Implementation of the Defense Trade Cooperation Treaty Between the United States and Australia, 21523-21537 [2013-08506]

Download as PDF Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations members,3 which may necessitate the sharing of information by the Commission to a DCO on a periodic basis. In order to mitigate market disruptions, ensure the best interests of market participants, and to effectuate any purpose of the CEA as amended, the Commission is revising regulation 140.72 to permit the provision of critical information to all of these registered entities. Presently, the delegation of authority in regulation 140.72 provides certain employees of the Commission with the authority to disclose confidential information only to any contract market, registered futures association, or certain self-regulatory organizations.4 With this revision of regulation 140.72, the present delegation of authority will be expanded to include all registered entities as defined in the CEA and as permitted by section 8a(6) of the CEA. II. Related Matters A. Administrative Procedure Act The revisions to the Commission’s regulations in this rulemaking do not establish any new substantive or legislative rules, but rather relate solely to rules of agency organization, practice, or procedure. Therefore, this rulemaking is excepted from the public notice and comment provisions of the Administrative Procedure Act.5 Additionally, as the revisions to the Commission’s regulations in this rulemaking will not cause any party to undertake efforts to comply with the regulations as revised, the Commission has determined to make this rulemaking effective upon publication in the Federal Register.6 TKELLEY on DSK3SPTVN1PROD with RULES B. Regulatory Flexibility Act The Regulatory Flexibility Act requires the Commission to consider whether the regulations it adopts will have a significant economic impact on a substantial number of small entities.7 The Commission is obligated to conduct a regulatory flexibility analysis for any rule for which the agency publishes a general notice of proposed rulemaking pursuant to section 553(b) of the Administrative Procedure Act.8 This rulemaking is excepted from the public rulemaking provisions of the Administrative Procedure Act. Accordingly, the Commission is not obligated to conduct a regulatory flexibility analysis for this rulemaking. C. Paperwork Reduction Act The Commission may not conduct or sponsor, and a respondent is not required to respond to, a collection of information contained in a rulemaking unless the information collection displays a currently valid control number issued by the Office of Management and Budget (‘‘OMB’’) pursuant to the Paperwork Reduction Act.9 This rulemaking contains no collection of information that obligates the Commission to obtain a control number from OMB. List of Subjects in 17 CFR Part 140 Authority delegations (Government agencies), Organization and functions (Government agencies). For the reasons stated in the preamble, the Commission hereby amends chapter I of title 17 of the Code of Federal Regulations as follows: PART 140—ORGANIZATION, FUNCTIONS, AND PROCEDURES OF THE COMMISSION 1. The authority citation for part 140 is revised to read as follows: ■ Authority: 7 U.S.C. 2(a)(12) and 12(b). § 140.72 2. Amend § 140.72 in the section heading and paragraphs (a), (b), (d), and (f) by removing the words ‘‘contract market’’ wherever they appear and adding in their place the words ‘‘registered entity.’’ ■ Issued in Washington, DC, on April 5, 2013, by the Commission. Christopher J. Kirkpatrick, Deputy Secretary of the Commission. [FR Doc. 2013–08440 Filed 4–10–13; 8:45 am] BILLING CODE 6351–01–P DEPARTMENT OF STATE 22 CFR Parts 120 and 126 RIN 1400–AD38 [Public Notice 8270] Implementation of the Defense Trade Cooperation Treaty Between the United States and Australia 17 CFR 39.13(h)(2). CFR 140.72. 5 5 U.S.C. 553(b). 6 See 5 U.S.C. 553(d). 7 See 5 U.S.C. 601 et seq. 8 5 U.S.C. 601(2). The Department of State is amending the International Traffic in Arms Regulations (ITAR) to implement SUMMARY: 4 17 VerDate Mar<15>2010 18:35 Apr 10, 2013 Department of State. Final rule. AGENCY: ACTION: 3 See [Amended] 9 See Jkt 229001 PO 00000 44 U.S.C. 3501 et seq. Frm 00009 Fmt 4700 Sfmt 4700 21523 the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation, identify via a supplement to the ITAR the defense articles and defense services that cannot be exported pursuant to the licensing exemption created by the Treaty, and make certain other corrections to the supplement. DATES: This rule is effective upon the entry into force of the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation. The Department will publish a final rule in the Federal Register providing the effective date of this rule. FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663–2809 or email DDTCResponseTeam@state.gov. ATTN: Regulatory Change—Treaties. SUPPLEMENTARY INFORMATION: The Department of State is amending the International Traffic in Arms Regulations (ITAR) pursuant to the Security Cooperation Act of 2010 (Pub. L. 111–266), with the inclusion of other changes. Title I of the Security Cooperation Act, the Defense Trade Cooperation Treaties Implementation Act of 2010, implements the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation (Treaty Doc. 110–10), and the Treaty Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland Concerning Defense Trade Cooperation (Treaty Doc. 110–7). The U.S.-UK treaty entered into force on April 13, 2012. (See ‘‘Implementation of the Defense Trade Cooperation Treaty Between the United States and the United Kingdom,’’ 77 FR 16592, and ‘‘Announcement of Entry Into Force of the Defense Trade Cooperation Treaty Between the United States and the United Kingdom,’’ 77 FR 33089.) This rule amends the ITAR with regard to the U.S.-Australia treaty (the ‘‘Treaty’’). ITAR § 120.1 is amended to provide updated authorities and editorial changes. ITAR § 120.33 is added to provide a definition of ‘‘Defense Trade Cooperation Treaty between the United States and Australia.’’ New ITAR § 120.35 defines the Implementing Arrangement pursuant to the Treaty. ITAR § 126.16 is added to create the licensing exemption and provide guidance on its use. Supplement No. 1 to part 126 is amended to identify E:\FR\FM\11APR1.SGM 11APR1 TKELLEY on DSK3SPTVN1PROD with RULES 21524 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations defense articles that may not be exported and defense services that may not be furnished through the exemption. In addition, the supplement is amended to make the following corrections and clarifications: the phrase, ‘‘defense articles and services related to’’ is removed from the row regarding USML Category I articles, and the USML citation for armored plates is changed from USML Category XIII(c) to XIII(e). On November 22, 2011 (76 FR 72246, RIN 1400–AC95), the Department published for public comment a proposed rule to amend the ITAR to implement the Defense Trade Cooperation Treaty between the United States and the United Kingdom and the Defense Trade Cooperation Treaty between the United States and Australia, and to identify, via a supplement, the defense articles that may not be exported and the defense services that may not be furnished through use of the licensing exemptions created by the treaties. The comment period ended December 22, 2011. Fifteen parties filed comments that applied to the Treaty. The Department’s evaluation of the comments and recommendations follows. The majority of commenting parties expressed support for the Treaty’s intention of facilitating defense exports with one of the United States’ closest allies. However, the commenting parties expressed concern that the exemption is overly complicated and its requirements too burdensome to be truly workable. The Department appreciates these comments and believes the clarifying edits made in this final rule make application of the exemption clearer. Several commenting parties requested additional guidance for various aspects of the exemption described in ITAR § 126.16. As part of Treaty implementation, the Department’s Directorate of Defense Trade Controls (DDTC) has posted Frequently Asked Questions (FAQs) on its Web site (www.pmddtc.state.gov). These FAQs address these requests for guidance. Two commenting parties recommended that the Department add a definition for defense articles to ITAR § 126.16(a)(1) to clarify that ’’defense articles’’ also includes technical data for purposes of the exemption. The Department does not believe this change is necessary as the definition for ‘‘defense articles’’ in ITAR § 120.6 clearly identifies technical data as within its scope. Unless specifically indicated otherwise, the use of the term ‘‘defense article’’ includes technical data. VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 One commenting party requested clarification of the term ‘‘access’’ as used in ITAR § 126.16(a)(1)(iv), indicating that it is common for U.S. Customs and Border Protection (CBP) to authorize a physical manipulation of a container, which would seemingly result in an intermediate consignee having ‘‘access’’ to an item in the shipment. The Department believes the meaning of ‘‘access’’ is plain, and does not include situations such as this, where there is a directive from a CBP official to open a container for the purpose as stated. Another party requested that the Department place in this section a reference to ITAR § 126.16(k), which discusses intermediate consignees. The Department accepted this recommendation and has revised the section accordingly. One commenting party expressed concern that the process by which the U.S. Government would obtain records, as provided in ITAR § 126.16(l) and other sections of the exemption, is unclear. These sections are not intended to identify the process by which record requests are made, and therefore were not revised to provide this information. (The records-request process would be the same for ITAR § 126.16(l) as for requests made pursuant to any other section of the ITAR.) One commenting party noted that ITAR § 126.16(a)(4) seemed to limit transfers just to exports to the United States. The Department has revised this section to clarify that it applies to transfers within the Approved Community. Two commenting parties requested that the Department change the word ‘‘required’’ to ‘‘pursuant to’’ in ITAR § 126.16(a)(4)(iii). This change was not accepted because the word ‘‘required’’ is a requirement of the Treaty. In response to the recommendation of two commenting parties, the Department revised ITAR § 126.16(a)(5) regarding the applicability of this exemption to defense articles delivered via the Foreign Military Sales program. Three commenting parties recommended that the Department include an explanation of the vetting process for the Australian Community in ITAR § 126.16(d). The Department did not accept this recommendation for the rule itself, but notes that the vetting requirements are identified in the Treaty and Implementing Arrangement, which are available on DDTC’s Web site. Three commenting parties requested that the Department provide additional guidance on requesting confirmation of Treaty eligibility for operations, programs, and projects that cannot be PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 publicly identified (i.e., are classified). For this information, the Department refers inquiries by members of the approved community to both the DDTC Web site and the appropriate defense authority. One commenting party inquired whether the Department will publish a complete list of U.S. Government contracts that are Treaty eligible. The Department will not do so. The U.S. Department of Defense has updated the Defense Federal Acquisition Regulation Supplement (DFARS) and certain contract clauses, which will identify Treaty eligibility when incorporated into a contract. Three commenting parties requested that ITAR § 126.16(g)(1) be clarified to indicate whether it applies to marketing to members of the Approved Community, or requested its removal. This provision is part of the Treaty’s Exempted Technology List, and therefore cannot be removed. However, the Department revised ITAR § 126.16(g)(1) to indicate that marketing to members of the Australian Community is covered so long as it is for an approved Treaty end-use and meets the other requirements of this section. One commenting party recommended removal of ITAR § 126.16(g)(4) or, in the alternative, adding the parenthetical ‘‘(or foreign equivalent)’’ after ‘‘Milestone B.’’ The Department cannot remove this paragraph as it is part of the Treaty’s Exempted Technology List. The Department also cannot add the parenthetical as there is no equivalent in Australia to ‘‘Milestone B.’’ One commenting party requested changes to ITAR § 126.16(g)(5) to allow for the export of embedded exempted technologies in certain circumstances. The Department is not, at this time, prepared to broaden this provision to include embedded exempted technologies. Two commenting parties commented on the complexity of using ITAR § 126.16(h) with a diverse supply chain and requested clarification on the applicability of ITAR § 123.9(e) to this exemption. The Department appreciates the diverse nature of global supply chains, but believes the mechanisms provided in ITAR § 126.16(h) are no more onerous than current retransfer or reexport requirements. Further, as indicated in ITAR § 126.16(h)(5), any retransfer, reexport, or change in enduse under ITAR § 126.16(h) shall be made in accordance with ITAR § 123.9. In response to the recommendation of two commenting parties, the Department has deleted ‘‘any citizen of E:\FR\FM\11APR1.SGM 11APR1 TKELLEY on DSK3SPTVN1PROD with RULES Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations such countries’’ from ITAR § 126.16(h)(8). Ten commenting parties commented on the marking requirements provided in ITAR § 126.16(j). Of most concern was a perception that the requirements of this section made using the exemption overly burdensome and costly. Various suggestions were provided, ranging from removal of the requirement to rewording of certain sections. The majority of these commenting parties requested removal of the requirement in paragraph (j)(2) for exporters to remove Treaty markings. The Department appreciates these comments; however, apart from minor clarifying changes, the marking requirements have not been removed or revised because they are made pursuant to the Treaty and its Implementing Arrangement. One commenting party requested that the Department revise the text of the statement required by ITAR § 126.16(j)(5) to indicate that the items being exported are USML items and authorized only for export to Australia under the Treaty. The Department accepted this suggestion and revised the text accordingly. One commenting party requested that registered brokers be included in ITAR § 126.16(k)(1)(ii). Australian intermediate consignees must meet the requirements of this section. If a registered broker meets these requirements, then it may be an intermediate consignee for purposes of this exemption. However, simply being a registered broker does not automatically qualify an entity as an Australian intermediate consignee. One commenting party recommended changing ‘‘all exports’’ in ITAR § 126.16(l)(1) to ‘‘their exports’’ to acknowledge that the U.S. exporter may not be aware or have record of a reexport/retransfer request submitted by an Australian Community member. The Department accepted this recommendation and has revised the section accordingly. One commenting party requested clarification of whether ITAR § 126.16(l)(1)(x) referred to the USML category or security classification. The Department revised this section to make clear that it refers to security classification. The Department accepted the recommendation of one commenting party to remove reference to ‘‘defense services’’ in ITAR § 126.16(l)(2). Two commenting parties requested that the Department clarify whether ITAR § 126.16(m) required exporters to submit negative reports. Reporting requirements under this section are VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 contingent on meeting the requirements of ITAR § 130.9. Two commenting parties requested clarification on whether the congressional notification requirement under the Treaty is identical to that required under normal license authorization processes. The Department confirms that the requirement is the same. Ten commenting parties submitted comments regarding the scope and text of Supplement No. 1 to part 126. In particular, comments indicated concern that the supplement was too broad and possibly excluded too much to make the exemption useful. The Department appreciates these comments, and has made clarifying edits to Supplement No. 1 to the extent possible within the confines of the Treaty, the Implementing Arrangement, and the Exempted Technology List. For clarification, the Department has added, ‘‘prior to movement,’’ to the text of ITAR § 126.16(j)(1), which is in conformance with the requirements of the Treaty’s Implementing Arrangement. Having thoroughly reviewed and evaluated the written comments and recommended changes, the Department has determined that it will accept, and hereby adopt with the noted changes, the proposed rule, as it pertained to the Treaty, as a final rule, to be effective when the Treaty enters into force. Regulatory Analysis and Notices Administrative Procedure Act The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States government and that rules implementing this function are exempt from sections 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act (APA). In addition, this rulemaking is implementing the provisions of a treaty between the United States and Australia and related amendments to the Arms Export Control Act. Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department published this rule with a 30-day provision for public comment and without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function (RIN 1400– AC95). This rule is effective upon the entry into force of the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation (Treaty Doc. 110–10). Once the Treaty is in force, exporters must be PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 21525 able to utilize the Treaty for qualifying exports of defense articles. Regulatory Flexibility Act Since the Department is of the opinion that this rule is exempt from the provisions of 5 U.S.C. 553, there is no requirement for an analysis under the Regulatory Flexibility Act. Unfunded Mandates Reform Act of 1995 This rulemaking does not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. Executive Order 13175 The Department of State has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the requirement of Executive Order 13175 does not apply to this rulemaking. Small Business Regulatory Enforcement Fairness Act of 1996 This rulemaking is not a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996. Executive Orders 12372 and 13132 This rulemaking will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this rulemaking. Executive Orders 12866 and 13563 Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, E:\FR\FM\11APR1.SGM 11APR1 21526 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations environmental, public health and safety effects, distributed impacts, and equity). These executive orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Department has reviewed this regulation to ensure its consistency with the regulatory philosophy and principles set forth in these executive orders. The Department also has determined that this rule is not a ‘‘significant regulatory action’’ under section 3(f) of Executive Order 12866. Executive Order 12988 The Department of State has reviewed this rulemaking in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden. Paperwork Reduction Act 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 in 22 CFR Parts 120 and 126 Arms and Munitions, Exports. Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 120 and 126 are amended as follows: 1. The authority citation for part 120 is revised to read as follows: Authority: Secs. 2, 38, and 71, Pub. L. 90– 629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub. L. 105–261, 112 Stat. 1920; Pub. L. 111–266; Section 1261, Pub. L. 112–239; E.O. 13637, 78 FR 16129. 2. Section 120.1 is amended by revising paragraph (a) to read as follows: ■ TKELLEY on DSK3SPTVN1PROD with RULES General authorities and eligibility. (a) Section 38 of the Arms Export Control Act (22 U.S.C. 2778), as amended, authorizes the President to control the export and import of defense articles and defense services. The statutory authority of the President to promulgate regulations with respect to exports of defense articles and defense services was delegated to the Secretary of State by Executive Order 13637. This subchapter implements that authority. By virtue of delegations of authority by the Secretary of State, these regulations are primarily administered by the Deputy Assistant Secretary of State for Defense Trade and Regional Security and the Managing Director of the 18:35 Apr 10, 2013 Defense Trade Cooperation Treaty between the United States and Australia means the Treaty between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation, done at Sydney, September 5, 2007. For additional information on making exports pursuant to this treaty, see § 126.16 of this subchapter. ■ 4. Section 120.35 is added to read as follows: § 120.35 Australia Implementing Arrangement. Australia Implementing Arrangement means the Implementing Arrangement Pursuant to the Treaty between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation, done at Washington, March 14, 2008, as it may be amended. PART 126—GENERAL POLICIES AND PROVISIONS 5. The authority citation for part 126 is revised to read as follows: ■ VerDate Mar<15>2010 § 120.33 Defense Trade Cooperation Treaty between the United States and Australia. ■ PART 120—PURPOSE AND DEFINITIONS § 120.1 Directorate of Defense Trade Controls, Bureau of Political-Military Affairs. * * * * * ■ 3. Section 120.33 is added to read as follows: Jkt 229001 Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp., p. 899; Sec. 1225, Pub. L. 108– 375; Sec. 7089, Pub. L. 111–117; Pub. L. 111– 266; Section 7045, Pub. L. 112–74; Section 7046, Pub. L. 112–74; E.O. 13637, 78 FR 16129. 