16592 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

DEPARTMENT OF STATE 

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

and 129 

RIN 1400–AC95 

[Public Notice 7828] 

Implementation of the Defense Trade 

Cooperation Treaty Between the 

United States and the United Kingdom 

AGENCY: Department of State. 

ACTION: Final rule. 

SUMMARY: The Department of State is 

amending the International Traffic in 

Arms Regulations (ITAR) to implement 

the Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom, and identify via a 

supplement the defense articles and 

defense services that may not be 

exported pursuant to the Treaty. This 

final rule implements only the Defense 

Trade Cooperation Treaty between the 

United States and the United Kingdom. 

The final rule implementing the Defense 

Trade Cooperation Treaty between the 

United States and Australia will be 

published later in the year once that 

treaty enters into force. Additionally, 

the Department of State amends the 

section pertaining to the Canadian 

exemption to reference the new 

supplement, and, with regard to 

Congressional certification, the 

Department of State adds Israel to the 

list of countries and entities that have a 

shorter certification time period and a 

higher dollar value reporting threshold. 

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 the 

United Kingdom of Great Britain and 

Northern Ireland Concerning Defense 

Trade Cooperation (Treaty Doc. 110–7). 

We will publish a rule document in the 

Federal Register announcing 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 INFORMATON: The 

Department of State is amending the 

International Traffic in Arms 

Regulations (ITAR) to implement the 

Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom, and identify via a 

supplement the defense articles and 

defense services that may not be 

exported pursuant to the Treaty. This 

final rule implements only the Defense 

Trade Cooperation Treaty between the 

United States and the United Kingdom. 

These final amendments affect parts 

120, 123, 124, 126, 127, and 129, with 

a new section in part 126 describing the 

licensing exemptions pursuant to the 

Treaty. 

On November 22, 2011 (76 FR 72246), 

the Department’s Directorate of Defense 

Trade Controls (DDTC) 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 and 

defense services that may not be 

exported pursuant to the Treaties. 

However, this rule implements only the 

Treaty between the United States and 

the United Kingdom. The final rule 

implementing the Treaty between the 

United States and Australia will be 

published later in the year once that 

treaty enters into force. The proposed 

rule also sought to amend the section 

pertaining to the Canadian exemption to 

reference the new supplement, and, 

with regard to Congressional 

certification, add Israel to the list of 

countries and entities that have a 

shorter certification time period and a 

higher dollar value reporting threshold. 

The proposed rule’s comment period 

ended December 22, 2011. Fifteen (15) 

parties filed comments. Having 

thoroughly reviewed and evaluated the 

comments and the recommended 

changes, the Department has 

determined that it will, and hereby 

does, adopt the proposed rule, with 

changes noted and minor edits, and 

promulgates it as a final rule. The 

Department’s evaluation of the written 

comments and recommendations 

follows: 

The majority of commenting parties 

expressed support for the intent of the 

Treaty, to ease export licensing burdens 

with one of the U.S.’s closest allies. 

However, the commenting parties 

expressed concern that the exemption is 

overly complicated and its requirements 

too burdensome to be truly workable for 

industry. DDTC appreciates these 

comments and believes the clarifying 

edits made in this final rule make 

application of the exemption clear. 

One commenting party requested 

§ 123.9(a) clarify whether the United 

Kingdom government could deploy 

items received pursuant to the Treaty. 

DDTC has reviewed this request and has 

not made changes to this paragraph. 

Section 126.17(h) identifies the process 

by which items exported pursuant to the 

Treaty may be deployed by the United 

Kingdom government. 

One commenting party requested 

edits to the note to § 123.9(a) to use the 

word ‘‘knowledge.’’ DDTC rejected this 

request because the language in the note 

is sufficient, but has added clarifying 

language to the note. 

Three commenting parties suggested 

that DDTC delete the reference to 

defense services in § 123.9(b) and (c). 

DDTC accepts this request and has 

deleted the reference. 

One commenting party requested 

clarification of the addition and use of 

the word ‘‘destination’’ in § 123.9 (c). 

The term ‘‘destination’’ is added 

because while the end-user may remain 

the same, the destination may change, 

therefore requiring authorization from 

DDTC. 

One commenting party sought 

clarification of whether § 123.9(c)(4) set 

up a different process for a retransfer 

request if such were submitted for 

articles received under the new 

§ 126.17. Section 123.9(c)(4)does not set 

up a new process; it identifies who may 

submit a retransfer request and is 

language reflective of Section 9(3) of the 

Implementing Arrangement. 

Three commenting parties noted that 

the proposed revised text of § 123.26 

appeared to conflict with provisions of 

§ 123.22. DDTC has considered these 

comments and has revised § 123.26 to 

clarify that its requirements are 

consistent with those of § 123.22. 

One commenting party requested that 

DDTC delete the requirement in 

§ 123.26 to record the time of the 

transaction. DDTC accepts this 

suggestion and has removed the text 

accordingly. 

One commenting party requested 

§ 126.5(b) be revised to reference 

screening programs developed pursuant 

to § 126.18. Guidance for using § 126.18 

is available on DDTC’s Web site and is 

not appropriate to add to this section. 

Therefore, no edits were made to this 

section. 

Two commenting parties noted that 

the proposed rule changed the word 

‘‘or’’ to ‘‘for’’ in § 126.5(b). DDTC has 

corrected this typographical error, and 

that text in the first sentence again 

reads, ‘‘or for return to the United 

States.’’ 

One commenting party noted that by 

reserving § 126.5(c) and removing the 

items previously controlled there to 

Supplement No. 1, the requirement to 

obtain written certifications, as well as 

recordkeeping requirements, were 

removed. Clarification was requested as 

to whether this was intentional. DDTC 

has reviewed this section and confirms 

that the removal of these requirements 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16593 

was inadvertent. Therefore, Supplement 

No. 1 has been revised to clarify that all 

previous requirements of the Canadian 

exemption, including those provided in 

paragraph (c), remain. There is no 

intention to change the requirements for 

using the Canadian exemption. 

Several commenting parties requested 

additional guidance with various 

aspects of the new § 126.17. As part of 

Treaty implementation, DDTC will be 

posting Frequently Asked Questions 

(FAQs) on its Web site. These FAQs will 

address these requests for guidance. 

Two commenting parties suggested 

that DDTC add a definition for defense 

articles to § 126.17(a)(1) to clarify that 

the definition also includes technical 

data for purposes of the exemption. 

DDTC does not believe this change is 

necessary as the definition in § 120.6 

clearly identifies technical data as 

within the scope of the ‘‘defense article’’ 

definition. 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 § 126.17(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 result in an intermediate 

consignee having access to an item in 

the shipment. DDTC believes the 

meaning of ‘‘access’’ is plain and does 

not see a need to revise this paragraph. 

A directive from a CBP official to open 

a container is not the type of access that 

would require a license from DDTC. 

Another party requested DDTC place a 

reference to paragraph (k), which 

discusses intermediate consignees, in 

this section. DDTC accepted this 

suggestion and has made corresponding 

changes. 

One commenting party expressed 

concerns that the process by which the 

U.S. Government would obtain 

maintained records, as provided in 

§ 126.17(a)(3)(vi) and other sections of 

the exemption, is unclear. These 

sections are not intended to identify the 

process by which record requests will 

be made. The process will be the same 

as for any request currently made under 

the ITAR. Therefore, DDTC has not 

revised these paragraphs. 

One commenting party noted the 

language in § 126.17(a)(4) seemed to 

limit transfers just to exports to the 

United States. DDTC has revised this 

section to clarify that it applies to 

transfers within the Approved 

Community. 

Two commenting parties requested 

DDTC change the word ‘‘required’’ to 

‘‘pursuant to’’ in § 126.17(a)(4)(iii). This 

change has been rejected as the word 

‘‘required’’ is a requirement of the 

Treaty. 

Two commenting parties asked DDTC 

to clarify the requirements in 

§ 126.17(a)(5) related to items delivered 

via the Foreign Military Sales program. 

DDTC has revised § 126.17(a)(5) to 

provide clarifying language. 

Three commenting parties suggested 

DDTC include additional information in 

§ 126.17(d) to explain the vetting 

process for the UK Community. DDTC 

does not accept this suggestion. The 

vetting requirements are identified in 

the Treaty and Implementing 

Arrangement, which are available on 

DDTC’s Web site. One commenting 

party noted that there was no reference 

to Her Majesty’s Government (HMG) 

entities and facilities in § 126.17(d). 

DDTC has revised this paragraph to also 

reference HMG. 

Three commenting parties requested 

DDTC provide additional guidance with 

respect to identification of operations, 

programs and projects that cannot be 

publicly identified (i.e., are classified). 

DDTC has not added additional 

language to § 126.17(f)(2), but will 

provide additional guidance on its Web 

site for requesting confirmation of 

Treaty eligibility for classified programs. 

