PERSONNEL UPDATES

As a regular feature in each newsletter, the
Center for Defense Trade (CDT) profiles
several employees. For this edition, we have
selected three licensing officers, one paralegal,
one registration specialist, and one attorney.

Calvin Chin arrived at DIC August 27, 1990
from the General Accounting Office (GAO)
where he served as an analyst reviewing
various U.S. national security and foreign
policy programs. Both his previous job
experience and Masters Degree in Political
Science transfer directly to his DTC assign-
ment as a Licensing Officer in the Electronics
and Combat Systems Branch of the Arms
Licensing Division (ALD). Chin currently
handles DSP-5 and DSP-85 applications for all
of Category IX (Military Training Equipment);
for Radars (Weather, Navigation, & Traffic
Control) in Category XI; for companies N-Z
for some items in category XII including Fire
Control Systems and Lasers and Night Vision
Equipment; and for numerous articles cov-
ered by Category XIII.

Suzanne P. Norsworthy came to DTC Sep-
tember 4, 1990, from the State Department's
Office of Foreign Missions where she served
for 4 years. In her previous position,
Norsworthy assisted the U.S. diplomatic
community in all areas where U.S. Foreign
Service personnel encountered problems
abroad, and applied reciprocal restrictions on
foreign diplomats serving in the U.S. She
began her government career as a researcher
in the Foreign Affairs and National Defense

Division of the Congressional Research
Service while completing her Masters Degree
in International Affairs. In her current assign-
ment as a licensing officer in ALD’s Aero-
space and Ordnance Branch, Norsworthy
handles all DSP-5s (except spare parts less
than or equal to $500,000 and amendments)
and DSP-85s for Companies K-Z for Catego-
ries I (Firearms) and I] (Ammunition and
Ammunition Producing Equipment).

Sue Ann Plant began her new duties asa
licensing officer on September 23, 1990. She
possesses a Bachelor's Degree in Political
Science, and worked for the past 5 years in
private industry. Plant’s industry experience
in providing program management support
for four major, international naval weapons
programs transfers directly to her current
position. In the Agreements and Commodity
Jurisdictions Branch of the Arms Licensing
Division (ALD), Plant handles all amend-
ments for Manufacturing Licensing Agree-
ments (AG-MLAs) and Technical Assistance
Agreements (AG-TAAs) for all USML Catego-
ries.

Eva O. Tyler also arrived in DTC on Septem-
ber 23, 1990. Since she joined the Department
in 1976, Tyler has served in positions in the
Passport Office, the Foreign Service Institute,
and, most recently, for 4 years as a paralegal
specialist in the Office of the Legal Adviser
after completing her degree as a paralegal
specialist in 1986. Tyler’s extensive work
experience in many of the Department’s
bureaus and her first-hand knowledge of the
Office of Legal Adviser assist her greatly in
her current position as a Paralegal Specialist
in the Compliance Analysis Division (CAD).

Wendy Payne came to DTC on August 27,
1990 from a position in the Department's
Bureau of Administration. She has a total of
8 years’ experience in the State Department,
with other assignments including the Bureau

Page 20

Defense Trade News, Volume 2, Number 2, April 1991



EEE
DOD CRITERIA FOR “FMS-ONLY” HARDWARE SALES

“FMS-only.” Under the Arms Export Control
Act, the President may designate that specific
items be sold only through the government-
to-government Foreign Military Sales (FMS)
program (rather than commercially). In
Executive Order 11958, the President del-
egated this authority to the Department of
State, which looks to the Department of
Defense (DOD) for recommendations on this
matter.

Four key FMS-only criteria. Defense is
usually neutral as to whether a foreign coun-
try purchases a U.S. defense article through
the FMS program or ona direct commercial
basis. In some instances, however, Defense
prefers that a specific transaction be “FMS-
only” and notifies State accordingly.

Specifically, for cases in which one or more of
four criteria apply, DOD will recommend to
State that an exception to normal procedures
be made and that the transaction be desig-
nated as an FMS-only sale. The four key
criteria are:

* legislative or Presidential restrictions;

* DOD or Service policies, directives, or
regulatory requirements, such as Na-
tional Disclosure Policies;

* government-to-government agreement
requirements; and,

* interoperability or safety requirements
for U.S. forces.

The internal DOD process. In the course of
its review of staffed State license applications,
DOD (usually, the armed services) examines
each case to determine if any of these criteria
apply. Service recommendations to make a
sale FMS-only based on the above criteria
must be supported with specific details and
concurred with by the Defense Technology
Security Administration (DTSA).

