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PM/DTC, SA-6, Room 228
ATTN: Defense Trade News
Office of Defense Trade Controls
Bureau of Politico-Military Affairs
US. Department of State

2201 C Street N.W.

Washington, D.C. 20522-0602

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55 YEARS OF DEFENSE TRADE CONTROLS

Munitions List Controls Over The Years

The history of U.S. defense trade controls
goes back to public concern over profiteering
from armaments in the 1930s and the desire
to avoid entanglement in European conflicts.
The controls regime has been subject to
repeated modifications, but exhibits a sur-
prising degree of institutional continuity.

Increased volume and complexity of com-
mercial defense trade. The 1970s and 1980s
produced considerable growth in U.S. com-
mercial defense trade, despite a tightening of
licensing and enforcement measures. This
trade growth has meant a continuous in-
crease in licensing burdens, despite periodic
ptunings of the International Traffic in Arms
Regulations (ITAR), which regulate the
licensing process. Moreover, the increasing
importance of manufacturing license and
technical assistance agreements has resulted
in increasingly complex licensing arrange-
ments.

Office of Defense Trade Control's various
legal mandates. The 1935 Neutrality Act
empowered the Secretary of State to establish
an Office of Arms and Munitions Controls,
with authority to register and issue export
licenses to all U.S. entities engaged in de-

fense-related trade. This authority was
elaborated by the Mutual Security Act of
1954, the Arms Export Control Act (AECA) of
1976, and related executive orders.

A changing ITAR. ITAR evolution over the
years reflects changes in technology and the
composition of defense trade. Civil aircraft
and avionics, for example, remained on the
U.S. Munitions List (USML) until 1959, when
they were placed under Commerce juris-
diction. Today only military and develop-
mental aircraft, as well as inertial navigation
systems, remain on the USML.

Tightened controls. During the Carter and
Reagan administrations, Congress strength-
ened munitions export controls in several
respects. Through amendments to the
AECA, the Department of State assumed the
right of prior approval on contract proposals
for the sale or production of “Significant
Military Equipment” over $14 million. The
Department also acquired broad discretion-
ary authority to debar firms from engaging in
defense trade. Although many of the most
publicized coups of the U.S. Customs Serv-
ice’s Project Exodus involved arrests for
diversion of dual-use exports, arrests and
convictions for violations of the AECA and
the ITAR also rose sharply in the 1980s. Ml

“EMPOWERED OFFICIAL” GUIDELINES

Part 120.1 (b) of the International Traffic in
Arms Regulations (ITAR) requires that
applications for licenses or other approvals
submitted to the Office of Defense Trade
Controls (DTC) by non-governmental entities
must be signed by a “responsible official who
is a US. person and who has been empow-
ered by the registrant [applicant] to sign such
documents”—generally referred to as an
“empowered official.”

In view of recent changes to the ITAR, the :
selection of individuals authorized to sign
applications, certifications, statements, and
other official correspondence for their compa-
nies is a matter of considerable importance
and one that should not be taken lightly. The
issue of who should be permitted to repre-
sent their companies in these matters has
often been confusing, and in many instances
not fully understood. In response to industry
requests for a definition of what constitutes
an “empowered official,” DTC has developed
the following guidelines.

Page 12

Defense Trade News, Volume 1, Number 2, June 1990



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WORKLOAD REDUCTIONS MOVING FORWARD

Ten Initiatives Already in Testing Phase

Along with the effort to facilitate muni-
tions export licensing through a responsive
licensing process, the Center for Defense
Trade is also working to facilitate licensing
through workload reduction. At the direc-
tion of Deputy Secretary of State Eagleburger,
the new-Center began a workload reduction
initiative immediately uj upon its creation in
Janvary.— a

Ten initiatives already agreed on. Initially,
the workload reduction initiative focused on
developing specific ideas. Center personnel
worked closely with the Defense Technology
Security Administration (DTSA) at the De-
partment of Defense (DOD) in this effort.
Much progress was made, and quite quickly.

Having developed a package of initiatives,
the Center and DTSA began examining the
feasibility of implementing these ideas to
reduce and simplify licensing while retaining] “
the required export controls. Of this package, &
10 initiatives have been specifically defined.
(Additional ideas are still being considered.)

Two types of initiatives. Broadly defined,
the 10 workload reduction initiatives (with
the exception of the group CJ) fall into two
categories: those that will require specialized
International Traffic in Arms Regulations
(ITAR) exemptions and those that will ulti-
mately require specialized DTC licenses. The
following charts categorize the initiatives and
provide a brief explanation of each, inchiding
its purpose, what it aims to replace (i.e., how
it will reduce workload), and the anticipated
requirements and restrictions for its applica-
tion.

Reducing workload for you and us. Each of
these initiatives will ultimately eliminate
hundreds, and in some cases thousands, of
DTC license applications. The specialized
ITAR exemptions will do so by eliminating
the need for DTC licenses altogether. The
specialized DTC licenses will consolidate
multiple, current transactions into one li-
cense. As they become instituted, the initia-
tives will thus reduce the licensing burden
currently placed on both industry and the
Controls Office.

Looking for test cases. The Center, working
closely with the State Department Legal
Adviser's Office and Customs officials, is
now starting to test implementation mecha-
nisms for these initiatives. To ensure that this
process is effective, the Center will imple-
ment the initiatives incrementally.

atti As part of this program, the Center will use
\so&t test cases to develop appropriate interagency

Xo

‘procedures for these initiatives and work out
the bugs that are certain to arise. If you
believe you would benefit from one of the
initiatives and are interested in submitting a
test case, please contact Ken Chard at (202)
647-2558 or 4231. Chard would also welcome
any comments and suggestions you might
have.

Note: Just testing. All of these initiatives are
still in the design and testing phase; not all
may come to pass. Some aspects of the
following charts, such as the “Self-Certifica-
tion Form,” are just conceptual at this stage.
The Center will publish the initiatives, as they
are finalized, in the Federal Register for public
comment.