One commenting party inquired 

whether DDTC will post on its Web site 

a complete list of U.S. Government 

contracts that are Treaty eligible. DDTC 

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 

clarifying language be added to 

§ 126.17(g)(1) to indicate whether this 

paragraph applied to marketing to 

members of the Approved Community. 

These parties also requested 

clarification of the term ‘‘identical 

type.’’ Finally, parties requested that 

this paragraph be removed in its 

entirety. DDTC cannot remove this 

requirement as it is part of the Treaty’s 

Exempted Technology List. DDTC, 

however, has revised the paragraph to 

indicate that marketing may be to 

members of the United Kingdom 

Community so long as it is for an 

approved Treaty end-use and it meets 

the other requirements of § 126.17(g)(1). 

One commenting party recommended 

removal of § 126.17(g)(4) or, in the 

alternative, adding a parenthetical ‘‘(or 

foreign equivalent)’’ after ‘‘Milestone 

B.’’ DDTC cannot remove this paragraph 

as it is part of the Treaty’s Exempted 

Technology List. DDTC considered 

adding a parenthetical to include 

foreign equivalents, but has decided to 

reject this suggestion as there is no 

equivalent in the UK to ‘‘Milestone B.’’ 

One commenting party requested 

changes to § 126.17(g)(5) to allow for the 

export of embedded exempted 

technologies in certain circumstances. 

DDTC is not, at this time, prepared to 

broaden this paragraph to include 

embedded exempted technologies. 

Four commenting parties expressed 

concerns with § 126.17(g)(8) and the 

reference to the European Union Dual 

Use List. DDTC has revised this 

paragraph to clarify that any such items 

have been included in Supplement No. 

1 to Part 126. 

Two commenting parties raised 

concerns with the complexity of using 

§ 126.17(h) with a diverse supply chain 

and requested clarification on the 

applicability of § 123.9(e) to this 

exemption. DDTC appreciates the 

diverse nature of global supply chains, 

but believes the mechanisms provided 

in § 126.17(h) are no more onerous than 

current retransfer or reexport 

requirements. Further, as indicated in 

§ 126.17(h)(5), any retransfer, reexport, 

or change in end-use under § 126.17(h) 

shall be made in accordance with 

§ 123.9, which includes § 123.9(e). 

One commenting party requested 

definition of ‘‘United Kingdom Armed 

Forces transmission channels’’ in 

§ 126.17(h)(7). This language is used in 

the Implementing Arrangement and 

DDTC believes § 126.17(h)(7) and the 

Implementing Arrangement are clear. 

Therefore, DDTC has not provided an 

additional definition. 

Two commenting parties requested 

DDTC delete the words ‘‘any citizen of 

such countries’’ from § 126.17(h)(8). 

DDTC accepts this suggestion and has 

revised this paragraph accordingly. 

Three commenting parties requested 

clarification as to the form a written 

request under § 126.17(i)(2)(i) should 

take. Parties should submit such 

requests in the form of a General 

Correspondence (GC), the required 

elements of which are identified in 

§ 126.17(i)(2)(i). 

One commenting party requested 

clarification as to the form a written 

request under § 126.17(i)(3) should take. 

Parties should also submit such requests 

in the form of a GC to DDTC. 

Ten commenting parties expressed 

concerns with the marking requirements 

contained in § 126.17(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 

paragraph, to rewording of certain 

sections. The majority of commenting 

mstockstill on DSK4VPTVN1PROD with RULES2

16594 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

parties requested DDTC remove the 

requirement in § 126.17(j)(2) for 

exporters to remove Treaty markings. 

DDTC appreciates the concerns 

expressed. However, the requirements 

contained in 126.17(j) are reflective of 

the requirements in the Treaty and its 

Implementing Arrangement. DDTC has 

made some minor edits to provide 

clarity in this paragraph, but the 

requirement to remove certain markings 

will not be removed from the 

regulations at this time. 

One commenting party requested 

DDTC edit the text of the statement 

required by § 126.17(j)(5) to indicate the 

items being exported were USML items 

and authorized only for export to the 

UK under the Treaty. DDTC accepts this 

suggestion and has revised the text 

accordingly. 

One commenting party requested that 

registered brokers be included in 

paragraph § 126.17(k)(1)(ii). United 

Kingdom intermediate consignees must 

meet the requirements of 

§ 126.17(k)(1)(ii). 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 a 

United Kingdom intermediate 

consignee. 

Five commenting parties suggested 

DDTC clarify the language related to 

recordkeeping in § 126.17(l) and ensure 

that it is consistent with other 

recordkeeping provisions in the ITAR. 

DDTC concurs with the need to keep 

ITAR sections consistent and has 

updated § 123.26 to reference the 

recordkeeping requirements of 

§ 126.17(l). DDTC has also made 

clarifying edits to § 126.17(l). 

One commenting party suggested 

changing the word ‘‘all’’ in § 126.17(l)(1) 

to ‘‘their’’ to acknowledge that the U.S. 

exporter may not be aware or have 

record of a reexport/retransfer request 

submitted by a UK Community member. 

DDTC agrees with this request and has 

revised the paragraph accordingly. 

One commenting party requested 

clarification of § 126.17(l)(1)(x) as to 

whether this referred to the USML 

category or security classification. This 

is intended to refer to security 

classification. DDTC has revised the 

paragraph accordingly. 

One commenting party requested 

DDTC delete the reference to ‘‘defense 

services’’ in § 126.17(l)(2). DDTC 

accepted this request and has revised 

the paragraph accordingly. 

Two commenting parties asked DDTC 

to clarify whether § 126.17(m) required 

exporters to submit negative reports. 

DDTC confirms that reporting 

requirements under § 126.17(m) are 

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. DDTC confirms 

that the process will be the same. 

Ten commenting parties expressed 

various concerns regarding the scope 

and wording 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. 

DDTC appreciates these comments, and 

has made clarifying edits to Supplement 

No. 1 to the extent possible within the 

confines of the Treaty, the 

Implementing Arrangements, and the 

Exempted Technology List. 

BILLING CODE 4710–25–P 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16595 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.004</GPH>
16596 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

BILLING CODE 4710–25–C 

Regulatory Analysis and Notices 

Administrative Procedure Act 

The Department of State is of the 

opinion that controlling the import and 

export of defense services is a foreign 

affairs function of the United States 

Government and that rules 

implementing this function are exempt 

from § 553 (Rulemaking) and § 554 

(Adjudications) of the Administrative 

Procedure Act. Nevertheless, as noted in 

the text above, the Department 

published this rule as a Notice of 

Proposed Rule Making on November 22, 

2011 (76 FR 72246), with a 30-day 

comment period, and without prejudice 

to its determination that controlling the 

import and export of defense services is 

a foreign affairs function. 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 the United Kingdom of 

Great Britain and Northern Ireland 

Concerning Defense Trade Cooperation 

(Treaty Doc. 110–7). Once the Treaty is 

in force, exports must be able to utilize 

the Treaty for qualifying exports of 

defense articles. 

Regulatory Flexibility Act 

Since this amendment is not subject 

to the notice-and-comment procedures 

of 5 U.S.C. 553, it does not require 

analysis under the Regulatory 

Flexibility Act. 

Unfunded Mandates Reform Act of 1995 

This amendment 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 amendment will 

not have tribal implications, will not 

impose substantial direct compliance 

costs on Indian tribal governments, and 

will not preempt tribal law. 

Accordingly, Executive Order 13175 

does not apply to this rulemaking. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

This amendment has been found not 

to be a major rule within the meaning 

of the Small Business Regulatory 

Enforcement Fairness Act of 1996. 

Executive Orders 12372 and 13132 

This amendment 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 amendment 

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 amendment. 

Executive Order 12866 

The Department is of the opinion that 

restricting defense articles exports is a 

foreign affairs function of the United 

States Government and that rules 

governing the conduct of this function 

are exempt from the requirements of 

Executive order 12866. However, the 

Department has nevertheless reviewed 

this regulation to ensure its consistency 

with the regulatory philosophy and 

principles set forth in that Executive 

Order. 

Executive Order 12988 

The Department of State has reviewed 

this amendment 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. 

Executive Order 13563 

The Department of State has 

considered this rule in light of 

Executive Order 13563, dated January 

18, 2011, and affirms that this regulation 

is consistent with the guidance therein. 

Paperwork Reduction Act 

This amendment does not impose any 

new reporting or recordkeeping 

requirements subject to the Paperwork 

Reduction Act, 44 U.S.C. chapter 35. 

The burden or number of respondents to 

any of the existing OMB approved 

information collections is not expected 

to change annually as a result of this 

rule. 

List of Subjects 

22 CFR Parts 120, 123, 124, and 126 

Arms and munitions, Exports. 

22 CFR Part 127 

Arms and munitions, Crime, Exports, 

Penalties, Seizures and forfeitures. 

22 CFR Part 129 

Arms and munitions, Exports, 

Brokering. 

