
time after they are filed. An appeal may be granted or denied in whole or in
part, or dismissed at the request of the appellant. The decision of the Under
Secretary for Security Assistance, Science and Technology will be final.

@ 128.14 -- Confidentiality of proceedings.

   Proceedings under this part are confidential. The documents referred to in @
128.17 are not, however, deemed to be confidential Reports of the Presiding
Official and copies of transcripts or recordings of hearings will be available
to parties and, to the extent of their own testimony, to witnesses. All records
are available to any U.S. Government agency showing a proper interest therein.
[*39323]

@ 128.15 -- Orders containing probationary periods.                                                                       PAGE  124
                              58 FR 39280, *39323
                                                                          FOCUS

   (a) Revocation of probationary periods. A debarment or interim suspension
order may set a probationary period during which the order may be held in
abeyance for all or part of the debarment or suspension period, subject to the
conditions stated therein. The Director, Office of Munitions Control, may apply,
without notice to any person to be affected thereby, to the Presiding Official
for an order revoking probation when it appears that the conditions of the
probation have been breached. The facts in support of the application will be
presented to the Presiding Official, who will report thereon and make a
recommendation to the Assistant Secretary for Politico-Military Affairs. The
latter will make a determination whether to revoke probation and will issue an
appropriate order.

   (b) Hearing-(1) Objections upon notice. Any person affected by an application
upon notice to revoke probation, within the time specified in the notice, may
file objections with the Presiding Official.

   (2) Objections to order without notice. Any person adversely affected by an
order revoking probation, without notice may request that the order be set aside
by filing his objections thereto with the Presiding Official. The request will
not stay the effective date of the order or revocation.

   (3) Requirements for filing objections. Objections filed with the Presiding
Official must be submitted in writing and in duplicate. A copy must be
simultaneously submitted to the Office of Munitions Control. Denials and
admissions, as well as any mitigating circumstances, which the person affected
intends to present must be set forth in or accompany the letter of objection and
must be supported by evidence. A request for an oral hearing may be made at the
time of filing objections.

   (4) Determination. The application and objections thereto will be referred to
the Presiding Official. An oral hearing, if requested, will be conducted at an
early convenient date, unless the objections filed raise no issues of material
fact to be determined. The Presiding Official will report the facts and make a
recommendation to the Assistant Secretary for Politico-Military Affairs, who
will determine whether the application should be granted or denied and will
issue an appropriate order. A copy of the order and of the Presiding Official's
report will be furnished to any person affected thereby.

   (c) Effect of revocation on other actions. The revocation of a probationary
period will not preclude any other action concerning a further violation, even
where revocation is based on the further violation.

@ 128.16 -- Extension of time.

   The Presiding Official, for good cause shown, may extend the time within
which to prepare and submit an answer to a charging letter or to perform any
other act required by this part 128.

@ 128.17 -- Availability of orders.

   All charging letters, debarment orders, orders imposing civil penalties,
probationary periods, and interim suspension orders are available for public
inspection in the Public Reading Room of the Department of State.
                                                                        PAGE  125
                              58 FR 39280, *39323
                                                                          FOCUS



PART 129-[RESERVED]



PART 130-POLITICAL CONTRIBUTIONS, FEES AND COMMISSIONS

Sec.

130.1 Purpose.

130.2 Applicant.

130.3 Armed forces.

130.4 Defense articles and defense services.

130.5 Fee or commission.

130.6 Political contribution.

130.7 Supplier.

130.8 Vendor.

130.9 Obligation to furnish information to the Office of Defense Trade Controls.

130.10 Information to be furnished by applicant or supplier to the Office of
Defense Trade Controls.

130.11 Supplementary reports.

130.12 Information to be furnished by vendor to applicant or supplier.

130.13 Information to be furnished to applicant, supplier or vendor by a
recipient of a fee or commission.

130.14 Recordkeeping.

130.15 Confidential business information.

130.16 Other reporting requirements.

130.17 Utilization of and access to reports and records.

   Authority: Sec. 39, Arms Export Control Act, 90 Stat. 767 (22 U.S.C. 2779);
E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp. p.79; 22 U.S.C. 2658.

@ 130.1 -- Purpose.