Defense Trade News, Volume 1, Number 2, June 1990

Page 3







contract. DFOISR will conduct those reviews
and make its determinations in accordance
with the same criteria applied to proposed
public releases of technical data under Sec-
tion 1217 of Public Law 98-94 and
appropriate DOD directives.

U.S. persons who propose to present a paper
or make an oral presentation that includes
ITAR-controlled technical data, at either an
open international society meeting abroad or
at an open conference in the United States,
should submit those papers/presentations to
DFOISR.

If DFOISR approves the material for public
release, DTC will consider the material to be
exempt from licensing requirements pursuant
to ITAR Section 125.4(b) (13). Submit formal
requests and five legible copies of all materi-
als to: OASD (PA)/DFOISR, Room 2C757,
The Pentagon, Washington, D.C. 20301-1400.

SSNs and DOBs

The Office of Defense Trade Controls has
amended its instructions to those individuals,
companies, or other legal persons registering
with DTC as manufacturers or exporters of
defense articles or services per ITAR Part 122.

Effective immediately, information in block 7
of the “Application for Registration” (Form
DSP-9) should include the dates of birth and
Social Security numbers of principal execu-

tive officers, partners, and owners in addition
to their names, home addresses, positions,
and whether or not the officer is a U.S. person
as defined in 120.23.

Note: This applies only to new DSP-9
submissions; current registrants will supply
this information during registration renewal.

Offices of Defense Cooperation

If your company is contemplating enter-
ing into a joint venture with a foreign com-
pany, bidding on a foreign procurement, or
doing any foreign defense business abroad,
remember to consult the U.S. Embassy in that
country first. The Offices of Defense Coop-
eration (ODC) and the economic and com-
mercial officers in most embassies can pro-
vide information that could make your goal
much easier to achieve. During a recent trip
to Europe, Defense Trade Policy personnel
found the ODCs and embassy officers ready,
willing, and able to help you avoid pitfalls.
Take advantage of these valuable resources.

New DTC ZIP Code: 20522-0602

Please use ZIP code 20522-0602 when
mailing to the Office of Defense Trade Con-
trols (DTC). Using the new ZIP code allows
faster sorting and automated handling by
newly installed postal equipment. See the
inside cover, for additional addresses and
other information. i

Department of State Publication 9783
Bureau of Politico-Military Affairs

Released June 1990

Page 16

Defense Trade News, Volume 1, Number 2, June 1990



The vast majority of this time is spent in the
interagency referral stage. Upon receipt of a
CJ request, DTC ordinarily refers the CJ to the
appropriate agencies within 4 days. Upon
receipt of the other agencies’ recommenda-
tions, DTC usually makes its final decision
within 10 days.

Prodding the interagency process. To pre-
vent CJs from getting bogged down in the
interagency review stage, the CJ licensing
team makes regular calls about slow cases.
Center Director Duelfer also arranges inter-
agency meetings to expedite decisions on
delayed cases.

Self-initiated CJs. To facilitate the removal
of commodities from the USML via the CJ]
process, DTC is self-initiating CJ requests on
items it believes may be removed from the
USML at this point in time. DTC has self-
initiated 10 CJ cases in the past 3 months.

The Center is also encouraging other agencies
to do likewise.

Helping us help you. You can assist the CJ
team in its work, and get CJ determinations

faster, by avoiding a few common problems
in CJ submissions. First, clearly identify in
the subject line of your letter the specific
items being requested for adjudication.
Second, provide adequate technical docu-
mentation to support claims made in en-
closed brochures. Third, identify the specific
modifications that make the product under
review different from the original or similar
products.

Selected CJ Determinations. To encourage
more CJ submissions, and in response to
numerous requests to publicize CJ decisions,
we provide the chart (below) of selected 1990
CJs. The commodity descriptions are very
general to ensure the confidentiality of all
proprietary information related to these
cases.

If you think you have an item similar to one
of those listed as having been placed under
Commerce control, please submit a CJ re-
quest (ITAR 120.5). Michael Van Atta or
Gary Oncale of the CJ licensing team are
available at (703) 875-6644 to answer any
questions you may have. Hl

( COMMODITY JURISDICTION DETERMINATIONS Y
COMMODITY JURISDICTION COMMODITY JURISDICTION
Agricultural flame thrower Commerce Imaging equipment Commerce

. ien modified for military use State
Aircraft deicing system Commerce
Automated bullet sizing and Partially assembled semiconductor devices Commerce
lubricating machine State Power amplifiers uscd
Ceramic products Commerce by ground-based transmitters State
When modified or formulated Radio frequency detectors ‘Commerce
for military application State - .
Silicone adhesives Commerce.
Channel Multiplier Plates and Intensifier Tubes oe
for image enhancement State Smart Cards . State *
: _ Personalized and issued
Chemical pesticides by financial institutions Commerce
using 2% or less of chloropicrin Commerce
an Software, Encryption Devices using DES State
Communications software not using DES Commerce Not ‘using DES Commerce
Computers . - Commerce Software for design analysis
hen ruggedized, or modified of military equipment Commerce
for military application State ;
Software for mapping Commerce
Electronic equipment or components .
hardened for space State Software programs used in damage
. assessment or modeling of building
Helicopters Commerce structural design Commerce
en modified to accept weapons .
or electronic equipment State Stratospheric balloons Commerce
Two-way relief valves Commerce

