Amendments to the International Traffic in Arms Regulations: Port Directors Definition, NATO Definition, Major Non-NATO Ally Definition, Recordkeeping Requirements, Supporting Documentation for Electronic License Applications, Disclosure of Registration Documents, 50958-50966 [05-17121]

Agencies

• DEPARTMENT OF STATE

[Federal Register Volume 70, Number 166 (Monday, August 29, 2005)]
[Rules and Regulations]
[Pages 50958-50966]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-17121]


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DEPARTMENT OF STATE

22 CFR Parts 120, 122, 123, 124, 126, and 127

[Public Notice 5176]


Amendments to the International Traffic in Arms Regulations: Port 
Directors Definition, NATO Definition, Major Non-NATO Ally Definition, 
Recordkeeping Requirements, Supporting Documentation for Electronic 
License Applications, Disclosure of Registration Documents

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The definition of ``District Director of Customs'' has been 
amended to reflect the change in title. Also, references to the Customs 
Service have been changed to the U.S. Customs and Border Protection. A 
definition has been added for the ``North Atlantic Treaty 
Organization'' and another definition for ``major non-NATO ally.'' The 
recordkeeping requirement has been revised to include maintaining 
records in an electronic format and reproduction of readable documents. 
No need for multiple copies of supporting documentation for electronic 
license applications. Also, registration documents are not releasable 
to the public.

DATES: Effective Date: This rule is effective August 29, 2005.

ADDRESSES: Interested parties are invited to submit written comments to 
the Department of State:
     E-mail comments may be sent to DDTCResponseTeam@state.gov 
with the subject line: Parts 120, 122, 123, 124, 126 and 127.
     Written comments may be sent to Directorate of Defense 
Trade Controls, Office of Defense Trade Controls Management, ATTN: 
Regulatory Change, Parts 120, 122, 123, 124, 126 and 127, SA-1, 12th 
Floor, Washington, DC 20522-0112.
    Persons with access to the Internet may also view this notice by 
going to the regulations.gov Web site at: https://www.regulations.gov. 
Comments will be accepted at any time.

FOR FURTHER INFORMATION CONTACT: Mary F. Sweeney, Office of Defense 
Trade Controls Management, Bureau of Political-Military Affairs, 
Department of State on 202-663-2865.

SUPPLEMENTARY INFORMATION: The definition of ``District Director of 
Customs'' has been amended to reflect that references to ``District 
Directors,'' have been replaced with ``Port Directors'' (Sections 
123.4, 123.5, 123.6, 123.13, 123.16, 123.17, 123.18, 123.23, 126.4, 
126.5, 126.6, and 126.13). Also, references to the ``Bureau of Customs 
and Border Protection'' and ``U.S. Customs'' have been replaced by 
``U.S. Customs and Border Protection'' (Sections 122.5, 123.4, 123.5, 
123.6, 123.13, 123.16, 123.17, 123.18, 123.22, 123.23, 123.24, 124.3, 
126.4, 126.5, 126.6, 126.13, and 127.4).
    The ITAR has been amended by adding two new definitions. There is a 
definition at 22 CFR 120.31 for the ``North Atlantic Treaty 
Organization'' and the countries are listed. The other definition is at 
22 CFR 120.32 for ``major non-NATO ally.'' Major non-NATO ally means a 
country that is designated in accordance with Sec.  517 of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2321k) as a major non-NATO ally for 
purposes of the Foreign Assistance Act of 1961 and the Arms Export 
Control Act (22 U.S.C. 2751 et seq.) (22 U.S.C. 2403(q)). The countries 
are listed in 22 CFR 120.32. Also, Taiwan shall be treated as though it 
were designated a major non-NATO ally (as defined in section 644(q) of 
the Foreign Assistance Act of 1961 (22 U.S.C. 2403(q)) in accordance 
with section 1206 of the Foreign Relations Authorization Act, Fiscal 
Year 2003 (Pub. L. 107-228). In complying with Presidential 
Determination No. 2004-35 of June 3, 2004 and Presidential 
Determination No. 2004-37 of June 16, 2004, the ITAR is being amended 
to add Morocco and Pakistan as major non-NATO allies of the United 
States.
    Section 122.3 has been amended to require a registrant renewing its 
registration to submit the renewal request at least 30 days prior to 
the expiration date.
    Section 122.5 has been amended to include if maintaining records in 
an electronic format the information must be capable of being 
reproduced legibly on paper. Also, the stored information if altered 
must keep track of all changes,

[[Page 50959]]

who made them and when they were made.
    Section 123.1 has been revised to address if submitting fully 
electronic license applications that there is no need for multiple 
copies of supporting documentation.
    Section 126.10 regarding disclosure of information has been amended 
to include that registration documents may not generally be disclosed 
to the public under Section 38(e) of the Arms Export Control Act.
    Section 127.4 has been revised to address the authority of U.S. 
Immigration and Customs Enforcement and U.S. Customs and Border 
Protection officers.
    Certain references to the ``Office of Defense Trade Controls'' were 
changed to the ``Directorate of Defense Trade Controls'' (Sections 
122.5, 123.1, 123.4, 123.5, 123.16, 126.4, 126.5, 126.6 and 126.13).