   Section 39(a) of the Arms Export Control Act (22 U.S.C. 2779) provides that
the Secretary of State shall prescribe regulations with respect to reporting on
certain payments relating to sales of defense articles and defense services.                                                                       PAGE  126
                              58 FR 39280, *39323
                                                                          FOCUS

The provisions of this part implement that requirement. Definitions which apply
to this part are contained in @@ 130.2 through 130.8.

@ 130.2 -- Applicant.

   Applicant means any person who applies to the Office of Defense Trade
Controls for any license or approval required under this subchapter for the
export of defense articles or defense services valued in an amount of $ 500,000
or more which are being sold commercially to or for the use of the armed forces
of a foreign country or international organization. This term also includes a
person to whom the required license or approval has been given.

@ 130.3 -- Armed forces.

   Armed forces means the army, navy, marine, air force, or coast guard, as well
as the national guard and national police, of a foreign country. This term also
includes any military unit or military personnel organized under or assigned to
an international organization.

@ 130.4 -- Defense articles and defense services.

   Defense articles and defense services have the meaning given those terms in
paragraphs (3), (4) and (7) of section 47 of the Arms Export Control Act (22
U.S.C. 2794 (3), (4), and (7)). When used with reference to commercial sales,
the definitions in @@ 120.6 and 120.9 of this subchapter apply.

@ 130.5 -- Fee or commission.

   (a) Fee or commission means, except as provided in paragraph (b) of this
section, any loan, gift, donation or other payment of $ 1,000 or more made, or
offered or agreed to be made directly or indirectly, whether in cash or in kind,
and whether or not pursuant to a written contract, which is:

   (1) To or at the direction of any person, irrespective of nationality,
whether or not employed by or affiliated with an applicant, a supplier or a
vendor; and

   (2) For the solicitation or promotion or otherwise to secure the conclusion
of a sale of defense articles or defense services to or for the use of the armed
forces of a foreign country or international organization.

   (b) The term fee or commission does not include:

   (1) A political contribution or a payment excluded by @ 130.6 from the
definition of political contribution:

   (2) A normal salary (excluding contingent compensation) established at an
annual rate and paid to a regular employee of an applicant, supplier or vendor;

   (3) General advertising or promotional expenses not directed to any
particular sale or purchaser; or

   (4) Payments made, or offered or agreed to be made, solely for the purchase
by an applicant, supplier or vendor of specific goods or technical,                                                                       PAGE  127
                              58 FR 39280, *39323
                                                                          FOCUS

operational or advisory services, which   [*39324]   payments are not
disproportionate in amount with the value of the specific goods or services
actually furnished.

@ 130.6 -- Political contribution.

   Political contribution means any loan, gift, donation or other payment of $
1,000 or more made, or offered or agreed to be made, directly or indirectly,
whether in cash or in kind, which is:

   (a) To or for the benefit of, or at the direction of, any foreign candidate,
committee, political party, political faction, or government or governmental
subdivision, or any individual elected, appointed or otherwise designated as an
employee or officer thereof; and

   (b) For the solicitation or promotion or otherwise to secure the conclusion
of a sale of defense articles or defense services to or for the use of the armed
forces of a foreign country or international organization. Taxes, customs
duties, license fees, and other charges required to be paid by applicable law or
regulation are not regarded as political contributions.

@ 130.7 -- Supplier.

   Supplier means any person who enters into a contract with the Department of
Defense for the sale of defense articles or defense services valued in an amount
of $ 500,000 or more under section 22 of the Arms Export Control Act (22 U.S.C.
2762).

@ 130.8 -- Vendor.

   Vendor means any distributor or manufacturer who, directly or indirectly,
furnishes to an applicant or supplier defense articles valued in an amount of $
500,000 or more which are end-items or major components as defined in @ 121.8 of
this subchapter. It also means any person who, directly or indirectly, furnishes
to an applicant or supplier defense articles or services valued in an amount of
$ 500,000 or more when such articles or services are to be delivered (or
incorporated in defense articles or defense services to be delivered) to or for
the use of the armed forces of a foreign country or international organization
under:

   (1) A sale requiring a license or approval from the Office of Defense Trade
Controls under this subchapter; or

   (2) A sale pursuant to a contract with the Department of Defense under
section 22 of the Arms Export Control Act (22 U.S.C. 2762).

@ 130.9 -- Obligation to furnish information to the Office of Defense Trade
Controls.