Page 8

Defense Trade News, Volume 1, Number 2, June 1990



Caen ee eee  a

Center for Defense Trade
Workload Reduction Initiatives

Specialized Licenses

Initiative Purpose Replaces Requirements Restrictions
Marketing Project Authorizes exporters to temporarily | Many + Must specially apply | Unclassified only.
License export specified defense articles, or | DSP-73's | for Marketing Project Valid only for

information on services and License. When ap- authorized destina-
technologies, to defined sales proved submit "Self- tions. Upgrades
territories, to facilitate marketing Certification Form" to | subject to new
demos. Valid indefinitely. Customs on temporary | authorization.
export and reimport.
Exporter's Distribution | Authorizes exporters to Many * Must specially apply. | Limited to ap-
License distribute specified quantities of DSP-5's Special submission and | proved hardware,
approved hardware through reporting requirements | quantities, interme-
identified intermediatries, to for NATO, Australia, diaries, and destina-
authorized destinations. and Japan country tions.
group. Other countries
more stringent.
Submit “Self-Certifica-
tion Form" with SED to
Customs.
Agreement Hardware Authorizes export, temporary DSP-5's, | * You must specially Limited to unclassi-
License import, and temporary export of DSP-73, | request AG Hardware fied, approved.
hardware pursant to MLA, TAA, DSP-61's | License as companion hardware to
and Distribution Agreements. to an existing or new authorized destina-
Agreement, identifying j tions through
hardware to be shipped. | approved interme-
Submit "Self-Certifica- | diaries.
tion Form" for tempo-
rary import or export,
along with SED for final
export, to Customs,
Offshore Procurement | Permits the consolidation of all DSP-5's &| * Submit request identi- | Limited to unclassi-
Agreement offshore procurement approv- DSP-73 fying all RFP recipients,| fied "build to print"

als under one document.

technical data, special-
ized hardware and
materials. On approval
submit "Self-Certifica-
tion Form" and (when
necessary) SED to
Customs.

manufacturing.

Defense Trade News, Volume 1, Number 2, June 1990

Page 5

?


Center for Defense Trade
Workload Reduction Initiatives

Specialized Exemptions

Initiative Purpose Replaces Requirements Restrictions
Application Specific In- | Eliminates licensing delays in pro- | DSP-S + Submit "Self-Certifi- | NATO, Australia,
tegrated Circuits viding ASICs and PROMs for cation Form" and SED } or Japan only,
(ASICs) and Program- | NATO and other USG-approved to Customs. except in support of
mable Read-Only weapons systems. + Send copy of design other USG ap-
Memories (PROMs) Provides for entry of technical data instructions directly to Proval. Board-level

and return to the foreign owner in DTC. chips to Missile

another form or format, such as Tech signatories

implementing foreign design in- only. Unclassified

structions into a computer chip. only; no encrypted

or GAP chips. No
U.S. content added

Temporary Export of Eliminates licensing delays for DSP-73 = Submit "Sclf-Certifi- | Static display only.
Hardware and Media for] temporary exports of hardware cation Form” to No operational
Static Demonstration and accompanying demonstra- Customs on export and | demonstrations.

tion media for trade shows and reimport. 180 days maximum

“open houses." duration.
Permanent Export of Eliminates licensing requirements | DSP-5 & _ |* Submit Letter of Exports to USG in-
Hardware to USG for hardware exported to USG GBL Authorization from stallations and U.S.
Installations or for U.S. | installations or for U.S. only cognizant authority in | only project.
Projects Overseas projects. relevant Federal agency

along with SED to
Customs.

Export, Temporary Eliminates licensing require- DSP-5, ¢ Submitt "Self-Certifi- | Cases must be used
Import, or Temporary ments for empty packing cases DSP-73, & | cation Form" to pursuant to USG
Export of Specialized specially designated for DSP-61 Customs and, in case of | authorization.

Packing Cases

defense articles.

permanent export, SED.

Page 4

Defense Trade News, Volume 1, Number 2, June 1990



READER QUESTIONNAIRE

Dear Reader,
Please give us your opinion. We'd like to know if you find Defense Trade News interest-
ing and informative. Complete this survey and return as soon as possible.

1. My interest in defense trade is: manufacturing exporting attorney
embassy customs armed forces other U.S. Government
consultant other (specify)

2. How many articles do you read in each issue?
All Almost All More than Half Less than Half None

3. Rank the following article topics according to your interest:
1 Much Interest 2 Some Interest 3 Slight Interest 4 No Interest

____DEFENSE TRADE POLICY _ TRADE LEGISLATION ___ CALENDAR OF EVENTS
____ CUSTOMS NEWS ____. PERSONNEL INFO ____ COMMODITY JURISDICTION
____COMPLIANCE CASES/TIPS ___ LETTERSTOTHE EDITOR _ OTHER
____ DTC DEVELOPMENTS. ___.. WORKLOAD REDUCTION
____ LICENSING TIPS

(Specify)
4. Articles are generally: too long too short about right

5. [have an article idea:

6. Rate Defense Trade News on each of the following categories:

Excellent Good Fair Poor
Your Overall Opinion
Writing Style/Reading Ease

Content

Appearance
Usefulness

7. This is a quarterly publication (Mar, Jun, Sept, Dec).

This is: too frequent about right too infrequent

8. If Defense Trade News became available by subscription through the Government Printing Office, | would sub-
scribe. Yes No

COMMENTS:


a

—————
CJs DECONTROLLING COMMODITIES

87 Items So Far in 1990, 40 Days Average Time

Upon its creation, the Center for Defense
Trade set as a key objective using the Com-
modity Jurisdiction (CJ) procedure to remove
as many commodities as appropriate from
the U.S. Munitions List (USML). Center
Director Charles A. Duelfer emphasized this
aim in hearings before the Congress, as
detailed in the March Defense Trade News.

Keeping our promise. As the March edition
stated, “to encourage the submission of more
CJ requests and expedite the handling of such
requests, DTC has designated two licensing
officers full-time as the CJ licensing team.”
The CJ team is fulfilling Duelfer’s promise to
the Congress “that as cases arrive, they will
get quick attention and that any disagree-
ments will be addressed in a timely fashion at
the appropriate levels.”

A brief history. The CJ procedure, as de-
tailed in the March edition and portrayed in
the following flowchart, began as an informal
interagency procedure in the early 1960s. It
was formalized in the ITAR in 1984, after an
industry and interagency (State, Commerce,
Defense, and Office of Management and
Budget) review agreed upon the current
process. The only change made since then
was the addition in 1989 of two appeal steps
within the Department of State before the
final appeal to the President.