Regulatory Analysis and Notices

    This amendment involves a foreign affairs function of the United 
States and, therefore, is not subject to the procedures required by 5 
U.S.C. 553 and 554. It is exempt from review under Executive Order 
12866 but has been reviewed internally by the Department to ensure 
consistency with the purposes thereof. This rule does not require 
analysis under the Regulatory Flexibility Act or the Unfunded Mandates 
Reform Act. It has been found not to be a major rule within the meaning 
of the Small Business Regulatory Enforcement Act of 1996. It will not 
have substantial direct effects on the States, the relationship between 
the National Government and the States, or on the distribution of power 
and responsibilities among the various levels of government. Therefore, 
it is determined that this rule does not have sufficient federalism 
implications to warrant application of consultation provisions of 
Executive Orders 12372 and 13132. This rule does not impose any new 
reporting or recordkeeping requirements subject to the Paperwork 
Reduction Act, 44 U.S.C. Chapter 35.

List of Subjects

22 CFR Part 120

    Arms and munitions, Classified information, Exports.

22 CFR Part 122

    Arms and munitions, Exports, Reporting and recordkeeping 
requirements.

22 CFR Parts 123 and 126

    Arms and munitions, Exports.

22 CFR Part 124

    Arms and munitions, Exports, Technical assistance.

22 CFR Part 127

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

0
Accordingly, for the reasons set forth above, title 22, chapter I, 
subchapter M, parts 120, 122, 123, 124, 126, and 127 are amended as 
follows:

PART 120--PURPOSE AND DEFINITIONS

0
1-2. The authority citation for part 120 continues to read as follows:

    Authority: Secs. 2, 38, and 71, Public Law 90-629, 90 Stat. 744 
(22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; E.O. 11958, 42 FR 
4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; Pub. L 105-261, 112 
Stat. 1920.

0
3. Section 120.24 is revised to read as follows:


Sec.  120.24  Port Directors.

    Port Directors of U.S. Customs and Border Protection means the U.S. 
Customs and Border Protection Port Directors at the U.S. Customs and 
Border Protection Ports of Entry (other than the port of New York, New 
York where their title is the Area Directors).

0
4. Section 120.31 is added to read as follows:


Sec.  120.31  North Atlantic Treaty Organization.

    North Atlantic Treaty Organization (NATO) is comprised of the 
following member countries: Belgium, Bulgaria, Canada, Czech Republic, 
Denmark, Estonia, France, Germany, Greece, Hungary, Iceland, Italy, 
Latvia, Lithuania, Luxembourg, The Netherlands, Norway, Poland, 
Portugal, Romania, Slovakia, Slovenia, Spain, Turkey, United Kingdom 
and the United States.

0
5. Section 120.32 is added to read as follows:


Sec.  120.32  Major non-NATO ally.

    Major non-NATO ally means a country that is designated in 
accordance with Sec.  517 of the Foreign Assistance Act of 1961 (22 
U.S.C. 2321k) as a major non-NATO ally for purposes of the Foreign 
Assistance Act of 1961 and the Arms Export Control Act (22 U.S.C. 2751 
et seq.) (22 U.S.C. 2403(q)). The following countries have been 
designated as major non-NATO allies: Argentina, Australia, Bahrain, 
Egypt, Israel, Japan, Jordan, Kuwait, Morocco, New Zealand, Pakistan, 
the Philippines, Thailand, and Republic of Korea. Taiwan shall be 
treated as though it were designated a major non-NATO ally (as defined 
in section 644(q) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2403(q)) .

PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS

0
6. The authority citation for part 122 is revised to read as follows:

    Authority: Secs. 2 and 38, Public Law 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. 2651a.


0
7. Section 122.3 is amended by revising paragraph (b) and adding 
paragraph (c) to read as follows:


Sec.  122.3  Registration fees.

* * * * *
    (b) Expiration of registration. A registrant must submit its 
request for registration renewal at least 30 days prior to the 
expiration date.
    (c) 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.

0
8. Section 122.5 is revised to read as follows:


Sec.  122.5  Maintenance of records by registrants.

