U.S. Department of State Proposes Changes to the ITAR

The U.S. Department of State published a proposed rule on Feb. 2, 2022, that suggests amendments to the International Traffic in Arms Regulations (ITAR). Though some changes are to correct internal inconsistencies and administrative errors – and won't result in any change in policy – others will influence how foreign persons may interact with ITAR-controlled hardware, software and technical data.

Of note, the State Department proposes changing the definition of export and reexport to reflect the fact that release of technical data to a foreign person only results in a release to the countries in which the foreign person currently holds citizenship or permanent residency.¹ This is a change from the rule published in 2016, which dictated that any former countries of citizenship or permanent residency were also included.

Other substantive changes include the following:

• The proposed rule would replace the term "person" with "national" in the Canadian exemption in Section 126.5(b) of the ITAR, consistent with how foreign persons are defined throughout the ITAR.
• The proposed rule makes clear that end-users and consignees must actually screen their employees who are dual nationals or third-country nationals for substantive contacts with ITAR Section 126.1 countries before relying on the exemption for intra-company, intra-organization and intra-governmental transfers.
• Finally, the proposed rule clarifies the ITAR by stating that a screened employee who is a dual national or third-country national, not the end-user or consignee, must execute a nondisclosure agreement to provide assurances that the employee will not transfer any unclassified defense articles to unauthorized persons.²

Reach out to the authors or another member of Holland & Knight's International Trade Group if you would like assistance submitting comments for this proposed rule or evaluating how these changes will affect your business.

Notes

¹ The definition changes will be reflected in Sections 120.17 and 120.19 of the ITAR.

² This clarification will be reflected in Section 126.18(c)(2) of the ITAR.

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