Key features of the CJ process. The CJ proc-
ess is headed by the State Department, since a
Cj determination is fundamentally a foreign
policy/national security decision. The CJ
determination decides which goods are mili-

tarily significant and thus—in each case—
need to be controlled for export on foreign
policy/national security grounds and under
the strict USML export control regulations.
Moreover, having a single bureaucratic head
facilitates the decision-making process.

All CJ requests submitted to DTC are referred
interagency, to both Commerce and the
appropriate technical agency, for review.
DTC's CJ decisions may be readily appealed
both within the State Department hierarchy
and to the President. Any U.S. citizen, com-
pany, or government agency may submit a CJ
request; submission of a case does not in any
way hinder DTC licensing of the commodity
while under CJ review.

An effective process for decontrolling items.
In the past 3 years alone, State has removed
hundreds of items from coverage by the
USML through the CJ process. As in recent
years, State has determined in the vast major-
ity of 1990 CJ cases to date that the commodi-
Hes under review should be under the juris-
diction of Commerce’s Commodity Control
List (CCL)—not State’s USML. Of the 143 CJ
determinations DTC has made so far this year
87 cases, or 61 percent, were decided in favor
of Commerce control.

An efficient process, too. CJ decisions are
now being made faster than ever before.
Whereas just last year, CJ cases were taking
several months on average, the average time
from receipt to completion of CJ requests
submitted so far in 1990 is only 40 business
days.

Year # of CJ
Determinations
1988 217

1989 223

1990 143
(to date)

Percent Decided in Favor
of Commerce Control

# of Items
Moved to Commerce

149
157
87

Defense Trade News, Volume 1, Number 2, June 1990

Page 7



United States Department of State Bureau of Politico-Military Affairs

= / Defense Trade News

The Bulletin of the Center for Defense Trade

Volume 1, Number 2 e Washington, D.C. e June 1990
Features
Project Accelerate Institutionalized 1
92% of Cases Issued or Staffed Within 10 days

Workload Reductions Moving Forward 3
Ten Initiatives Already in Testing Phase

CJs Decontrolling Commodities 7
87 Items So Far in 1990, 40 Days Average Time

Minimizing "Returned Without Action" Cases 1 0
A Six-Step Checklist for Avoiding RWAs

China Defense Trade Policy 1 1
An Overview After One Year

55 Years of Defense Trade Controls 1 2
Munitions List Controls Over the Years

“Empowered Official" Guidelines 12

Departments

Personnel Updates 13
DTC Growth Continues

Tips and Tidbits 15
Reader Questionnaire 17

Written and Edited by the Center for Defense Trade


MINIMIZING “RETURNED WITHOUT ACTION” CASES

A Six-Step Checklist for Avoiding RWAs

Everyone at the Office of Defense Trade
Controls (DTC) is working to make the muni-
tions export licensing process as fast and pre-
dictable as possible within the necessary
confines imposed by the International Traffic
in Arms Regulations. As part of this effort,
DTC decided early on that making its opera-
tion as transparent as possible would benefit
both industry and the Controls Office. Ar-
ticles such as this one are written with this
aim.

The bad news: too many RWAs. Roughly

5 percent of all submissions to DTC are re-
turned without action (RWA) to the applicant
with an accompanying explanation. The vast
majority of RWAs are cases DTC was unable
to review because the license application
lacked specific required documentation. For
DTC, this presents a frustrating source of
licensing delays.

The good news: most RWAs easily avoided.
To try to eliminate, or at least minimize, such
RWAs, DTC has identified the most common
deficiencies that result in RWA cases. Sur-
prisingly, only six “sins of omission” account
for some three-fourths of all returned applica-
tions.

The six-step checklist. The following list
represents these six common causes of
RWAs. Please help us minimize the number
of RWA cases by using this checklist before
sending license applications to DTC.

1. Missing /Inadequate 126.13 Empower-
ment Letter: All submissions to DTC must
include an original 126.13 letter signed by a
US. person who is an official empowered by
the applicant. If the person signing the

license application differs from the person
signing the letter, the letter must also certify
that the application signer is a U.S. person
and empowered by the applicant. The appli-
cant must accurately complete all required
information. DTC must receive the original
126.13; copies are not acceptable.

2. Missing Part 130 Letter: Applications
valued at or above $250,000 to foreign mili-

tary forces or international organizations
require a fee, commission, or political contri-
bution letter.

3. Missing Technical Data or Descriptive
Literature: The ITAR requires seven copies of
either technical data or product descriptive
literature. Many applicants include only one
copy.

4, Missing DSP-83: This form must ac-
company any application for Significant
Military Equipment (SME) and all classified
transactions. Applicants must also submit the
DSP-83 with firearm licenses for 50 or more
handguns and/or 100 or more rifles. (See
Tips and Tidbits, page 15, for more informa-
tion on DSP-83s.)

5, Inadequate Purchase Order/Letter of
Intent/Signed Contract: An order or letter of
intent must accompany DSP-5s and DSP-85s,
and it must correspond to the items listed in
the commodity block of the application. The
purchase order must clearly state both the
specific ultimate end-user and the specific
end-use of the equipment. Should the order
not state the specific end-user/end use, a
letter from the foreign customer must be
submitted.