    (a) A person who is required to register must maintain records 
concerning the manufacture, acquisition and disposition (to include 
copies of all documentation on exports using exemptions and 
applications and licenses and their related documentation), of defense 
articles; of technical data; the provision of defense services; 
brokering activities; and information on political contributions, fees, 
or commissions furnished or obtained, as required by part 130 of this 
subchapter. Records in an electronic format must be maintained using a 
process or system capable of reproducing all records on paper. Such 
records when displayed on a viewer, monitor, or reproduced on paper, 
must exhibit a high degree of legibility and readability. (For the 
purpose of this section, ``legible'' and ``legibility'' mean the 
quality of a letter or numeral that enables the observer to identify it 
positively and quickly to the exclusion of all other letters or 
numerals. ``Readable'' and ``readability'' means the quality of a group 
of letters or numerals being recognized as complete words or numbers.) 
This information must be stored in such a manner that none of it may be 
altered once it is initially

[[Page 50960]]

recorded without recording all changes, who made them, and when they 
were made. For processes or systems based on the storage of digital 
images, the process or system must afford accessibility to all digital 
images in the records being maintained. All records subject to this 
section must be maintained for a period of five years from the 
expiration of the license or other approval, to include exports using 
an exemption (See Sec. 123.26 of this subchapter); or, from the date of 
the transaction (e.g. expired licenses or other approvals relevant to 
the export transaction using an exemption). The Managing Director, 
Directorate of Defense Trade Controls, and the Director of the Office 
of Defense Trade Controls Licensing, 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 Directorate of Defense Trade 
Controls or a person designated by the Directorate of Defense Trade 
Controls (e.g. the Diplomatic Security Service) or U.S. Immigration and 
Customs Enforcement, or U.S. Customs and Border Protection. Upon such 
request, the person maintaining the records must furnish the records, 
the equipment, and if necessary, knowledgeable personnel for locating, 
reading, and reproducing any record that is required to be maintained 
in accordance with this section.

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

0
9-10. The authority citation for part 123 continues to read as follows:

    Authority: Secs. 2, 38, and 71, Public Law 90-629, 90 Stat. 744 
(22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; E.O. 11958, 42 FR 
4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; 
Public Law 105-261, 112 Stat. 1920; Sec 1205(a), Public Law 107-228.

0
11. Section 123.1 is amended by revising paragraph (c)(2) to read as 
follows:


Sec.  123.1  Requirement for export or temporary import licenses.

* * * * *
    (c) * * *
    (1) * * *
    (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. In the case of fully 
electronic submissions, unless otherwise expressly required by the 
Directorate of Defense Trade Controls, applicants need not provide 
multiple copies of supporting documentation and attachments, supporting 
technical data or brochures, and freight forwarder lists.
* * * * *

0
12. Section 123.4 is amended by revising paragraphs (a), (a)(2), (b), 
(d) introductory text, (d)(1)(i), and (d)(2) to read as follows:


Sec.  123.4  Temporary import license exemptions.

    (a) Port Directors of U.S. Customs and Border Protection 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 
items (including any items manufactured abroad pursuant to U.S. 
Government approval) if the item temporarily imported:
* * * * *
    (2) Is to be enhanced, upgraded or incorporated into another item 
which has already been authorized by the Directorate of Defense Trade 
Controls for permanent export; or
* * * * *
    (b) Port Directors of U.S. Customs and Border Protection 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.
* * * * *
    (d) Procedures. To the satisfaction of the Port Director of U.S. 
Customs and Border Protection, the importer and export must comply with 
the following procedures:
    (1) * * *
    (i) File and annotate the applicable U.S. Customs and Border 
Protection 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
* * * * *
    (2) At the time of export, in accordance with the U.S. Customs and 
Border Protection procedures, the Directorate of Defense Trade Controls 
(DDTC) registered and eligible exporter, or an agent acting on the 
filer's behalf, must electronically file the export information using 
the Automated Export System (AES), and identify 22 CFR 123.4 as the 
authority for the export and provide, as requested by U.S. Customs and 
Border Protection, the entry document number or a copy of the U.S. 
Customs and Border Protection document under which the article was 
imported.

0
13. Section 123.5 is revised to read as follows:


Sec.  123.5  Temporary export licenses.

    (a) The Directorate of Defense Trade Controls may issue a license 
for the temporary export of unclassified defense articles (DSP-73). 
Such licenses are valid only if the article will be exported for a 
period of less than 4 years and will be returned to the United States 
and transfer of title will not 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 Directorate 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 a port in the United States 
where a Port Director of U.S. Customs and Border Protection 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 
Port Director of U.S. Customs and Border Protection 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 Sec.  
123.22(b)). 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) Any temporary export license for hardware that is used, 
regardless of whether the hardware was exported directly to the foreign 
destination or

[[Page 50961]]

returned directly from the foreign destination, must be endorsed by the 
U.S. Customs and Border Protection in accordance with the procedures in 
Sec.  123.22 of this subchapter.