   (a)(1) Each applicant must inform the Office of Defense Trade Controls as to
whether applicant or its vendors have paid, or offered or agreed to pay, in
respect of any sale for which a license or approval is requested:                                                                       PAGE  128
                              58 FR 39280, *39324
                                                                          FOCUS

   (i) Political contributions in an aggregate amount of $ 5,000 or more, or

   (ii) Fees or commissions in an aggregate amount of $ 100,000 or more.

If so, applicant must furnish to the Office of Defense Trade Controls the
information specified in @ 130.10. The furnishing of such information or an
explanation satisfactory to the Director of the Office of Defense Trade Controls
as to why all the information cannot be furnished at that time is a condition
precedent to the granting of the relevant license or approval.

   (2) The requirements of this paragraph do not apply in the case of an
application with respect to a sale for which all the information specified in @
130.10 which is required by this section to be reported shall already have been
furnished.

   (b) Each supplier must inform the Office of Defense Trade Controls as to
whether the supplier or its vendors have paid, or offered or agreed to pay, in
respect of any sale:

   (1) Political contributions in an aggregate amount of $ 5,000 or more, or

   (2) Fees or commissions in an aggregate amount of $ 100,000 or more.

If so, supplier must furnish to the Office of Defense Trade Controls the
information specified in @ 130.10. The information required to be furnished
pursuant to this paragraph must be so furnished no later than 30 days after the
contract award to such supplier, or such earlier date as may be specified by the
Department of Defense. For purposes of this paragraph, a contract award includes
a purchase order, exercise of an option, or other procurement action requiring a
supplier to furnish defense articles or defense services to the Department of
Defense for the purposes of section 22 of the Arms Export Control Act (22 U.S.C.
2762).

   (c) In determining whether an applicant or its vendors, or a supplier or its
vendors, as the case may be, have paid, or offered or agreed to pay, political
contributions in an aggregate amount of $ 5,000 or more in respect of any sale
so as to require a report under this section, there must be included in the
computation of such aggregate amount any political contributions in respect of
the sale which are paid by or on behalf of, or at the direction of, any person
to whom the applicant, supplier or vendor has paid, or offered or agreed to pay,
a fee or commission in respect of the sale. Any such political contributions are
deemed for purposes of this part to be political contributions by the applicant,
supplier or vendor who paid or offered or agreed to pay the fee or commission.

   (d) Any applicant or supplier which has informed the Office of Defense Trade
Controls under this section that neither it nor its vendors have paid, or
offered or agreed to pay, political contributions or fees or commissions in an
aggregate amount requiring the information specified in @ 130.10 to be
furnished, must subsequently furnish such information within 30 days after
learning that it or its vendors had paid, or offered or agreed to pay, political
contributions or fees or commissions in respect of a sale in an aggregate amount
which, if known to applicant or supplier at the time of its previous
communication with the Office of Defense Trade Controls, would have required the
furnishing of information under @ 130.10 at that time. Any report furnished                                                                       PAGE  129
                              58 FR 39280, *39324
                                                                          FOCUS

under this paragraph must, in addition to the information specified in @ 130.10,
include a detailed statement of the reasons why applicant or supplier did not
furnish the information at the time specified in paragraph (a) or paragraph (b)
of this section, as applicable.

@ 130.10 -- Information to be furnished by applicant or supplier to the Office
of Defense Trade Controls.

   (a) Every person required under @ 130.9 to furnish information specified in
this section in respect to any sale must furnish to the Office of Defense Trade
Controls:

   (1) The total contract price of the sale to the foreign purchaser;

   (2) The name, nationality, address and principal place of business of the
applicant or supplier, as the case may be, and, if applicable, the employer and
title;

   (3) The name, nationality, address and principal place of business, and if
applicable, employer and title of each foreign purchaser, including the ultimate
end-user involved in the sale;

   (4) Except as provided in paragraph (c) of this section, a statement setting
forth with respect to such sale:

   (i) The amount of each political contribution paid, or offered or agreed to
be paid, or the amount of each fee or commission paid, or offered or agreed to
be paid;

   (ii) The date or dates on which each reported amount was paid, or offered or
agreed to be paid;

   (iii) The recipient of each such amount paid, or intended recipient if not
yet paid;

   (iv) The person who paid, or offered or agreed to pay such amount; and

   (v) The aggregate amounts of political contributions and of fees or
[*39325]   commission, respectively, which shall have been reported.