6. Section 126.16 is added to read as follows: ■ § 126.16 Exemption pursuant to the Defense Trade Cooperation Treaty between the United States and Australia. (a) Scope of exemption and required conditions. (1) Definitions. (i) An export means, for purposes of this section only, the initial movement of defense articles or defense services from the United States Community to the Australian Community. (ii) A transfer means, for purposes of this section only, the movement of a previously exported defense article or defense service by a member of the Australian Community within the Australian Community, or between a member of the United States Community and a member of the Australian Community. PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 (iii) Retransfer and reexport have the meaning provided in § 120.19 of this subchapter. (iv) Intermediate consignee means, for purposes of this section, an entity or person who receives, but does not have access to, defense articles, including technical data, for the sole purpose of effecting onward movement to members of the Approved Community (see paragraph (k) of this section). (2) Persons or entities exporting or transferring defense articles or defense services are exempt from the otherwise applicable licensing requirements if such persons or entities comply with the regulations set forth in this section. Except as provided in Supplement No. 1 to part 126 of this subchapter, Port Directors of U.S. Customs and Border Protection and postmasters shall permit the permanent and temporary export without a license from members of the United States Community to members of the Australian Community (see paragraph (d) of this section regarding the identification of members of the Australian Community) of defense articles and defense services not listed in Supplement No. 1 to part 126 of this subchapter, for the end-uses specifically identified pursuant to paragraphs (e) and (f) of this section. The purpose of this section is to specify the requirements to export, transfer, reexport, retransfer, or otherwise dispose of a defense article or defense service pursuant to the Defense Trade Cooperation Treaty between the United States and Australia. All persons must continue to comply with statutory and regulatory requirements outside of this subchapter concerning the import of defense articles and defense services or the possession or transfer of defense articles, including, but not limited to, regulations issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives found at 27 CFR parts 447, 478, and 479, which are unaffected by the Defense Trade Cooperation Treaty between the United States and Australia. (3) Export. In order for an exporter to export a defense article or defense service pursuant to the Defense Trade Cooperation Treaty between the United States and Australia, all of the following conditions must be met: (i) The exporter must be registered with the Directorate of Defense Trade Controls (DDTC) and must be eligible, according to the requirements and prohibitions of the Arms Export Control Act, this subchapter, and other provisions of United States law, to obtain an export license (or other forms of authorization to export) from any agency of the U.S. Government without E:\FR\FM\11APR1.SGM 11APR1 TKELLEY on DSK3SPTVN1PROD with RULES Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations restriction (see paragraphs (b) and (c) of this section for specific requirements); (ii) The recipient of the export must be a member of the Australian Community (see paragraph (d) of this section regarding the identification of members of the Australian Community). Australian non-governmental entities and facilities that become ineligible for such membership will be removed from the Australian Community; (iii) Intermediate consignees involved in the export must not be ineligible, according to the requirements and prohibitions of the Arms Export Control Act, this subchapter, and other provisions of United States law, to handle or receive a defense article or defense service without restriction (see paragraph (k) of this section for specific requirements); (iv) The export must be for an end-use specified in the Defense Trade Cooperation Treaty between the United States and Australia and mutually agreed to by the U.S. Government and the Government of Australia pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and the Implementing Arrangement thereto (the Australia Implementing Arrangement) (see paragraphs (e) and (f) of this section regarding authorized enduses); (v) The defense article or defense service is not excluded from the scope of the Defense Trade Cooperation Treaty between the United States and Australia (see paragraph (g) of this section and Supplement No. 1 to part 126 of this subchapter for specific information on the scope of items excluded from export under this exemption) and is marked or identified, at a minimum, as ‘‘Restricted USML’’ (see paragraph (j) of this section for specific requirements on marking exports); (vi) All required documentation of such export is maintained by the exporter and recipient and is available upon the request of the U.S. Government (see paragraph (l) of this section for specific requirements); and (vii) The Department of State has provided advance notification to the Congress, as required, in accordance with this section (see paragraph (o) of this section for specific requirements). (4) Transfers. In order for a member of the Approved Community (i.e., the United States Community and Australian Community) to transfer a defense article or defense service under the Defense Trade Cooperation Treaty within the Approved Community, all of the following conditions must be met: (i) The defense article or defense service must have been previously exported in accordance with paragraph VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 (a)(3) of this section or transitioned from a license or other approval in accordance with paragraph (i) of this section; (ii) The transferor and transferee of the defense article or defense service are members of the Australian Community (see paragraph (d) of this section regarding the identification of members of the Australian Community) or the United States Community (see paragraph (b) of this section for information on the United States Community/approved exporters); (iii) The transfer is required for an end-use specified in the Defense Trade Cooperation Treaty between the United States and Australia and mutually agreed to by the Government of the United States and the Government of Australia pursuant to the terms of the Defense Trade Cooperation Treaty between the United States and Australia and the Australia Implementing Arrangement (see paragraphs (e) and (f) of this section regarding authorized enduses); (iv) The defense article or defense service is not identified in paragraph (g) of this section and Supplement No. 1 to part 126 of this subchapter as ineligible for export under this exemption, and is marked or otherwise identified, at a minimum, as ‘‘Restricted USML’’ (see paragraph (j) of this section for specific requirements on marking exports); (v) All required documentation of such transfer is maintained by the transferor and transferee and is available upon the request of the U.S. Government (see paragraph (l) of this section for specific requirements); and (vi) The Department of State has provided advance notification to the Congress in accordance with this section (see paragraph (o) of this section for specific requirements). (5) This section does not apply to the export of defense articles or defense services from the United States pursuant to the Foreign Military Sales program. Once such items are delivered to the Australian Government, they may be treated as if they were exported pursuant to the Treaty and then must be marked, identified, transmitted, stored and handled in accordance with the Treaty, the Australia Implementing Arrangement, and the provisions of this section. (b) United States Community. The following persons compose the United States Community and may export or transfer defense articles and defense services pursuant to the Defense Trade Cooperation Treaty between the United States and Australia: (1) Departments and agencies of the U.S. Government, including their PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 21527 personnel acting in their official capacity, with, as appropriate, a security clearance and a need-to-know; and (2) Non-governmental U.S. persons registered with DDTC and eligible, according to the requirements and prohibitions of the Arms Export Control Act, this subchapter, and other provisions of United States law, to obtain an export license (or other forms of authorization to export) from any agency of the U.S. Government without restriction, including their employees acting in their official capacity with, as appropriate, a security clearance and a need-to-know. (c) An exporter that is otherwise an authorized exporter pursuant to paragraph (b) of this section may not export or transfer pursuant to the Defense Trade Cooperation Treaty between the United States and Australia if the exporter’s president, chief executive officer, any vice-president, any other senior officer or official (e.g., comptroller, treasurer, general counsel); any member of the board of directors of the exporter; any party to the export; or any source or manufacturer is ineligible to receive export licenses (or other forms of authorization to export) from any agency of the U.S. Government. (d) Australian Community. For purposes of the exemption provided by this section, the Australian Community consists of: (1) Government of Australia authorities with entities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; and (2) The non-governmental Australian entities and facilities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; nongovernmental Australian entities and facilities that become ineligible for such membership will be removed from the Australian Community. (e) Authorized End-uses. The following end-uses, subject to paragraph (f) of this section, are specified in the Defense Trade Cooperation Treaty between the United States and Australia: (1) United States and Australian combined military or counter-terrorism operations; (2) United States and Australian cooperative security and defense research, development, production, and support programs; (3) Mutually determined specific security and defense projects where the Government of Australia is the end-user; or (4) U.S. Government end-use. E:\FR\FM\11APR1.SGM 11APR1 TKELLEY on DSK3SPTVN1PROD with RULES 21528 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations (f) Procedures for identifying authorized end-uses pursuant to paragraph (e) of this section: (1) Operations, programs, and projects that can be publicly identified will be posted on the DDTC Web site; (2) Operations, programs, and projects that cannot be publicly identified will be confirmed in written correspondence from DDTC; or (3) U.S. Government end-use will be identified specifically in a U.S. Government contract or solicitation as being eligible under the Treaty. (4) No other operations, programs, projects, or end-uses qualify for this exemption. (g) Items eligible under this section. With the exception of items listed in Supplement No. 1 to part 126 of this subchapter, defense articles and defense services may be exported under this section subject to the following: (1) An exporter authorized pursuant to paragraph (b)(2) of this section may market a defense article to members of the Australian Community if that exporter has been licensed by DDTC to export (as defined by § 120.17 of this subchapter) the identical type of defense article to any foreign person and enduse of the article is for an end-use identified in paragraph (e) of this section. (2) The export of any defense article specific to the existence of (e.g., reveals the existence of or details of) antitamper measures made at U.S. Government direction always requires prior written approval from DDTC. (3) U.S.-origin classified defense articles or defense services may be exported only pursuant to a written request, directive, or contract from the U.S. Department of Defense that provides for the export of the classified defense article(s) or defense service(s). (4) U.S.-origin defense articles specific to developmental systems that have not obtained written Milestone B approval from the U.S. Department of Defense milestone approval authority are not eligible for export unless such export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense for an end-use identified pursuant to paragraph (e)(1), (2), or (4) of this section. (5) Defense articles excluded by paragraph (g) of this section or Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI (a)(3) electronically scanned array radar excluded by Note 2) that are embedded in a larger system that is eligible to ship under this section (e.g., a ship, an aircraft) must separately comply with any restrictions placed on that VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 embedded defense article under this subchapter. The exporter must obtain a license or other authorization from DDTC for the export of such embedded defense articles (for example, USML Category XI (a)(3) electronically scanned array radar systems that are exempt from this section that are incorporated in an aircraft that is eligible to ship under this section continue to require separate authorization from DDTC for their export, transfer, reexport, or retransfer). (6) No liability shall be incurred by or attributed to the U.S. Government in connection with any possible infringement of privately owned patent or proprietary rights, either domestic or foreign, by reason of an export conducted pursuant to this section. (7) Sales by exporters made through the U.S. Government shall not include either charges for patent rights in which the U.S. Government holds a royaltyfree license, or charges for information which the U.S. Government has a right to use and disclose to others, which is in the public domain, or which the U.S. Government has acquired or is entitled to acquire without restrictions upon its use and disclosure to others. (h) Transfers, retransfers, and reexports. (1) Any transfer of a defense article or defense service not exempted in Supplement No. 1 to part 126 of this subchapter by a member of the Australian Community (see paragraph (d) of this section for specific information on the identification of the Community) to another member of the Australian Community or the United States Community for an end-use that is authorized by this exemption (see paragraphs (e) and (f) of this section regarding authorized end-uses) is authorized under this exemption. (2) Any transfer or other provision of a defense article or defense service for an end-use that is not authorized by the exemption provided by this section is prohibited without a license or the prior written approval of DDTC (see paragraphs (e) and (f) of this section regarding authorized end-uses). (3) Any retransfer or reexport, or other provision of a defense article or defense service by a member of the Australian Community to a foreign person that is not a member of the Australian Community, or to a U.S. person that is not a member of the United States Community, is prohibited without a license or the prior written approval of DDTC (see paragraph (d) of this section for specific information on the identification of the Australian Community). (4) Any change in the use of a defense article or defense service previously PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 exported, transferred, or obtained under this exemption by any foreign person, including a member of the Australian Community, to an end-use that is not authorized by this exemption is prohibited without a license or other written approval of DDTC (see paragraphs (e) and (f) of this section regarding authorized end-uses). (5) Any retransfer, reexport, or change in end-use requiring such approval of the U.S. Government shall be made in accordance with § 123.9 of this subchapter. (6) Defense articles excluded by paragraph (g) of this section or Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI (a)(3) electronically scanned array radar systems) that are embedded in a larger system that is eligible to ship under this section (e.g., a ship, an aircraft) must separately comply with any restrictions placed on that embedded defense article unless otherwise specified. A license or other authorization must be obtained from DDTC for the export, transfer, reexport, retransfer, or change in enduse of any such embedded defense article (for example, USML Category XI(a)(3) electronically scanned array radar systems that are excluded from this section by Supplement No. 1 to part 126 of this subchapter, Note 2 that are incorporated in an aircraft that is eligible to ship under this section continue to require separate authorization from DDTC for their export, transfer, reexport, or retransfer). (7) A license or prior approval from DDTC is not required for a transfer, retransfer, or reexport of an exported defense article or defense service under this section, if: (i) The transfer of defense articles or defense services is made by a member of the United States Community to Australian Department of Defence (ADOD) elements deployed outside the Territory of Australia and engaged in an authorized end-use (see paragraphs (e) and (f) of this section regarding authorized end-uses) using ADOD transmission channels or the provisions of this section (Note: For purposes of paragraph (h)(7)(i) through (iv) of this section, per Section 9(9) of the Australia Implementing Arrangement, ‘‘ADOD Transmission channels’’ includes electronic transmission of a defense article and transmission of a defense article by an ADOD contracted carrier or freight forwarder that merely transports or arranges transport for the defense article in this instance.); (ii) The transfer of defense articles or defense services is made by a member of the United States Community to an Approved Community member (either E:\FR\FM\11APR1.SGM 11APR1 TKELLEY on DSK3SPTVN1PROD with RULES Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations United States or Australian) that is operating in direct support of ADOD elements deployed outside the Territory of Australia and engaged in an authorized end-use (see paragraphs (e) and (f) of this section regarding authorized end-uses) using ADOD transmission channels or the provisions of this section; (iii) The reexport is made by a member of the Australian Community to ADOD elements deployed outside the Territory of Australia engaged in an authorized end-use (see paragraphs (e) and (f) of this section regarding authorized end-uses) using ADOD transmission channels or the provisions of this section; (iv) The reexport is made by a member of the Australian Community to an Approved Community member (either United States or Australian) that is operating in direct support of ADOD elements deployed outside the Territory of Australia engaged in an authorized end-use (see paragraphs (e) and (f) of this section regarding authorized enduses) using ADOD transmission channels or the provisions of this section; or (v) The defense article or defense service will be delivered to the ADOD for an authorized end-use (see paragraphs (e) and (f) of this section regarding authorized end-uses); the ADOD may deploy the item as necessary when conducting official business within or outside the Territory of Australia. The item must remain under the effective control of the ADOD while deployed and access may not be provided to unauthorized third parties. (8) U.S. persons registered, or required to be registered, pursuant to part 122 of this subchapter and members of the Australian Community must immediately notify DDTC of any actual or proposed sale, retransfer, or reexport of a defense article or defense service on the U.S. Munitions List originally exported under this exemption to any of the countries listed in § 126.1 of this subchapter or any person acting on behalf of such countries, whether within or outside the United States. Any person knowing or having reason to know of such a proposed or actual sale, reexport, or retransfer shall submit such information in writing to the Office of Defense Trade Controls Compliance, Directorate of Defense Trade Controls. (i) Transitions. (1) Any previous export of a defense article under a license or other approval of the U.S. Department of State remains subject to the conditions and limitations of the original license or authorization unless VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 DDTC has approved in writing a transition to this section. (2) If a U.S. exporter desires to transition from an existing license or other approval to the use of the provisions of this section, the following is required: (i) The U.S. exporter must submit a written request to DDTC, which identifies the defense articles or defense services to be transitioned, the existing license(s) or other authorizations under which the defense articles or defense services were originally exported, and the Treaty-eligible end-use for which the defense articles or defense services will be used. Any license(s) filed with U.S. Customs and Border Protection should remain on file until the exporter has received approval from DDTC to retire the license(s) and transition to this section. When this approval is conveyed to U.S. Customs and Border Protection by DDTC, the license(s) will be returned to DDTC by U.S. Customs and Border Protection in accord with existing procedures for the return of expired licenses in § 123.22(c) of this subchapter. (ii) Any license(s) not filed with U.S. Customs and Border Protection must be returned to DDTC with a letter citing approval by DDTC to transition to this section as the reason for returning the license(s). (3) If a member of the Australian Community desires to transition defense articles received under an existing license or other approval to the processes established under the Treaty, the Australian Community member must submit a written request to the Government of Australia. The Government of Australia will submit the request to DDTC for review and approval. The defense article or defense service shall remain subject to the conditions and limitations of the existing license or other approval until the Australian Community member has received via the Government of Australia the approval from DDTC. (4) Authorized exporters identified in paragraph (b)(2) of this section who have exported a defense article or defense service that has subsequently been placed on the list of exempted items in Supplement No. 1 to part 126 of this subchapter must review and adhere to the requirements in the relevant Federal Register notice announcing such removal. Once removed, the defense article or defense service will no longer be subject to this section, and such defense article or defense service previously exported shall remain on the U.S. Munitions List and be subject to the requirements of this subchapter unless the applicable PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 21529 Federal Register notice states otherwise. Subsequent reexport or retransfer must be made pursuant to § 123.9 of this subchapter. (5) Any defense article or defense service transitioned from a license or other approval to treatment under this section must be marked in accordance with the requirements of paragraph (j) of this section. (j) Marking of exports. (1) All defense articles and defense services exported or transitioned pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and this section shall be marked or identified prior to movement as follows: (i) For classified defense articles and defense services the standard marking or identification shall read ‘‘//CLASSIFICATION LEVEL USML// REL AUS and USA Treaty Community//.’’ For example, for defense articles classified SECRET, the marking or identification shall be ‘‘//SECRET USML//REL AUS and USA Treaty Community//.’’ (ii) Unclassified defense articles and defense services exported under or transitioned pursuant to this section shall be handled while in Australia as ‘‘Restricted USML’’ and the standard marking or identification shall read ‘‘//RESTRICTED USML//REL AUS and USA Treaty Community//.’’ (2) Where U.S.-origin defense articles are returned to a member of the United States Community identified in paragraph (b) of this section, any defense articles marked or identified pursuant to paragraph (j)(1)(ii) of this section as ‘‘//RESTRICTED USML//REL AUS and USA Treaty Community//’’ will be considered unclassified and the marking or identification shall be removed; and (3) The standard marking and identification requirements are as follows: (i) Defense articles (other than technical data) shall be individually labeled with the appropriate identification detailed in paragraphs (j)(1) and (j)(2) of this section; or, where such labeling is impracticable (e.g., propellants, chemicals), shall be accompanied by documentation (such as contracts or invoices) clearly associating the defense articles with the appropriate markings as detailed in paragraphs (j)(1)(i) and (j)(1)(ii) of this section; (ii) Technical data (including data packages, technical papers, manuals, presentations, specifications, guides and reports), regardless of media or means of transmission (physical, oral, or electronic), shall be individually labeled with the appropriate identification E:\FR\FM\11APR1.SGM 11APR1 TKELLEY on DSK3SPTVN1PROD with RULES 21530 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations detailed in paragraphs (j)(1) and (j)(2) of this section; or, where such labeling is impractical shall be accompanied by documentation (such as contracts or invoices) or verbal notification clearly associating the technical data with the appropriate markings as detailed in paragraphs (j)(1)(i) and (j)(1)(ii) of this section; and (4) Defense services shall be accompanied by documentation (contracts, invoices, shipping bills, or bills of lading) clearly labeled with the appropriate identification detailed in paragraphs (j)(1) and (j)(2) of this section. (5) The exporter shall incorporate the following statement as an integral part of the bill of lading and the invoice whenever defense articles are to be exported: ‘‘These U.S. Munitions List commodities are authorized by the U.S. Government under the U.S.-Australia Defense Trade Cooperation Treaty for export only to Australia for use in approved projects, programs or operations by members of the Australian Community. They may not be retransferred or reexported or used outside of an approved project, program, or operation, either in their original form or after being incorporated into other end-items, without the prior written approval of the U.S. Department of State.’’ (k) Intermediate consignees. (1) Unclassified exports under this section may only be handled by: (i) U.S. intermediate consignees who are: (A) Exporters registered with DDTC and eligible; (B) Licensed customs brokers who are subject to background investigation and have passed a comprehensive examination administered by U.S. Customs and Border Protection; or (C) Commercial air freight and surface shipment carriers, freight forwarders, or other parties not exempt from registration under § 129.3(b)(3) of this subchapter, that are identified at the time of export as being on the U.S. Department of Defense Civil Reserve Air Fleet (CRAF) list of approved air carriers, a link to which is available on the DDTC Web site; or (ii) Australian intermediate consignees who are: (A) Members of the Australian Community; or (B) Freight forwarders, customs brokers, commercial air freight and surface shipment carriers, or other Australian parties that are identified at the time of export as being on the list of Authorized Australian Intermediate Consignees, which is available on the DDTC Web site. VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 (2) Classified exports must comply with the security requirements of the National Industrial Security Program Operating Manual (DoD 5220.22–M and supplements or successors). (l) Records. (1) All exporters authorized pursuant to paragraph (b)(2) of this section who export defense articles or defense services pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and this section shall maintain detailed records of their exports, imports, and transfers. Exporters shall also maintain detailed records of any reexports and retransfers approved or otherwise authorized by DDTC of defense articles or defense services subject to the Defense Trade Cooperation Treaty between the United States and Australia and this section. These records shall be maintained for a minimum of five years from the date of export, import, transfer, reexport, or retransfer and shall be made available upon request to DDTC or a person designated by DDTC (e.g., the Diplomatic Security Service) or U.S. Immigration and Customs Enforcement, or U.S. Customs and Border Protection. 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.). These records shall consist of the following: (i) Port of entry/exit; (ii) Date of export/import; (iii) Method of export/import; (iv) Commodity code and description of the commodity, including technical data; (v) Value of export; (vi) Reference to this section and justification for export under the Treaty; (vii) End-user/end-use; (viii) Identification of all U.S. and foreign parties to the transaction; (ix) How the export was marked; (x) Security classification of the export; (xi) All written correspondence with the U.S. Government on the export; (xii) All information relating to political contributions, fees, or commissions furnished or obtained, offered, solicited, or agreed upon as outlined in paragraph (m) of this section; PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 (xiii) Purchase order or contract; (xiv) Technical data actually exported; (xv) The Internal Transaction Number for the Electronic Export Information filing in the Automated Export System; (xvi) All shipping documentation (including, but not limited to the airway bill, bill of lading, packing list, delivery verification, and invoice); and (xvii) Statement of Registration (Form DS–2032). (2) Filing of export information. All exporters of defense articles under the Defense Trade Cooperation Treaty between the United States and Australia and this section must electronically file Electronic Export Information (EEI) using the Automated Export System citing one of the four below referenced codes in the appropriate field in the EEI for each shipment: (i) For exports in support of United States and Australian combined military or counter-terrorism operations identify § 126.16(e)(1) (the name or an appropriate description of the operation shall be placed in the appropriate field in the EEI, as well); (ii) For exports in support of United States and Australian cooperative security and defense research, development, production, and support programs identify § 126.16(e)(2) (the name or an appropriate description of the program shall be placed in the appropriate field in the EEI, as well); (iii) For exports in support of mutually determined specific security and defense projects where the Government of Australia is the end-user identify § 126.16(e)(3) (the name or an appropriate description of the project shall be placed in the appropriate field in the EEI, as well); or (iv) For exports that will have a U.S. Government end-use identify § 126.16(e)(4) (the U.S. Government contract number or solicitation number (e.g., ‘‘U.S. Government contract number XXXXX’’) shall be placed in the appropriate field in the EEI, as well). Such exports must meet the required export documentation and filing guidelines, including for defense services, of § 123.22(a), (b)(1), and (b)(2) of this subchapter. (m) Fees and commissions. All exporters authorized pursuant to paragraph (b)(2) of this section shall, with respect to each export, transfer, reexport, or retransfer, pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and this section, submit a statement to DDTC containing the information identified in § 130.10 of this subchapter relating to fees, commissions, and political contributions on contracts or E:\FR\FM\11APR1.SGM 11APR1 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations other instruments valued in an amount of $500,000 or more. (n) Violations and enforcement. (1) Exports, transfers, reexports, and retransfers that do not comply with the conditions prescribed in this section will constitute violations of the Arms Export Control Act and this subchapter, and are subject to all relevant criminal, civil, and administrative penalties (see § 127.1 of this subchapter), and may also be subject to penalty under other statutes or regulations. (2) U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection officers may take appropriate action to ensure compliance with this section as to the export or the attempted export of any defense article or technical data, including the inspection of loading or unloading of any vessel, vehicle, or aircraft. (3) 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 that does not comply with this section or that is otherwise unlawful. (4) DDTC or a person designated by DDTC (e.g., the Diplomatic Security Service), U.S. Immigration and Customs Enforcement, or U.S. Customs and Border Protection may require the production of documents and information relating to any actual or attempted export, transfer, reexport, or retransfer pursuant to this section. Any foreign person refusing to provide such records within a reasonable period of time shall be suspended from the Australian Community and ineligible to receive defense articles or defense services pursuant to the exemption under this section or otherwise. (o) Procedures for legislative notification. (1) Exports pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and this section by any person identified in paragraph (b)(2) of this section shall not take place until 30 days after DDTC has acknowledged receipt of a written notification from the exporter notifying the Department of State if the export involves one or more of the following: (i) A contract or other instrument for the export of major defense equipment in the amount of $25,000,000 or more, or for defense articles and defense services in the amount of $100,000,000 or more; (ii) A contract for the export of firearms controlled under Category I of the U.S. Munitions List of the International Traffic in Arms Regulations in an amount of $1,000,000 or more; (iii) A contract, regardless of value, for the manufacturing abroad of any item of significant military equipment (see § 120.7 of this subchapter); or 21531 (iv) An amended contract that meets the requirements of paragraphs (o)(1)(i) through (o)(1)(iii) of this section. (2) The written notification required in paragraph (o)(1) of this section shall indicate the item/model number, general item description, U.S. Munitions List category, value, and quantity of items to be exported pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and this section, and shall be accompanied by the following additional information: (i) The information identified in § 130.10 and § 130.11 of this subchapter; (ii) A statement regarding whether any offset agreement is final to be entered into in connection with the export and a description of any such offset agreement; (iii) A copy of the signed contract; and (iv) If the notification is for paragraph (o)(1)(ii) of this section, a statement of what will happen to the weapons in their inventory (for example, whether the current inventory will be sold, reassigned to another service branch, destroyed, etc.). (3) The Department of State will notify the Congress of exports that meet the requirements of paragraph (o)(1) of this section. 7. Supplement No. 1 to part 126 is revised to read as follows: ■ SUPPLEMENT NO. 1 TO PART 126* USML Category Exclusion (CA) § 126.5 (AS) § 126.16 (UK) § 126.17 I–XXI ................. I–XXI ................. I–XXI ................. Classified defense articles and services. See Note 1 ............................................. Defense articles listed in the Missile Technology Control Regime (MTCR) Annex U.S. origin defense articles and services used for marketing purposes and not previously licensed for export in accordance with this subchapter. Defense services for or technical data related to defense articles identified in this supplement as excluded from the Canadian exemption. Any transaction involving the export of defense articles and services for which congressional notification is required in accordance with § 123.15 and § 124.11 of this subchapter. U.S. origin defense articles and services specific to developmental systems that have not obtained written Milestone B approval from the U.S. Department of Defense milestone approval authority, unless such export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of § 126.16 or § 126.17 of this subchapter and is consistent with other exclusions of this supplement. Nuclear weapons strategic delivery systems and all components, parts, accessories, and attachments specifically designed for such systems and associated equipment. Defense articles and services specific to the existence or method of compliance with anti-tamper measures, where such measures are readily identifiable, made at originating Government direction. Defense articles and services specific to reduced observables or counter low observables in any part of the spectrum. See Note 2. Defense articles and services specific to sensor fusion beyond that required for display or identification correlation. See Note 3. Defense articles and services specific to the automatic target acquisition or recognition and cueing of multiple autonomous unmanned systems. X X .................... X X X X X X X X .................... X X .................... X X .................... X X .................... X X I–XXI ................. I–XXI ................. I–XXI ................. I–XXI ................. TKELLEY on DSK3SPTVN1PROD with RULES I–XXI ................. I–XXI ................. I–XXI ................. I–XXI ................. VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 X X .................... X E:\FR\FM\11APR1.SGM 11APR1 21532 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations SUPPLEMENT NO. 1 TO PART 126*—Continued USML Category Exclusion (CA) § 126.5 (AS) § 126.16 (UK) § 126.17 I–XXI ................. Nuclear power generating equipment or propulsion equipment (e.g., nuclear reactors), specifically designed for military use and components therefore, specifically designed for military use. See also § 123.20 of this subchapter. Libraries (parametric technical databases) specially designed for military use with equipment controlled on the USML. See Note 13. Defense services or technical data specific to applied research as defined in § 125.4(c)(3) of this subchapter, design methodology as defined in § 125.4(c)(4) of this subchapter, engineering analysis as defined in § 125.4(c)(5) of this subchapter, or manufacturing know-how as defined in § 125.4(c)(6) of this subchapter. See Note 12. Defense services other than those required to prepare a quote or bid proposal in response to a written request from a department or agency of the United States Federal Government or from a Canadian Federal, Provincial, or Territorial Government; or defense services other than those required to produce, design, assemble, maintain or service a defense article for use by a registered U.S. company, or a U.S. Federal Government Program, or for end-use in a Canadian Federal, Provincial, or Territorial Government Program. See Note 14. Firearms, close assault weapons, and combat shotguns ........................................ Software source code related to USML Categories II(c), II(d), or II(i). See Note 4 Manufacturing know-how related to USML Category II(d). See Note 5 .................. Ammunition for firearms, close assault weapons, and combat shotguns listed in USML Category I. Defense articles and services specific to ammunition and fuse setting devices for guns and armament controlled in USML Category II. Manufacturing know-how related to USML Categories III(d)(1) or III(d)(2) and their specially designed components. See Note 5. Software source code related to USML Categories III(d)(1) or III(d)(2). See Note 4. Defense articles and services specific to man-portable air defense systems (MANPADS). See Note 6. Defense articles and services specific to rockets, designed or modified for nonmilitary applications that do not have a range of 300 km (i.e., not controlled on the MTCR Annex). Defense articles and services specific to torpedoes ................................................ Defense articles and services specific to anti-personnel landmines. See Note 15 Defense articles and services specific to cluster munitions. See Note 16 .............. Software source code related to USML Categories IV(a), IV(b), IV(c), or IV(g). See Note 4. Manufacturing know-how related to USML Categories IV(a), IV(b), IV(d), or IV(g) and their specially designed components. See Note 5. The following energetic materials and related substances: a. TATB (triaminotrinitrobenzene) (CAS 3058–38–6); b. Explosives controlled in USML Category V(a)(32) or V(a)(33); c. Iron powder (CAS 7439–89–6) with particle size of 3 micrometers or less produced by reduction of iron oxide with hydrogen; d. BOBBA–8 (bis(2-methylaziridinyl)2-(2-hydroxypropanoxy) propylamino phosphine oxide), and other MAPO derivatives; e. N-methyl-p-nitroaniline (CAS 100–15–2); or Trinitrophenylmethylnitramine (tetryl) (CAS 479–45–8). Pyrotechnics and pyrophorics specifically formulated for military purposes to enhance or control radiated energy in any part of the IR spectrum. Bis-2, 2-dinitropropylnitrate (BDNPN) ...................................................................... Defense articles specific to cryogenic equipment, and specially designed components or accessories therefor, specially designed or configured to be installed in a vehicle for military ground, marine, airborne or space applications, capable of operating while in motion and of producing or maintaining temperatures below 103 K (¥170°C). Defense Articles specific to superconductive electrical equipment (rotating machinery and transformers) specially designed or configured to be installed in a vehicle for military ground, marine, airborne, or space applications and capable of operating while in motion. This, however, does not include direct current hybrid homopolar generators that have single-pole normal metal armatures which rotate in a magnetic field produced by superconducting windings, provided those windings are the only superconducting component in the generator. Defense articles and services specific to naval technology and systems relating to acoustic spectrum control and awareness. See Note 10. Nuclear powered vessels ......................................................................................... Defense articles and services specific to submarine combat control systems ....... Harbor entrance detection devices .......................................................................... Defense articles and services specific to naval nuclear propulsion equipment. See Note 7. .................... .................... X .................... .................... X X .................... X X X X X X .................... .................... X X X X .................... X X X X X .................... .................... X .................... X X .................... X X X X X X X X X X X .................... .................... X .................... .................... X .................... .................... .................... .................... X X .................... .................... X .................... X X X .................... .................... X X X .................... X X X X X I–XXI ................. I–XXI ................. I–XXI ................. I ......................... II(k) .................... II(k) .................... III ....................... III ....................... III(e) .................. III(e) .................. IV ...................... IV ...................... IV ...................... IV ...................... IV ...................... IV(i) ................... IV(i) ................... V ....................... V(c)(7) ............... V(d)(3) ............... VI ...................... TKELLEY on DSK3SPTVN1PROD with RULES VI ...................... VI ...................... VI(a) VI(c) VI(d) VI(e) .................. .................. .................. .................. VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 X X E:\FR\FM\11APR1.SGM 11APR1 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations 21533 SUPPLEMENT NO. 1 TO PART 126*—Continued USML Category Exclusion (CA) § 126.5 (AS) § 126.16 (UK) § 126.17 VI(g) .................. Technical data and defense services for gas turbine engine hot sections related to USML Category VI(f). See Note 8. Software source code related to USML Categories VI(a) or VI(c). See Note 4 ...... Defense articles specific to cryogenic equipment, and specially designed components or accessories therefor, specially designed or configured to be installed in a vehicle for military ground, marine, airborne or space applications, capable of operating while in motion and of producing or maintaining temperatures below 103 K (¥170°C). Defense articles specific to superconductive electrical equipment (rotating machinery and transformers) specially designed or configured to be installed in a vehicle for military ground, marine, airborne, or space applications and capable of operating while in motion. This, however, does not include direct current hybrid homopolar generators that have single-pole normal metal armatures which rotate in a magnetic field produced by superconducting windings, provided those windings are the only superconducting component in the generator. Armored all wheel drive vehicles fitted with, or designed or modified to be fitted with, a plough or flail for the purpose of land mine clearance, other than vehicles specifically designed or modified for military use. Amphibious vehicles ................................................................................................. Technical data and defense services for gas turbine engine hot sections. See Note 8. Defense articles specific to cryogenic equipment, and specially designed components and accessories therefor, specially designed or configured to be installed in a vehicle for military ground, marine, airborne or space applications, capable of operating while in motion and of producing or maintaining temperatures below 103 K (¥170°C). Defense articles specific to superconductive electrical equipment (rotating machinery and transformers) specially designed or configured to be installed in a vehicle for military ground, marine, airborne, or space applications and capable of operating while in motion. This, however, does not include direct current hybrid homopolar generators that have single-pole normal metal armatures which rotate in a magnetic field produced by superconducting windings, provided those windings are the only superconducting component in the generator. All USML Category VIII(a) items. Defense articles and services specific to gas turbine engine hot section components and digital engine controls. See Note 8. Developmental aircraft, engines and components identified in USML Category VIII(f). Ground Effect Machines (GEMS). Technical data and defense services for gas turbine engine hot sections and digital engine controls related to USML Category VIII(b). See Note 8. Manufacturing know-how related to USML Categories VIII(a), VIII(b), or VIII(e) and their specially designed components. See Note 5. Software source code related to USML Categories VIII(a) or VIII(e). See Note 4 Training or simulation equipment for Man Portable Air Defense Systems (MANPADS). See Note 6. Software source code related to USML Categories IX(a) or IX(b). See Note 4 ..... Software that is both specifically designed or modified for military use and specifically designed or modified for modeling or simulating military operational scenarios. Manufacturing know-how related to USML Categories X(a)(1) or X(a)(2) and their specially designed components. See Note 5. Defense articles and services specific to countermeasures and counter- countermeasures See Note 9. High Frequency and Phased Array Microwave Radar systems, with capabilities such as search, acquisition, tracking, moving target indication, and imaging radar systems. See Note 17. Defense articles and services specific to naval technology and systems relating to acoustic spectrum control and awareness. See Note 10. Defense articles and services specific to USML Category XI (b) (e.g., communications security (COMSEC) and TEMPEST). Software source code related to USML Category XI(a). See Note 4 ...................... Manufacturing know-how related to USML Categories XI(a)(3) or XI(a)(4) and their specially designed components. See Note 5. Defense articles and services specific to countermeasures and counter- countermeasures. See Note 9. X X X .................... .................... X .................... X X .................... .................... X .................... .................... X .................... X .................... X X X .................... .................... X .................... .................... X X .................... X X .................... X .................... X X X X X X .................... .................... X X X X .................... .................... X .................... X X X X X .................... X X .................... X .................... X X .................... X X .................... X X X X X .................... X X VI(g) .................. VII ..................... VII ..................... VII ..................... VII(e) ................. VII(f) .................. VIII .................... VIII .................... VIII(a) ................ VIII(b) ................ VIII(f) ................. VIII(g) ................ VIII(i) ................. VIII(i) ................. VIII(i) ................. IX ...................... IX(e) .................. IX(e) .................. X(e) ................... XI(a) .................. XI(a) .................. TKELLEY on DSK3SPTVN1PROD with RULES XI ...................... XI(b), XI(c), XI(d). XI(d) .................. XI(d) .................. XII ..................... VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 X E:\FR\FM\11APR1.SGM 11APR1 21534 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations SUPPLEMENT NO. 1 TO PART 126*—Continued USML Category Exclusion (CA) § 126.5 XII ..................... Defense articles and services specific to USML Category XII(c) articles, except any 1st- and 2nd-generation image intensification tubes and 1st- and 2nd-generation image intensification night sighting equipment. End items in XII(c) and related technical data limited to basic operations, maintenance, and training information as authorized under the exemption in § 125.4(b)(5) of this subchapter may be exported directly to a Canadian Government entity (i.e., federal, provincial, territorial, or municipal) consistent with § 126.5, other exclusions, and the provisions of this subchapter. Technical data or defense services for night vision equipment beyond basic operations, maintenance, and training data. However, the AS and UK Treaty exemptions apply when such export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of § 126.16 or § 126.17 of this subchapter and is consistent with other exclusions of this supplement. Manufacturing know-how related to USML Category XII(d) and their specially designed components. See Note 5. Software source code related to USML Categories XII(a), XII(b), XII(c), or XII(d). See Note 4. Defense articles and services specific to USML Category XIII(b) (Military Information Security Assurance Systems). Carbon/carbon billets and preforms which are reinforced in three or more dimensional planes, specifically designed, developed, modified, configured or adapted for defense articles. Defense articles and services specific to armored plate manufactured to comply with a military standard or specification or suitable for military use. See Note 11. Structural materials specifically designed, developed, modified, configured or adapted for defense articles. Defense articles and services related to concealment and deception equipment and materials. Energy conversion devices other than fuel cells ..................................................... Metal embrittling agents ........................................................................................... Defense articles and services related to hardware associated with the measurement or modification of system signatures for detection of defense articles as described in Note 2. Defense articles and services related to tooling and equipment specifically designed or modified for the production of defense articles identified in USML Category XIII(b). Software source code related to USML Category XIII(a). See Note 4 .................... Defense articles and services related to toxicological agents, including chemical agents, biological agents, and associated equipment. Chemical agents listed in USML Category XIV(a), (d) and (e), biological agents and biologically derived substances in USML Category XIV(b), and equipment listed in USML Category XIV(f) for dissemination of the chemical agents and biological agents listed in USML Category XIV(a), (b), (d), and (e). Defense articles and services specific to spacecraft/satellites. However, the Canadian exemption may be used for commercial communications satellites that have no other type of payload. Defense articles and services specific to ground control stations for spacecraft telemetry, tracking, and control. Defense articles and services are not excluded under this entry if they do not control the spacecraft. Receivers for receiving satellite transmissions are also not excluded under this entry. Defense articles and services specific to GPS/PPS security modules ................... Defense articles controlled in USML Category XV(c) except end items for enduse by the Federal Government of Canada exported directly or indirectly through a Canadian-registered person. Defense articles and services specific to radiation-hardened microelectronic circuits. Anti-jam systems with the ability to respond to incoming interference by adaptively reducing antenna gain (nulling) in the direction of the interference. Antennas having any of the following: ..................................................................... a. Aperture (overall dimension of the radiating portions of the antenna) greater than 30 feet; b. All sidelobes less than or equal to -35 dB relative to the peak of the main beam; or c. Designed, modified, or configured to provide coverage area on the surface of the earth less than 200 nautical miles in diameter, where ‘‘coverage area’’ is defined as that area on the surface of the earth that is illuminated by the main beam width of the antenna (which is the angular distance between half power points of the beam). Optical intersatellite data links (cross links) and optical ground satellite terminals. X XII ..................... XII(f) .................. XII(f) .................. XIII(b) ................ XIII(d) ................ XIII(e) ................ XIII(f) ................. XIII(g) ................ XIII(h) ................ XIII(i) XIII(j) ................. XIII(k) ................ XIII(l) ................. XIV .................... XIV(a), XIV(b), XIV(d). XIV(e) ................ XIV(f) ................. XV(a) ................. XV(b) ................. XV(c) ................. XV(c) ................. XV(d) ................. XV(e) ................. TKELLEY on DSK3SPTVN1PROD with RULES XV(e) ................. XV(e) ................. VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 (AS) § 126.16 (UK) § 126.17 X X X X X X .................... X X .................... X X .................... .................... X .................... .................... X .................... .................... X .................... .................... X .................... .................... .................... .................... .................... X X X X .................... X X .................... .................... X X X X X X X .................... X X .................... X X X X X X X E:\FR\FM\11APR1.SGM X X X 11APR1 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations 21535 SUPPLEMENT NO. 1 TO PART 126*—Continued USML Category Exclusion (CA) § 126.5 XV(e) ................. Spaceborne regenerative baseband processing (direct up and down conversion to and from baseband) equipment. Propulsion systems which permit acceleration of the satellite on-orbit (i.e., after mission orbit injection) at rates greater than 0.1 g. Attitude control and determination systems designed to provide spacecraft pointing determination and control or payload pointing system control better than 0.02 degrees per axis. All specifically designed or modified systems, components, parts, accessories, attachments, and associated equipment for all USML Category XV(a) items, except when specifically designed or modified for use in commercial communications satellites. Defense articles and services specific to spacecraft and ground control station systems (only for telemetry, tracking and control as controlled in USML Category XV(b)), subsystems, components, parts, accessories, attachments, and associated equipment. Technical data and defense services directly related to the other defense articles excluded from the exemptions for USML Category XV. Defense articles and services specific to design and testing of nuclear weapons. Nuclear radiation measuring devices manufactured to military specifications ........ Software source code related to USML Category XVI(c). See Note 4 ................... Classified articles and defense services not elsewhere enumerated. See Note 1. Defense articles and services specific to directed energy weapon systems .......... Defense articles and services related to submersible vessels, oceanographic, and associated equipment. Miscellaneous defense articles and services ........................................................... X XV(e) ................. XV(e) ................. XV(e) ................. XV(e) ................. XV(f) .................. XVI .................... XVI(c) ................ XVI(e) ................ XVII ................... XVIII .................. XX ..................... TKELLEY on DSK3SPTVN1PROD with RULES XXI .................... (AS) § 126.16 (UK) § 126.17 .................... X X X X X X X .................... X .................... X X X X X X X X X X X X X X X X X Note 1: Classified defense articles and services are not eligible for export under the Canadian exemptions. U.S. origin defense articles and services controlled in USML Category XVII are not eligible for export under the UK Treaty exemption. U.S. origin classified defense articles and services are not eligible for export under either the UK or AS Treaty exemptions except when being released pursuant to a U.S. Department of Defense written request, directive, or contract that provides for the export of the defense article or service. Note 2: The phrase ‘‘any part of the spectrum’’ includes radio frequency (RF), infrared (IR), electro-optical, visual, ultraviolet (UV), acoustic, and magnetic. Defense articles related to reduced observables or counter reduced observables are defined as: a. Signature reduction (radio frequency (RF), infrared (IR), Electro-Optical, visual, ultraviolet (UV), acoustic, magnetic, RF emissions) of defense platforms, including systems, subsystems, components, materials (including dual-purpose materials used for Electromagnetic Interference (EM) reduction), technologies, and signature prediction, test and measurement equipment and software and material transmissivity/reflectivity prediction codes and optimization software. b. Electronically scanned array radar, high power radars, radar processing algorithms, periscope-mounted radar systems (PATRIOT), LADAR, multistatic and IR focal plane array-based sensors, to include systems, subsystems, components, materials, and technologies. Note 3: Defense Articles related to sensor fusion beyond that required for display or identification correlation is defined as techniques designed to automatically combine information from two or more sensors/sources for the purpose of target identification, tracking, designation, or passing of data in support of surveillance or weapons engagement. Sensor fusion involves sensors such as acoustic, infrared, electro optical, frequency, etc. Display or identification correlation refers to the combination of target detections from multiple sources for assignment of common target track designation. Note 4: Software source code beyond that source code required for basic operation, maintenance, and training for programs, systems, and/or subsystems is not eligible for use of the UK or AS Treaty exemptions, unless such export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of § 126.16 or § 126.17 of this subchapter and is consistent with other exclusions of this supplement. Note 5: Manufacturing know-how, as defined in § 125.4(c)(6) of this subchapter, is not eligible for use of the UK or AS Treaty exemptions, unless such export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of § 126.16 or § 126.17 of this subchapter and is consistent with other exclusions of this supplement. Note 6: Defense Articles specific to Man Portable Air Defense Systems (MANPADS) includes missiles which can be used without modification in other applications. It also includes production and test equipment and components specifically designed or modified for MANPAD systems, as well as training equipment specifically designed or modified for MANPAD systems. Note 7: Naval nuclear propulsion plants includes all of USML Category VI(e). Naval nuclear propulsion information is technical data that concerns the design, arrangement, development, manufacture, testing, operation, administration, training, maintenance, and repair of the propulsion plants of naval nuclear-powered ships and prototypes, including the associated shipboard and shore-based nuclear support facilities. Examples of defense articles covered by this exclusion include nuclear propulsion plants and nuclear submarine technologies or systems; nuclear powered vessels (see USML Categories VI and XX). Note 8: A complete gas turbine engine with embedded hot section components or digital engine controls is eligible for export or transfer under the Treaties. Technical data, other than required for routine external maintenance and operation, related to the hot section or digital engine controls, as well as individual hot section components are not eligible for the Treaty exemption whether shipped separately or accompanying a complete engine. Examples of gas turbine engine hot section exempted defense article components and technology are combustion chambers/liners; high pressure turbine blades, vanes, disks and related cooled structure; cooled low pressure turbine blades, vanes, disks and related cooled structure; advanced cooled augmenters; and advanced cooled nozzles. Examples of gas turbine engine hot section developmental technologies are Integrated High Performance Turbine Engine Technology (IHPTET), Versatile, Affordable Advanced Turbine Engine (VAATE), Ultra-Efficient Engine Technology (UEET). Note 9: Examples of countermeasures and counter-countermeasures related to defense articles not exportable under the AS or UK Treaty exemptions are: a. IR countermeasures; b. Classified techniques and capabilities; VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 E:\FR\FM\11APR1.SGM 11APR1 21536 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations SUPPLEMENT NO. 1 TO PART 126*—Continued TKELLEY on DSK3SPTVN1PROD with RULES USML Category (CA) § 126.5 Exclusion (AS) § 126.16 (UK) § 126.17 c. Exports for precision radio frequency location that directly or indirectly supports fire control and is used for situation awareness, target identification, target acquisition, and weapons targeting and Radio Direction Finding (RDF) capabilities. Precision RF location is defined as angle of arrival accuracy of less than five degrees (RMS) and RF emitter location of less than ten percent range error; d. Providing the capability to reprogram; and e. Acoustics (including underwater), active and passive countermeasures, and counter-countermeasures. Note 10: Examples of defense articles covered by this exclusion include underwater acoustic vector sensors; acoustic reduction; off-board, underwater, active and passive sensing, propeller/propulsor technologies; fixed mobile/floating/powered detection systems which include in-buoy signal processing for target detection and classification; autonomous underwater vehicles capable of long endurance in ocean environments (manned submarines excluded); automated control algorithms embedded in on-board autonomous platforms which enable (a) group behaviors for target detection and classification, (b) adaptation to the environment or tactical situation for enhancing target detection and classification; ‘‘intelligent autonomy’’ algorithms which define the status, group (greater than 2) behaviors, and responses to detection stimuli by autonomous, underwater vehicles; and low frequency, broad-band ‘‘acoustic color,’’ active acoustic ‘‘fingerprint’’ sensing for the purpose of long range, single pass identification of ocean bottom objects, buried or otherwise (controlled under Category USML XI(a)(1), (a)(2), (b), (c), and (d)). Note 11: This exclusion does not apply to the platforms (e.g., vehicles) for which the armored plates are applied. For exclusions related to the platforms, reference should be made to the other exclusions in this list, particularly for the category in which the platform is controlled. The excluded defense articles include constructions of metallic or non-metallic materials or combinations thereof specially designed to provide protection for military systems. The phrase ‘‘suitable for military use’’ applies to any articles or materials which have been tested to level IIIA or above IAW NIJ standard 0108.01 or comparable national standard. This exclusion does not include military helmets, body armor, or other protective garments which may be exported IAW the terms of the AS or UK Treaty. Note 12: Defense services or technical data specific to applied research (§ 125.4(c)(3) of this subchapter), design methodology (§ 125.4(c)(4) of this subchapter), engineering analysis (§ 125.4(c)(5) of this subchapter), or manufacturing know-how (§ 125.4(c)(6) of this subchapter) are not eligible for export under the Canadian exemptions. However, this exclusion does not include defense services or technical data specific to build-to-print as defined in § 125.4(c)(1) of this subchapter, build/design-to-specification as defined in § 125.4(c)(2) of this subchapter, or basic research as defined in § 125.4(c)(3) of this subchapter, or maintenance (i.e., inspection, testing, calibration or repair, including overhaul, reconditioning and one-to-one replacement of any defective items parts or components, but excluding any modification, enhancement, upgrade or other form of alteration or improvement that changes the basic performance of the item) of non-excluded defense articles which may be exported subject to other exclusions or terms of the Canadian exemptions. Note 13: The term ‘‘libraries’’ (parametric technical databases) means a collection of technical information of a military nature, reference to which may enhance the performance of military equipment or systems. Note 14: In order to utilize the authorized defense services under the Canadian exemption, the following must be complied with: (a) The Canadian contractor and subcontractor must certify, in writing, to the U.S. exporter that the technical data and defense services being exported will be used only for an activity identified in Supplement No. 1 to part 126 of this subchapter and in accordance with § 126.5 of this subchapter; and (b) A written arrangement between the U.S. exporter and the Canadian recipient must: 1. Limit delivery of the defense articles being produced directly to an identified manufacturer in the United States registered in accordance with part 122 of this subchapter; a department or agency of the United States Federal Government; a Canadian-registered person authorized in writing to manufacture defense articles by and for the Government of Canada; a Canadian Federal, Provincial, or Territorial Government; 2. Prohibit the disclosure of the technical data to any other contractor or subcontractor who is not a Canadian-registered person; 3. Provide that any subcontract contain all the limitations of § 126.5 of this subchapter; 4. Require that the Canadian contractor, including subcontractors, destroy or return to the U.S. exporter in the United States all of the technical data exported pursuant to the contract or purchase order upon fulfillment of the contract, unless for use by a Canadian or United States Government entity that requires in writing the technical data be maintained. The U.S. exporter must be provided written certification that the technical data is being retained or destroyed; and 5. Include a clause requiring that all documentation created from U.S. origin technical data contain the statement that, ‘‘This document contains technical data, the use of which is restricted by the U.S. Arms Export Control Act. This data has been provided in accordance with, and is subject to, the limitations specified in § 126.5 of the International Traffic in Arms Regulations (ITAR). By accepting this data, the consignee agrees to honor the requirements of the ITAR.’’ (c) The U.S. exporter must provide the Directorate of Defense Trade Controls a semi-annual report of all their on-going activities authorized under § 126.5 of this subchapter. The report shall include the article(s) being produced; the end-user(s); the end item into which the product is to be incorporated; the intended end-use of the product; the name and address of all the Canadian contractors and subcontractors. Note 15: This exclusion does not apply to demining equipment in support of the clearance of landmines and unexploded ordnance for humanitarian purposes. As used in this exclusion, ‘‘anti-personnel landmine’’ means any mine placed under, on, or near the ground or other surface area, or delivered by artillery, rocket, mortar, or similar means or dropped from an aircraft and which is designed to be detonated or exploded by the presence, proximity, or contact of a person; any device or material which is designed, constructed, or adapted to kill or injure and which functions unexpectedly when a person disturbs or approaches an apparently harmless object or performs an apparently safe act; any manually-emplaced munition or device designed to kill, injure, or damage and which is actuated by remote control or automatically after a lapse of time. Note 16: The cluster munitions that are subject to this exclusion are set forth below: The Convention on Cluster Munitions, signed December 3, 2008, and entered into force on August 1, 2010, defines a ‘‘cluster munition’’ as: A conventional munition that is designed to disperse or release explosive submunitions each weighing less than 20 kilograms, and includes those explosive submunitions. Under the Convention, a ‘‘cluster munition’’ does not include the following munitions: (a) A munition or submunition designed to dispense flares, smoke, pyrotechnics or chaff; or a munition designed exclusively for an air defense role; (b) A munition or submunition designed to produce electrical or electronic effects; (c) A munition that, in order to avoid indiscriminate area effects and the risks posed by unexploded submunitions, has all of the following characteristics: 1. Each munition contains fewer than ten explosive submunitions; 2. Each explosive submunition weighs more than four kilograms; 3. Each explosive submunition is designed to detect and engage a single target object; VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 E:\FR\FM\11APR1.SGM 11APR1 Federal Register / Vol. 78, No. 70 / Thursday, April 11, 2013 / Rules and Regulations 21537 SUPPLEMENT NO. 1 TO PART 126*—Continued USML Category (CA) § 126.5 Exclusion (AS) § 126.16 (UK) § 126.17 4. Each explosive submunition is equipped with an electronic self-destruction mechanism; and 5. Each explosive submunition is equipped with an electronic self-deactivating feature. Pursuant to U.S. law (Pub. L. 111–117, section 7055(b)), no military assistance shall be furnished for cluster munitions, no defense export license for cluster munitions may be issued, and no cluster munitions or cluster munitions technology shall be sold or transferred, unless: (a) The submunitions of the cluster munitions, after arming, do not result in more than 1 percent unexploded ordnance across the range of intended operational environments; and (b) The agreement applicable to the assistance, transfer or sale of such cluster munitions or cluster munitions technology specifies that the cluster munitions will only be used against clearly defined military targets and will not be used where civilians are known to be present or in areas normally inhabited by civilians. Note 17: The radar systems described are controlled in USML Category XI(a)(3)(i) through (v). As used in this entry, the term ‘‘systems’’ includes equipment, devices, software, assemblies, modules, components, practices, processes, methods, approaches, schema, frameworks, and models. * An ‘‘X’’ in the chart indicates that the item is excluded from use under the exemption referenced in the top of the column. An item excluded in any one row is excluded regardless of whether other rows may contain a description that would include the item. Dated: April 5, 2013. Rose E. Gottemoeller, Acting Under Secretary, Arms Control and International Security, Department of State. [FR Doc. 2013–08506 Filed 4–10–13; 8:45 am] BILLING CODE 4710–25–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG–2013–0183] Drawbridge Operation Regulations; Upper Mississippi River, Rock Island, IL Coast Guard, DHS. Notice of deviation from drawbridge regulation. AGENCY: ACTION: The Coast Guard has issued a temporary deviation from the operating schedule that governs the Rock Island Railroad and Highway Drawbridge across the Upper Mississippi River, mile 482.9, at Rock Island, Illinois. The deviation is necessary to allow the Front Street 5K Run to cross the bridge. This deviation allows the bridge to be maintained in the closed-to-navigation position for one hour. DATES: This deviation is effective from 7 p.m. to 8 p.m. on June 15, 2013. ADDRESSES: The docket for this deviation, [USCG–2013–0183] is available at https://www.regulations.gov. Type the docket number in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this deviation. You may also visit the Docket Management Facility in Room W12–140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, TKELLEY on DSK3SPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 18:35 Apr 10, 2013 Jkt 229001 DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: If you have questions on this temporary deviation, call or email Eric A. Washburn, Bridge Administrator, Western Rivers, Coast Guard; telephone 314–269–2378, email Eric.Washburn@uscg.mil. If you have questions on viewing the docket, call Barbara Hairston, Program Manager, Docket Operations, telephone 202–366– 9826. SUPPLEMENTARY INFORMATION: The U.S. Army Rock Island Arsenal requested a temporary deviation for the Rock Island Railroad and Highway Drawbridge, across the Upper Mississippi River, mile 482.9, at Rock Island, Illinois to remain in the closed-to-navigation position for a one hour period from 7 p.m. to 8 p.m., June 15, 2013, while a 5K run is held between the cities of Davenport, IA and Rock Island, IL. The Rock Island Railroad and Highway Drawbridge currently operates in accordance with 33 CFR 117.5, which states the general requirement that drawbridges shall open promptly and fully for the passage of vessels when a request to open is given in accordance with the subpart. There are no alternate routes for vessels transiting this section of the Upper Mississippi River. The Rock Island Railroad and Highway Drawbridge, in the closed-tonavigation position, provides a vertical clearance of 23.8 feet above normal pool. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This temporary deviation has been coordinated with waterway users. No objections were received. In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35. Dated: March 21, 2013. Eric A. Washburn, Bridge Administrator, Western Rivers. [FR Doc. 2013–08404 Filed 4–10–13; 8:45 am] BILLING CODE 9110–04–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA–R09–OAR–2013–0103; FRL–9794–4] Revisions to the California State Implementation Plan, Santa Barbara and San Diego County Air Pollution Control Districts Environmental Protection Agency (EPA). ACTION: Direct final rule. AGENCY: EPA is taking direct final action to approve revisions to the Santa Barbara County Air Pollution Control District (SBCAPCD) and San Diego County Air Pollution Control District (SDCAPCD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC) emissions from surface coating of aerospace vehicles and components and from wood products coating operations. We are approving local rules that regulate these emission sources under the Clean Air Act as amended in 1990 (CAA or the Act). SUMMARY: This rule is effective on June 10, 2013 without further notice, unless EPA receives adverse comments by May 13, 2013. If we receive such comments, we will publish a timely withdrawal in the Federal Register to notify the public DATES: E:\FR\FM\11APR1.SGM 11APR1

