DDTC 'Very Close' to Publishing First ITAR Reorganization Rule, Official Says

The State Department is close to publishing the first in a series of rules to reorganize the International Traffic in Arms Regulations after months of legal reviews (see 1907120011) and a delay caused by the COVID-19 pandemic (see 2005080038), an agency official said. The first rule, part of a larger reorganization effort led by the Directorate of Defense Trade Controls, will tackle the organization of definitions in the ITAR. Other rules will consolidate exemptions and streamline licensing requirements and policies.

“We are very close. I hoped it would’ve been published by now,” said Mike Miller, the State Department’s deputy assistant secretary for defense trade in the Bureau of Political-Military Affairs, speaking during an Oct. 22 Defense Trade Advisory Group meeting. Miller stressed that the rule will not change the meaning of any definitions in the ITAR but will “simply consolidate and improve the organization of definitions.” DDTC will give industry a 180-day implementation period after the rule is published so they have time to adjust to the changes, Miller said.

“This is something that hasn’t been done in decades,” Miller said. “We asked for and received an extended period of implementation ... given the challenges we all face in these times to make sure that industry has a sufficient amount of time to implement this.”

Miller also said the State Department will consider extending a September rule that temporarily suspended restrictions for certain defense exports to Cyprus (see 2009250005). The agency will monitor the “experiences” of U.S. exporters who choose to ship to Cyprus to determine whether to extend the rule after it expires in September 2021. “Obviously it's a market that probably hasn't been broadly explored, given the prohibitions in the ITAR up to this point,” Miller said. “We'll be considering factors … to see what provisions we may make for an extension of that.”

Miller praised DDTC’s licensing office, which he said “has been working at full speed” during the pandemic. The agency has processed nearly 20,000 license applications this year, he added, which isn’t a “record-breaking year by any means” but is still a “robust throughput under these circumstances.” He said the agency has seen a drop in licensing applications due to the pandemic. “We're operating I think in a very formidable way considering the challenges,” Miller said.

DDTC’s compliance office also “remains very active,” and the agency has seen a “steady increase” in the number of entities that have registered with DDTC as exporters, manufacturers or brokers, Miller said, which exceeded 14,000 as of September. But that number may decrease due to the recent transfer of export controls from the State Department to the Commerce Department earlier this year (see 2001170030 and 2003090029). “We’re watching this trend closely to see how this might change, particularly with the pandemic and obviously with a large number of technologies moving to the jurisdiction of the Commerce Department,” Miller said. “We're doing our best to forecast there.”

The agency has also maintained its enforcement work and has helped the Justice Department with a range of prosecutions this year involving violations of the Arms Export Control Act, Miller said. Although the “court system has slowed down some” due to the pandemic, Miller said the agency has helped with 22 AECA-related prosecutions in 2020. Miller also said DDTC completed its 18-month consent agreement with Darling Industries in August, which stemmed from the company's AECA and ITAR violations. The company “met all the terms of the agreement,” Miller said.