Department Of State Proposes Amending ITAR Definitions, Creating Encryption Carve-Out

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Torres Law, PLLC is an international trade and national security law firm that assists clients with the import and export of goods, technology, services, and foreign investment matters. We have extensive experience with the various regimes and agencies governing trade such as U.S. Customs and Border Protection (CBP), the Department of Commerce Bureau of Industry and Security (BIS), the Department of State Directorate of Defense Trade Controls (DDTC), the Department of Treasury Office of Foreign Assets Control (OFAC), the Department of Defense Security Service (DSS), the Committee on Foreign Investment in the United States (CFIUS), and others.

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The export community has anticipated a harmonization of the ITAR with the EAR encryption rule.

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In a recently published Notice of Proposed Rulemaking,¹ the Department of State proposes an amendment to the International Traffic in Arms Regulations ("ITAR") provisions defining activities that are not exports, re-exports, or retransfers. Such activities that will not be exports, re-exports, or retransfers under the proposed definition include (1) launching items into space, (2) providing technical data to U.S. persons within the United States or within a single country abroad, and (3) moving defense articles between U.S. states, possessions, and territories. Importantly, the proposed revisions will allow for the electronic storage and transmission of unclassified technical data through foreign communications infrastructure without requiring ITAR licensing when the technical data is sufficiently secured to prevent access by foreign persons. The proposed amendments also include the creation of a definition for "access information" and the revision of the "release" definition to include the improper provision of access information to foreign persons.

The proposed amendment sets the stage for the Department of State to create a rule similar to the Department of Commerce Export Administration Regulations ("EAR") "encryption carve-out," which was finalized on June 3, 2016. The export community has anticipated a harmonization of the ITAR with the EAR encryption rule. Torres Law has previously written about the EAR carve-out, located here: End-to-End Encryption and a New Understanding of Technology and Software Export Controls. We will monitor these developments as the proposed amendment moves through the federal rulemaking process and provide updates as necessary.

Footnote

1 International Traffic in Arms Regulations: Activities Not Exports, Re-exports, or Transfers, Department of State, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=1400-AE76 (last visited, Nov. 15, 2019).

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