Accordingly, for the reasons set forth 

above, Title 22, Chapter I, Subchapter 

M, parts 120, 123, 124, 126, 127, and 

129 are amended as follows: 

PART 120—PURPOSE AND 

DEFINITIONS 

■ 1. The authority citation for part 120 

is revised to read as follows: 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.005</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16597 

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; E.O. 11958, 42 FR 

4311; E.O. 13284, 68 FR 4075; 3 CFR, 1977 

Comp. p. 79; 22 U.S.C. 2651a; Pub. L. 105– 

261, 112 Stat. 1920; Pub. L. 111–266. 

■ 2. Section 120.1 is amended by 

revising paragraphs (a), (c), and (d) to 

read as follows: 

§ 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 11958, as 

amended. This subchapter implements 

that authority. Portions of this 

subchapter also implement the Defense 

Trade Cooperation Treaty between the 

United States and the United Kingdom. 

(Note, however, that the Treaty is not 

the source of authority for the 

prohibitions in part 127, but instead is 

the source of one limitation on the 

scope of such prohibitions.) 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 Defense Trade Controls, 

Bureau of Political-Military Affairs. 

* * * * * 

(c) Receipt of Licenses and Eligibility. 

(1) A U.S. person may receive a license 

or other approval pursuant to this 

subchapter. A foreign person may not 

receive such a license or other approval, 

except as follows: 

(i) A foreign governmental entity in 

the United States may receive an export 

license or other export approval; 

(ii) A foreign person may receive a 

reexport or retransfer approval; and 

(iii) A foreign person may receive a 

prior approval for brokering activities. 

Requests for a license or other 

approval, other than by a person 

referred to in paragraphs (c)(1)(i) and 

(c)(1)(ii) of this section, will be 

considered only if the applicant has 

registered with the Directorate of 

Defense Trade Controls pursuant to part 

122 or 129 of this subchapter, as 

appropriate. 

(2) Persons who have been convicted 

of violating the criminal statutes 

enumerated in § 120.27 of this 

subchapter, who have been debarred 

pursuant to part 127 or 128 of this 

subchapter, who are subject to 

indictment or are otherwise charged 

(e.g., by information) for violating the 

criminal statutes enumerated in § 120.27 

of this subchapter, who are ineligible to 

contract with, or to receive a license or 

other form of authorization to import 

defense articles or defense services from 

any agency of the U.S. Government, 

who are ineligible to receive an export 

license or other approval from any other 

agency of the U.S. Government, or who 

are subject to a Department of State 

policy of denial, suspension or 

revocation under § 126.7(a) of this 

subchapter, or to interim suspension 

under § 127.8 of this subchapter, are 

generally ineligible to be involved in 

activities regulated under this 

subchapter. 

(d) The exemptions provided in this 

subchapter do not apply to transactions 

in which the exporter, any party to the 

export (as defined in § 126.7(e) of this 

subchapter), any source or 

manufacturer, broker or other 

participant in the brokering activities, is 

generally ineligible in paragraph (c) of 

this section, unless prior written 

authorization has been granted by the 

Directorate of Defense Trade Controls. 

* * * * * 

■ 3. Section 120.19 is revised to read as 

follows: 

§ 120.19 Reexport or retransfer. 

Reexport or retransfer means the 

transfer of defense articles or defense 

services to an end-use, end-user, or 

destination not previously authorized 

by license, written approval, or 

exemption pursuant to this subchapter. 

■ 4. Section 120.28 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 120.28 Listing of forms referred to in this 

subchapter. 

* * * * * 

(b) * * * 

(2) Electronic Export Information filed 

via the Automated Export System. 

* * * * * 

■ 5. Section 120.34 is added to read as 

follows: 

§ 120.34 Defense Trade Cooperation 

Treaty between the United States and the 

United Kingdom. 

Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom means 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, done at 

Washington DC and London, June 21 

and 26, 2007. For additional 

information on making exports pursuant 

to this Treaty, see § 126.17 of this 

subchapter. 

■ 6. Section 120.36 is added to read as 

follows: 

§ 120.36 United Kingdom Implementing 

Arrangement. 

United Kingdom Implementing 

Arrangement means the Implementing 

Arrangement Pursuant to 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, done at 

Washington DC, February 14, 2008, as it 

may be amended. 

PART 123—LICENSES FOR THE 

EXPORT OF DEFENSE ARTICLES 

■ 7. The authority citation for part 123 

continues 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. 2753; E.O. 11958, 42 FR 

4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 

2651a; 22 U.S.C. 2776; Pub. L. 105–261, 112 

Stat. 1920; Sec. 1205(a), Pub. L. 107–228. 

■ 8. Section 123.4 is amended by 

revising paragraph (d) introductory text 

to read as follows: 

§ 123.4 Temporary import license 

exemptions. 

* * * * * 

(d) Procedures. To the satisfaction of 

the Port Directors of U.S. Customs and 

Border Protection, the importer and 

exporter must comply with the 

following procedures: 

* * * * * 

■ 9. Section 123.9 is amended by 

revising paragraphs (a), (b), (c), (e) 

introductory text, (e)(1), (e)(3), and 

(e)(4), adding a note after paragraph (a), 

and removing and reserving paragraph 

(d), to read as follows: 

§ 123.9 Country of ultimate destination 

and approval of reexports or retransfers. 

(a) The country designated as the 

country of ultimate destination on an 

application for an export license, or in 

an Electronic Export Information filing 

where an exemption is claimed under 

this subchapter, must be the country of 

ultimate end-use. The written approval 

of the Directorate of Defense Trade 

Controls must be obtained before 

reselling, transferring, reexporting, 

retransferring, transshipping, or 

disposing of a defense article to any 

end-user, end-use, or destination other 

than as stated on the export license, or 

in the Electronic Export Information 

filing in cases where an exemption is 

claimed under this subchapter, except 

in accordance with the provisions of an 

exemption under this subchapter that 

explicitly authorizes the resell, transfer, 

mstockstill on DSK4VPTVN1PROD with RULES2

16598 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

reexport, retransfer, transshipment, or 

disposition of a defense article without 

such approval. Exporters must 

determine the specific end-user, enduse, and destination prior to submitting 

an application to the Directorate of 

Defense Trade Controls or claiming an 

exemption under this subchapter. 

Note to paragraph (a): In making the 

aforementioned determination, a person is 

expected to review all readily available 

information, including information readily 

available to the public generally as well as 

information readily available from other 

parties to the transaction. 

(b) The exporter shall incorporate the 

following statement as an integral part 

of the bill of lading, airway bill, or other 

shipping documents, and the invoice 

whenever defense articles are to be 

exported or transferred pursuant to a 

license, other written approval, or an 

exemption under this subchapter, other 

than the exemptions contained in 

§ 126.16 and § 126.17 of this subchapter 

(Note: for exports made pursuant to 

§ 126.16 or § 126.17 of this subchapter, 

see § 126.16(j)(5) or § 126.17(j)(5)): 

‘‘These commodities are authorized 

by the U.S. Government for export only 

to [country of ultimate destination] for 

use by [end-user]. They may not be 

transferred, transshipped on a noncontinuous voyage, or otherwise be 

disposed of, to any other country or 

end-user, either in their original form or 

after being incorporated into other enditems, without the prior written 

approval of the U.S. Department of 

State.’’ 

(c) Any U.S. person or foreign person 

requesting written approval from the 

Directorate of Defense Trade Controls 

for the reexport, retransfer, other 

disposition, or change in end-use, enduser, or destination of a defense article 

initially exported or transferred 

pursuant to a license or other written 

approval, or an exemption under this 

subchapter, must submit all the 

documentation required for a permanent 

export license (see § 123.1 of this 

subchapter) and shall also submit the 

following: 

(1) The license number, written 

authorization, or exemption under 

which the defense article or defense 

service was previously authorized for 

export from the United States (Note: For 

exports under exemptions at § 126.16 or 

§ 126.17 of this subchapter, the original 

end-use, program, project, or operation 

under which the item was exported 

must be identified.); 

(2) A precise description, quantity, 

and value of the defense article or 

defense service; 

(3) A description and identification of 

the new end-user, end-use, and 

destination; and 

(4) With regard to any request for such 

approval relating to a defense article or 

defense service initially exported 

pursuant to an exemption contained in 

§ 126.16 or § 126.17 of this subchapter, 

written request for the prior approval of 

the transaction from the Directorate of 

Defense Trade Controls must be 

submitted: By the original U.S. exporter, 

provided a written request is received 

from a member of the Australian 

Community, as identified in § 126.16 of 

this subchapter, or the United Kingdom 

Community, as identified in § 126.17 of 

this subchapter (where such a written 

request includes a written certification 

from the member of the Australian 

Community or the United Kingdom 

Community providing the information 

set forth in § 126.17 of this subchapter); 

or by a member of the Australian 

Community or the United Kingdom 

Community, where such request 

provides the information set forth in 

this section. 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 the 

United Kingdom and continue to apply 

fully to defense articles and defense 

services subject to either of the 

aforementioned treaties and the 

exemptions contained in § 126.17 of this 

subchapter. 