Internal DOD disagreements between DISA
and a Service regarding FMS-only recommen-
dations may be referred to the International
Technology Transfer Control Committee for
resolution. The final DOD recommendation
is then forwarded, along with any other
recommended provisos, back to the Office of
Defense Trade Controls (DTC).

State consideration of DOD recommenda-
tions. Upon receipt of a DOD recommenda-
tion for an FMS-only restriction, DTC consid-
ers the recommendation in the course of its
final review of the license application. Most
often, State defers to DOD on the issue of
FMS-only sales and includes the FMS-only
restriction in its proviso letter accompanying
the license.

Point of contact. For questions regarding
FMS-only criteria or procedures, please
contact Nancy Hindman in DOD/DTSA at
(703) 614-7761 or telefax at (703) 693-5306. #

Page 14

Defense Trade News, Volume 2, Number 2, April 1991



Subject bibliography catalogs too. In addi-
tion to these three catalogs, GPO offers a
“subject bibliography” service. This service
provides catalogs of all currently available
GPO titles in a specific area of study, witha
brief description of each publication.

Some of the subject bibliographies available
that are related to defense trade are Foreign
Trade and Tariffs (SB-123); Foreign Relations of
the United States (SB-210); Foreign Area Studies
(SB-166); and, Foreign Affairs of the United
States (SB-075).

To order a subject bibliography, or to get a
listing of all available subject bibliographies,
write to the Superintendent of Documents,
Mail Stop SSOP, Washington, D.C. 20402-
9328. Subject bibliographies are also free.

Twenty-four U.S. Government bookstores.
All GPO publications are available at or
through the 24 U.S. Government bookstores
located across the country. Each store carries
many of the Government's most popular
publications, along with a selection of other
books tailored to suit the interests of the
store’s local clientele. Any government
publication that is not in stock can be mail-
ordered through the store. The stores are
located in the following cities, listed in alpha-
betical order by city. (For exact locations,
look in the Yellow Pages under “Books.”)

Atlanta, GA Kansas City, MO
Birmingham, AL Laurel, MD
Boston, MA Los Angeles, CA
Chicago, IL Milwaukee, WI
Cleveland, OH New York, NY
Columbus, OH Philadelphia, PA
Dallas, TX Pittsburgh, PA
Denver, CO Portland, OR
Detroit, MI Pueblo, CO
Houston, TX San Francisco, CA
Jacksonville, FL Seattle, WA

Washington, DC

Library collections too. GPO publications are
also available at some 1,400 depository librar-
ies throughout the U.S. and its territories
through the Federal Depository Library
System (FDLS). Established by Congress to
allow free public access to government publi-
cations, the FDLS is administered by GPO.
(Defense Trade News is available in more than
900 of these depository libraries.)

To find the Depository Library in your area,
contact your local library or write to the
Superintendent of Documents, Mail Stop SM,
U.S. Government Printing Office, Washing-
ton, D.C. 20402. Or, you may telefax your
request for Depository Library information to
(202) 275-7747.

How to Order. We have provided the “GPO
Publications and Subscriptions” order form at
the end of this edition of Defense Trade News.
Complete ordering information is listed on
the back of the order form.

Please note in ordering GPO publications that
all GPO orders must be paid in advance.
Moreover, to expedite the handling of your
order, place subscription orders and non-
subscription orders on two separate forms.

Phone orders are accepted 8 am-4 pm week-
days at (202) 783-3238. Expect a telephone
tree (press “1” for subscriptions, “3” fora
recorded list of recently published GPO
books, and “6” to order GPO catalogs, books,
pamphlets, or posters). Use (202) 275-0019 to
telefax an order for subscriptions or (202) 275-
2529 for non-subscription items, catalogs, and
subject bibliographies. Both telefax numbers *
are available 24 hours a day, 7 days a week. #

Department of State Publication 9783
Bureau of Politico-Military Affairs

Released April 1991

Page 24

Defense Trade News, Volume 2, Number 2, April 1991



DEFENSE TRADE WITH CZECHOSLOVAKIA, HUNGARY,

AND POLAND

Some Exceptions for USML Exports Now Being Made

Throughout the Cold War era, it was U.S.
policy to deny license applications for the
export of U.S. Munitions List (USML) items to
the member countries of the Warsaw Pact,
each of which is listed in the “prohibited
country list” in Section 126.1 of the Interna-
tional Traffic in Arms Regulations (ITAR).
More recently, the collapse of the Warsaw
Pact and the coming to power of democratic
governments in Czechoslovakia, Hungary,
and Poland have brought about some changes
in U.S. defense trade policy toward these
three countries in particular.