6. Inadequate Identification of End-User:
The end-user cited in block 18 of the DSP-5 or
block 21 of the DSP-85 must be clearly tied to
the Purchase Order or Letter of Intent. Addi-
tional documents frequently link these crucial
elements. Mf

Page 10

Defense Trade News, Volume 1, Number 2, June 1990



Sf

Commodity Jurisdiction Procedure
Request for Commodity Jurisdiction Determination

Office of Defense Trade Controls
Department of State

| Referral

Commerce Technical Agency
usually Defense

Other Agency recommendations submitted to DTC
DTC determination/notification

1st Appeal
Deputy Assistant Secretary level
chaired by Director, Center for Defense
Trade

2nd Appeal
Undersecretary level
chaired by Undersecretary of State
for International Security Affairs

Final Appeal
Interagency to President

Detense Trade News, Volume 1, Number 2, June 1990 Page 9



Center for Defense Trade
Workload Reduction Initiatives
Specialized Licenses

Initiative Purpose Replaces Requirements Restrictions
MLA Direct Export Authorizes U.S. companies holding | Many + Must specially apply | Limited only to
License Manufacturing License Agreements | DSP-5's for MLA Direct Export | hardware approved
to export the same articles ap- License, specifying on original MLA
proved for sale under MLA to the hardware, quantities, and for same
same sales territories authorized on intermediatries, and destinations. Total
the MLA. end-users. On approval, | value may not
submit "Self-Certifica- | exceed actual or
tion Form" and SED to | estimated value of
Customs for exports. MLA.
Annual reports to DTC.
Class or Facilitates the simultaneous N/A + Submit technical Must recommend

Group Commodity
Jurisdiction

removal of related technologics
and similar groups of commodi-
ties and components [rom the
USML.

analysis paper listing all
commodities derived
from a particular
technology or groups of
related commodities,
describing commercial
provenance or applica-
tion, and detailing
technological history.

which commodities
should be removed
and which should
remain on USML
based on ITAR
criteria.

Page 6

Defense Trade News, Volume 1, Number 2, June 1990





percent of the month’s casework was not
initially acted upon within a fortnight of
receipt.

Stopping delays on the 11th day. DTC has
established an internal control mechanism to
ensure that the 8 percent that have not been
issued or staffed within 10 days are not
delayed any longer (unless appropriate).
Specifically, the two Branch Chiefs in the
Arms Licensing Division, Mal Zerden and
Allan Suchinsky, each day check the status of
all pending cases in their 11th day in DTC
and move them along as appropriate.

Preventing unnecessary staffing. Each day,
DTC Director Bill Robinson also checks all of
the cases prepared for staffing the previous
day to ensure that cases are not referred for
review unnecessarily but truly need to be
staffed for policy or technical-related rea-
sons. Notably, 1990 staffing to date is run-
ning slightly higher than recent years’ staff-
ing levels primarily because industry is
pursuing more complicated and sensitive
sales.

Enforcing a fast staffing process. For the
roughly one-fourth of DTC’s license applica-
tions that DTC does need to refer to a policy
office elsewhere in State or a technical office
in another agency, DTC has established a
mechanism for preventing these more diffi-
cult cases from getting bogged down.

Namely, DTC has brought on board a licens-
ing officer, Rob Groesbeck, who will be
tracking all cases more than 30 days old,
ensuring that the staffing offices make
prompt decisions. Groesbeck will also see
that cases returned from staffing are handled
expeditiously in final review in DTC.

Ending typing delays. For the nearly 15,000
cases typed each year, most of which are
cases requiring a proviso letter attached to
the approved license, DTC has also devel-
oped a typing tracking system. This system

ensures that cases are handled in chronologi-
cal order, except for emergency cases, which
receive top priority.

Three-day typing turnaround. Whereas in
the past typing used to be backlogged with
weeks worth of pending licenses, the average
license in May was in and out of typing
within 3 days. With the typing tracking
system, DIC immediately knows when a
typing backlog is developing. The office then
quickly addresses the problem by reallocating
personnel resources and using overtime.

Raising the bar. Having reached the 10-day
initial review target for 90 percent of its cases,
the Controls Office is now aiming to reach
this target for 95 percent of all cases (assum-
ing that less than 5 percent of its workload
must be held longer for policy reasons).
Similarly, through various mechanisms, the
office is working to ensure that every step of
the licensing process is working properly,
both in terms of speed and substance. DTC is
continuously devising new, tougher targets
and mechanisms to track its performance and
attain its aims. As stated in the March edi
tion, we welcome industry input in this *
process.

Filling the need. Our bottom line objective
remains unchanged: to provide faster, pre-
dictable export licensing while enforcing the
necessary strict controls imposed by the
USML. Such a licensing process permits U.S.
defense industry to be more competitive in
today’s fast-moving, international business
environment.

To achieve this, we are striving—at all levels
throughout the office—to develop mecha-
nisms for continuously improving the im-
plementation of our statutory and regulatory
responsibilities. In so doing, we are confident
we will be able to provide the quality work
that the nation demands and deserves in the
regulation of defense trade. Ml

Page 2

Defense Trade News, Volume 1, Number 2, June 1990



For purposes of the ITAR, an "empowered
official” is an individual who is a U.S. person
(120.23) and:

a. Is directly employed by the applicant
or its subsidiary in a position having the
authority for policy and/or management
within the applicant organization; and

b. _ Is legally empowered in writing by the
applicant to sign a license application or
other request for approval on behalf of the
applicant; and

c. Is thoroughly informed and familiar
with the provisions of the various export
control statutes and regulations (including
but not limited to the Arms Export Control
Act (AECA), Export Administration Act
(EAA), International Traffic in Arms Regula-
tions (ITAR), and Export Administration
Regulations (EAR)); and

d. Understands the criminal liability,
civil liability, and administrative penalties for
violating the AECA and the ITAR; and

e. Is knowledgeable about (1) the estab-
lished procedures and practices of the Office
of Defense Trade Controls, (2) the export and

import regulations and procedures of the
US. Customs Service, and (3) the export
practices and procedures of the applicant;
and

f. Has the independent authority, before
signing an application, to inquire into any
aspect of a proposed export or temporary
import transaction by the applicant involving
defense articles or defense services, and to
verify the legality of the transaction and the
accuracy of the information required to be
submitted to the U.S. Government; and.

g. Has the independent authority to
refuse to sign any license application or other
request for approval, without prejudice or
other adverse recourse, having presented
justification to the appropriate corporate
official(s).

