DDTC Working Through USML Updates, Hiring New Attorney Adviser, Official Says

The State Department’s Directorate of Defense Trade Controls is drafting at least two rules to make “targeted revisions” to the U.S. Munitions List and is preparing to soon propose changes to its registration fees, said Timothy Betts, DDTC’s acting deputy assistant secretary. Betts also said the State Department is looking to hire a DDTC-dedicated attorney adviser and stressed the importance of defense companies having compliance buy-in from upper management.

Betts, speaking during DDTC’s Defense Trade Advisory Group fall plenary Oct. 12, said the agency hopes to publish the first set of USML targeted revision rules “shortly,” including one interim final rule and one notice of proposed rulemaking. The rules are part of a broader, monthslong effort to modernize the USML (see 2209140018), which has so far included an interim final rule in April that removed export controls from certain high-energy storage capacitors (see 2304260017).

Betts said DDTC is still reviewing public comments from that change and may make changes. He said the agency plans to issue a final version of the rule “by the end of 2024.”

He also said the agency soon will issue a rule proposing “adjustments” to DDTC’s registration fees, which would be the first such increases since 2008. Betts noted that the agency has “significantly reduced our licensing volume over the past 15 years, leading to a 75% reduction in licenses," but fee changes may be needed “in order to continue to provide excellent service to the defense industrial base and to keep innovating.”

The agency also will soon be adding new officials, including a new attorney adviser in the State Department’s Office of the Legal Adviser, to specifically advise DDTC. This lawyer will provide “dedicated legal support” to DDTC “so that we can more efficiently work on the things that are important” to the defense industry, Betts said. “We really want to be able to provide efficient and quick service and we can only do that if we have a full stable of legal advisors.”

The agency also hasn’t yet publicly announced who will fill the role left by Mike Miller, who left his position as head of DDTC in December to become the deputy director of the Defense Security Cooperation Agency (see 2212120004). Betts replaced Miller on an acting basis in May (see 2307200007), but he said he soon will be replaced by Jae Shin, the agency’s compliance director.

“I'm not in a position to make any announcements,” Betts said, “but Jae will be taking over the helm and probably seeing DDTC through the end of the year.” A DDTC official recently said the lack of a permanent leader may cause some slowdowns, including around licenses (see 2310020014).

Betts also stressed the importance of compliance, saying all “competent compliance programs start at the top.” Defense companies that deal in controlled goods or services should “cultivate a corporate culture where adherence to compliance is paramount,” Betts said. “Regardless of a company’s size, the non-negotiable ingredient to a strong and effective compliance program is management's unwavering commitment to compliance.”

DDTC recently published two new risk compliance matrices, one for businesses and one for universities, to help them comply with the International Traffic in Arms Regulations (see 2309150029). Betts said the matrices will help companies and researchers “identify their most vulnerable areas of ITAR compliance.”