Establishing export control regimes. Over
the past year, the U.S. has helped Czechoslo-
vakia, Hungary, and Poland establish effec-
tive export control regimes to prevent unau-
thorized transfers of USML and CoCom
controlled items.

The new governments in these three countries
have reacted favorably to this initiative, and
continue to welcome U.S. assistance in imple-
menting their technology transfer controls.
The U.S. and other CoCom members are
aythorized to conduct pre-license and post-
shipment verifications to ensure that the new
export control regimes are operating effec-
tively.

State granting some USML exceptions. For
the time being, Czechoslovakia, Hungary,
and Poland remain prohibited destinations

for USML items under ITAR Section 126.1.
However, the Office of Defense Trade Con-
trols (DTC) is now reviewing munitions
license applications for these three countries
ona case-by-case basis, rather than immedi-
ately denying them as in previous years.

Such license requests are subject to intensive
review, given the evolving nature of these
governments’ export control capabilities, and
ordinarily take longer in the license review
process than most cases. Nevertheless, DTC
is now, when appropriate, granting some
exceptions to the general policy of denial for
USML exports to these countries. The types
of exports for which exceptions are most often
granted are USML articles or services des-
tined for civil end-users for civil end-uses.

The situation in CoCom. Multilateral export
controls for these three countries are currently
under review in CoCom. At this time, all
three countries remain “proscribed destina-
tions” in CoCom, but CoCom intends to
approve the export for civil end-uses of most
“dual-use” Industrial List items to these
countries. However, like the U.S., CoCom is
granting only occasional exceptions for items
covered by the International Munitions List.

As a member of CoCom, the U.S. sends all
proposed USML hardware exceptions for
proscribed destinations to CoCom where they
must also be approved prior to DTC granting
the export license.

Defense Trade News, Volume 2, Number 2, April 1991

Page 5



a

of Consular Affairs and the Office of the
Secretary of State. Her previous experience
with the administrative activities of the
Department are a great asset in her new
position as a Compliance Operations Special-
ist focusing on registration duties in the
Compliance Analysis Division (CAD).

Susan Page joined the State Department's
Office of the Legal Adviser (L/PM) as an
Attorney-Adviser for Politico-Military Affairs
on March 11, 1991. After completing a Bach-
elors Degree in English, she pursued a law
degree at Harvard University, graduating in

1989. Following law school, Page served as
an attorney in Nepal where she worked on
children’s rights issues while on a 1-year
Rotary Foundation Fellowship. In L/PM, she
will be working with the Arms Licensing
Division (ALD) on a variety of defense trade
licensing issues related to the State
Department’s authority under the Arms
Export Control Act (AECA) and the Interna-
tional Traffic in Arms Regulations (ITAR). #

Defense Trade News, Volume 2, Number 2, April 1991

Page 21





¢ For Block #3, Payment, check either
square 2 or square 4, as appropriate.
Use square 2 if you have a Federal
Express Account and fill in your
account number on the shaded blue
line below squares 2 and 3. Use
square 4 if you want to bill your credit
card and fill in the credit card account
number and expiration date on the
shaded blue line below squares 2 and
3. (Note: Do not use square 1 be-
cause DTC cannot accept billing as a
sender.)

© Complete the rest of the form, indicat-
ing the services and special handling
you desire when DTC returns your
package.

¢ Attach this airbill to the outside of an
appropriate size envelope. Fold the
envelope and place in the package that
you are sending to DTC. #

PUBLICATIONS FOR EXPORTERS

Starting with this edition, “Publications for
Exporters” will be a regular department in
Defense Trade News. It will feature U.S. Gov-
ernment, non-profit, and other publications
that may be useful reference guides for U.S.
exporters.

GPO, The Information Warehouse

What is GPO? For this first article on “Publi-
cations for Exporters” however, we thought it
would be useful to provide an overview of
the Government Printing Office (GPO) since it
is the official printer for most U.S. Govern-
ment publications.

Although some departments use other print-
ers for their internal publications, most
documents releasable to the public are
printed by GPO. Indeed, only GPO prints
periodicals, books, posters, pamphlets, etc.
from all parts of the federal government.

Three types of publications. GPO publica-
tions fall into three basic types.

* Periodicals available by subscription. These
are printed on a regular basis at a pre-
determined subscription price. Such
periodicals include regular U.S. Govern-
ment magazines, newsletters, directo-
ries, catalogues, etc.

Recurring publications. Recurring publi-
cations are published at regular inter-
vals, but without specific publication
dates or pre-determined prices due to
variations in the volume of information.
Examples include Annual Reports to
Congress, Factbooks, and the Code of
Federal Regulations (CFR).