Applicants who have questions or unique
circumstances in these matters should direct
their queries to either Rose Biancaniello,
Chief, Arms Licensing Division, or Clyde
Bryant, Chief, Compliance Analysis
Division.

DEPARTMENTS

PERSONNEL UPDATES

DTC Growth Continues: More employ-
ees on board at DTC. When the March
edition went to press, the Office of Defense
Trade Controls had added 12 new, full-time
people to its staff, including seven licensing
officers, two secretaries, two data entry
contractors, and one Deputy Office Director.
Since then, six more full-time employees have
joined the ranks.

This second group comprises four licensing
officers (Carol Basden, Peter Dade, Rob
Groesbeck, and Nelson Hines), one compli-
ance special agent (Michelle Becker), and one
registration clerk (Susanne Mackie). In
addition, six part-time clerk/typists have
joined DTC, greatly boosting the office’s

capacity to handle the millions of sheets of
paper and hundreds of thousands of phone
calls DTC receives annually.

Licensing staff more than doubled since
January. Since established January 8, DTC
has seen substantial growth throughout the
office. The most notable growth, however,
has been in the Arms Licensing Division
(ALD). In ALD, the working-level licensing
staff has grown from nine licensing officers
on January 8 to the current staff of 20.

Personnel profiles. As a regular feature in
each newsletter, the Center profiles several
employees. For this edition, we have selected
three civilian licensing officers, three military
licensing officers, and one registration clerk.

Defense Trade News, Volume 1, Number 2, June 1990

Page 13



(DD-946), main propulsion assistant onboard
USS Dahlgren (DDG-43), and ordnance/fire
control officer of the USS Estocin (FFG-15).
During his 10 years of consecutive sea duty,
he gained hands-on expertise in all facets of
anti-air, anti-surface and anti-submarine
warfare. LCDR Hines served in the US.
Marine Corps 1970-1974, and completed his
bachelors degree in 1977. He currently serves
as a licensing officer, handling Technical
Assistance Agreements (TAAs) and Manufac-
turing License Agreements (MLAs).

Susanne Blanchette Mackie started work at
DTC May 7 as a registration clerk. A Be-
thesda, MD native, she is in her senior year as

"an undergraduate at George Washington

University (GWU). She will be entering
medical school at GWU in the fall of 1991.
Mackie previously worked for the National
Institute of Health (NIH). i

TIPS AND TIDBITS

DSP-83 Requirements

An original, signed Nontransfer and Use
Certificate, Form DSP-83 is required with
submissions to DTC of DSP-5s, DSP-85s
(permanent export), Agreements (AGs), and
Advisory Opinions (GCs) for:

* unclassified Significant Military Equip-
ment (SME) as defined in ITAR 120.19 (iden-
tified throughout the ITAR by an asterisk);

* any classified defense articles or techni-
cal data;

* transfer of technical assistance or
manufacturing know-how, which relates to
SME, classified technical data, or classified
defense articles;

* permanent retention or retransfer of
SME or classified articles, which were previ-
ously approved for export on a DSP-73, DSP-
5, or an agreement.

In addition, a DSP-83 may be required at the
discretion of a DTC licensing officer for the
export of any other defense article or service.
A DSP-83 may follow the initial submission
to DTC if the applicant includes a statement
outlining the reasons for separate DSP-83
submission, and the reason is acceptable to
the licensing officer. When appropriate, DSP-
83s should be signed by the foreign con-

signee, foreign end-user, or foreign govern-
ment. In all cases, the DSP-83 must be signed
on the reverse by the applicant.

Mailing Point of Contact

Unfortunately, the Center for Defense
Trade cannot afford to mail separate copies of
Defense Trade News to different parts of the
same company. Starting with the September
issue, we will mail the newsletter to only the
registered point of contact (POC) at each
company, allowing this POC to determine
distribution within the organization. Thank
you in advance for your understanding and
assistance.

Clearing Academic Materials
for Public Release

The Departments of State and Defense
agreed in 1986 on procedures to publicly
release ITAR-controlled technical data. The
Office of Assistant Secretary of Defense,
Public Affairs, Directorate for Freedom of
Information and Security Review (DFOISR)
will accept and review technical data that
was generated under other than DOD

Defense Trade News, Volume 1, Number 2, June 1990

Page 15



PROJECT ACCELERATE INSTITUTIONALIZED

92 Percent of Cases Issued or Staffed Within 10 Days

In the March edition of Defense Trade
News, the Office of Defense Trade Controls
(DTC) made a commitment to move beyond
its near-term Project Accelerate success of
eliminating the December/January backlog
by setting as its “long-term aim ... to begin
institutionalizing a faster licensing process.”
Weare proud to report that the long-term
aim has rapidly become a reality.

Setting a tough licensing turnaround

target ... By March 5, DTC had completed the
first phase of Project Accelerate, eliminating
the backlog of license applications while also
handling the continuous flow of incoming
cases. The office then began establishing
internal licensing guidelines and control
mechanisms aimed at creating a faster, more
responsive licensing process.

For its most important guideline, the Controls
Office borrowed from the Congress. In the
Conference Report for the Foreign Relations
Authorization Act, FY 90-91 (Public Law 101-
246), Congress urged the old OMC to set as a
target “by the end of FY 1990 being able to
determine within 10 days of receipt of a
license application whether that application
will be referred to other agencies for re-
view....”

Building on this recommendation, the Office
of Defense Trade Controls in mid-March set
as its goal to “initially review” at least 90
percent of all submissions to the office within
10 business days.

For a license application to meet this “initial
review” target, one of two actions must be
taken on it within 10 days of receipt: either it
must be issued (i.e., decided upon and al-
ready mailed back to the applicant) or it must
be staffed (i.e., referred to another policy
office in State, to DIC’s Compliance Division,
or to a technical agency for review).

trocess
p rele

ttt te gel Jbexi pubes SD

DTC sought to achieve this goal by Septem-
ber 1990. At the time, DTC estimated that
exceeding 90 percent might not be possible
given the small, yet certain, percentage of
cases (such as those for the People's Republic
of China) that require a lengthier DTC initial
review for foreign policy reasons.