Agencies

DEPARTMENT OF STATE

[Federal Register Volume 78, Number 70 (Thursday, April 11, 2013)]
[Rules and Regulations]
[Pages 21523-21537]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08506]

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DEPARTMENT OF STATE

22 CFR Parts 120 and 126

RIN 1400-AD38
[Public Notice 8270]

Implementation of the Defense Trade Cooperation Treaty Between
the United States and Australia

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State is amending the International Traffic
in Arms Regulations (ITAR) to implement the Treaty Between the
Government of the United States of America and the Government of
Australia Concerning Defense Trade Cooperation, identify via a
supplement to the ITAR the defense articles and defense services that
cannot be exported pursuant to the licensing exemption created by the
Treaty, and make certain other corrections to the supplement.

DATES: This rule is effective upon the entry into force of the Treaty
Between the Government of the United States of America and the
Government of Australia Concerning Defense Trade Cooperation. The
Department will publish a final rule in the Federal Register providing
the effective date of this rule.

FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Office of Defense Trade
Controls Policy, Department of State, telephone (202) 663-2809 or email
DDTCResponseTeam@state.gov. ATTN: Regulatory Change--Treaties.

SUPPLEMENTARY INFORMATION: The Department of State is amending the
International Traffic in Arms Regulations (ITAR) pursuant to the
Security Cooperation Act of 2010 (Pub. L. 111-266), with the inclusion
of other changes. Title I of the Security Cooperation Act, the Defense
Trade Cooperation Treaties Implementation Act of 2010, implements the
Treaty Between the Government of the United States of America and the
Government of Australia Concerning Defense Trade Cooperation (Treaty
Doc. 110-10), and the Treaty Between the Government of the United
States of America and the Government of the United Kingdom of Great
Britain and Northern Ireland Concerning Defense Trade Cooperation
(Treaty Doc. 110-7). The U.S.-UK treaty entered into force on April 13,
2012. (See ``Implementation of the Defense Trade Cooperation Treaty
Between the United States and the United Kingdom,'' 77 FR 16592, and
``Announcement of Entry Into Force of the Defense Trade Cooperation
Treaty Between the United States and the United Kingdom,'' 77 FR
33089.) This rule amends the ITAR with regard to the U.S.-Australia
treaty (the ``Treaty'').
ITAR Sec. 120.1 is amended to provide updated authorities and
editorial changes. ITAR Sec. 120.33 is added to provide a definition
of ``Defense Trade Cooperation Treaty between the United States and
Australia.'' New ITAR Sec. 120.35 defines the Implementing Arrangement
pursuant to the Treaty. ITAR Sec. 126.16 is added to create the
licensing exemption and provide guidance on its use. Supplement No. 1
to part 126 is amended to identify

[[Page 21524]]

defense articles that may not be exported and defense services that may
not be furnished through the exemption.
In addition, the supplement is amended to make the following
corrections and clarifications: the phrase, ``defense articles and
services related to'' is removed from the row regarding USML Category I
articles, and the USML citation for armored plates is changed from USML
Category XIII(c) to XIII(e).
On November 22, 2011 (76 FR 72246, RIN 1400-AC95), the Department
published for public comment a proposed rule to amend the ITAR to
implement the Defense Trade Cooperation Treaty between the United
States and the United Kingdom and the Defense Trade Cooperation Treaty
between the United States and Australia, and to identify, via a
supplement, the defense articles that may not be exported and the
defense services that may not be furnished through use of the licensing
exemptions created by the treaties. The comment period ended December
22, 2011. Fifteen parties filed comments that applied to the Treaty.
The Department's evaluation of the comments and recommendations
follows.
The majority of commenting parties expressed support for the
Treaty's intention of facilitating defense exports with one of the
United States' closest allies. However, the commenting parties
expressed concern that the exemption is overly complicated and its
requirements too burdensome to be truly workable. The Department
appreciates these comments and believes the clarifying edits made in
this final rule make application of the exemption clearer.
Several commenting parties requested additional guidance for
various aspects of the exemption described in ITAR Sec. 126.16. As
part of Treaty implementation, the Department's Directorate of Defense
Trade Controls (DDTC) has posted Frequently Asked Questions (FAQs) on
its Web site (www.pmddtc.state.gov). These FAQs address these requests
for guidance.
Two commenting parties recommended that the Department add a
definition for defense articles to ITAR Sec. 126.16(a)(1) to clarify
that ''defense articles'' also includes technical data for purposes of
the exemption. The Department does not believe this change is necessary
as the definition for ``defense articles'' in ITAR Sec. 120.6 clearly
identifies technical data as within its scope. Unless specifically
indicated otherwise, the use of the term ``defense article'' includes
technical data.
One commenting party requested clarification of the term ``access''
as used in ITAR Sec. 126.16(a)(1)(iv), indicating that it is common
for U.S. Customs and Border Protection (CBP) to authorize a physical
manipulation of a container, which would seemingly result in an
intermediate consignee having ``access'' to an item in the shipment.
The Department believes the meaning of ``access'' is plain, and does
not include situations such as this, where there is a directive from a
CBP official to open a container for the purpose as stated. Another
party requested that the Department place in this section a reference
to ITAR Sec. 126.16(k), which discusses intermediate consignees. The
Department accepted this recommendation and has revised the section
accordingly.
One commenting party expressed concern that the process by which
the U.S. Government would obtain records, as provided in ITAR Sec.
126.16(l) and other sections of the exemption, is unclear. These
sections are not intended to identify the process by which record
requests are made, and therefore were not revised to provide this
information. (The records-request process would be the same for ITAR
Sec. 126.16(l) as for requests made pursuant to any other section of
the ITAR.)
One commenting party noted that ITAR Sec. 126.16(a)(4) seemed to
limit transfers just to exports to the United States. The Department
has revised this section to clarify that it applies to transfers within
the Approved Community.
Two commenting parties requested that the Department change the
word ``required'' to ``pursuant to'' in ITAR Sec. 126.16(a)(4)(iii).
This change was not accepted because the word ``required'' is a
requirement of the Treaty.
In response to the recommendation of two commenting parties, the
Department revised ITAR Sec. 126.16(a)(5) regarding the applicability
of this exemption to defense articles delivered via the Foreign
Military Sales program.
Three commenting parties recommended that the Department include an
explanation of the vetting process for the Australian Community in ITAR
Sec. 126.16(d). The Department did not accept this recommendation for
the rule itself, but notes that the vetting requirements are identified
in the Treaty and Implementing Arrangement, which are available on
DDTC's Web site.
Three commenting parties requested that the Department provide
additional guidance on requesting confirmation of Treaty eligibility
for operations, programs, and projects that cannot be publicly
identified (i.e., are classified). For this information, the Department
refers inquiries by members of the approved community to both the DDTC
Web site and the appropriate defense authority.
One commenting party inquired whether the Department will publish a
complete list of U.S. Government contracts that are Treaty eligible.
The Department will not do so. The U.S. Department of Defense has
updated the Defense Federal Acquisition Regulation Supplement (DFARS)
and certain contract clauses, which will identify Treaty eligibility
when incorporated into a contract.
Three commenting parties requested that ITAR Sec. 126.16(g)(1) be
clarified to indicate whether it applies to marketing to members of the
Approved Community, or requested its removal. This provision is part of
the Treaty's Exempted Technology List, and therefore cannot be removed.
However, the Department revised ITAR Sec. 126.16(g)(1) to indicate
that marketing to members of the Australian Community is covered so
long as it is for an approved Treaty end-use and meets the other
requirements of this section.
One commenting party recommended removal of ITAR Sec. 126.16(g)(4)
or, in the alternative, adding the parenthetical ``(or foreign
equivalent)'' after ``Milestone B.'' The Department cannot remove this
paragraph as it is part of the Treaty's Exempted Technology List. The
Department also cannot add the parenthetical as there is no equivalent
in Australia to ``Milestone B.''
One commenting party requested changes to ITAR Sec. 126.16(g)(5)
to allow for the export of embedded exempted technologies in certain
circumstances. The Department is not, at this time, prepared to broaden
this provision to include embedded exempted technologies.
Two commenting parties commented on the complexity of using ITAR
Sec. 126.16(h) with a diverse supply chain and requested clarification
on the applicability of ITAR Sec. 123.9(e) to this exemption. The
Department appreciates the diverse nature of global supply chains, but
believes the mechanisms provided in ITAR Sec. 126.16(h) are no more
onerous than current retransfer or reexport requirements. Further, as
indicated in ITAR Sec. 126.16(h)(5), any retransfer, reexport, or
change in end-use under ITAR Sec. 126.16(h) shall be made in
accordance with ITAR Sec. 123.9.
In response to the recommendation of two commenting parties, the
Department has deleted ``any citizen of

[[Page 21525]]

such countries'' from ITAR Sec. 126.16(h)(8).
Ten commenting parties commented on the marking requirements
provided in ITAR Sec. 126.16(j). Of most concern was a perception that
the requirements of this section made using the exemption overly
burdensome and costly. Various suggestions were provided, ranging from
removal of the requirement to rewording of certain sections. The
majority of these commenting parties requested removal of the
requirement in paragraph (j)(2) for exporters to remove Treaty
markings. The Department appreciates these comments; however, apart
from minor clarifying changes, the marking requirements have not been
removed or revised because they are made pursuant to the Treaty and its
Implementing Arrangement.
One commenting party requested that the Department revise the text
of the statement required by ITAR Sec. 126.16(j)(5) to indicate that
the items being exported are USML items and authorized only for export
to Australia under the Treaty. The Department accepted this suggestion
and revised the text accordingly.
One commenting party requested that registered brokers be included
in ITAR Sec. 126.16(k)(1)(ii). Australian intermediate consignees must
meet the requirements of this section. If a registered broker meets
these requirements, then it may be an intermediate consignee for
purposes of this exemption. However, simply being a registered broker
does not automatically qualify an entity as an Australian intermediate
consignee.
One commenting party recommended changing ``all exports'' in ITAR
Sec. 126.16(l)(1) to ``their exports'' to acknowledge that the U.S.
exporter may not be aware or have record of a reexport/retransfer
request submitted by an Australian Community member. The Department
accepted this recommendation and has revised the section accordingly.
One commenting party requested clarification of whether ITAR Sec.
126.16(l)(1)(x) referred to the USML category or security
classification. The Department revised this section to make clear that
it refers to security classification.
The Department accepted the recommendation of one commenting party
to remove reference to ``defense services'' in ITAR Sec. 126.16(l)(2).
Two commenting parties requested that the Department clarify
whether ITAR Sec. 126.16(m) required exporters to submit negative
reports. Reporting requirements under this section are contingent on
meeting the requirements of ITAR Sec. 130.9.
Two commenting parties requested clarification on whether the
congressional notification requirement under the Treaty is identical to
that required under normal license authorization processes. The
Department confirms that the requirement is the same.
Ten commenting parties submitted comments regarding the scope and
text of Supplement No. 1 to part 126. In particular, comments indicated
concern that the supplement was too broad and possibly excluded too
much to make the exemption useful. The Department appreciates these
comments, and has made clarifying edits to Supplement No. 1 to the
extent possible within the confines of the Treaty, the Implementing
Arrangement, and the Exempted Technology List.
For clarification, the Department has added, ``prior to movement,''
to the text of ITAR Sec. 126.16(j)(1), which is in conformance with
the requirements of the Treaty's Implementing Arrangement.
Having thoroughly reviewed and evaluated the written comments and
recommended changes, the Department has determined that it will accept,
and hereby adopt with the noted changes, the proposed rule, as it
pertained to the Treaty, as a final rule, to be effective when the
Treaty enters into force.

Regulatory Analysis and Notices

Administrative Procedure Act

The Department of State is of the opinion that controlling the
import and export of defense articles and services is a foreign affairs
function of the United States government and that rules implementing
this function are exempt from sections 553 (rulemaking) and 554
(adjudications) of the Administrative Procedure Act (APA). In addition,
this rulemaking is implementing the provisions of a treaty between the
United States and Australia and related amendments to the Arms Export
Control Act. Although the Department is of the opinion that this rule
is exempt from the rulemaking provisions of the APA, the Department
published this rule with a 30-day provision for public comment and
without prejudice to its determination that controlling the import and
export of defense services is a foreign affairs function (RIN 1400-
AC95). This rule is effective upon the entry into force of the Treaty
Between the Government of the United States of America and the
Government of Australia Concerning Defense Trade Cooperation (Treaty
Doc. 110-10). Once the Treaty is in force, exporters must be able to
utilize the Treaty for qualifying exports of defense articles.

Regulatory Flexibility Act

Since the Department is of the opinion that this rule is exempt
from the provisions of 5 U.S.C. 553, there is no requirement for an
analysis under the Regulatory Flexibility Act.

Unfunded Mandates Reform Act of 1995

This rulemaking does not involve a mandate that will result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year, and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.

Executive Order 13175

The Department of State has determined that this rulemaking will
not have tribal implications, will not impose substantial direct
compliance costs on Indian tribal governments, and will not preempt
tribal law. Accordingly, the requirement of Executive Order 13175 does
not apply to this rulemaking.

Small Business Regulatory Enforcement Fairness Act of 1996

This rulemaking is not a major rule within the meaning of the Small
Business Regulatory Enforcement Fairness Act of 1996.

Executive Orders 12372 and 13132

This rulemaking will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this rulemaking does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this rulemaking.

Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic,

[[Page 21526]]

environmental, public health and safety effects, distributed impacts,
and equity). These executive orders stress the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. The Department has reviewed this
regulation to ensure its consistency with the regulatory philosophy and
principles set forth in these executive orders. The Department also has
determined that this rule is not a ``significant regulatory action''
under section 3(f) of Executive Order 12866.

Executive Order 12988

The Department of State has reviewed this rulemaking in light of
sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate
ambiguity, minimize litigation, establish clear legal standards, and
reduce burden.

Paperwork Reduction Act

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 in 22 CFR Parts 120 and 126

Arms and Munitions, Exports.

Accordingly, for the reasons set forth above, Title 22, Chapter I,
Subchapter M, parts 120 and 126 are amended as follows:

PART 120--PURPOSE AND DEFINITIONS

0
1. The authority citation for part 120 is revised to read as follows:

Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744
(22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub.
L. 105-261, 112 Stat. 1920; Pub. L. 111-266; Section 1261, Pub. L.
112-239; E.O. 13637, 78 FR 16129.

0
2. Section 120.1 is amended by revising paragraph (a) to read as
follows:

Sec. 120.1 General authorities and eligibility.

(a) Section 38 of the Arms Export Control Act (22 U.S.C. 2778), as
amended, authorizes the President to control the export and import of
defense articles and defense services. The statutory authority of the
President to promulgate regulations with respect to exports of defense
articles and defense services was delegated to the Secretary of State
by Executive Order 13637. This subchapter implements that authority. By
virtue of delegations of authority by the Secretary of State, these
regulations are primarily administered by the Deputy Assistant
Secretary of State for Defense Trade and Regional Security and the
Managing Director of the Directorate of Defense Trade Controls, Bureau
of Political-Military Affairs.
* * * * *
0
3. Section 120.33 is added to read as follows:

Sec. 120.33 Defense Trade Cooperation Treaty between the United
States and Australia.

Defense Trade Cooperation Treaty between the United States and
Australia means the Treaty between the Government of the United States
of America and the Government of Australia Concerning Defense Trade
Cooperation, done at Sydney, September 5, 2007. For additional
information on making exports pursuant to this treaty, see Sec. 126.16
of this subchapter.
0
4. Section 120.35 is added to read as follows:

Sec. 120.35 Australia Implementing Arrangement.

Australia Implementing Arrangement means the Implementing
Arrangement Pursuant to the Treaty between the Government of the United
States of America and the Government of Australia Concerning Defense
Trade Cooperation, done at Washington, March 14, 2008, as it may be
amended.

PART 126--GENERAL POLICIES AND PROVISIONS

0
5. The authority citation for part 126 is revised to read as follows:

Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90
Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C.
2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp.,
p. 899; Sec. 1225, Pub. L. 108-375; Sec. 7089, Pub. L. 111-117; Pub.
L. 111-266; Section 7045, Pub. L. 112-74; Section 7046, Pub. L. 112-
74; E.O. 13637, 78 FR 16129.
0
6. Section 126.16 is added to read as follows:

Sec. 126.16 Exemption pursuant to the Defense Trade Cooperation
Treaty between the United States and Australia.

