One of the most intricate aspects of the United States'
export regime that regulates the export of defense related items is
the issue of re-export of the U.S defense items to the third
countries. Since the issue has beyond commercial ramifications
related with national security, it has been one of the most
strictly regulated areas of the U.S export regime. US Arms Export
Control Act authorizes the Congress to delegate the control of the
defense related exports to the President who in turn delegates the
issue to the Secretary of State. Directorate of Defense Trade
Controls within the State Department implement the day to day
running of the Arms Export Control Act in line with the
International Traffic in Arms Regulation. (ITAR)
The initial step for the companies that would like to export
defense related items or services is the required registration to
the Directorate of Defense Trade Controls. Then the companies that
are seeking to export defense related items or services can apply
for the necessary licenses to do so. Then either a permanent or a
temporary license might be issued to the companies by the
The issue of re-exports(re-transfers) is dealt under the ITAR.
The defense related items that are enumerated in the U.S Munitions
List are subjected to re-transfer prohibitions under ITAR. The
regulation prohibits any defense service or technical data exported
from the United States or any defense article which may be produced
from this service and data to be shared with a person in a third
country or with a national of a third country. In plain language,
this means that if a non-US citizen would like to transfer a
defense related item indicated in the US Munitions List, to another
non-US citizen, both sides have to be authorized to do so. For such
re-exports a third party transfer approval from the United States
government has to be obtained. Moreover the export authorization
licenses must have the names of all the parties included to be
effective in such cases.
ITAR's all encompassing focus on the issue of re-transfers
is apparent especially in the definition given for the foreign
nationals. The access to the items indicated in US Munitions List
by the employees of a foreign organization which are categorized
under the definition of "Dual-National" and "Third
Country National" has to be specifically authorized. It is
specifically elaborated in the regulation that an access
authorization for the items listed in the US Munitions List for the
dual national or third country nationals mean an authorization of
transfer only to the employee not to his/her country. If the US
export authorization does not contain any information about the
access of dual or third country nationals working for a non-US
employer, then this has the effect of access limitation for the
employees who are nationals only of the country of their employer.
In general employees of non-US persons who are holding dual or
third country nationality from the countries listed in ITAR 126.1
are barred from access to the items listed in the US Munitions
The issue of re-exports is considered to have implications for
the national defense of the United States. It is understandable
that the defense industry, which contains information that might be
important for national security, will be subject to a strict
regulatory regime marked by ITAR and Arms Export Control Act.
However there is a growing concern in the American defense industry
that those regulations are being outdated and impeding the future
growth of the American defense industry. Already there are
complaints about a loss of global market share for the American
defense industry which have to deal with stringent regulations for
arms exports. As the re-transfer clauses indicate the issue is
dealt under the national security perspective. Even though such
concerns are understandable, it is still an imperative for the
American lawmakers to deal with the issue and reform the existing
legal regime that regulates the export of defense related items and
services to help the American defense industry to cope with the
increasing challenges that it faces.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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