* One-time publications. GPO also prints a
wide variety of one-time publications as
needed.

Free catalogs list what GPO sells. The
Superintendent of Documents offers three
free, standard catalogs that list most of GPO’s
publications. The newest of these catalogs is
aimed exclusively at U.S. businesses, and
includes publications on exporting. This
catalogue, U.S. Government Books for Business
Professionals (SN 021-700-00254-4), highlights
publications on general business, export/
import, patents and trademarks, accounting
and taxes, law, labor relations, and selling to
the government.

In addition, GPO publishes two other stand-
ard catalogues. One, U.S. Government Books
(SN 021-602-00001-9), features hundreds of
new government books. The other, Govern-
ment Periodicals and Subscription Services (SN
021-600-000290-6), contains descriptions of
periodicals and recurring publications avail-
able by subscription.

Defense Trade News, Volume 2, Number 2, April 1991

Page 23



COMMODITY JURISDICTION
DETERMINATIONS

The following chart provides selected Commodity
Jurisdiction (CJ) determinations. The commodity de-
scriptions are intentionally general to ensure the confi-
dentiality of all proprietary information related to indi-
vidual cases.

These determinations apply only to the specific commodity reviewed in the CJ process. If you
believe one of your products is similar to one of those listed as having been placed on the Depart-
ment of Commerce's Commodity Control List (CCL), please submit a CJ request letter (ITAR 120.5).
Please refer to the article "A Checklist for Preparing CJ Requests" published in the September 1990
edition of Defense Trade News for assistance in submitting your request.

Page 18 Defense Trade News, Volume 2, Number 2, April 1991



mn]

amendment is required to change the dollar
value on the license up to 10% above the
originally licensed value. This regulation
only applies to the dollar value of the item
though, not to the quantity. (ITAR Section
123.25(d) addresses this issue.)

Submitting license amendment requests. To
request a license amendment, please provide
DTC with the signed original and one copy of
the following information prepared on com-
pany stationary:

¢ the type of license (DSP-5, 61, or 73)
being amended;

* the case number assigned by DTC to the
license being amended;

* the date that the submitted amendment
Tequest was prepared;

* your company’s DTC registration code;

* the company name, address, phone
number, and the name of an individual
point of contact;

* the country of ultimate destination
indicated on the license being
amended;

« the license block number that you are
Tequesting be amended;

¢ the current information in this license
block;

* the new information that you propose
be added or changed in this license
block;

* the reason or explanation for the
amendment; and,

* the following statement, dated and
signed by an empowered official in the
company:

I (name of signatory), hereby apply for approval for

the above amendment; warrant the truth of all

statements made herein; and acknowledge,
understand, and will comply with the provisions of

Title 22 CFR 120-130 and any conditions or limita-

tions imposed.

In addition to the original and one copy of the
above submission, please provide the follow-
ing with your amendment request:

* a copy of the license to be amended,
including copies of all proviso letters or
other attachments to the license; and,

¢ a self-addressed mailing label.

In those instances where an amendment
request adds U.S. freight forwarders or
consignors to the license, you must also
submit a signed certification letter (as out-
lined in ITAR Section 126.13).

Four officers handling license amendments.
Upon receipt in DTC, all license amendment
requests are handled by the four “DSP-61/73
licensing officers” identified in the article
“Licensing Officers’ Workload Assignments”
published in the January 1991 edition.
Namely, in the Aerospace and Ordnance
Branch, Terry Hunter handles all amend-
ments for companies A-J while Sue Clark
handles companies K-Z. In the Electronics
and Combat Systems Branch, Carolyn Love
handles all amendments for companies A-L
and Daniel Buzby handles companies M-Z.

Approved and denied amendment requests.
If approved, the original amendment request
is signed by the appropriate DTC licensing
officer, dated, sealed with the Department of
State seal, and returned to the applicant.
Upon receipt of the approved amendment,
the applicant should attach the amendment to
the license, or provide it to U.S. Customs to
attach to the license.

Denied amendment requests are returned
without action to the applicant, with the
reason for denial indicated in the returned.
package. If a new license application is
required, the existing license should accom-
pany the new application. The statement
“This is a new application to replace license
(fill in the #) ” should be indicated at the
bottom of the commodity block on the “re-
placement” license application. The license

Page 10

Defense Trade News, Volume 2, Number 2, April 1991



Lengthy review process for Hill cases.
Exporters need to plan ona lengthy review
process for sales requiring Congressional
notification. License applications that need to
be notified to the Congress represent some of
DTC’s lengthiest cases for three main reasons.