(d) [Reserved] 

(e) Reexports or retransfers of U.S.- 

origin components incorporated into a 

foreign defense article to NATO, NATO 

agencies, a government of a NATO 

country, or the governments of 

Australia, Israel, Japan, New Zealand, or 

the Republic of Korea are authorized 

without the prior written approval of 

the Directorate of Defense Trade 

Controls, provided: 

(1) The U.S.-origin components were 

previously authorized for export from 

the United States, either by a license, 

written authorization, or an exemption 

other than those described in either 

§ 126.16 or § 126.17 of this subchapter; 

* * * * * 

(3) The person reexporting the 

defense article provides written 

notification to the Directorate of Defense 

Trade Controls of the retransfer not later 

than 30 days following the reexport. The 

notification must state the articles being 

reexported and the recipient 

government. 

(4) The original license or other 

approval of the Directorate of Defense 

Trade Controls did not include 

retransfer or reexport restrictions 

prohibiting use of this exemption. 

■ 10. Section 123.15 is amended by 

revising paragraphs (a)(1), (a)(2), and (b) 

to read as follows: 

§ 123.15 Congressional certification 

pursuant to Section 36(c) of the Arms 

Export Control Act. 

(a) * * * 

(1) A license for the export of major 

defense equipment sold under a 

contract in the amount of $14,000,000 or 

more, or for defense articles and defense 

services sold under a contract in the 

amount of $50,000,000 or more, to any 

country that is not a member of the 

North Atlantic Treaty Organization 

(NATO), or Australia, Israel, Japan, New 

Zealand, or the Republic of Korea that 

does not authorize a new sales territory; 

or 

(2) A license for export to a country 

that is a member country of NATO, or 

Australia, Israel, Japan, New Zealand, or 

the Republic of Korea, of major defense 

equipment sold under a contract in the 

amount of $25,000,000 or more, or for 

defense articles and defense services 

sold under a contract in the amount of 

$100,000,000 or more, and provided the 

transfer does not include any other 

countries; or 

* * * * * 

(b) Unless an emergency exists which 

requires the final export in the national 

security interests of the United States, 

approval may not be granted for any 

transaction until at least 15 calendar 

days have elapsed after receipt by the 

Congress of the certification required by 

22 U.S.C. 2776(c)(1) involving NATO, or 

Australia, Israel, Japan, New Zealand, or 

the Republic of Korea or at least 30 

calendar days have elapsed for any 

other country; in the case of a license for 

an export of a commercial 

communications satellite for launch 

from, and by nationals of, the Russian 

Federation, Ukraine, or Kazakhstan, 

until at least 15 calendar days after the 

Congress receives such certification. 

* * * * * 

■ 11. Section 123.16 is amended by 

revising paragraphs (a), (b)(1)(iii), and 

(b)(2)(vi) to read as follows: 

§ 123.16 Exemptions of general 

applicability. 

(a) The following exemptions apply to 

exports of unclassified defense articles 

for which no approval is needed from 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16599 

the Directorate of Defense Trade 

Controls. These exemptions do not 

apply to: Proscribed destinations under 

§ 126.1 of this subchapter; exports for 

which Congressional notification is 

required (see § 123.15 of this 

subchapter); MTCR articles; Significant 

Military Equipment (SME); and may not 

be used by persons who are generally 

ineligible as described in § 120.1(c) of 

this subchapter. All shipments of 

defense articles, including but not 

limited to those to Australia, Canada, 

and the United Kingdom, require an 

Electronic Export Information (EEI) 

filing or notification letter. If the export 

of a defense article is exempt from 

licensing, the EEI filing must cite the 

exemption. Refer to § 123.22 of this 

subchapter for EEI filing and letter 

notification requirements. 

(b) * * * 

(1) * * * 

(iii) The exporter identifies in the EEI 

filing by selecting the appropriate code 

that the export is exempt from the 

licensing requirements of this 

subchapter; and 

* * * * * 

(2) * * * 

(vi) The exporter must certify on the 

invoice, the bill of lading, air waybill, or 

shipping documents that the export is 

exempt from the licensing requirements 

of this subchapter. This is done by 

writing ‘‘22 CFR 123.16(b)(2) 

applicable.’’ 

* * * * * 

■ 12. Section 123.22 is amended by 

revising paragraphs (a) introductory text 

and (b)(2) introductory text to read as 

follows: 

§ 123.22 Filing, retention, and return of 

export licenses and filing of export 

information. 

(a) Any export, as defined in this 

subchapter, of a defense article 

controlled by this subchapter, to include 

defense articles transiting the United 

States, requires the electronic reporting 

of export information. The reporting of 

the export information shall be to the 

U.S. Customs and Border Protection 

using the Automated Export System 

(AES) or directly to the Directorate of 

Defense Trade Controls (DDTC). Any 

license or other approval authorizing 

the permanent export of hardware must 

be filed at a U.S. Port before any export. 

Licenses or other approvals for the 

permanent export of technical data and 

defense services shall be retained by the 

applicant who will send the export 

information directly to DDTC. 

Temporary export or temporary import 

licenses for such items need not be filed 

with the U.S. Customs and Border 

Protection, but must be presented to the 

U.S. Customs and Border Protection for 

decrementing of the shipment prior to 

departure and at the time of entry. The 

U.S. Customs and Border Protection will 

only decrement a shipment after the 

export information has been filed 

correctly using the AES. Before the 

export of any hardware using an 

exemption in this subchapter, the DDTC 

registered applicant/exporter, or an 

agent acting on the filer’s behalf, must 

electronically provide export 

information using the AES (see 

paragraph (b) of this section). In 

addition to electronically providing the 

export information to the U.S. Customs 

and Border Protection before export, all 

the mandatory documentation must be 

presented to the port authorities (e.g., 

attachments, certifications, proof of AES 

filing; such as the Internal Transaction 

Number (ITN)). Export authorizations 

shall be filed, retained, decremented or 

returned to DDTC as follows: 

* * * * * 

(b) * * * 

(2) Emergency shipments of hardware 

that cannot meet the pre-departure 

filing requirements. U.S. Customs and 

Border Protection may permit an 

emergency export of hardware by truck 

(e.g., departures to Mexico or Canada) or 

air, by a U.S. registered person, when 

the exporter is unable to comply with 

the Electronic Export Information (EEI) 

filing timeline in paragraph (b)(1)(i) of 

this section. The applicant, or an agent 

acting on the applicant’s behalf, in 

addition to providing the EEI using the 

AES, must provide documentation 

required by U.S. Customs and Border 

Protection and this subchapter. The 

documentation provided to U.S. 

Customs and Border Protection at the 

port of exit must include the Internal 

Transaction Number (ITN) for the 

shipment and a copy of a notification to 

the Directorate of Defense Trade 

Controls stating that the shipment is 

urgent and must be accompanied by an 

explanation for the urgency. The 

original of the notification must be 

immediately provided to the Directorate 

of Defense Trade Controls. The AES 

filing of the export information must be 

made at least two hours prior to any 

departure by air from the United States. 

When shipping via ground, the AES 

filing must be made at the time when 

the exporter provides the articles to the 

carrier or at least one hour prior to 

departure from the United States, when 

the permanent export of the hardware 

has been authorized for export: 

* * * * * 

■ 13. Section 123.26 is revised to read 

as follows: 

§ 123.26 Recordkeeping for exemptions. 

Any person engaging in any export, 

reexport, transfer, or retransfer of a 

defense article or defense service 

pursuant to an exemption must 

maintain records of each such export, 

reexport, transfer, or retransfer. The 

records shall, to the extent applicable to 

the transaction and consistent with the 

requirements of § 123.22 of this 

subchapter, include the following 

information: A description of the 

defense article, including technical data, 

or defense service; the name and 

address of the end-user and other 

available contact information (e.g., 

telephone number and electronic mail 

address); the name of the natural person 

responsible for the transaction; the 

stated end-use of the defense article or 

defense service; the date of the 

transaction; the Electronic Export 

Information (EEI) Internal Transaction 

Number (ITN); and the method of 

transmission. The person using or acting 

in reliance upon the exemption shall 

also comply with any additional 

recordkeeping requirements enumerated 

in the text of the regulations concerning 

such exemption (e.g., requirements 

specific to the Defense Trade 

Cooperation Treaties in § 126.16 and 

§ 126.17 of this subchapter). 

PART 124—AGREEMENTS, OFFSHORE PROCUREMENT, AND OTHER 

DEFENSE SERVICES 

■ 14. The authority citation for part 124 

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); E.O. 11958, 42 FR 4311; 3 CFR 1977 

Comp. p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; 

Pub. L. 105–261; Pub. L. 111–266. 

■ 15. Section 124.11 is amended by 

revising paragraph (b) to read as follows: 

§ 124.11 Congressional certification 

pursuant to Section 36(d) of the Arms 

Export Control Act. 