0
14. Section 123.6 is revised to read as follows:


Sec.  123.6  Foreign trade zones and U.S. Customs and Border Protection 
bonded warehouses.

    Foreign trade zones in the United States and U.S. Customs and 
Border Protection 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 U.S. Customs and Border Protection 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 and Border 
Protection bonded warehouses to foreign countries, regardless of how 
the articles reached the zone or warehouse.

0
15. Section 123.13 is revised to read as follows:


Sec.  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 Port Director of U.S. 
Customs and Border Protection at the port of exit in the United States. 
The original statement must be filed at the time of exit with the Port 
Director of U.S. Customs and Border Protection. A duplicate must be 
filed at the port of reentry with the Port Director of U.S. Customs and 
Border Protection, who will duly endorse it and transmit it to the Port 
Director of U.S. Customs and Border Protection 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: U.S. Customs and Border Protection Inspector.

 Port of Exit----------------------------------------------------------

 Date------------------------------------------------------------------

 Signed----------------------------------------------------------------

    Endorsement: U.S. Customs and Border Protection Inspector.

 Port of Entry---------------------------------------------------------

 Date------------------------------------------------------------------


0
16. Section 123.16 is amended by revising paragraphs (a), (b)(1) 
introductory text, (b)(2) introductory text, (b)(3), (b)(4), (b)(5), 
(b)(9), and (b)(10) introductory text to read as follows:


Sec.  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 Directorate 
of Defense Trade Controls. These exemptions do not apply to: Proscribed 
destinations under Sec.  126.1 of this subchapter; exports for which 
Congressional notification is required (see Sec.  123.15 of this 
subchapter); MTCR articles; Significant Military Equipment (SME); and 
may not be used by persons who are generally ineligible as described in 
Sec.  120.1(c) of this subchapter. All shipments of defense articles, 
including those to and from Canada, require a Shipper's Export 
Declaration (SED) or notification letter. If the export of a defense 
article is exempt from licensing, the SED must cite the exemption. 
Refer to Sec.  123.22 for Shipper's Export Declaration and letter 
notification requirements.
    (b) * * *
    (1) Port Directors of U.S. Customs and Border Protection shall 
permit the export without a license of defense hardware being exported 
in furtherance of a manufacturing license agreement, technical 
assistance agreement, distribution agreement or an arrangement for 
distribution of items identified in Category XIII(b)(1), approved in 
accordance with part 124, provided that:
* * * * *
    (2) Port Directors of U.S. Customs and Border Protection shall 
permit the export of components or spare parts (for exemptions for 
firearms and ammunition see Sec.  123.17) without a license when the 
total value does not exceed $500 in a single transaction and:
* * * * *
    (3) Port Directors of U.S. Customs and Border Protection shall 
permit the export without a license, of packing cases specially 
designed to carry defense articles.
    (4) Port Directors of U.S. Customs and Border Protection 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 Sec.  125.4(b) of 
this subchapter and do not contain components covered by the U.S. 
Munitions List (see Sec.  121.8(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 Port Director of U.S. 
Customs and Border Protection that these conditions are met. This 
exemption does not imply that the Directorate 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) Port Directors of U.S. Customs and Border Protection 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 Port Director of U.S. Customs 
and Border Protection that these conditions are met.
* * * * *
    (9) Port Directors of U.S. Customs and Border Protection 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 Sec.  
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 Directorate of Defense 
Trade Controls and complies with all requirements set forth in part 122 
of this subchapter;
    (ii) No defense article exported under this exemption may be sold 
or transferred without the appropriate license or other approval from 
the Directorate of Defense Trade Controls.
    (10) Port Directors of U.S. Customs and Border Protection shall 
permit, without a license, the permanent export, and temporary export 
and return to the

[[Page 50962]]

United States, by accredited U.S. institutions of higher learning of 
articles fabricated only for fundamental research purposes otherwise 
controlled by Category XV (a) or (e) in Sec.  121.1 of this subchapter 
when all of the following conditions are met:
* * * * *

0
17. Section 123.17 is amended by revising paragraphs (a), (b), (c) 
introductory text, (d) and (e) to read as follows:


Sec.  123.17  Exports of firearms and ammunition.