.. and meeting, indeed beating, the goal
ahead of schedule. By April, DTC had al-
ready exceeded this objective. In fact, the
March statistics were cause for much celebra-
tion at the Center. In the second half of
March, 87 percent of the cases received were
initially reviewed within 10 days of receipt.
For the 4,500+ licenses received in April, the
10-day turnaround rate was 91 percent. This
figure reached 92 percent for the 4,700+ cases
that arrived in May.

Initial Review Statistics:
(Percent of Cases Issued or Staffed
Within 10 Days of Receipt)

March April May
87% 91% 92%

Sixty- six percent of all cases issued within a
fortnight. Broken down, the 92 percent
turnaround figure means that roughly two-
thirds, exactly 66 percent, of all of the May
cases were in-processed by the DTC admminis-
trative staff, reviewed and issued by a DTC
licensing officer, and then out-processed and
mailed back to the applicant within just 10
days. Indeed, many of these issued cases
were completed in fewer than 5 days.

The other 26 percent of May’s mail handled
within 2 weeks represents the cases that were
in-processed, reviewed by a licensing officer,
and out-processed for staffing. Thus, only 8
ee ee

,

lredperr SS hence eeere 41

Defense Trade News, Volume 1, Number 2, June 1990

Page 1



Secretary of State
James A. Baker III

Assistant Secretary
of State for
Politico-Military
Affairs
Richard A. Clarke

Director of the Center
for Defense Trade
Charles A. Duelfer

Executive Editor
Richard A. Levy

Managing Editor
Marsha F. Filtrante

Defense Trade News (ISSN 1051-2845) is a quarterly publication of the Center for Defense
Trade, Bureau of Politico-Military Affairs, U.S. Department of State. Its purpose is to provide the
public, Congress, government agencies, and American industry with information on developments
about defense trade policy, licensing practices, and compliance issues. The newsletter contents
include official policy statements and other official documents. Special features, articles, and
other supportive materials (such as maps, charts, graphs, tables, and photographs) provide
additional information on current issues but should not necessarily be interpreted as official U.S.
policy statements. The Secretary of State has determined that the publication of this periodical is
necessary in the transaction of public business required by law of the Department.

Subscription, Address Changes: Firms registered with the Office of Defense Trade Controls
automatically receive this publication at their registered address, Registrants must notify the
Office of Defense Trade Controls in writing, citing the applicant code, whenever the mailing
address changes (ITAR 122.4). The editorial staff maintains a separate list for other interested
persons and organizations. Contact the Managing Editor, via mail or datafax, for addition to or
address change for the editorial mailing list.

Copyright: Most of this publication's contents are in the public domain and not copyrighted.
Those items may be reprinted; citing the source as Defense Trade News would be appreciated.
Permission to reproduce all copyrighted material (including photographs) must be obtained from
the original source.

Limited Reprint Authorization: All addressees that are registered with the Office of Defense
Trade Controls may reproduce this entire publication (excluding postal mailing label) for distribu-
tion within their organizations. This permission is given to ensure proper distribution throughout
companies with multiple locations or offices and to reduce mailing costs.

Corrections, Contributions, and Correspondence to the Editor: Address to Editor, Defense
Trade News, PM/DTC, SA-6 Room 228, U.S. Department of State, Washington, D.C. 20522-
0602. Sending a letter to the Editor constitutes consent for publication unless otherwise requested.

Postmaster: Send address changes to Defense Trade News, PM/DTC SA-6 Room 228, U.S. De-
partment of State, Washington, D.C. 20522-0602

Postage: Third-class postage paid at Washington, D.C. 20522-0602.

Office of Defense Trade Controls

PM/DTC SA-6 Room 228

Office of Defense Trade Controls

Bureau of Politico-Military
USS. Department of State

Washington, D.C. 20522-0602

PM/DTC Room 228

Office of Defense Trade Controls

Bureau of Politico-Military
U.S. Department of State
1701 N. Fort Myer Drive

Contacting the Center for Defense Trade
Office of Defense Trade Policy
Postal Mailing Address

PM/DTP Room 7815

Office of Defense Trade Policy
Bureau of Politico-Military Affairs
U.S. Department of State
Washington, D.C. 20520-7815

Affairs

Express Mail and Courier Delivery Address

PM/DTP Room 7815

Office of Defense Trade Policy
Bureau of Politico-Military Affairs
U.S. Department of State
Washington, D.C. 20520-7815

Affairs

Arlington, VA 22209-3113
Telephone Numbers
General Information: (703) 875-6644
Commodity Jurisdiction Licensing Team: (703) 875-6644
License Status Inquiry: (703) 875-6652
Registration and Compliance Information: (703) 875-6650
Facsimile Numbers

Arms Licensing Division: (703) 875-6647
Compliance Analysis Division: (703) 875-5663

General Information: (202) 647-4231

PM/DTP: (202) 647-1346


CHINA DEFENSE TRADE POLICY

An Overview After 1 Year

The history of export sanctions to the
People’s Republic of China (P.R.C.) over the
last year is quite complex. The Office of De-
fense Trade Controls (DTC) would thus like
to clarify its policy for handling license appli-
cations for exports to China. This policy
statement is intended to guide exporters of
defense articles and services through appli-
cable laws. This policy remains subject to
change by events unfolding in China and
elsewhere in the world.

Presidential Sanctions. Last June, the Presi-
dent responded to the crackdown on pro-
democracy demonstrators in Tiananmen
Square by ordering, among other things, a
suspension of all weapons exports to the
P.R.C. DTC immediately suspended all
outstanding licenses and other approvals in-
volving munitions exports to China.