(a) Scope of exemption and required conditions. (1) Definitions.
(i) An export means, for purposes of this section only, the initial
movement of defense articles or defense services from the United States
Community to the Australian Community.
(ii) A transfer means, for purposes of this section only, the
movement of a previously exported defense article or defense service by
a member of the Australian Community within the Australian Community,
or between a member of the United States Community and a member of the
Australian Community.
(iii) Retransfer and reexport have the meaning provided in Sec.
120.19 of this subchapter.
(iv) Intermediate consignee means, for purposes of this section, an
entity or person who receives, but does not have access to, defense
articles, including technical data, for the sole purpose of effecting
onward movement to members of the Approved Community (see paragraph (k)
of this section).
(2) Persons or entities exporting or transferring defense articles
or defense services are exempt from the otherwise applicable licensing
requirements if such persons or entities comply with the regulations
set forth in this section. Except as provided in Supplement No. 1 to
part 126 of this subchapter, Port Directors of U.S. Customs and Border
Protection and postmasters shall permit the permanent and temporary
export without a license from members of the United States Community to
members of the Australian Community (see paragraph (d) of this section
regarding the identification of members of the Australian Community) of
defense articles and defense services not listed in Supplement No. 1 to
part 126 of this subchapter, for the end-uses specifically identified
pursuant to paragraphs (e) and (f) of this section. The purpose of this
section is to specify the requirements to export, transfer, reexport,
retransfer, or otherwise dispose of a defense article or defense
service pursuant to the Defense Trade Cooperation Treaty between the
United States and Australia. All persons must continue to comply with
statutory and regulatory requirements outside of this subchapter
concerning the import of defense articles and defense services or the
possession or transfer of defense articles, including, but not limited
to, regulations issued by the Bureau of Alcohol, Tobacco, Firearms and
Explosives found at 27 CFR parts 447, 478, and 479, which are
unaffected by the Defense Trade Cooperation Treaty between the United
States and Australia.
(3) Export. In order for an exporter to export a defense article or
defense service pursuant to the Defense Trade Cooperation Treaty
between the United States and Australia, all of the following
conditions must be met:
(i) The exporter must be registered with the Directorate of Defense
Trade Controls (DDTC) and must be eligible, according to the
requirements and prohibitions of the Arms Export Control Act, this
subchapter, and other provisions of United States law, to obtain an
export license (or other forms of authorization to export) from any
agency of the U.S. Government without

[[Page 21527]]

restriction (see paragraphs (b) and (c) of this section for specific
requirements);
(ii) The recipient of the export must be a member of the Australian
Community (see paragraph (d) of this section regarding the
identification of members of the Australian Community). Australian non-
governmental entities and facilities that become ineligible for such
membership will be removed from the Australian Community;
(iii) Intermediate consignees involved in the export must not be
ineligible, according to the requirements and prohibitions of the Arms
Export Control Act, this subchapter, and other provisions of United
States law, to handle or receive a defense article or defense service
without restriction (see paragraph (k) of this section for specific
requirements);
(iv) The export must be for an end-use specified in the Defense
Trade Cooperation Treaty between the United States and Australia and
mutually agreed to by the U.S. Government and the Government of
Australia pursuant to the Defense Trade Cooperation Treaty between the
United States and Australia and the Implementing Arrangement thereto
(the Australia Implementing Arrangement) (see paragraphs (e) and (f) of
this section regarding authorized end-uses);
(v) The defense article or defense service is not excluded from the
scope of the Defense Trade Cooperation Treaty between the United States
and Australia (see paragraph (g) of this section and Supplement No. 1
to part 126 of this subchapter for specific information on the scope of
items excluded from export under this exemption) and is marked or
identified, at a minimum, as ``Restricted USML'' (see paragraph (j) of
this section for specific requirements on marking exports);
(vi) All required documentation of such export is maintained by the
exporter and recipient and is available upon the request of the U.S.
Government (see paragraph (l) of this section for specific
requirements); and
(vii) The Department of State has provided advance notification to
the Congress, as required, in accordance with this section (see
paragraph (o) of this section for specific requirements).
(4) Transfers. In order for a member of the Approved Community
(i.e., the United States Community and Australian Community) to
transfer a defense article or defense service under the Defense Trade
Cooperation Treaty within the Approved Community, all of the following
conditions must be met:
(i) The defense article or defense service must have been
previously exported in accordance with paragraph (a)(3) of this section
or transitioned from a license or other approval in accordance with
paragraph (i) of this section;
(ii) The transferor and transferee of the defense article or
defense service are members of the Australian Community (see paragraph
(d) of this section regarding the identification of members of the
Australian Community) or the United States Community (see paragraph (b)
of this section for information on the United States Community/approved
exporters);
(iii) The transfer is required for an end-use specified in the
Defense Trade Cooperation Treaty between the United States and
Australia and mutually agreed to by the Government of the United States
and the Government of Australia pursuant to the terms of the Defense
Trade Cooperation Treaty between the United States and Australia and
the Australia Implementing Arrangement (see paragraphs (e) and (f) of
this section regarding authorized end-uses);
(iv) The defense article or defense service is not identified in
paragraph (g) of this section and Supplement No. 1 to part 126 of this
subchapter as ineligible for export under this exemption, and is marked
or otherwise identified, at a minimum, as ``Restricted USML'' (see
paragraph (j) of this section for specific requirements on marking
exports);
(v) All required documentation of such transfer is maintained by
the transferor and transferee and is available upon the request of the
U.S. Government (see paragraph (l) of this section for specific
requirements); and
(vi) The Department of State has provided advance notification to
the Congress in accordance with this section (see paragraph (o) of this
section for specific requirements).
(5) This section does not apply to the export of defense articles
or defense services from the United States pursuant to the Foreign
Military Sales program. Once such items are delivered to the Australian
Government, they may be treated as if they were exported pursuant to
the Treaty and then must be marked, identified, transmitted, stored and
handled in accordance with the Treaty, the Australia Implementing
Arrangement, and the provisions of this section.
(b) United States Community. The following persons compose the
United States Community and may export or transfer defense articles and
defense services pursuant to the Defense Trade Cooperation Treaty
between the United States and Australia:
(1) Departments and agencies of the U.S. Government, including
their personnel acting in their official capacity, with, as
appropriate, a security clearance and a need-to-know; and
(2) Non-governmental U.S. persons registered with DDTC and
eligible, according to the requirements and prohibitions of the Arms
Export Control Act, this subchapter, and other provisions of United
States law, to obtain an export license (or other forms of
authorization to export) from any agency of the U.S. Government without
restriction, including their employees acting in their official
capacity with, as appropriate, a security clearance and a need-to-know.
(c) An exporter that is otherwise an authorized exporter pursuant
to paragraph (b) of this section may not export or transfer pursuant to
the Defense Trade Cooperation Treaty between the United States and
Australia if the exporter's president, chief executive officer, any
vice-president, any other senior officer or official (e.g.,
comptroller, treasurer, general counsel); any member of the board of
directors of the exporter; any party to the export; or any source or
manufacturer is ineligible to receive export licenses (or other forms
of authorization to export) from any agency of the U.S. Government.
(d) Australian Community. For purposes of the exemption provided by
this section, the Australian Community consists of:
(1) Government of Australia authorities with entities identified as
members of the Approved Community through the DDTC Web site at the time
of a transaction under this section; and
(2) The non-governmental Australian entities and facilities
identified as members of the Approved Community through the DDTC Web
site at the time of a transaction under this section; non-governmental
Australian entities and facilities that become ineligible for such
membership will be removed from the Australian Community.
(e) Authorized End-uses. The following end-uses, subject to
paragraph (f) of this section, are specified in the Defense Trade
Cooperation Treaty between the United States and Australia:
(1) United States and Australian combined military or counter-
terrorism operations;
(2) United States and Australian cooperative security and defense
research, development, production, and support programs;
(3) Mutually determined specific security and defense projects
where the Government of Australia is the end-user; or
(4) U.S. Government end-use.

[[Page 21528]]

(f) Procedures for identifying authorized end-uses pursuant to
paragraph (e) of this section:
(1) Operations, programs, and projects that can be publicly
identified will be posted on the DDTC Web site;
(2) Operations, programs, and projects that cannot be publicly
identified will be confirmed in written correspondence from DDTC; or
(3) U.S. Government end-use will be identified specifically in a
U.S. Government contract or solicitation as being eligible under the
Treaty.
(4) No other operations, programs, projects, or end-uses qualify
for this exemption.
(g) Items eligible under this section. With the exception of items
listed in Supplement No. 1 to part 126 of this subchapter, defense
articles and defense services may be exported under this section
subject to the following:
(1) An exporter authorized pursuant to paragraph (b)(2) of this
section may market a defense article to members of the Australian
Community if that exporter has been licensed by DDTC to export (as
defined by Sec. 120.17 of this subchapter) the identical type of
defense article to any foreign person and end-use of the article is for
an end-use identified in paragraph (e) of this section.
(2) The export of any defense article specific to the existence of
(e.g., reveals the existence of or details of) anti-tamper measures
made at U.S. Government direction always requires prior written
approval from DDTC.
(3) U.S.-origin classified defense articles or defense services may
be exported only pursuant to a written request, directive, or contract
from the U.S. Department of Defense that provides for the export of the
classified defense article(s) or defense service(s).
(4) U.S.-origin defense articles specific to developmental systems
that have not obtained written Milestone B approval from the U.S.
Department of Defense milestone approval authority are not eligible for
export unless such export is pursuant to a written solicitation or
contract issued or awarded by the U.S. Department of Defense for an
end-use identified pursuant to paragraph (e)(1), (2), or (4) of this
section.
(5) Defense articles excluded by paragraph (g) of this section or
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI
(a)(3) electronically scanned array radar excluded by Note 2) that are
embedded in a larger system that is eligible to ship under this section
(e.g., a ship, an aircraft) must separately comply with any
restrictions placed on that embedded defense article under this
subchapter. The exporter must obtain a license or other authorization
from DDTC for the export of such embedded defense articles (for
example, USML Category XI (a)(3) electronically scanned array radar
systems that are exempt from this section that are incorporated in an
aircraft that is eligible to ship under this section continue to
require separate authorization from DDTC for their export, transfer,
reexport, or retransfer).
(6) No liability shall be incurred by or attributed to the U.S.
Government in connection with any possible infringement of privately
owned patent or proprietary rights, either domestic or foreign, by
reason of an export conducted pursuant to this section.
(7) Sales by exporters made through the U.S. Government shall not
include either charges for patent rights in which the U.S. Government
holds a royalty-free license, or charges for information which the U.S.
Government has a right to use and disclose to others, which is in the
public domain, or which the U.S. Government has acquired or is entitled
to acquire without restrictions upon its use and disclosure to others.
(h) Transfers, retransfers, and reexports. (1) Any transfer of a
defense article or defense service not exempted in Supplement No. 1 to
part 126 of this subchapter by a member of the Australian Community
(see paragraph (d) of this section for specific information on the
identification of the Community) to another member of the Australian
Community or the United States Community for an end-use that is
authorized by this exemption (see paragraphs (e) and (f) of this
section regarding authorized end-uses) is authorized under this
exemption.
(2) Any transfer or other provision of a defense article or defense
service for an end-use that is not authorized by the exemption provided
by this section is prohibited without a license or the prior written
approval of DDTC (see paragraphs (e) and (f) of this section regarding
authorized end-uses).
(3) Any retransfer or reexport, or other provision of a defense
article or defense service by a member of the Australian Community to a
foreign person that is not a member of the Australian Community, or to
a U.S. person that is not a member of the United States Community, is
prohibited without a license or the prior written approval of DDTC (see
paragraph (d) of this section for specific information on the
identification of the Australian Community).
(4) Any change in the use of a defense article or defense service
previously exported, transferred, or obtained under this exemption by
any foreign person, including a member of the Australian Community, to
an end-use that is not authorized by this exemption is prohibited
without a license or other written approval of DDTC (see paragraphs (e)
and (f) of this section regarding authorized end-uses).
(5) Any retransfer, reexport, or change in end-use requiring such
approval of the U.S. Government shall be made in accordance with Sec.
123.9 of this subchapter.
(6) Defense articles excluded by paragraph (g) of this section or
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI
(a)(3) electronically scanned array radar systems) that are embedded in
a larger system that is eligible to ship under this section (e.g., a
ship, an aircraft) must separately comply with any restrictions placed
on that embedded defense article unless otherwise specified. A license
or other authorization must be obtained from DDTC for the export,
transfer, reexport, retransfer, or change in end-use of any such
embedded defense article (for example, USML Category XI(a)(3)
electronically scanned array radar systems that are excluded from this
section by Supplement No. 1 to part 126 of this subchapter, Note 2 that
are incorporated in an aircraft that is eligible to ship under this
section continue to require separate authorization from DDTC for their
export, transfer, reexport, or retransfer).
(7) A license or prior approval from DDTC is not required for a
transfer, retransfer, or reexport of an exported defense article or
defense service under this section, if:
(i) The transfer of defense articles or defense services is made by
a member of the United States Community to Australian Department of
Defence (ADOD) elements deployed outside the Territory of Australia and
engaged in an authorized end-use (see paragraphs (e) and (f) of this
section regarding authorized end-uses) using ADOD transmission channels
or the provisions of this section (Note: For purposes of paragraph
(h)(7)(i) through (iv) of this section, per Section 9(9) of the
Australia Implementing Arrangement, ``ADOD Transmission channels''
includes electronic transmission of a defense article and transmission
of a defense article by an ADOD contracted carrier or freight forwarder
that merely transports or arranges transport for the defense article in
this instance.);
(ii) The transfer of defense articles or defense services is made
by a member of the United States Community to an Approved Community
member (either

[[Page 21529]]

United States or Australian) that is operating in direct support of
ADOD elements deployed outside the Territory of Australia and engaged
in an authorized end-use (see paragraphs (e) and (f) of this section
regarding authorized end-uses) using ADOD transmission channels or the
provisions of this section;
(iii) The reexport is made by a member of the Australian Community
to ADOD elements deployed outside the Territory of Australia engaged in
an authorized end-use (see paragraphs (e) and (f) of this section
regarding authorized end-uses) using ADOD transmission channels or the
provisions of this section;
(iv) The reexport is made by a member of the Australian Community
to an Approved Community member (either United States or Australian)
that is operating in direct support of ADOD elements deployed outside
the Territory of Australia engaged in an authorized end-use (see
paragraphs (e) and (f) of this section regarding authorized end-uses)
using ADOD transmission channels or the provisions of this section; or
(v) The defense article or defense service will be delivered to the
ADOD for an authorized end-use (see paragraphs (e) and (f) of this
section regarding authorized end-uses); the ADOD may deploy the item as
necessary when conducting official business within or outside the
Territory of Australia. The item must remain under the effective
control of the ADOD while deployed and access may not be provided to
unauthorized third parties.
(8) U.S. persons registered, or required to be registered, pursuant
to part 122 of this subchapter and members of the Australian Community
must immediately notify DDTC of any actual or proposed sale,
retransfer, or reexport of a defense article or defense service on the
U.S. Munitions List originally exported under this exemption to any of
the countries listed in Sec. 126.1 of this subchapter or any person
acting on behalf of such countries, whether within or outside the
United States. Any person knowing or having reason to know of such a
proposed or actual sale, reexport, or retransfer shall submit such
information in writing to the Office of Defense Trade Controls
Compliance, Directorate of Defense Trade Controls.
(i) Transitions. (1) Any previous export of a defense article under
a license or other approval of the U.S. Department of State remains
subject to the conditions and limitations of the original license or
authorization unless DDTC has approved in writing a transition to this
section.
(2) If a U.S. exporter desires to transition from an existing
license or other approval to the use of the provisions of this section,
the following is required:
(i) The U.S. exporter must submit a written request to DDTC, which
identifies the defense articles or defense services to be transitioned,
the existing license(s) or other authorizations under which the defense
articles or defense services were originally exported, and the Treaty-
eligible end-use for which the defense articles or defense services
will be used. Any license(s) filed with U.S. Customs and Border
Protection should remain on file until the exporter has received
approval from DDTC to retire the license(s) and transition to this
section. When this approval is conveyed to U.S. Customs and Border
Protection by DDTC, the license(s) will be returned to DDTC by U.S.
Customs and Border Protection in accord with existing procedures for
the return of expired licenses in Sec. 123.22(c) of this subchapter.
(ii) Any license(s) not filed with U.S. Customs and Border
Protection must be returned to DDTC with a letter citing approval by
DDTC to transition to this section as the reason for returning the
license(s).
(3) If a member of the Australian Community desires to transition
defense articles received under an existing license or other approval
to the processes established under the Treaty, the Australian Community
member must submit a written request to the Government of Australia.
The Government of Australia will submit the request to DDTC for review
and approval. The defense article or defense service shall remain
subject to the conditions and limitations of the existing license or
other approval until the Australian Community member has received via
the Government of Australia the approval from DDTC.
(4) Authorized exporters identified in paragraph (b)(2) of this
section who have exported a defense article or defense service that has
subsequently been placed on the list of exempted items in Supplement
No. 1 to part 126 of this subchapter must review and adhere to the
requirements in the relevant Federal Register notice announcing such
removal. Once removed, the defense article or defense service will no
longer be subject to this section, and such defense article or defense
service previously exported shall remain on the U.S. Munitions List and
be subject to the requirements of this subchapter unless the applicable
Federal Register notice states otherwise. Subsequent reexport or
retransfer must be made pursuant to Sec. 123.9 of this subchapter.
(5) Any defense article or defense service transitioned from a
license or other approval to treatment under this section must be
marked in accordance with the requirements of paragraph (j) of this
section.
(j) Marking of exports. (1) All defense articles and defense
services exported or transitioned pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia and this
section shall be marked or identified prior to movement as follows:
(i) For classified defense articles and defense services the
standard marking or identification shall read ``//CLASSIFICATION LEVEL
USML//REL AUS and USA Treaty Community//.'' For example, for defense
articles classified SECRET, the marking or identification shall be ``//
SECRET USML//REL AUS and USA Treaty Community//.''
(ii) Unclassified defense articles and defense services exported
under or transitioned pursuant to this section shall be handled while
in Australia as ``Restricted USML'' and the standard marking or
identification shall read ``//RESTRICTED USML//REL AUS and USA Treaty
Community//.''
(2) Where U.S.-origin defense articles are returned to a member of
the United States Community identified in paragraph (b) of this
section, any defense articles marked or identified pursuant to
paragraph (j)(1)(ii) of this section as ``//RESTRICTED USML//REL AUS
and USA Treaty Community//'' will be considered unclassified and the
marking or identification shall be removed; and
(3) The standard marking and identification requirements are as
follows:
(i) Defense articles (other than technical data) shall be
individually labeled with the appropriate identification detailed in
paragraphs (j)(1) and (j)(2) of this section; or, where such labeling
is impracticable (e.g., propellants, chemicals), shall be accompanied
by documentation (such as contracts or invoices) clearly associating
the defense articles with the appropriate markings as detailed in
paragraphs (j)(1)(i) and (j)(1)(ii) of this section;
(ii) Technical data (including data packages, technical papers,
manuals, presentations, specifications, guides and reports), regardless
of media or means of transmission (physical, oral, or electronic),
shall be individually labeled with the appropriate identification