* * * * * 

(b) Unless an emergency exists which 

requires the immediate approval of the 

agreement in the national security 

interests of the United States, approval 

may not be granted until at least 15 

calendar days have elapsed after receipt 

by the Congress of the certification 

required by 22 U.S.C. 2776(d)(1) 

involving the North Atlantic Treaty 

Organization, any member country of 

that Organization, or Australia, Israel, 

Japan, New Zealand, or the Republic of 

Korea or at least 30 calendar days have 

elapsed for any other country. 

Approvals may not be granted when the 

mstockstill on DSK4VPTVN1PROD with RULES2

16600 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

Congress has enacted a joint resolution 

prohibiting the export. 

* * * * * 

PART 126—GENERAL POLICIES AND 

PROVISIONS 

■ 16. 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); E.O. 11958, 42 FR 

4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 

2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 

28205; 3 CFR, 1994 Comp. p. 899; Sec. 1225, 

Pub. L. 108–375; Sec. 7089, Pub. L. 111–117; 

Pub. L. 111–266. 

■ 17. Section 126.1 is amended by 

revising paragraph (e) to read as follows: 

§ 126.1 Prohibited exports, imports, and 

sales to or from certain countries. 

* * * * * 

(e) Final sales. No sale, export, 

transfer, reexport, or retransfer and no 

proposal to sell, export, transfer, 

reexport, or retransfer any defense 

articles or defense services subject to 

this subchapter may be made to any 

country referred to in this section 

(including the embassies or consulates 

of such a country), or to any person 

acting on its behalf, whether in the 

United States or abroad, without first 

obtaining a license or written approval 

of the Directorate of Defense Trade 

Controls. However, in accordance with 

paragraph (a) of this section, it is the 

policy of the Department of State to 

deny licenses and approvals in such 

cases. 

(1) Duty to Notify: Any person who 

knows or has reason to know of such a 

final or actual sale, export, transfer, 

reexport, or retransfer of such articles, 

services, or data must immediately 

inform the Directorate of Defense Trade 

Controls. Such notifications should be 

submitted to the Office of Defense Trade 

Controls Compliance, Directorate of 

Defense Trade Controls. 

(2) [Reserved] 

* * * * * 

■ 18. Section 126.3 is revised to read as 

follows: 

§ 126.3 Exceptions. 

In a case of exceptional or undue 

hardship, or when it is otherwise in the 

interest of the United States 

Government, the Managing Director, 

Directorate of Defense Trade Controls, 

may make an exception to the 

provisions of this subchapter. 

■ 19. Section 126.4 is amended by 

revising paragraph (d) to read as 

follows: 

§ 126.4 Shipments by or for United States 

Government agencies. 

* * * * * 

(d) An Electronic Export Information 

(EEI) filing, required under § 123.22 of 

this subchapter, and a written statement 

by the exporter certifying that these 

requirements have been met must be 

presented at the time of export to the 

appropriate Port Directors of U.S. 

Customs and Border Protection or 

Department of Defense transmittal 

authority. A copy of the EEI filing and 

the written certification statement shall 

be provided to the Directorate of 

Defense Trade Controls immediately 

following the export. 

■ 20. Section 126.5 is amended by 

revising paragraphs (a), (b), (d) 

introductory text, and Notes 1 and 2, 

and removing and reserving paragraph 

(c) to read as follows: 

§ 126.5 Canadian exemptions. 

(a) Temporary import of defense 

articles. Port Directors of U.S. Customs 

and Border Protection and postmasters 

shall permit the temporary import and 

return to Canada without a license of 

any unclassified defense articles (see 

§ 120.6 of this subchapter) that originate 

in Canada for temporary use in the 

United States and return to Canada. All 

other temporary imports shall be in 

accordance with §§ 123.3 and 123.4 of 

this subchapter. 

(b) Permanent and temporary export 

of defense articles. Except as provided 

in Supplement No. 1 to part 126 of this 

subchapter and for exports that transit 

third countries, Port Directors of U.S. 

Customs and Border Protection and 

postmasters shall permit, when for enduse in Canada by Canadian Federal or 

Provincial governmental authorities 

acting in an official capacity or by a 

Canadian-registered person, or for 

return to the United States, the 

permanent and temporary export to 

Canada without a license of unclassified 

defense articles and defense services 

identified on the U.S. Munitions List (22 

CFR 121.1). The exceptions are subject 

to meeting the requirements of this 

subchapter, to include 22 CFR 120.1(c) 

and (d), parts 122 and 123 (except 

insofar as exemption from licensing 

requirements is herein authorized) and 

§ 126.1, and the requirement to obtain 

non-transfer and use assurances for all 

significant military equipment. For 

purposes of this section, ‘‘Canadianregistered person’’ is any Canadian 

national (including Canadian business 

entities organized under the laws of 

Canada), dual citizen of Canada and a 

third country other than a country listed 

in § 126.1 of this subchapter, and 

permanent resident registered in Canada 

in accordance with the Canadian 

Defense Production Act, and such other 

Canadian Crown Corporations identified 

by the Department of State in a list of 

such persons publicly available through 

the Internet Web site of the Directorate 

of Defense Trade Controls and by other 

means. 

(c) [Reserved](d) Reexports/retransfer. 

Reexport/retransfer in Canada to 

another end-user or end-use or from 

Canada to another destination, except 

the United States, must in all instances 

have the prior approval of the 

Directorate of Defense Trade Controls. 

Unless otherwise exempt in this 

subchapter, the original exporter is 

responsible, upon request from a 

Canadian-registered person, for 

obtaining or providing reexport/ 

retransfer approval. In any instance 

when the U.S. exporter is no longer 

available to the Canadian end-user the 

request for reexport/retransfer may be 

made directly to the Directorate of 

Defense Trade Controls. All requests 

must include the information in 

§ 123.9(c) of this subchapter. Reexport/ 

retransfer approval is acquired by: 

* * * * * 

Notes to § 126.5: 

1. In any instance when the exporter has 

knowledge that the defense article exempt 

from licensing is being exported for use other 

than by a qualified Canadian-registered 

person or for export to another foreign 

destination, other than the United States, in 

its original form or incorporated into another 

item, an export license must be obtained 

prior to the transfer to Canada. 

2. Additional exemptions exist in other 

sections of this subchapter that are applicable 

to Canada, for example §§ 123.9, 125.4, and 

124.2, that allow for the performance of 

defense services related to training in basic 

operations and maintenance, without a 

license, for certain defense articles lawfully 

exported, including those identified in 

Supplement No. 1 to part 126 of this 

subchapter. 

■ 21. Section 126.7 is amended by 

revising the section heading and 

paragraphs (a)(3), (a)(7), and (e) 

introductory text to read as follows: 

§ 126.7 Denial, revocation, suspension, or 

amendment of licenses and other 

approvals. 

(a) * * * 

(3) An applicant is the subject of a 

criminal complaint, other criminal 

charge (e.g., an information), or 

indictment for a violation of any of the 

U.S. criminal statutes enumerated in 

§ 120.27 of this subchapter; or 

* * * * * 

(7) An applicant has failed to include 

any of the information or 

documentation expressly required to 

support a license application, 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16601 

exemption, or other request for approval 

under this subchapter, or as required in 

the instructions in the applicable 

Department of State form or has failed 

to provide notice or information as 

required under this subchapter; or 

* * * * * 

(e) Special definition. For purposes of 

this subchapter, the term ‘‘Party to the 

Export’’ means: 

* * * * * 

22. Section 126.13 is amended by 

revising paragraphs (a) introductory 

text, (a)(1), and (a)(4) to read as follows: 

§ 126.13 Required information. 

(a) All applications for licenses (DSP– 

5, DSP–61, DSP–73, and DSP–85), all 

requests for approval of agreements and 

amendments thereto under part 124 of 

this subchapter, and all requests for 

other written authorizations (including 

requests for retransfer or reexport 

pursuant to § 123.9 of this subchapter) 

must include a letter signed by a 

responsible official empowered by the 

applicant and addressed to the 

Directorate of Defense Trade Controls, 

stating whether: 

(1) The applicant or the chief 

executive officer, president, vicepresidents, other senior officers or 

officials (e.g., comptroller, treasurer, 

general counsel) or any member of the 

board of directors is the subject of a 

criminal complaint, other criminal 

charge (e.g., an information), or 

indictment for or has been convicted of 

violating any of the U.S. criminal 

statutes enumerated in § 120.27 of this 

subchapter since the effective date of 

the Arms Export Control Act, Public 

Law 94–329, 90 Stat. 729 (June 30, 

1976); 

* * * * * 

(4) The natural person signing the 

application, notification or other request 

for approval (including the statement 

required by this subchapter) is a citizen 

or national of the United States, has 

been lawfully admitted to the United 

States for permanent residence (and 

maintains such lawful permanent 

residence status) under the Immigration 

and Nationality Act, as amended (8 

U.S.C. 1101(a), section 101(a)20, 60 Stat. 