   (b) In responding to paragraph (a)(4) of this section, the statement must:

   (1) With respect to each payment reported, state whether such payment was in
cash or in kind. If in kind, it must include a description and valuation
thereof. Where precise amounts are not available because a payment has not yet
been made, an estimate of the amount offered or agreed to be paid must be
provided;

   (2) With respect to each recipient, state:

   (i) Its name;

   (ii) Its nationality;                                                                       PAGE  130
                              58 FR 39280, *39325
                                                                          FOCUS

   (iii) Its address and principal place of business;

   (iv) Its employer and title; and

   (v) Its relationship, if any, to applicant, supplier, or vendor, and to any
foreign purchaser or end-user.

   (c) In submitting a report required by @ 130.9, the detailed information
specified in paragraph (a)(4) and (b) of this section need not be included if
the payments do not exceed:

   (1) $ 2,500 in the case of political contributions; and

   (2) $ 50,000 in the case of fees or commissions.

In lieu of reporting detailed information with respect to such payments, the
aggregate amount thereof must be reported, identified as miscellaneous political
contributions or miscellaneous fees or commissions, as the case may be.

   (d) Every person required to furnish the information specified in paragraphs
(a) and (b) of this section must respond fully to each subdivision of those
paragraphs and, where the correct response is none or not applicable," must so
state.

@ 130.11 -- Supplementary reports.

   (a) Every applicant or supplier who is required under @ 130.9 to furnish the
information specified in @ 130.10 must submit a supplementary report in
connection with each sale in respect of which applicant or supplier has
previously been required to furnish information if:

   (1) Any political contributions aggregating $ 2,500 or more or fees or
commissions aggregating $ 50,000 or more not previously reported or paid, or
offered or agreed to be paid by applicant or supplier or any vendor;

   (2) Subsequent developments cause the information initially reported to be no
longer accurate or complete (as in the case where a payment actually made is
substantially different in amount from a previously reported estimate of an
amount offered or agreed to be paid); or

   (3) Additional details are requested by the Office of Defense Trade Controls
with respect to any miscellaneous payments reported under @ 130.10(c).

   (b) Supplementary reports must be sent to the Office of Defense Trade
Controls within 30 days after the payment, offer or agreement reported therein
or, when requested by the Office of Defense Trade Controls, within 30 days after
such request, and must include:

   (1) Any information specified in @ 130.10 required or requested to be
reported and which was not previously reported; and

   (2) The Defense Trade Control license number, if any, and the Department or
Defense contract number, if any, related to the sale.
                                                                        PAGE  131
                              58 FR 39280, *39325
                                                                          FOCUS

@ 130.12 -- Information to be furnished by vendor to applicant or supplier.

   (a) In order to determine whether it is obliged under @ 130.9 to furnish the
information specified in @ 130.10 with respect to a sale, every applicant or
supplier must obtain from each vendor, from or through whom the applicant
acquired defense articles or defense services forming the whole or a part of the
sale, a full disclosure by the vendor of all political contributions or fees or
commission paid, by vendor with respect to such sale. Such disclosure must
include responses to all the information pertaining to vendor required to enable
applicant or supplier, as the case may be, to comply fully with @@ 130.9 and
130.10. If so required, they must include the information furnished by each
vendor in providing the information specified.

   (b) Any vendor which has been requested by an applicant or supplier to
furnish an initial statement under paragraph (a) of this section must, except as
provided in paragraph (c) of this section, furnish such statement in a timely
manner and not later than 20 days after receipt of such request.

   (c) If the vendor believes that furnishing information to an applicant or
supplier in a requested statement would unreasonably risk injury to the vendor's
commercial interests, the vendor may furnish in lieu of the statement an
abbreviated statement disclosing only the aggregate amount of all political
contributions and the aggregate amount of all fees or commissions which have
been paid, or offered or agreed to be paid, or offered or agreed to be paid, by
the vendor with respect to the sale. Any abbreviated statement furnished to an
applicant or supplier under this paragraph must be accompanied by a
certification that the requested information has been reported by the vendor
directly to the Office of Defense Trade Controls. The vendor must simultaneously
report fully to the Office of Defense Trade Controls all information which the
vendor would otherwise have been required to report to the applicant or supplier
under this section. Each such report must clearly identify the sale with respect
to which the reported information pertains.