    (a) Except as provided in Sec.  126.1 of this subchapter, Port 
Directors of U.S. Customs and Border Protection shall permit the export 
without a license of components and parts for Category I(a) firearms, 
except barrels, cylinders, receivers (frames) or complete breech 
mechanisms when the total value does not exceed $100 wholesale in any 
transaction.
    (b) Port Directors of U.S. Customs and Border Protection shall 
permit the export without a license of nonautomatic firearms covered by 
Category I(a) of Sec.  121.1 of this subchapter if they were 
manufactured in or before 1898, or are replicas of such firearms.
    (c) Port Directors of U.S. Customs and Border Protection 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 Sec.  121.1 of this subchapter and not more than 1,000 
cartridges therefor, provided that:
* * * * *
    (d) Port Directors of U.S. Customs and Border Protection shall 
permit a foreign person to export without a license such firearms in 
Category I(a) of Sec.  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) Port Directors of U.S. Customs and Border Protection shall 
permit U.S. persons to export without a 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 Sec.  123.18.

0
18. Section 123.18 is amended by revising paragraphs (a) introductory 
text, (a)(3), and (b) to read as follows:


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

* * * * *
    (a) Firearms. Port Directors of U.S. Customs and Border Protection 
shall permit nonautomatic firearms in Category I(a) of Sec.  121.1 of 
this subchapter and parts therefor to be exported, except by mail, from 
the United States without a license if:
* * * * *
    (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 Port 
Director of U.S. Customs and Border Protection.
    (b) Ammunition. Port Directors of U.S. Customs and Border 
Protection 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).

0
19. Section 123.22 is amended by revising paragraphs (a), (b)(1) 
introductory text, (b)(2) introductory text, (b)(3)(iii) and (c) to 
read as follows:


Sec.  123.22  Filing, retention, and return of export licenses and 
filing of export information.

    (a) Any export, as defined in this subchapter, of a defense article 
controlled by this subchapter, to include defense articles transiting 
the United States, requires the electronic reporting of export 
information. The reporting of the export information shall be to the 
U.S. Customs and Border Protection using the Automated Export System 
(AES) or directly to the Directorate of Defense Trade Controls (DDTC). 
Any license or other approval authorizing the permanent export of 
hardware must be filed at a U.S. Port before any export. Licenses or 
other approvals for the permanent export of technical data and defense 
services shall be retained by the applicant who will send the export 
information directly to DDTC. Temporary export or temporary import 
licenses for such items need not be filed with the U.S. Customs and 
Border Protection, but must be presented to the U.S. Customs and Border 
Protection for decrementing of the shipment prior to departure and at 
the time of entry. The U.S. Customs and Border Protection will only 
decrement a shipment after the export information has been filed 
correctly using the AES. Before the export of any hardware using an 
exemption in this subchapter, the DDTC registered applicant/exporter, 
or an agent acting on the filer's behalf, must electronically provide 
export information using the AES (see paragraph (b) of this section). 
In addition to electronically providing the export information to the 
U.S. Customs and Border Protection before export, all the mandatory 
documentation must be presented to the port authorities (e.g., 
attachments, certifications, proof of AES filing; such as the External 
Transaction Number (XTN) or Internal Transaction Number (ITN)). Export 
authorizations shall be filed, retained, decremented or returned to 
DDTC as follows:
    (1) Filing of licenses and documentation for the permanent export 
of hardware. For any permanent export of hardware using a license 
(e.g., DSP-5, DSP-94) or an exemption in this subchapter, the exporter 
must, prior to an AES filing, deposit the license and provide any 
required documentation for the license or the exemption with the U.S. 
Customs and Border Protection, unless otherwise directed in this 
subchapter (e.g., Sec.  125.9). If necessary, an 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 
and Border Protection.
    (2) Presentation and retention by the applicant of temporary 
licenses and related documentation for the export of unclassified 
defense articles. Licenses for the temporary export or temporary import 
of unclassified defense articles need not be filed with the U.S. 
Customs and Border Protection, but must be retained by the applicant 
and presented to the U.S. Customs and Border Protection at the time of 
temporary import and temporary export. When a defense article is 
temporarily exported from the United States and moved from one 
destination authorized on a license to another destination authorized 
on the same or another temporary license, the applicant, or an agent 
acting on the applicant's behalf, must ensure that the U.S. Customs and 
Border Protection decrements both temporary licenses to show the exit 
and entry of the hardware.
    (b) Filing and reporting of export information--(1) Filing of 
export information with the U.S. Customs and

[[Page 50963]]