163), or is an official of a foreign 

government entity in the United States, 

or is a foreign person making a request 

pursuant to § 123.9 of this subchapter. 

* * * * * 

■ 23. Section 126.17 is added to read as 

follows: 

§ 126.17 Exemption pursuant to the 

Defense Trade Cooperation Treaty between 

the United States and the United Kingdom. 

(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 United 

Kingdom 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 

United Kingdom Community within the 

United Kingdom Community, or 

between a member of the United States 

Community and a member of the United 

Kingdom Community. 

(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 defense articles, 

including technical data, but who does 

not have access to such defense articles, 

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 

U.S. Community to members of the 

United Kingdom Community (see 

paragraph (d) of this section regarding 

the identification of members of the 

United Kingdom Community) of defense 

articles and defense services not listed 

in Supplement No. 1 to part 126, 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 the United Kingdom. 

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 the 

United Kingdom and continue to apply 

fully to defense articles and defense 

services subject to either of the 

aforementioned treaties and the 

exemptions contained in § 126.17 of this 

subchapter. 

(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 the United Kingdom, all of 

the following conditions must be met: 

(i) The exporter must be registered 

with the Directorate of Defense Trade 

Controls 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 restriction (see 

paragraphs (b) and (c) of this section for 

specific requirements); 

(ii) The recipient of the export must 

be a member of the United Kingdom 

Community (see paragraph (d) of this 

section regarding the identification of 

members of the United Kingdom 

Community). United Kingdom nongovernmental entities and facilities that 

become ineligible for such membership 

will be removed from the United 

Kingdom 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 the United Kingdom and 

mutually agreed to by the U.S. 

Government and the Government of the 

United Kingdom pursuant to the 

Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom and the Implementing 

Arrangement thereto (United Kingdom 

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 the 

United Kingdom (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 

mstockstill on DSK4VPTVN1PROD with RULES2

16602 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

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 

U.S. Community and United Kingdom 

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 United Kingdom 

Community (see paragraph (d) of this 

section regarding the identification of 

members of the United Kingdom 

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 the United Kingdom and 

mutually agreed to by the United States 

and the Government of United Kingdom 

pursuant to the terms of the Defense 

Trade Cooperation Treaty between the 

United States and the United Kingdom 

and the United Kingdom 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 Her 

Majesty’s 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 United Kingdom 

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 the United Kingdom: 

(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 the Directorate of 

Defense Trade Controls 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 the 

United Kingdom 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) United Kingdom Community. For 

purposes of the exemption provided by 

this section, the United Kingdom 

Community consists of: 

(1) Her Majesty’s Government entities 

and facilities identified as members of 

the Approved Community through the 

Directorate of Defense Trade Controls 

Web site at the time of a transaction 

under this section; and 

(2) The non-governmental United 

Kingdom entities and facilities 

identified as members of the Approved 

Community through the Directorate of 

Defense Trade Controls Web site at the 

time of a transaction under this section; 

non-governmental United Kingdom 

entities and facilities that become 

ineligible for such membership will be 

removed from the United Kingdom 

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 the 

United Kingdom: 

(1) United States and United Kingdom 

combined military or counter-terrorism 

operations; 

(2) United States and United Kingdom 

cooperative security and defense 

research, development, production, and 

support programs; 

(3) Mutually determined specific 

security and defense projects where the 

Government of the United Kingdom is 

the end-user; or 

(4) U.S. Government end-use. 

(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 Directorate of Defense 

Trade Controls Web site; 

(2) Operations, programs, and projects 

that cannot be publicly identified will 

be confirmed in written correspondence 

from the Directorate of Defense Trade 

Controls; 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 United Kingdom Community if that 

exporter has been licensed by the 

Directorate of Defense Trade Controls 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) antimstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16603 

tamper measures made at U.S. 

Government direction always requires 

prior written approval from the 

Directorate of Defense Trade Controls. 

(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 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 Department of Defense 

for an end-use identified pursuant to 

paragraphs (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 or 

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 the 

Directorate of Defense Trade Controls 

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 the Directorate of 

Defense Trade Controls 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. 

(8) Defense articles on the European 

Union Dual Use List (as described in 

Annex 1 to EC Council Regulation No. 

428/2009) are not eligible for export 

under the Defense Trade Cooperation 

Treaty between the United States and 

the United Kingdom. These articles 

have been identified and included in 

Supplement No.1 to part 126. 

(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 United 

Kingdom Community (see paragraph (d) 

of this section for specific information 

on the identification of the Community) 

to another member of the United 

Kingdom 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 the Directorate of 

Defense Trade Controls (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 United 

Kingdom Community to a foreign 

person that is not a member of the 

United Kingdom 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 the Directorate of Defense 

Trade Controls (see paragraph (d) of this 

section for specific information on the 

identification of the United Kingdom 

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 United 

Kingdom Community, to an end-use 

that is not authorized by this exemption 

is prohibited without a license or other 

written approval of the Directorate of 

Defense Trade Controls (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 or 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 the Directorate of Defense Trade 

Controls for the export, transfer, 

reexport, or 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, Note 2 that are incorporated in an 

aircraft that is eligible to ship under this 

section continue to require separate 

authorization from the Directorate of 

Defense Trade Controls for their export, 

transfer, reexport, or retransfer). 

(7) A license or prior approval from 

the Directorate of Defense Trade 

Controls 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 

United Kingdom Ministry of Defence 

elements deployed outside the Territory 

of the United Kingdom and engaged in 

an authorized end-use (see paragraphs 

(e) and (f) of this section regarding 

authorized end-uses) using United 

Kingdom Armed Forces transmission 

channels or the provisions of this 

section; 

(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 

U.S. or UK) that is operating in direct 

support of United Kingdom Ministry of 

Defence elements deployed outside the 

Territory of the United Kingdom and 

engaged in an authorized end-use (see 

paragraphs (e) and (f) of this section 

regarding authorized end-uses) using 

United Kingdom Armed Forces 

transmission channels or the provisions 

of this section; 

(iii) The reexport is made by a 

member of the United Kingdom 

Community to United Kingdom 

Ministry of Defence elements deployed 

outside the Territory of the United 

Kingdom engaged in an authorized enduse (see paragraphs (e) and (f) of this 

section regarding authorized end-uses) 

using United Kingdom Armed Forces 

transmission channels or the provisions 

of this section; 

(iv) The reexport is made by a 

member of the United Kingdom 

Community to an Approved Community 

member (either U.S. or UK) that is 

operating in direct support of United 

Kingdom Ministry of Defence elements 

deployed outside the Territory of the 

United Kingdom engaged in an 

authorized end-use (see paragraphs (e) 

mstockstill on DSK4VPTVN1PROD with RULES2

16604 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

and (f) of this section regarding 

authorized end-uses) using United 

Kingdom Armed Forces transmission 

channels or the provisions of this 

section; or 

(v) The defense article or defense 

service will be delivered to the United 

Kingdom Ministry of Defence for an 

authorized end-use (see paragraphs (e) 

and (f) of this section regarding 

authorized end-uses); the United 

Kingdom Ministry of Defence may 

deploy the item as necessary when 

conducting official business within or 

outside the Territory of the United 

Kingdom. The item must remain under 

the effective control of the United 

Kingdom Ministry of Defence 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 United Kingdom 

Community must immediately notify 

the Directorate of Defense Trade 

Controls 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 

the Directorate of Defense Trade 

Controls 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 the Directorate of 

Defense Trade Controls, 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 the 

Directorate of Defense Trade Controls to 

retire the license(s) and transition to this 

section. When this approval is conveyed 

to U.S. Customs and Border Protection 

by the Directorate of Defense Trade 

Controls, the license(s) will be returned 

to the Directorate of Defense Trade 

Controls 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 the Directorate of Defense 

Trade Controls with a letter citing 

approval by the Directorate of Defense 

Trade Controls to transition to this 

section as the reason for returning the 

license(s). 

(3) If a member of the United 

Kingdom Community desires to 

transition defense articles received 

under an existing license or other 

approval to the processes established 

under the Treaty, the United Kingdom 

Community member must submit a 

written request to the Directorate of 

Defense Trade Controls, either directly 

or through the original U.S. exporter, 

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 

received, and the Treaty-eligible enduse (see paragraphs (e) and (f) of this 

section regarding authorized end-uses) 

for which the defense articles or defense 

services will be used. The defense 

article or defense service shall remain 

subject to the conditions and limitations 

of the existing license or other approval 

until the United Kingdom Community 

member has received approval from the 

Directorate of Defense Trade Controls to 

transition to this section. 

(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, such defense article or defense 

service previously exported shall 

remain on the U.S. Munitions List and 

be subject to the International Traffic in 

Arms Regulations unless the applicable 

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 the United Kingdom 

and this section shall be marked or 

identified as follows: 

(i) For classified defense articles and 

defense services the standard marking 

or identification shall read: ‘‘// 

CLASSIFICATION LEVEL USML//REL 

GBR and USA Treaty Community//.’’ 