[[Page 21530]]

detailed in paragraphs (j)(1) and (j)(2) of this section; or, where
such labeling is impractical shall be accompanied by documentation
(such as contracts or invoices) or verbal notification clearly
associating the technical data with the appropriate markings as
detailed in paragraphs (j)(1)(i) and (j)(1)(ii) of this section; and
(4) Defense services shall be accompanied by documentation
(contracts, invoices, shipping bills, or bills of lading) clearly
labeled with the appropriate identification detailed in paragraphs
(j)(1) and (j)(2) of this section.
(5) The exporter shall incorporate the following statement as an
integral part of the bill of lading and the invoice whenever defense
articles are to be exported: ``These U.S. Munitions List commodities
are authorized by the U.S. Government under the U.S.-Australia Defense
Trade Cooperation Treaty for export only to Australia for use in
approved projects, programs or operations by members of the Australian
Community. They may not be retransferred or reexported or used outside
of an approved project, program, or operation, either in their original
form or after being incorporated into other end-items, without the
prior written approval of the U.S. Department of State.''
(k) Intermediate consignees. (1) Unclassified exports under this
section may only be handled by:
(i) U.S. intermediate consignees who are:
(A) Exporters registered with DDTC and eligible;
(B) Licensed customs brokers who are subject to background
investigation and have passed a comprehensive examination administered
by U.S. Customs and Border Protection; or
(C) Commercial air freight and surface shipment carriers, freight
forwarders, or other parties not exempt from registration under Sec.
129.3(b)(3) of this subchapter, that are identified at the time of
export as being on the U.S. Department of Defense Civil Reserve Air
Fleet (CRAF) list of approved air carriers, a link to which is
available on the DDTC Web site; or
(ii) Australian intermediate consignees who are:
(A) Members of the Australian Community; or
(B) Freight forwarders, customs brokers, commercial air freight and
surface shipment carriers, or other Australian parties that are
identified at the time of export as being on the list of Authorized
Australian Intermediate Consignees, which is available on the DDTC Web
site.
(2) Classified exports must comply with the security requirements
of the National Industrial Security Program Operating Manual (DoD
5220.22-M and supplements or successors).
(l) Records. (1) All exporters authorized pursuant to paragraph
(b)(2) of this section who export defense articles or defense services
pursuant to the Defense Trade Cooperation Treaty between the United
States and Australia and this section shall maintain detailed records
of their exports, imports, and transfers. Exporters shall also maintain
detailed records of any reexports and retransfers approved or otherwise
authorized by DDTC of defense articles or defense services subject to
the Defense Trade Cooperation Treaty between the United States and
Australia and this section. These records shall be maintained for a
minimum of five years from the date of export, import, transfer,
reexport, or retransfer and shall be made available upon request to
DDTC or a person designated by DDTC (e.g., the Diplomatic Security
Service) or U.S. Immigration and Customs Enforcement, or U.S. Customs
and Border Protection. 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.). These records shall consist of the following:
(i) Port of entry/exit;
(ii) Date of export/import;
(iii) Method of export/import;
(iv) Commodity code and description of the commodity, including
technical data;
(v) Value of export;
(vi) Reference to this section and justification for export under
the Treaty;
(vii) End-user/end-use;
(viii) Identification of all U.S. and foreign parties to the
transaction;
(ix) How the export was marked;
(x) Security classification of the export;
(xi) All written correspondence with the U.S. Government on the
export;
(xii) All information relating to political contributions, fees, or
commissions furnished or obtained, offered, solicited, or agreed upon
as outlined in paragraph (m) of this section;
(xiii) Purchase order or contract;
(xiv) Technical data actually exported;
(xv) The Internal Transaction Number for the Electronic Export
Information filing in the Automated Export System;
(xvi) All shipping documentation (including, but not limited to the
airway bill, bill of lading, packing list, delivery verification, and
invoice); and
(xvii) Statement of Registration (Form DS-2032).
(2) Filing of export information. All exporters of defense articles
under the Defense Trade Cooperation Treaty between the United States
and Australia and this section must electronically file Electronic
Export Information (EEI) using the Automated Export System citing one
of the four below referenced codes in the appropriate field in the EEI
for each shipment:
(i) For exports in support of United States and Australian combined
military or counter-terrorism operations identify Sec. 126.16(e)(1)
(the name or an appropriate description of the operation shall be
placed in the appropriate field in the EEI, as well);
(ii) For exports in support of United States and Australian
cooperative security and defense research, development, production, and
support programs identify Sec. 126.16(e)(2) (the name or an
appropriate description of the program shall be placed in the
appropriate field in the EEI, as well);
(iii) For exports in support of mutually determined specific
security and defense projects where the Government of Australia is the
end-user identify Sec. 126.16(e)(3) (the name or an appropriate
description of the project shall be placed in the appropriate field in
the EEI, as well); or
(iv) For exports that will have a U.S. Government end-use identify
Sec. 126.16(e)(4) (the U.S. Government contract number or solicitation
number (e.g., ``U.S. Government contract number XXXXX'') shall be
placed in the appropriate field in the EEI, as well). Such exports must
meet the required export documentation and filing guidelines, including
for defense services, of Sec. 123.22(a), (b)(1), and (b)(2) of this
subchapter.
(m) Fees and commissions. All exporters authorized pursuant to
paragraph (b)(2) of this section shall, with respect to each export,
transfer, reexport, or retransfer, pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia and this
section, submit a statement to DDTC containing the information
identified in Sec. 130.10 of this subchapter relating to fees,
commissions, and political contributions on contracts or

[[Page 21531]]

other instruments valued in an amount of $500,000 or more.
(n) Violations and enforcement. (1) Exports, transfers, reexports,
and retransfers that do not comply with the conditions prescribed in
this section will constitute violations of the Arms Export Control Act
and this subchapter, and are subject to all relevant criminal, civil,
and administrative penalties (see Sec. 127.1 of this subchapter), and
may also be subject to penalty under other statutes or regulations.
(2) U.S. Immigration and Customs Enforcement and U.S. Customs and
Border Protection officers may take appropriate action to ensure
compliance with this section as to the export or the attempted export
of any defense article or technical data, including the inspection of
loading or unloading of any vessel, vehicle, or aircraft.
(3) 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 that does not comply with this section or that is
otherwise unlawful.
(4) DDTC or a person designated by DDTC (e.g., the Diplomatic
Security Service), U.S. Immigration and Customs Enforcement, or U.S.
Customs and Border Protection may require the production of documents
and information relating to any actual or attempted export, transfer,
reexport, or retransfer pursuant to this section. Any foreign person
refusing to provide such records within a reasonable period of time
shall be suspended from the Australian Community and ineligible to
receive defense articles or defense services pursuant to the exemption
under this section or otherwise.
(o) Procedures for legislative notification. (1) Exports pursuant
to the Defense Trade Cooperation Treaty between the United States and
Australia and this section by any person identified in paragraph (b)(2)
of this section shall not take place until 30 days after DDTC has
acknowledged receipt of a written notification from the exporter
notifying the Department of State if the export involves one or more of
the following:
(i) A contract or other instrument for the export of major defense
equipment in the amount of $25,000,000 or more, or for defense articles
and defense services in the amount of $100,000,000 or more;
(ii) A contract for the export of firearms controlled under
Category I of the U.S. Munitions List of the International Traffic in
Arms Regulations in an amount of $1,000,000 or more;
(iii) A contract, regardless of value, for the manufacturing abroad
of any item of significant military equipment (see Sec. 120.7 of this
subchapter); or
(iv) An amended contract that meets the requirements of paragraphs
(o)(1)(i) through (o)(1)(iii) of this section.
(2) The written notification required in paragraph (o)(1) of this
section shall indicate the item/model number, general item description,
U.S. Munitions List category, value, and quantity of items to be
exported pursuant to the Defense Trade Cooperation Treaty between the
United States and Australia and this section, and shall be accompanied
by the following additional information:
(i) The information identified in Sec. 130.10 and Sec. 130.11 of
this subchapter;
(ii) A statement regarding whether any offset agreement is final to
be entered into in connection with the export and a description of any
such offset agreement;
(iii) A copy of the signed contract; and
(iv) If the notification is for paragraph (o)(1)(ii) of this
section, a statement of what will happen to the weapons in their
inventory (for example, whether the current inventory will be sold,
reassigned to another service branch, destroyed, etc.).
(3) The Department of State will notify the Congress of exports
that meet the requirements of paragraph (o)(1) of this section.

0
7. Supplement No. 1 to part 126 is revised to read as follows:

Supplement No. 1 to Part 126*
----------------------------------------------------------------------------------------------------------------
(CA) Sec. (AS) Sec. (UK) Sec.
USML Category Exclusion 126.5 126.16 126.17
----------------------------------------------------------------------------------------------------------------
I-XXI............................. Classified defense articles and X X X
services. See Note 1.
I-XXI............................. Defense articles listed in the X X X
Missile Technology Control Regime
(MTCR) Annex.
I-XXI............................. U.S. origin defense articles and ............ X X
services used for marketing
purposes and not previously
licensed for export in accordance
with this subchapter.
I-XXI............................. Defense services for or technical X
data related to defense articles
identified in this supplement as
excluded from the Canadian
exemption.
I-XXI............................. Any transaction involving the X
export of defense articles and
services for which congressional
notification is required in
accordance with Sec. 123.15 and
Sec. 124.11 of this subchapter.
I-XXI............................. U.S. origin defense articles and ............ X X
services specific to
developmental systems that have
not obtained written Milestone B
approval from the U.S. Department
of Defense milestone approval
authority, unless such export is
pursuant to a written
solicitation or contract issued
or awarded by the U.S. Department
of Defense for an end-use
identified in paragraph (e)(1),
(e)(2), or (e)(4) of Sec.
126.16 or Sec. 126.17 of this
subchapter and is consistent with
other exclusions of this
supplement.
I-XXI............................. Nuclear weapons strategic delivery X
systems and all components,
parts, accessories, and
attachments specifically designed
for such systems and associated
equipment.
I-XXI............................. Defense articles and services ............ X X
specific to the existence or
method of compliance with anti-
tamper measures, where such
measures are readily
identifiable, made at originating
Government direction.
I-XXI............................. Defense articles and services ............ X X
specific to reduced observables
or counter low observables in any
part of the spectrum. See Note 2.
I-XXI............................. Defense articles and services ............ X X
specific to sensor fusion beyond
that required for display or
identification correlation. See
Note 3.
I-XXI............................. Defense articles and services ............ X X
specific to the automatic target
acquisition or recognition and
cueing of multiple autonomous
unmanned systems.

[[Page 21532]]

I-XXI............................. Nuclear power generating equipment ............ ............ X
or propulsion equipment (e.g.,
nuclear reactors), specifically
designed for military use and
components therefore,
specifically designed for
military use. See also Sec.
123.20 of this subchapter.
I-XXI............................. Libraries (parametric technical ............ ............ X
databases) specially designed for
military use with equipment
controlled on the USML. See Note
13.
I-XXI............................. Defense services or technical data X
specific to applied research as
defined in Sec. 125.4(c)(3) of
this subchapter, design
methodology as defined in Sec.
125.4(c)(4) of this subchapter,
engineering analysis as defined
in Sec. 125.4(c)(5) of this
subchapter, or manufacturing know-
how as defined in Sec.
125.4(c)(6) of this subchapter.
See Note 12.
I-XXI............................. Defense services other than those X
required to prepare a quote or
bid proposal in response to a
written request from a department
or agency of the United States
Federal Government or from a
Canadian Federal, Provincial, or
Territorial Government; or
defense services other than those
required to produce, design,
assemble, maintain or service a
defense article for use by a
registered U.S. company, or a
U.S. Federal Government Program,
or for end-use in a Canadian
Federal, Provincial, or
Territorial Government Program.
See Note 14.
I................................. Firearms, close assault weapons, X
and combat shotguns.
II(k)............................. Software source code related to ............ X X
USML Categories II(c), II(d), or
II(i). See Note 4.
II(k)............................. Manufacturing know-how related to X X X
USML Category II(d). See Note 5.
III............................... Ammunition for firearms, close X
assault weapons, and combat
shotguns listed in USML Category
I.
III............................... Defense articles and services ............ ............ X
specific to ammunition and fuse
setting devices for guns and
armament controlled in USML
Category II.
III(e)............................ Manufacturing know-how related to X X X
USML Categories III(d)(1) or
III(d)(2) and their specially
designed components. See Note 5.
III(e)............................ Software source code related to ............ X X
USML Categories III(d)(1) or
III(d)(2). See Note 4.
IV................................ Defense articles and services X X X
specific to man-portable air
defense systems (MANPADS). See
Note 6.
IV................................ Defense articles and services ............ ............ X
specific to rockets, designed or
modified for non-military
applications that do not have a
range of 300 km (i.e., not
controlled on the MTCR Annex).
IV................................ Defense articles and services ............ X X
specific to torpedoes.
IV................................ Defense articles and services X X X
specific to anti-personnel
landmines. See Note 15.
IV................................ Defense articles and services X X X
specific to cluster munitions.
See Note 16.
IV(i)............................. Software source code related to ............ X X
USML Categories IV(a), IV(b),
IV(c), or IV(g). See Note 4.
IV(i)............................. Manufacturing know-how related to X X X
USML Categories IV(a), IV(b),
IV(d), or IV(g) and their
specially designed components.
See Note 5.
V................................. The following energetic materials ............ ............ X
and related substances:
a. TATB (triaminotrinitrobenzene)
(CAS 3058-38-6);
b. Explosives controlled in USML
Category V(a)(32) or V(a)(33);
c. Iron powder (CAS 7439-89-6)
with particle size of 3
micrometers or less produced by
reduction of iron oxide with
hydrogen;
d. BOBBA-8 (bis(2-
methylaziridinyl)2-(2-
hydroxypropanoxy) propylamino
phosphine oxide), and other MAPO
derivatives;
e. N-methyl-p-nitroaniline (CAS
100-15-2); or
Trinitrophenylmethylnitramine
(tetryl) (CAS 479-45-8).
V(c)(7)........................... Pyrotechnics and pyrophorics ............ ............ X
specifically formulated for
military purposes to enhance or
control radiated energy in any
part of the IR spectrum.
V(d)(3)........................... Bis-2, 2-dinitropropylnitrate ............ ............ X
(BDNPN).
VI................................ Defense articles specific to ............ ............ X
cryogenic equipment, and
specially designed components or
accessories therefor, specially
designed or configured to be
installed in a vehicle for
military ground, marine, airborne
or space applications, capable of
operating while in motion and of
producing or maintaining
temperatures below 103 K (-
170[deg]C).
VI................................ Defense Articles specific to ............ ............ X
superconductive electrical
equipment (rotating machinery and
transformers) specially designed
or configured to be installed in
a vehicle for military ground,
marine, airborne, or space
applications and capable of
operating while in motion. This,
however, does not include direct
current hybrid homopolar
generators that have single-pole
normal metal armatures which
rotate in a magnetic field
produced by superconducting
windings, provided those windings
are the only superconducting
component in the generator.
VI................................ Defense articles and services ............ X X
specific to naval technology and
systems relating to acoustic
spectrum control and awareness.
See Note 10.
VI(a)............................. Nuclear powered vessels........... X X X
VI(c)............................. Defense articles and services ............ X X
specific to submarine combat
control systems.
VI(d)............................. Harbor entrance detection devices. ............ ............ X
VI(e)............................. Defense articles and services X X X
specific to naval nuclear
propulsion equipment. See Note 7.

[[Page 21533]]

VI(g)............................. Technical data and defense X X X
services for gas turbine engine
hot sections related to USML
Category VI(f). See Note 8.
VI(g)............................. Software source code related to ............ X X
USML Categories VI(a) or VI(c).
See Note 4.
VII............................... Defense articles specific to ............ ............ X
cryogenic equipment, and
specially designed components or
accessories therefor, specially
designed or configured to be
installed in a vehicle for
military ground, marine, airborne
or space applications, capable of
operating while in motion and of
producing or maintaining
temperatures below 103 K (-
170[deg]C).
VII............................... Defense articles specific to ............ ............ X
superconductive electrical
equipment (rotating machinery and
transformers) specially designed
or configured to be installed in
a vehicle for military ground,
marine, airborne, or space
applications and capable of
operating while in motion. This,
however, does not include direct
current hybrid homopolar
generators that have single-pole
normal metal armatures which
rotate in a magnetic field
produced by superconducting
windings, provided those windings
are the only superconducting
component in the generator.
VII............................... Armored all wheel drive vehicles ............ ............ X
fitted with, or designed or
modified to be fitted with, a
plough or flail for the purpose
of land mine clearance, other
than vehicles specifically
designed or modified for military
use.
VII(e)............................ Amphibious vehicles............... ............ ............ X
VII(f)............................ Technical data and defense X X X
services for gas turbine engine
hot sections. See Note 8.
VIII.............................. Defense articles specific to ............ ............ X
cryogenic equipment, and
specially designed components and
accessories therefor, specially
designed or configured to be
installed in a vehicle for
military ground, marine, airborne
or space applications, capable of
operating while in motion and of
producing or maintaining
temperatures below 103 K (-
170[deg]C).
VIII.............................. Defense articles specific to ............ ............ X
superconductive electrical
equipment (rotating machinery and
transformers) specially designed
or configured to be installed in
a vehicle for military ground,
marine, airborne, or space
applications and capable of
operating while in motion. This,
however, does not include direct
current hybrid homopolar
generators that have single-pole
normal metal armatures which
rotate in a magnetic field
produced by superconducting
windings, provided those windings
are the only superconducting
component in the generator.
VIII(a)........................... All USML Category VIII(a) items. X
VIII(b)........................... Defense articles and services ............ X X
specific to gas turbine engine
hot section components and
digital engine controls. See Note
8.
VIII(f)........................... Developmental aircraft, engines X
and components identified in USML
Category VIII(f).
VIII(g)........................... Ground Effect Machines (GEMS). ............ ............ X
VIII(i)........................... Technical data and defense X X X
services for gas turbine engine
hot sections and digital engine
controls related to USML Category
VIII(b). See Note 8.
VIII(i)........................... Manufacturing know-how related to X X X
USML Categories VIII(a), VIII(b),
or VIII(e) and their specially
designed components. See Note 5.
VIII(i)........................... Software source code related to ............ X X
USML Categories VIII(a) or
VIII(e). See Note 4.
IX................................ Training or simulation equipment ............ X X
for Man Portable Air Defense
Systems (MANPADS). See Note 6.
IX(e)............................. Software source code related to ............ X X
USML Categories IX(a) or IX(b).
See Note 4.
IX(e)............................. Software that is both specifically ............ ............ X
designed or modified for military
use and specifically designed or
modified for modeling or
simulating military operational
scenarios.
X(e).............................. Manufacturing know-how related to X X X
USML Categories X(a)(1) or
X(a)(2) and their specially
designed components. See Note 5.
XI(a)............................. Defense articles and services ............ X X
specific to countermeasures and
counter- countermeasures See Note
9.
XI(a)............................. High Frequency and Phased Array ............ X
Microwave Radar systems, with
capabilities such as search,
acquisition, tracking, moving
target indication, and imaging
radar systems. See Note 17.
XI................................ Defense articles and services ............ X X
specific to naval technology and
systems relating to acoustic
spectrum control and awareness.
See Note 10.
XI(b), XI(c), XI(d)............... Defense articles and services ............ X X
specific to USML Category XI (b)
(e.g., communications security
(COMSEC) and TEMPEST).
XI(d)............................. Software source code related to ............ X X
USML Category XI(a). See Note 4.
XI(d)............................. Manufacturing know-how related to X X X
USML Categories XI(a)(3) or
XI(a)(4) and their specially
designed components. See Note 5.
XII............................... Defense articles and services ............ X X
specific to countermeasures and
counter- countermeasures. See
Note 9.