Border Protection. Before exporting any hardware controlled by this 
subchapter, using a license or exemption, the DDTC registered 
applicant/exporter, or an agent acting on the filer's behalf, must 
electronically file the export information with the U.S. Customs and 
Border Protection using the Automated Export System (AES) in accordance 
with the following timelines:
* * * * *
    (2) Emergency shipments of hardware that cannot meet the pre-
departure filing requirements. U.S. Customs and Border Protection may 
permit an emergency export of hardware by truck (e.g., departures to 
Mexico or Canada) or air, by a U.S. registered person, when the 
exporter is unable to comply with the SED filing timeline in paragraph 
(b)(1)(i) of this section. The applicant, or an agent acting on the 
applicant's behalf, in addition to providing the export information 
electronically using the AES, must provide documentation required by 
the U.S. Customs and Border Protection and this subchapter. The 
documentation provided to the U.S. Customs and Border Protection at the 
port of exit must include the External Transaction Number (XTN) or 
Internal Transaction Number (ITN) for the shipment and a copy of a 
notification to DDTC stating that the shipment is urgent and why. The 
original of the notification must be immediately provided to DDTC. The 
AES filing of the export information when the export is by air must be 
at least two hours prior to any departure from the United States; and, 
when a truck shipment, at the time when the exporter provides the 
articles to the carrier or at least one hour prior to departure from 
the United States, when the permanent export of the hardware has been 
authorized for export:
* * * * *
    (3) * * *
    (iii) Technical data and defense service exemptions. In any 
instance when technical data is exported using an exemption in this 
subchapter (e.g., Sec. Sec.  125.4(b)(2), 125.4(b)(4), 126.5) from a 
U.S. port, the exporter is not required to report using AES, but must, 
effective January 18, 2004, provide the export data electronically to 
DDTC. A copy of the electronic notification to DDTC must accompany the 
technical data shipment and be made available to the U.S. Customs and 
Border Protection upon request.

    Note to paragraph (b)(3)(iii): Future changes to the electronic 
reporting procedure will be amended by publication of a rule in the 
Federal Register. Exporters are reminded to continue maintaining 
records of all export transactions, including exemption shipments, 
in accordance with this subchapter.


    (c) Return of licenses. All licenses issued by the Directorate of 
Defense Trade Controls (DDTC) must be returned to the DDTC in 
accordance with the following:
    (1) License filed with the U.S. Customs and Border Protection. The 
U.S. Customs and Border Protection must return to the DDTC any license 
when the total value or quantity authorized has been shipped or when 
the date of expiration is reached, whichever occurs first.
    (2) Licenses not filed with the U.S. Customs and Border Protection. 
Any license that is not filed with the U.S. Customs and Border 
Protection (e.g., oral or visual technical data releases or temporary 
import and export licenses retained in accordance with paragraph (a)(2) 
of this section), must be returned by the applicant to the DDTC no 
later than 60 days after the license has been expended (e.g., total 
value or quantity authorized has been shipped) or the date of 
expiration, whichever occurs first.

0
20. Section 123.23 is revised to read as follows:


Sec.  123.23  Monetary value of shipments.

    Port Directors of U.S. Customs and Border Protection 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.

0
21. Section 123.24 is amended by revising paragraph (a) to read as 
follows:


Sec.  123.24  Shipments by U.S. Postal Service.

    (a) The export of any defense hardware using a license or exemption 
in this subchapter by the U.S. Postal Service must be filed with the 
U.S. Customs and Border Protection using the Automated Export System 
(AES) and the license must be filed with the U.S. Customs and Border 
Protection before any hardware is actually sent abroad by mail. The 
exporter must certify the defense hardware being exported in accordance 
with this subchapter by clearly marking on the package ``This export is 
subject to the controls of the ITAR, 22 CFR (identify section for an 
exemption) or (state license number) and the export has been 
electronically filed with the U.S. Customs and Border Protection using 
the Automated Export System (AES).''
* * * * *

0
22. Section 123.27 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  123.27  Special licensing regime for export to U.S. allies of 
commercial communications satellite components, systems, parts, 
accessories, attachments and associated technical data.

    (a) * * *
    (1) The proposed exports or re-exports concern exclusively one or 
more countries of the North Atlantic Treaty Organization (see Sec.  
120.31 of this subchapter) and/or one or more countries which have been 
designated in accordance with section 517 of the Foreign Assistance Act 
of 1961 and with section 1206 of the Foreign Relations Authorization 
Act, Fiscal Year 2003 as a major non-NATO ally (see Sec.  120.32 of 
this subchapter).
* * * * *

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

0
23. The authority citation for part 124 continues to read as follows:

    Authority: Secs. 2, 38, and 71, Public Law 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. 2651a; 22 U.S.C. 2776; Public Law 105-261.


0
24. Section 124.3 is amended by revising paragraphs (a) and (b) 
introductory text to read as follows:


Sec.  124.3  Exports of technical data in furtherance of an agreement.