In addition, DTC returned without action
nearly 100 license applications then under
review. Since then, DTC has lifted suspen-
sions or granted licenses for about 20 excep-
tional cases. In each such case, the applicant
specifically requested review for an excep-
tion. DTC found these cases involved items
destined for a strictly civilian end use, with
no chance of diversion to the military.

Legislative Sanctions. In December 1989
and February 1990, Congress passed legisla-
tion that had the effect of codifying some

of the Presidential sanctions. The December
legislation is the Departments of Commerce,
Justice, and State, the Judiciary, and Related
Agencies Appropriations Act, 1990 (Public
Law 101-162). This law prohibits the issuance
of licenses for export of USS. satellites for
launch on Chinese launch vehicles. However,
Congress authorized the President to waive
the restriction if the chief executive reported

to Congress that China had executed certain
political reforms or that the export was in the
national interest. Shortly after the legislation
was enacted, the President made the required
national interest report with respect to the
export of the AsiaSat and AUSSAT satellites.

The sanctions passed in February as part of
the Foreign Relations Authorization Act,
Fiscal Years 1990 and 1991 (Public Law 101-
246) extended the prohibition to all munitions
export licenses. This law also provides for
the same type of Presidential waiver as the
December legislation. To date, the President
has not exercised his waiver authority under
this Act.

Current Licensing Policy. DTC accepts
license applications for China that involve
exports intended for a civilian end use. For
DTC to process P.R.C. license requests, appli-
cants should include the following documen-
tation:

1. A letter requesting an exception from
the various restrictions on munitions exports.
Applicants should list all reasons for the
request. The applicant must verify and state
clearly that only civilians will use the item
and only for commercial purposes; and

2. A completed Form DSP-83.

When DTC receives the proper documenta-
tion, a DTC licensing officer will forward the
application to the proper agencies and
offices for review. In addition to the normal
foreign policy, national security, and technol-
ogy transfer concerns, licensing officers will
thoroughly examine the item’s potential for
diversion to military end use.

For additional information regarding P.R.C.
trade policy, please call Paul Almeida in the
Office of Defense Trade Policy at (202) 647-
4231.

Defense Trade News, Volume 1, Number 2, June 1990

Page 11



Carol B. Basden arrived at the Center March
26 following a 5-year assignment in the
Bureau of Export Administration at the
Department of Commerce. At Commerce,
Basden served as an export administration
specialist and licensing officer, reviewing
export applications for computers and related
equipment. After spending the first 2 months
at DTC rotating through the Licensing Divi-
sion, Basden is now settling into her job as
the licensing officer for specific Category VIII
items. In this post, Basden will exercise
licensing authority for helicopters, non-
expansive balloons, drones, cartridge-acti-
vated devices, and inertial navigation sys-
tems.

Peter L. Dade joined the Center June 4 to filla
licensing officer position. Dade previously
spent 5 years in the Office of Freedom of
Information as a paralegal specialist. His
experience in Freedom of Information Act
case processing, especially the extensive
coordination with other bureaus and govern-
ment agencies, will transfer directly to his
new duties. After completing an initial
familarization period, Dade is scheduled to
handle Categories I, Firearms, and II, Am-
munition and Ammunition Producing
Equipment.

Terry L. Davis came to the Center March 15.
He brings with him 9 years of experience as
an analyst in Defense and International
Affairs for the U.S. General Accounting
Office (GAO). At GAO, Davis specialized in
reviewing both Department of State pro-
grams and U.S. Navy tactical and strategic
missile programs. He is also a 1988 graduate
of the Naval War College. At DTC, Davis
exercises licensing authority for two catego-
ries: Category IV, Launch Vehicles, Guided
Missiles, Ballistic Missiles, Rockets, Torpe-
does, Bombs, and Mines; and Category XIV,
Chemical and Biological Agents.

MAJ Mike Van Atta reported to the Center
February 23 after serving as an independent
Army evaluator at the Operational Test and
Evaluation Agency (OTEA). Van Atta has

one of the broadest backgrounds possible for
an Army officer. He served as an enlisted
Marine during the Vietnam war, completed a
bachelors degree after discharge, and re-
ceived his commission in 1974. He has held
both command and staff positions in Infan-
try, Armor, and Engineer units. He is also a
qualified acquisition program manager and
graduate of the Military Acquisition Man-
ager’s course. Van Atta possesses direct
operator knowledge of most currently-fielded
Army systems and is the Center’s technical
expert for such systems. He currently acts as
half of the two-man Commodity Jurisdiction
licensing team.

MAJ Marsha F. Filtrante came to the Center
February 28 from a 4-year tour with the U.S.
Army Aviation Systems Command
(AVSCOM). There, she served in assistant
program manager positions for both the UH-
60 Black Hawk Office and the Light Helicop-
ter Program (LHX). Filtrante served in the
US. Navy from 1967-1970 and completed her
bachelors degree prior to commissioning in
1976. She has direct experience in training
centers, and positions in Transportation and
Aviation units. Like Van Atta, Filtrante is a
qualified acquisition program manager and
graduate of the Military Acquisition Man-
ager’s course. A 1979 graduate of the Rotary
Wing Officer Course, she is rated in UH-1H,
CH-47 A-C, and OH-58 A-C military helicop-
ters. At DTC, she currently works as a public
affairs licensing officer, formulating ideas for
Defense Trade News, as well as organizing,
editing, and overseeing publication and
distribution of the newsletter. Filtrante also,
provides DTC with in-house rotary wing ~
technical expertise.

LCDR Nelson R. Hines reported to DTC
March 27 as the last of six military officers
detailed to the Center. His most recent
assignment was as the combat systems officer
onboard the USS King (DDG-41), a guided
missile destroyer homeported at Norfolk, VA.
During that tour, Hines qualified for com-
mand of surface ships at sea. Other tours
include: weapons officer on the USS Edson

Page 14

Defense Trade News, Volume 1, Number 2, June 1990