   (d)(1) If upon the 25th day after the date of its request to vendor, an
applicant or supplier has not received from the vendor the initial statement
required by paragraph (a) of this section, the applicant or supplier must submit
to the Office of Defense Trade Controls a signed statement attesting to:

   (i) The manner and extent of applicant's or supplier's attempt to obtain from
the vendor the initial statement required under paragraph (a) of this section;

   (ii) Vendor's failure to comply with this section; and

   (iii) The amount of time which has elapsed between the date of applicant's or
supplier's request and the date of the signed statement;

   (2) The failure of a vendor to comply with this section does not relieve any
applicant or supplier otherwise required by @ 130.9 to submit a report to the
Office of Defense Trade Controls from submitting such a report.

@ 130.13 -- Information to be furnished to applicant, supplier or vendor by a
recipient of a fee or commission.                                                                       PAGE  132
                              58 FR 39280, *39325
                                                                          FOCUS

   (a) Every applicant or supplier, and each vendor thereof;

   (1) In order to determine whether it is obliged under @ 130.9 or @ 130.12 to
furnish information specified in @ 130.10 with respect to a sale; and

   (2) Prior to furnishing such information, must obtain from each person, if
any, to whom it has paid, or offered or agreed to pay, a fee or commission in
respect of such sale, a timely statement containing a full disclosure by such a
person of all political contributions paid, or offered or agreed to be paid, by
it or on its behalf, or at its direction, in respect of such sale. Such
disclosure must include responses to all the information required to enable the
applicant, supplier or vendor, as the case may be, to comply fully with @@
130.9, 130.10, and 130.12.

   (b) In obtaining information under paragraph (a) of this section, the
applicant, supplier or vendor, as the case may be, must also require each person
to whom a fee or commission is paid, or offered or agreed to be paid, to furnish
from time to time such reports of its political contributions as may be
necessary to enable the applicant, supplier or vendor, as the case may be,
[*39326]   to comply fully with @@ 130.9, 130.10, 130.11, and 130.12.

   (c) The applicant supplier or vendor, as the case may be, must include any
political contributions paid, or offered or agreed to be paid, by or on behalf
of, or at the direction of, any person to whom it has paid, or offered or agreed
to pay a fee or commission in determining whether applicant, supplier or vendor
is required by @@ 130.9, 130.11, and 130.12 to furnish information specified in
@ 130.10.

@ 130.14 -- Recordkeeping.

   Each applicant, supplier and vendor must maintain a record of any information
it was required to furnish or obtain under this part and all records upon which
its reports are based for a period of not less than five years following the
date of the report to which they pertain.

@ 130.15 -- Confidential business information.

   (a) Any person who is required to furnish information under this part may
identify any information furnished hereunder which the person considers to be
confidential business information. No person, including any applicant or
supplier, shall publish, divulge, disclose, or make known in any manner, any
information so identified by a vendor or other person unless authorized by law
or regulation.

   (b) For purposes of this section, confidential business information means
commercial or financial information which by law is entitled to protection from
disclosure. (See, e.g., 5 U.S.C. 552(b) (3) and (4); 18 U.S.C. 1905; 22 U.S.C.
2778(e); Rule 26(c)(7), Federal Rules of Civil Procedure.)

@ 130.16 -- Other reporting requirements.

   The submission of reports under this part does not relieve any person of any
requirements to furnish information to any federal, state, or municipal agency,
department or other instrumentality as required by law, regulation or                                                                       PAGE  133
                              58 FR 39280, *39326
                                                                          FOCUS

contract.

@ 130.17 -- Utilization of and access to reports and records.

   (a) All information reported and records maintained under this part will be
made available, upon request for utilization by standing committees of the
Congress and subcommittees thereof, and by United States Government agencies, in
accordance with section 39(d) of the Arms Export Control Act (22 U.S.C.
2779(d)), and reports based upon such information will be submitted to Congress
in accordance with sections 36(a)(8) and 36(b)(1) of that Act (22 U.S.C. 2776
(a)(8) and (b)(1)).

   (b) All confidential business information provided pursuant to this part
shall be protected against disclosure to the extent provided by law.

   (c) Nothing in this section shall preclude the furnishing of information to
foreign governments for law enforcement or regulatory purposes under
international arrangements between the United States and any foreign government.

   Dated: July 12, 1993.

Lynn E. Davis,

Under Secretary for International Security Affairs.

[FR Doc. 93-17073 Filed 7-21-93; 8:45 am]

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