    (a) Unclassified technical data. The U.S. Customs and Border 
Protection or U.S. 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 Directorate of Defense Trade Controls 
(DDTC) and the technical data does not exceed the scope or limitations 
of the relevant agreement. The approval of the DDTC must be obtained 
for the export of any unclassified technical data that 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

[[Page 50964]]

the transmittal of classified information does not require further 
approval from the Directorate of Defense Trade Controls when:
* * * * *

PART 126--GENERAL POLICIES AND PROVISIONS

0
25. The authority citation for part 126 continues to read as follows:

    Authority: Secs. 2, 38, 40, 42, and 71, Public Law 90-629, 90 
Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); E.O. 11958, 
42 FR 4311; 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2651a; 22 U.S.C. 
287c; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; Sec. 1225, 
Public Law 108-375.

0
26. Section 126.4 is amended by revising paragraphs (a) and (d) to read 
as follows:


Sec.  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 for official use by such an agency, or 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 affected 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 Directorate 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 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 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.

* * * * *
    (d) A Shipper's Export Declaration (SED), required under Sec.  
123.22 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 Port Director of U.S. Customs and 
Border Protection or Department of Defense transmittal authority. A 
copy of the SED and the written certification statement shall be 
provided to the Directorate of Defense Trade Controls immediately 
following the export.

0
27. Section 126.5 is amended by revising paragraphs (a), (b) 
introductory text, (c)(5) and (d) introductory text to read as follows:


Sec.  126.5  Canadian exemptions.

    (a) Temporary import of defense articles. Port Director of U.S. 
Customs and Border Protection and postmasters shall permit the 
temporary import and return to Canada without a license of any 
unclassified defense articles (see Sec.  120.6 of this subchapter) that 
originate in Canada for temporary use in the United States and return 
to Canada. All other temporary imports shall be in accordance with 
Sec. Sec.  123.3 and 123.4 of this subchapter.
    (b) Permanent and temporary export of defense articles. Except as 
provided below, the Port Director of U.S. Customs and Border Protection 
and postmasters shall permit, when for end-use in Canada by Canadian 
Federal or Provincial governmental authorities acting in an official 
capacity or by a Canadian-registered person or return to the United 
States, the permanent and temporary export to Canada without a license 
of defense articles and related technical data identified in 22 CFR 
121.1. The above exemption is subject to the following limitations: 
Defense articles and related technical data, and defense services 
identified in paragraphs (b)(1) through (b)(21) of this section and 
exports that transit third countries. Such limitations also are subject 
to meeting the requirements of this subchapter, (to include 22 CFR 
120.1(c) and (d), parts 122 and 123 (except insofar as exemption from 
licensing requirements is herein authorized) and Sec.  126.1, and the 
requirement to obtain non-transfer and use assurances for all 
significant military equipment. For purposes of this section, 
``Canadian-registered person'' is any Canadian national (including 
Canadian business entities organized under the laws of Canada), dual 
citizen of Canada and a third country (subject to Sec.  126.1), and 
permanent resident registered in Canada in accordance with the Canadian 
Defense Production Act, and such other Canadian Crown Corporations 
identified by the Department of State in a list of such persons 
publicly available through the Internet Web site of the Directorate of 
Defense Trade Controls and by other means. The defense articles, 
related technical data, and defense services identified in 22 CFR 121.1 
continuing to require a license are:
* * * * *
    (c) * * *
    (5) The U.S. exporter must provide the Directorate of Defense Trade 
Controls a semi-annual report of all their on-going activities 
authorized under this section. The report shall include the article(s) 
being produced; the end user(s) (i.e., name of U.S. or Canadian 
company); the end item into which the product is to be incorporated; 
the intended end use of the product (e.g., United States or Canadian 
Defense contract number and identification of program); the name and 
address of all the Canadian contractors and subcontractors; and
* * * * *
    (d) Reexports/retransfer. Reexport/re-transfer in Canada to another 
end user or end use or from Canada to another destination, except the 
United States, must in all instances have the prior approval of the 
Directorate of Defense Trade Controls. Unless otherwise exempt in this 
subchapter, the original exporter is responsible, upon request from a 
Canadian-registered person, for obtaining or providing reexport/
retransfer approval. In any instance when the U.S. exporter is no 
longer available to the Canadian end user the request for reexport/
retransfer may be made directly to Department of State, Directorate of 
Defense Trade Controls. All requests must include the information in 
Sec.  123.9(c) of this subchapter. Reexport/retransfer approval is 
acquired by:
* * * * *

0
28. Section 126.6 is amended by revising paragraphs (a) introductory 
text, (c) introductory text, (c)(6)(i), (c)(6)(ii), (c)(7)(ii) and 
(c)(7)(iv) to read as follows:


Sec.  126.6  Foreign-owned military aircraft and naval vessels, and the 
Foreign Military Sales program.