For example, for defense articles 

classified SECRET, the marking or 

identification shall be ‘‘//SECRET 

USML//REL GBR and USA Treaty 

Community//.’’ 

(ii) Unclassified defense articles and 

defense services exported under or 

transitioned pursuant to this section 

shall be handled while in the UK as 

‘‘Restricted USML’’ and the standard 

marking or identification shall read ‘‘// 

RESTRICTED USML//REL GBR 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 

GBR 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 

paragraph (j)(1)(i) and (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 

detailed in paragraphs (j)(1) and (j)(2) of 

this section; or, where such labeling is 

impracticable shall be accompanied by 

documentation (such as contracts or 

invoices) or verbal notification clearly 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16605 

associating the technical data with the 

appropriate markings as detailed in 

paragraph (j)(1)(i) and (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.-UK Defense 

Trade Cooperation Treaty for export 

only to United Kingdom for use in 

approved projects, programs or 

operations by members of the United 

Kingdom 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 the 

Directorate of Defense Trade Controls 

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 Directorate of Defense Trade 

Controls Web site. 

(ii) United Kingdom intermediate 

consignees who are: 

(A) Members of the United Kingdom 

Community; or 

(B) Freight forwarders, customs 

brokers, commercial air freight and 

surface shipment carriers, or other 

United Kingdom parties that are 

identified at the time of export as being 

on the list of Authorized United 

Kingdom Intermediate Consignees, 

which is available on the Directorate of 

Defense Trade Controls 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 pursuant to 

the Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom and this section shall 

maintain detailed records of their 

exports, imports, and transfers made by 

that exporter of defense articles or 

defense services subject to the Defense 

Trade Cooperation Treaty between the 

United States and the United Kingdom 

and this section. Exporters shall also 

maintain detailed records of any 

reexports and retransfers approved or 

otherwise authorized by the Directorate 

of Defense Trade Controls of defense 

articles or defense services subject to the 

Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom 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 the Directorate of 

Defense Trade Controls or a person 

designated by the Directorate of Defense 

Trade Controls (e.g. the Diplomatic 

Security Service) or U.S. Immigration 

and Customs Enforcement, or U.S. 

Customs and Border Protection. 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 the 

United Kingdom 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 United Kingdom combined 

military or counter-terrorism operations 

identify § 126.17(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 United Kingdom cooperative 

security and defense research, 

development, production, and support 

programs identify § 126.17(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 the United Kingdom is 

the end-user identify 126.17(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 

126.17(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, 

mstockstill on DSK4VPTVN1PROD with RULES2

16606 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

with respect to each export, transfer, 

reexport, or retransfer, pursuant to the 

Defense Trade Cooperation Treaty 

between the United States and the 

United Kingdom and this section, 

submit a statement to the Directorate of 

Defense Trade Controls containing the 

information identified in § 130.10 of this 

subchapter relating to fees, 

commissions, and political 

contributions on contracts or 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) The Directorate of Defense Trade 

Controls or a person designated by the 

Directorate of Defense Trade Controls 

(e.g., the Diplomatic Security Service) or 

U.S. Immigration and Customs 

Enforcement, or U.S. Customs and 

Border Protection 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 

United Kingdom 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 the 

United Kingdom and this section by any 

person identified in paragraph (b)(2) of 

this section shall not take place until 30 

days after the Directorate of Defense 

Trade Controls has acknowledged 

receipt of a Form DS–4048 (entitled, 

‘‘Projected Sales of Major Weapons in 

Support of Section 25(a)(1) of the Arms 

Export Control Act’’) 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; or 

(iv) An amended contract that meets 

the requirements of paragraphs (o)(1)(i) 

through (o)(1)(iii) of this section. 

(2) The Form DS–4048 required in 

paragraph (o)(1) of this section 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. 

■ 24. Supplement No. 1 to Part 126 is 

added to read as follows: 

BILLING CODE 4710–25–P 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16607 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.006</GPH>
16608 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.007</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16609 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.008</GPH>
16610 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.009</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16611 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.010</GPH>
16612 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.011</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16613 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.012</GPH>
16614 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.013</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16615 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.014</GPH>
16616 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.015</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16617 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.016</GPH>
16618 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.017</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16619 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.018</GPH>
16620 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.019</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16621 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.020</GPH>
16622 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.021</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16623 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.022</GPH>
16624 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.023</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16625 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.024</GPH>
16626 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.025</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16627 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.026</GPH>
16628 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.027</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16629 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.028</GPH>
16630 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.029</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16631 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.030</GPH>
16632 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.031</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16633 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.032</GPH>
16634 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.033</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16635 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.034</GPH>
16636 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.035</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16637 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.036</GPH>
16638 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.037</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16639 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.038</GPH>
16640 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.039</GPH>
Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16641 

BILLING CODE 4710–25–C 

PART 127—VIOLATIONS AND 

PENALTIES 

■ 25. The authority citation for part 127 

is revised to read to as follows: 

Authority: Secs. 2, 38, and 42, Public Law 

90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 

2791); E.O. 11958, 42 FR 4311; 3 CFR, 1977 

Comp., p. 79; 22 U.S.C. 401; 22 U.S.C. 2651a; 

22 U.S.C. 2779a; 22 U.S.C. 2780; Pub. L. 111– 

266. 

■ 26. Section 127.1 is revised to read as 

follows: 

§ 127.1 Violations. 

(a) Without first obtaining the 

required license or other written 

approval from the Directorate of Defense 

Trade Controls, it is unlawful: 

(1) To export or attempt to export 

from the United States any defense 

article or technical data or to furnish or 

attempt to furnish any defense service 

for which a license or written approval 

is required by this subchapter; 

(2) To reexport or retransfer or 

attempt to reexport or retransfer any 

defense article, technical data, or 

defense service from one foreign enduser, end-use, or destination to another 

foreign end-user, end-use, or destination 

for which a license or written approval 

is required by this subchapter, 

including, as specified in § 126.16(h) 

and § 126.17(h) of this subchapter, any 

defense article, technical data, or 

defense service that was exported from 

the United States without a license 

pursuant to any exemption under this 

subchapter; 

(3) To import or attempt to import any 

defense article whenever a license is 

required by this subchapter; or 

(4) To conspire to export, import, 

reexport, retransfer, furnish or cause to 

be exported, imported, reexported, 

retransferred or furnished, any defense 

article, technical data, or defense service 

for which a license or written approval 

is required by this subchapter. 

(b) It is unlawful: 

(1) To violate any of the terms or 

conditions of a license or approval 

granted pursuant to this subchapter, any 

exemption contained in this subchapter, 

or any rule or regulation contained in 

this subchapter; 

(2) To engage in the business of 

brokering activities for which 

registration and a license or written 

approval is required by this subchapter 

without first registering or obtaining the 

required license or written approval 

from the Directorate of Defense Trade 

Controls. For the purposes of this 

subchapter, engaging in the business of 

brokering activities requires only one 

occasion of engaging in an activity as 

reflected in § 129.2(b) of this 

subchapter. 

(3) To engage in the United States in 

the business of either manufacturing or 

exporting defense articles or furnishing 

defense services without complying 

with the registration requirements. For 

the purposes of this subchapter, 

engaging in the business of 

manufacturing or exporting defense 

articles or furnishing defense services 

requires only one occasion of 

manufacturing or exporting a defense 

article or furnishing a defense service. 

(c) Any person who is granted a 

license or other approval or who acts 

pursuant to an exemption under this 

subchapter is responsible for the acts of 

employees, agents, and all authorized 

persons to whom possession of the 

defense article or technical data has 

been entrusted regarding the operation, 

use, possession, transportation, and 

handling of such defense article or 

technical data abroad. All persons 

abroad subject to U.S. jurisdiction who 

obtain temporary or permanent custody 

of a defense article exported from the 

United States or produced under an 

agreement described in part 124 of this 

subchapter, and irrespective of the 

number of intermediate transfers, are 

bound by the regulations of this 

subchapter in the same manner and to 

the same extent as the original owner or 

transferor. 

(d) A person with knowledge that 

another person is then ineligible 


mstockstill on DSK4VPTVN1PROD with RULES2ER21MR12.040</GPH>
16642 Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 

pursuant to §§ 120.1(c) or 126.7 of this 

subchapter may not, directly or 

indirectly, in any manner or capacity, 

without prior disclosure of the facts to, 

and written authorization from, the 

Directorate of Defense Trade Controls: 

(1) Apply for, obtain, or use any 

export control document as defined in 

§ 127.2(b) of this subchapter for such 

ineligible person; or 

(2) Order, buy, receive, use, sell, 

deliver, store, dispose of, forward, 

transport, finance, or otherwise service 

or participate in any transaction which 

may involve any defense article or the 

furnishing of any defense service for 

which a license or approval is required 

by this subchapter or an exemption is 

available under this subchapter for 

export, where such ineligible person 

may obtain any benefit therefrom or 

have any direct or indirect interest 

therein. 