[[Page 21534]]

XII............................... Defense articles and services X
specific to USML Category XII(c)
articles, except any 1st- and 2nd-
generation image intensification
tubes and 1st- and 2nd-generation
image intensification night
sighting equipment. End items in
XII(c) and related technical data
limited to basic operations,
maintenance, and training
information as authorized under
the exemption in Sec.
125.4(b)(5) of this subchapter
may be exported directly to a
Canadian Government entity (i.e.,
federal, provincial, territorial,
or municipal) consistent with
Sec. 126.5, other exclusions,
and the provisions of this
subchapter.
XII............................... Technical data or defense services X X X
for night vision equipment beyond
basic operations, maintenance,
and training data. However, the
AS and UK Treaty exemptions apply
when such export is pursuant to a
written solicitation or contract
issued or awarded by the U.S.
Department of Defense for an end-
use identified in paragraph
(e)(1), (e)(2), or (e)(4) of Sec.
126.16 or Sec. 126.17 of this
subchapter and is consistent with
other exclusions of this
supplement.
XII(f)............................ Manufacturing know-how related to X X X
USML Category XII(d) and their
specially designed components.
See Note 5.
XII(f)............................ Software source code related to ............ X X
USML Categories XII(a), XII(b),
XII(c), or XII(d). See Note 4.
XIII(b)........................... Defense articles and services ............ X X
specific to USML Category XIII(b)
(Military Information Security
Assurance Systems).
XIII(d)........................... Carbon/carbon billets and preforms ............ ............ X
which are reinforced in three or
more dimensional planes,
specifically designed, developed,
modified, configured or adapted
for defense articles.
XIII(e)........................... Defense articles and services ............ ............ X
specific to armored plate
manufactured to comply with a
military standard or
specification or suitable for
military use. See Note 11.
XIII(f)........................... Structural materials specifically ............ ............ X
designed, developed, modified,
configured or adapted for defense
articles.
XIII(g)........................... Defense articles and services ............ ............ X
related to concealment and
deception equipment and materials.
XIII(h)........................... Energy conversion devices other ............ ............ X
than fuel cells.
XIII(i) Metal embrittling agents.......... ............ ............ X
XIII(j)........................... Defense articles and services ............ X X
related to hardware associated
with the measurement or
modification of system signatures
for detection of defense articles
as described in Note 2.
XIII(k)........................... Defense articles and services ............ X X
related to tooling and equipment
specifically designed or modified
for the production of defense
articles identified in USML
Category XIII(b).
XIII(l)........................... Software source code related to ............ X X
USML Category XIII(a). See Note 4.
XIV............................... Defense articles and services ............ X X
related to toxicological agents,
including chemical agents,
biological agents, and associated
equipment.
XIV(a), XIV(b), XIV(d)............ Chemical agents listed in USML X
XIV(e)............................ Category XIV(a), (d) and (e),
XIV(f)............................ biological agents and
biologically derived substances
in USML Category XIV(b), and
equipment listed in USML Category
XIV(f) for dissemination of the
chemical agents and biological
agents listed in USML Category
XIV(a), (b), (d), and (e).
XV(a)............................. Defense articles and services X X X
specific to spacecraft/
satellites. However, the Canadian
exemption may be used for
commercial communications
satellites that have no other
type of payload.
XV(b)............................. Defense articles and services ............ X X
specific to ground control
stations for spacecraft
telemetry, tracking, and control.
Defense articles and services are
not excluded under this entry if
they do not control the
spacecraft. Receivers for
receiving satellite transmissions
are also not excluded under this
entry.
XV(c)............................. Defense articles and services ............ X X
specific to GPS/PPS security
modules.
XV(c)............................. Defense articles controlled in X
USML Category XV(c) except end
items for end-use by the Federal
Government of Canada exported
directly or indirectly through a
Canadian-registered person.
XV(d)............................. Defense articles and services X X X
specific to radiation-hardened
microelectronic circuits.
XV(e)............................. Anti-jam systems with the ability X
to respond to incoming
interference by adaptively
reducing antenna gain (nulling)
in the direction of the
interference.
XV(e)............................. Antennas having any of the X
following:.
a. Aperture (overall dimension of
the radiating portions of the
antenna) greater than 30 feet;
b. All sidelobes less than or
equal to -35 dB relative to the
peak of the main beam; or
c. Designed, modified, or
configured to provide coverage
area on the surface of the
earth less than 200 nautical
miles in diameter, where
``coverage area'' is defined
as that area on the surface of
the earth that is illuminated
by the main beam width of the
antenna (which is the angular
distance between half power
points of the beam).
XV(e)............................. Optical intersatellite data links X
(cross links) and optical ground
satellite terminals..

[[Page 21535]]

XV(e)............................. Spaceborne regenerative baseband X
processing (direct up and down
conversion to and from baseband)
equipment.
XV(e)............................. Propulsion systems which permit X
acceleration of the satellite on-
orbit (i.e., after mission orbit
injection) at rates greater than
0.1 g.
XV(e)............................. Attitude control and determination X
systems designed to provide
spacecraft pointing determination
and control or payload pointing
system control better than 0.02
degrees per axis.
XV(e)............................. All specifically designed or X
modified systems, components,
parts, accessories, attachments,
and associated equipment for all
USML Category XV(a) items, except
when specifically designed or
modified for use in commercial
communications satellites.
XV(e)............................. Defense articles and services ............ X X
specific to spacecraft and ground
control station systems (only for
telemetry, tracking and control
as controlled in USML Category
XV(b)), subsystems, components,
parts, accessories, attachments,
and associated equipment.
XV(f)............................. Technical data and defense X X X
services directly related to the
other defense articles excluded
from the exemptions for USML
Category XV.
XVI............................... Defense articles and services X X X
specific to design and testing of
nuclear weapons..
XVI(c)............................ Nuclear radiation measuring X
devices manufactured to military
specifications.
XVI(e)............................ Software source code related to ............ X X
USML Category XVI(c). See Note 4.
XVII.............................. Classified articles and defense X X X
services not elsewhere
enumerated. See Note 1..
XVIII............................. Defense articles and services ............ X X
specific to directed energy
weapon systems.
XX................................ Defense articles and services X X X
related to submersible vessels,
oceanographic, and associated
equipment.

XXI............................... Miscellaneous defense articles and X X X
services.
----------------------------------------------------------------------------------------------------------------
Note 1: Classified defense articles and services are not eligible for export under the Canadian exemptions. U.S.
origin defense articles and services controlled in USML Category XVII are not eligible for export under the UK
Treaty exemption. U.S. origin classified defense articles and services are not eligible for export under either
the UK or AS Treaty exemptions except when being released pursuant to a U.S. Department of Defense written
request, directive, or contract that provides for the export of the defense article or service.
Note 2: The phrase ``any part of the spectrum'' includes radio frequency (RF), infrared (IR), electro-optical,
visual, ultraviolet (UV), acoustic, and magnetic. Defense articles related to reduced observables or counter
reduced observables are defined as:
a. Signature reduction (radio frequency (RF), infrared (IR), Electro-Optical, visual, ultraviolet (UV),
acoustic, magnetic, RF emissions) of defense platforms, including systems, subsystems, components,
materials (including dual-purpose materials used for Electromagnetic Interference (EM) reduction),
technologies, and signature prediction, test and measurement equipment and software and material
transmissivity/reflectivity prediction codes and optimization software..
b. Electronically scanned array radar, high power radars, radar processing algorithms, periscope-mounted
radar systems (PATRIOT), LADAR, multistatic and IR focal plane array-based sensors, to include systems,
subsystems, components, materials, and technologies..
Note 3: Defense Articles related to sensor fusion beyond that required for display or identification correlation
is defined as techniques designed to automatically combine information from two or more sensors/sources for the
purpose of target identification, tracking, designation, or passing of data in support of surveillance or
weapons engagement. Sensor fusion involves sensors such as acoustic, infrared, electro optical, frequency, etc.
Display or identification correlation refers to the combination of target detections from multiple sources for
assignment of common target track designation.
Note 4: Software source code beyond that source code required for basic operation, maintenance, and training for
programs, systems, and/or subsystems is not eligible for use of the UK or AS Treaty exemptions, unless such
export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense
for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of Sec. 126.16 or Sec. 126.17 of this
subchapter and is consistent with other exclusions of this supplement.
Note 5: Manufacturing know-how, as defined in Sec. 125.4(c)(6) of this subchapter, is not eligible for use of
the UK or AS Treaty exemptions, unless such export is pursuant to a written solicitation or contract issued or
awarded by the U.S. Department of Defense for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of
Sec. 126.16 or Sec. 126.17 of this subchapter and is consistent with other exclusions of this supplement.
Note 6: Defense Articles specific to Man Portable Air Defense Systems (MANPADS) includes missiles which can be
used without modification in other applications. It also includes production and test equipment and components
specifically designed or modified for MANPAD systems, as well as training equipment specifically designed or
modified for MANPAD systems.
Note 7: Naval nuclear propulsion plants includes all of USML Category VI(e). Naval nuclear propulsion
information is technical data that concerns the design, arrangement, development, manufacture, testing,
operation, administration, training, maintenance, and repair of the propulsion plants of naval nuclear-powered
ships and prototypes, including the associated shipboard and shore-based nuclear support facilities. Examples
of defense articles covered by this exclusion include nuclear propulsion plants and nuclear submarine
technologies or systems; nuclear powered vessels (see USML Categories VI and XX).
Note 8: A complete gas turbine engine with embedded hot section components or digital engine controls is
eligible for export or transfer under the Treaties. Technical data, other than required for routine external
maintenance and operation, related to the hot section or digital engine controls, as well as individual hot
section components are not eligible for the Treaty exemption whether shipped separately or accompanying a
complete engine. Examples of gas turbine engine hot section exempted defense article components and technology
are combustion chambers/liners; high pressure turbine blades, vanes, disks and related cooled structure; cooled
low pressure turbine blades, vanes, disks and related cooled structure; advanced cooled augmenters; and
advanced cooled nozzles. Examples of gas turbine engine hot section developmental technologies are Integrated
High Performance Turbine Engine Technology (IHPTET), Versatile, Affordable Advanced Turbine Engine (VAATE),
Ultra-Efficient Engine Technology (UEET).
Note 9: Examples of countermeasures and counter-countermeasures related to defense articles not exportable under
the AS or UK Treaty exemptions are:
a. IR countermeasures;......................................................................................
b. Classified techniques and capabilities;..................................................................

[[Page 21536]]

c. Exports for precision radio frequency location that directly or indirectly supports fire control and is
used for situation awareness, target identification, target acquisition, and weapons targeting and Radio
Direction Finding (RDF) capabilities. Precision RF location is defined as angle of arrival accuracy of less
than five degrees (RMS) and RF emitter location of less than ten percent range error;.
d. Providing the capability to reprogram; and...............................................................
e. Acoustics (including underwater), active and passive countermeasures, and counter-countermeasures........
Note 10: Examples of defense articles covered by this exclusion include underwater acoustic vector sensors;
acoustic reduction; off-board, underwater, active and passive sensing, propeller/propulsor technologies; fixed
mobile/floating/powered detection systems which include in-buoy signal processing for target detection and
classification; autonomous underwater vehicles capable of long endurance in ocean environments (manned
submarines excluded); automated control algorithms embedded in on-board autonomous platforms which enable (a)
group behaviors for target detection and classification, (b) adaptation to the environment or tactical
situation for enhancing target detection and classification; ``intelligent autonomy'' algorithms which define
the status, group (greater than 2) behaviors, and responses to detection stimuli by autonomous, underwater
vehicles; and low frequency, broad-band ``acoustic color,'' active acoustic ``fingerprint'' sensing for the
purpose of long range, single pass identification of ocean bottom objects, buried or otherwise (controlled
under Category USML XI(a)(1), (a)(2), (b), (c), and (d)).
Note 11: This exclusion does not apply to the platforms (e.g., vehicles) for which the armored plates are
applied. For exclusions related to the platforms, reference should be made to the other exclusions in this
list, particularly for the category in which the platform is controlled.
The excluded defense articles include constructions of metallic or non-metallic materials or combinations
thereof specially designed to provide protection for military systems. The phrase ``suitable for military use''
applies to any articles or materials which have been tested to level IIIA or above IAW NIJ standard 0108.01 or
comparable national standard. This exclusion does not include military helmets, body armor, or other protective
garments which may be exported IAW the terms of the AS or UK Treaty.
Note 12: Defense services or technical data specific to applied research (Sec. 125.4(c)(3) of this
subchapter), design methodology (Sec. 125.4(c)(4) of this subchapter), engineering analysis (Sec.
125.4(c)(5) of this subchapter), or manufacturing know-how (Sec. 125.4(c)(6) of this subchapter) are not
eligible for export under the Canadian exemptions. However, this exclusion does not include defense services or
technical data specific to build-to-print as defined in Sec. 125.4(c)(1) of this subchapter, build/design-to-
specification as defined in Sec. 125.4(c)(2) of this subchapter, or basic research as defined in Sec.
125.4(c)(3) of this subchapter, or maintenance (i.e., inspection, testing, calibration or repair, including
overhaul, reconditioning and one-to-one replacement of any defective items parts or components, but excluding
any modification, enhancement, upgrade or other form of alteration or improvement that changes the basic
performance of the item) of non-excluded defense articles which may be exported subject to other exclusions or
terms of the Canadian exemptions.
Note 13: The term ``libraries'' (parametric technical databases) means a collection of technical information of
a military nature, reference to which may enhance the performance of military equipment or systems.
Note 14: In order to utilize the authorized defense services under the Canadian exemption, the following must be
complied with:
(a) The Canadian contractor and subcontractor must certify, in writing, to the U.S. exporter that the
technical data and defense services being exported will be used only for an activity identified in
Supplement No. 1 to part 126 of this subchapter and in accordance with Sec. 126.5 of this subchapter; and.
(b) A written arrangement between the U.S. exporter and the Canadian recipient must:........................
1. Limit delivery of the defense articles being produced directly to an identified manufacturer in the
United States registered in accordance with part 122 of this subchapter; a department or agency of the
United States Federal Government; a Canadian-registered person authorized in writing to manufacture
defense articles by and for the Government of Canada; a Canadian Federal, Provincial, or Territorial
Government;.
2. Prohibit the disclosure of the technical data to any other contractor or subcontractor who is not a
Canadian-registered person;.
3. Provide that any subcontract contain all the limitations of Sec. 126.5 of this subchapter;.........
4. Require that the Canadian contractor, including subcontractors, destroy or return to the U.S.
exporter in the United States all of the technical data exported pursuant to the contract or purchase
order upon fulfillment of the contract, unless for use by a Canadian or United States Government entity
that requires in writing the technical data be maintained. The U.S. exporter must be provided written
certification that the technical data is being retained or destroyed; and.
5. Include a clause requiring that all documentation created from U.S. origin technical data contain the
statement that, ``This document contains technical data, the use of which is restricted by the U.S.
Arms Export Control Act. This data has been provided in accordance with, and is subject to, the
limitations specified in Sec. 126.5 of the International Traffic in Arms Regulations (ITAR). By
accepting this data, the consignee agrees to honor the requirements of the ITAR.''.
(c) The U.S. exporter must provide the Directorate of Defense Trade Controls a semi-annual report of all
their on-going activities authorized under Sec. 126.5 of this subchapter. The report shall include the
article(s) being produced; the end-user(s); the end item into which the product is to be incorporated; the
intended end-use of the product; the name and address of all the Canadian contractors and subcontractors..
Note 15: This exclusion does not apply to demining equipment in support of the clearance of landmines and
unexploded ordnance for humanitarian purposes. As used in this exclusion, ``anti-personnel landmine'' means any
mine placed under, on, or near the ground or other surface area, or delivered by artillery, rocket, mortar, or
similar means or dropped from an aircraft and which is designed to be detonated or exploded by the presence,
proximity, or contact of a person; any device or material which is designed, constructed, or adapted to kill or
injure and which functions unexpectedly when a person disturbs or approaches an apparently harmless object or
performs an apparently safe act; any manually-emplaced munition or device designed to kill, injure, or damage
and which is actuated by remote control or automatically after a lapse of time.
Note 16: The cluster munitions that are subject to this exclusion are set forth below:
The Convention on Cluster Munitions, signed December 3, 2008, and entered into force on August 1, 2010, defines
a ``cluster munition'' as:
A conventional munition that is designed to disperse or release explosive submunitions each weighing less than
20 kilograms, and includes those explosive submunitions. Under the Convention, a ``cluster munition'' does not
include the following munitions:
(a) A munition or submunition designed to dispense flares, smoke, pyrotechnics or chaff; or a munition
designed exclusively for an air defense role;.
(b) A munition or submunition designed to produce electrical or electronic effects;.........................
(c) A munition that, in order to avoid indiscriminate area effects and the risks posed by unexploded
submunitions, has all of the following characteristics:.
1. Each munition contains fewer than ten explosive submunitions;........................................
2. Each explosive submunition weighs more than four kilograms;..........................................
3. Each explosive submunition is designed to detect and engage a single target object;..................

[[Page 21537]]

4. Each explosive submunition is equipped with an electronic self-destruction mechanism; and............
5. Each explosive submunition is equipped with an electronic self-deactivating feature..................
Pursuant to U.S. law (Pub. L. 111-117, section 7055(b)), no military assistance shall be furnished for cluster
munitions, no defense export license for cluster munitions may be issued, and no cluster munitions or cluster
munitions technology shall be sold or transferred, unless:
(a) The submunitions of the cluster munitions, after arming, do not result in more than 1 percent unexploded
ordnance across the range of intended operational environments; and.
(b) The agreement applicable to the assistance, transfer or sale of such cluster munitions or cluster
munitions technology specifies that the cluster munitions will only be used against clearly defined
military targets and will not be used where civilians are known to be present or in areas normally
inhabited by civilians..
Note 17: The radar systems described are controlled in USML Category XI(a)(3)(i) through (v). As used in this
entry, the term ``systems'' includes equipment, devices, software, assemblies, modules, components, practices,
processes, methods, approaches, schema, frameworks, and models.
----------------------------------------------------------------------------------------------------------------
* An ``X'' in the chart indicates that the item is excluded from use under the exemption referenced in the top
of the column. An item excluded in any one row is excluded regardless of whether other rows may contain a
description that would include the item.

Dated: April 5, 2013.
Rose E. Gottemoeller,
Acting Under Secretary, Arms Control and International Security,
Department of State.
[FR Doc. 2013-08506 Filed 4-10-13; 8:45 am]
BILLING CODE 4710-25-P

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