    (a) A license from the Directorate of Defense Trade Controls is not 
required if:
* * * * *

[[Page 50965]]

    (c) Foreign Military Sales Program. A license from the Directorate 
of Defense Trade Controls is not required if the defense article or 
technical data or a defense service to be transferred was sold, leased 
or loaned by the Department of Defense to a foreign country or 
international organization under the Foreign Military Sales (FMS) 
Program of the Arms Export Control Act pursuant to an Letter of Offer 
and Acceptance (LOA) authorizing such transfer which meets the criteria 
stated below:
* * * * *
    (6) * * *
    (i) The transfer is 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 Directorate of 
Defense Trade Controls pursuant to part 122 of this subchapter, and
    (ii) At the time of shipment, the Port Director of U.S. Customs and 
Border Protection is provided an original and properly executed DSP-94 
accompanied by a copy of the LOA and any other documents required by 
U.S. Customs and Border Protection in carrying out its 
responsibilities. The Shippers Export Declaration or, if authorized, 
the outbound manifest, must be annotated ``This shipment is being 
exported under the authority of Department of State Form DSP-94. It 
covers FMS Case [insert case identification], expiration [insert date]. 
22 CFR 126.6 applicable. The U.S. Government point of contact is ------
--, telephone number --------,'' and
* * * * *
    (7) * * *
    (ii) The U.S. person(s) identified in the contract maintain a 
registration with the Directorate of Defense Trade Controls for the 
entire time that the defense service is being provided. In any instance 
when the U.S. registered person(s) identified in the contract employs a 
subcontractor, the subcontractor may only use this exemption when 
registered with DDTC, and when such subcontract meets the above stated 
requirements, and
* * * * *
    (iv) The U.S. person responsible for the transfer reports the 
initial transfer, citing this section of the ITAR, the FMS case 
identifier, contract and subcontract number, the foreign country, and 
the duration of the service being provided to the Directorate of 
Defense Trade Controls using DDTC's Direct Shipment Verification 
Program.

0
29. Section 126.10 is amended by revising paragraph (b) to read as 
follows:


Sec.  126.10  Disclosure of information.

* * * * *
    (b) Determinations required by law. Section 38(e) of the Arms 
Export Control Act (22 U.S.C. 2778) provides by reference to certain 
procedures of the Export Administration Act 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 in that provision, except that the names 
of the countries and types and quantities of defense articles for which 
licenses are issued under this section shall not be withheld from 
public disclosure unless the President determines that release of such 
information would be contrary to the national interest. Registration 
with the Directorate of Defense Trade Controls is required of certain 
persons, in accordance with Section 38 of the Arms Export Control Act. 
The requirements and guidance are provided in the ITAR pursuant to 
parts 122 and 129. Registration is generally a precondition to the 
issuance of any license or other approvals under this subchapter, to 
include the use of any exemption. Therefore, information provided to 
the Department of State to effect registration, as well as that 
regarding actions taken by the Department of State related to 
registration, may not generally be disclosed to the public. 
Determinations required by Section 38(e) shall be made by the Assistant 
Secretary for Political-Military Affairs.
* * * * *

0
30. Section 126.13 is amended by revising paragraphs (a) introductory 
text and (b) to read as follows:


Sec.  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 Sec.  126.8(c) must include a 
letter signed by a responsible official empowered by the applicant and 
addressed to the Directorate of Defense Trade Controls, stating 
whether:
* * * * *
    (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 Form (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 Directorate 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. Port 
Directors of U.S. Customs and Border Protection 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.
* * * * *

PART 127--VIOLATIONS AND PENALTIES

0
31-32. The authority citation for part 127 is revised to read as 
follows:

    Authority: Secs. 2, 38, and 42, Public Law 90-629, 90 Stat. 744 
(22 U.S.C. 2752, 2778, 2791); E.O. 11958, 42 FR 4311; 3 CFR, 1977 
Comp., p. 79; 22 U.S.C. 401; 22 U.S.C. 2651a; 22 U.S.C. 2779a; 22 
U.S.C. 2780.


0
33. Section 127.4 is revised to read as follows:


Sec.  127.4  Authority of U.S. Immigration and Customs Enforcement and 
U.S. Customs and Border Protection officers.

    (a) U.S. Immigration and Customs Enforcement and U.S. Customs and 
Border Protection 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

[[Page 50966]]

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. Immigration and Customs Enforcement and U.S. Customs and 
Border Protection 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 U.S. Customs and Border Protection 
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 and Border Protection or U.S. Immigration 
and Customs Enforcement.

    Dated: July 25, 2005.
Robert G. Joseph,
Under Secretary, Arms Control and International Security, Department of 
State.
[FR Doc. 05-17121 Filed 8-26-05; 8:45 am]
BILLING CODE 4710-25-P