(e) No person may knowingly or 

willfully cause, or aid, abet, counsel, 

demand, induce, procure, or permit the 

commission of, any act prohibited by, or 

the omission of any act required by, 22 

U.S.C. 2778 and 2779, or any regulation, 

license, approval, or order issued 

thereunder. 

■ 27. Section 127.2 is amended by 

revising paragraphs (a), (b) introductory 

text, (b)(1), (b)(2), and adding (b)(14), to 

read as follows: 

§ 127.2 Misrepresentation and omission of 

facts. 

(a) It is unlawful to use or attempt to 

use any export or temporary import 

control document containing a false 

statement or misrepresenting or 

omitting a material fact for the purpose 

of exporting, transferring, reexporting, 

retransferring, obtaining, or furnishing 

any defense article, technical data, or 

defense service. Any false statement, 

misrepresentation, or omission of 

material fact in an export or temporary 

import control document will be 

considered as made in a matter within 

the jurisdiction of a department or 

agency of the United States for the 

purposes of 18 U.S.C. 1001, 22 U.S.C. 

2778, and 22 U.S.C. 2779. 

(b) For the purpose of this subchapter, 

export or temporary import control 

documents include the following: 

(1) An application for a permanent 

export, reexport, retransfer, or a 

temporary import license and 

supporting documents. 

(2) Electronic Export Information 

filing. 

* * * * * 

(14) Any other shipping document 

that has information related to the 

export of the defense article or defense 

service. 

■ 28. Section 127.3 is revised to read as 

follows: 

§ 127.3 Penalties for violations. 

Any person who willfully: 

(a) Violates any provision of § 38 or 

§ 39 of the Arms Export Control Act (22 

U.S.C. 2778 and 2779) or any rule or 

regulation issued under either § 38 or 

§ 39 of the Act, or any undertaking 

specifically required by part 124 of this 

subchapter; or 

(b) In a registration, license 

application, or report required by § 38 or 

§ 39 of the Arms Export Control Act (22 

U.S.C. 2778 and 2779) or by any rule or 

regulation issued under either section, 

makes any untrue statement of a 

material fact or omits a material fact 

required to be stated therein or 

necessary to make the statements 

therein not misleading, shall upon 

conviction be subject to a fine or 

imprisonment, or both, as prescribed by 

22 U.S.C. 2778(c). 

■ 29. Section 127.4 is amended by 

revising paragraphs (a) and (c), and 

adding paragraph (d), to read as follows: 

§ 127.4 Authority of U.S. Immigration and 

Customs Enforcement and U.S. Customs 

and Border Protection officers. 

(a) U.S. Immigration and Customs 

Enforcement and U.S. Customs and 

Border Protection officers may take 

appropriate action to ensure observance 

of this subchapter as to the export or the 

attempted export or the temporary 

import of any defense article or 

technical data, including the inspection 

of loading or unloading of any vessel, 

vehicle, or aircraft. This applies whether 

the export is authorized by license or by 

written approval issued under this 

subchapter or by exemption. 

* * * * * 

(c) Upon the presentation to a U.S. 

Customs and Border Protection Officer 

of a license or written approval, or claim 

of an exemption, authorizing the export 

of any defense article, the customs 

officer may require the production of 

other relevant documents and 

information relating to the final export. 

This includes an invoice, order, packing 

list, shipping document, 

correspondence, instructions, and the 

documents otherwise required by the 

U.S. Customs and Border Protection or 

U.S. Immigration and Customs 

Enforcement. 

(d) If an exemption under this 

subchapter is used or claimed to export, 

transfer, reexport or retransfer, furnish, 

or obtain a defense article, technical 

data, or defense service, law 

enforcement officers may rely upon the 

authorities noted, additional authority 

identified in the language of the 

exemption, and any other lawful means 

or authorities to investigate such a 

matter. 

■ 30. Section 127.7 is amended by 

revising paragraph (a) to read as follows: 

§ 127.7 Debarment. 

(a) Debarment. In implementing § 38 

of the Arms Export Control Act, the 

Assistant Secretary of State for PoliticalMilitary Affairs may prohibit any person 

from participating directly or indirectly 

in the export, reexport and retransfer of 

defense articles, including technical 

data, or in the furnishing of defense 

services for any of the reasons listed 

below and publish notice of such action 

in the Federal Register. Any such 

prohibition is referred to as a debarment 

for purposes of this subchapter. The 

Assistant Secretary of State for PoliticalMilitary Affairs shall determine the 

appropriate period of time for 

debarment, which shall generally be for 

a period of three years. However, 

reinstatement is not automatic and in all 

cases the debarred person must submit 

a request for reinstatement and be 

approved for reinstatement before 

engaging in any export or brokering 

activities subject to the Arms Export 

Control Act or this subchapter. 

* * * * * 

■ 31. Section 127.10 is amended by 

revising paragraph (a) to read as follows: 

§ 127.10 Civil penalty. 

(a) The Assistant Secretary of State for 

Political-Military Affairs is authorized 

to impose a civil penalty in an amount 

not to exceed that authorized by 22 

U.S.C. 2778, 2779a, and 2780 for each 

violation of 22 U.S.C. 2778, 2779a, and 

2780, or any regulation, order, license, 

or written approval issued thereunder. 

This civil penalty may be either in 

addition to, or in lieu of, any other 

liability or penalty which may be 

imposed. 

* * * * * 

■ 32. Section 127.12 is amended by 

adding paragraph (b)(5), and revising 

paragraph (d), to read as follows: 

§ 127.12 Voluntary disclosures. 

* * * * * 

(b) * * * 

(5) Nothing in this section shall be 

interpreted to negate or lessen the 

affirmative duty pursuant to §§ 126.1(e), 

126.16(h)(5), and 126.17(h)(5) of this 

subchapter upon persons to inform the 

Directorate of Defense Trade Controls of 

the actual or final sale, export, transfer, 

reexport, or retransfer of a defense 

article, technical data, or defense service 

to any country referred to in § 126.1 of 

this subchapter, any citizen of such 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 77, No. 55 / Wednesday, March 21, 2012 / Rules and Regulations 16643 

country, or any person acting on its 

behalf. 

* * * * * 

(d) Documentation. The written 

disclosure should be accompanied by 

copies of substantiating documents. 

Where appropriate, the documentation 

should include, but not be limited to: 

(1) Licensing documents (e.g., license 

applications, export licenses, and enduser statements), exemption citation, or 

other authorization description, if any; 

(2) Shipping documents (e.g., 

Electronic Export Information filing, 

including the Internal Transaction 

Number, air waybills, and bills of laden, 

invoices, and any other associated 

documents); and 

(3) Any other relevant documents 

must be retained by the person making 

the disclosure until the Directorate of 

Defense Trade Controls requests them or 

until a final decision on the disclosed 

information has been made. 

* * * * * 

PART 129—REGISTRATION AND 

LICENSING OF BROKERS 

■ 33. The authority citation for part 129 

continues to read as follows: 

Authority: Sec. 38, Pub. L. 104–164, 110 

Stat. 1437, (22 U.S.C. 2778). 

■ 34. Section 129.6 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 129.6 Requirements for license/approval. 

* * * * * 

(b) * * * 

(2) Brokering activities that are 

arranged wholly within and destined 

exclusively for the North Atlantic Treaty 

Organization, any member country of 

that Organization, Australia, Israel, 

Japan, New Zealand, or the Republic of 

Korea, except in the case of the defense 

articles or defense services specified in 

§ 129.7(a) of this subchapter, for which 

prior approval is always required. 

■ 35. Section 129.7 is amended by 

revising paragraphs (a)(1)(vii) and (a)(2) 

to read as follows: 

§ 129.7 Prior approval (license). 

(a) * * * 

(1) * * * 

(vii) Foreign defense articles or 

defense services (other than those that 

are arranged wholly within and 

destined exclusively for the North 

Atlantic Treaty Organization, any 

member country of that Organization, 

Australia, Israel, Japan, New Zealand, or 

the Republic of Korea (see §§ 129.6(b)(2) 

and 129.7(a)). 

(2) Brokering activities involving 

defense articles or defense services 

covered by, or of a nature described by 

part 121, of this subchapter, in addition 

to those specified in § 129.7(a), that are 

designated as significant military 

equipment under this subchapter, for or 

from any country not a member of the 

North Atlantic Treaty Organization, 

Australia, Israel, Japan, New Zealand, or 

the Republic of Korea whenever any of 

the following factors are present: 

* * * * * 

Dated: March 16, 2012. 

Rose Gottemoeller, 

Acting Under Secretary, Arms Control and 

International Security, Department of State. 

[FR Doc. 2012–6825 Filed 3–20–12; 8:45 am] 

BILLING CODE 4710–25–P 

mstockstill on DSK4VPTVN1PROD with RULES2