First, they are often very complicated or
controversial cases that require extensive
interagency review. Second, these cases are
sometimes submitted before the final signed
contract is completed, resulting in DTC
having to hold the case after interagency
review until the contract is provided. And
third, the review process itself for these cases
involves two additional review stages not
included in the review process for other DTC
cases.

Namely, Congressional notification cases
move through three stages in the license
review process. The first stage involves DTC
and interagency review of the case; the
second stage involves interagency review of
the Congressional notification letter; and the
third stage involves Congressional notifica-
tion and related handling.

Stage one: DTC and interagency case re-
view. The first stage is identical to that for all
“staffed” cases that DTC handles (i.e., cases
referred outside of DTC for more detailed
technical or policy review). Basically, this
stage involves a) initial review in DTC,

b) staffing and interagency review, with
recommendations sent to DTC by all staffing
offices, and c) final review in DTC, including
making a final decision based on the
interagency recommendations and preparing
the final decision letter.

For the 25% of DTC’s cases that are staffed,
the license review process ordinarily ends at
this point with the issuance of the final
decision and license. For Hill cases, however,
the review process is only one-third com-
plete.

Stage two: Interagency notification review.
In the second stage of the review process,
DTC prepares the Congressional notification
letter and gains interagency approval of the
text of this letter. To save time, DTC drafts
the notification letter while the case is in
interagency review in stage one. However,
since the letter is dependent on the outcome
of stage one, DTC does not begin seeking
interagency approval of this letter until a final
decision has been made in stage one.

DIC seeks interagency approval on the draft
notification letter from three offices: the
National Security Council (NSC) and the
Office of Management and Budget (OMB) at
the White House, and the Office of the Legal
Advisor (L/PM) in the State Department.
After gaining interagency approval of the
Congressional notification letter, DTC pre-
pares the final package to be sent to the
Congress.

Stage three: Congressional notification. In
the third stage of the review process, DTC
forwards the Congressional notification
package to the Bureau of Legislative Affairs
(H) in the State Department, which is respon-
sible for sending the package to the appropri-
ate Members of Congress. Once the package
is sent to the Congress, DTC waits 30 calendar
days and then—assuming a joint resolution
prohibiting the export has not been adopted
by Congress and enacted into law—DTC
issues the export license.

Special tracking of Hill cases. In August
1990, DTC created a special tracking system
for all Hill cases. Upon arrival in DTC and
teceipt by the appropriate licensing officer, all
license applications are immediately exam-
ined to see if they require Congressional
notification. If so, a copy of the case is given
to Rob Groesbeck, the Special Projects Licens-
ing Officer in DTC’s Arms Licensing Division
(DTC/ALD) responsible for tracking Hill
cases (as identified in the September edition
of Defense Trade News in “Personnel Up-
dates”).

Defense Trade News, Volume 2, Number 2, April 1991

Page 7



A

THE CONGRESSIONAL NOTIFICATION PROCESS

Special Handling of All “Hill” Cases

The Arms Export Control Act (AECA) of 1976
provides that the President must notify
certain commercial defense trade applications
to the Congress for 30 days prior to approval.
The President’s authority has been delegated
to the Secretary of State. Sections 36(c) and
36(d) of the AECA specifically delineate
which cases submitted to the Office of De-
fense Trade Controls (DTC) require Congres-
sional notification.

36(c) cases. Section 36(c) generally covers the
following two types of license applications:

¢ Allexports of defense articles or serv-
ices sold under a contract in the amount
of $50 million or more; and,

¢ All exports of “Major Defense Equip-
ment” (MDE) sold under a contract in
the amount of $14 million or more.

AECA Section 47(6) defines MDE as “Signifi-
cant Military Equipment” (SME) having a
one-time research and development cost to
the U.S. Government of $50 million or more,
ora total U.S. Government procurement cost
of $200 million or more. (The Defense Secu-
rity Assistance Agency (DSAA) at the Depart-
ment of Defense maintains the list of defense
articles categorized as MDE. The July edition
will contain information on how to get copies
of the MDE List.)

(For completeness, it should be noted that re-
transfers—e.g., sale of U.S. defense articles by
the licensed recipient country to another
country—of goods notified to the Congress
under Section 36(c) must also be notified to
the Congress for 30 calendar days prior to
DTC approval, pursuant to AECA Section
3(d)(3). Such notifications, however, are
extremely infrequent.)

36(d) cases. Section 36(d) covers the follow-
ing cases received by DTC:

* All Technical Assistance (AG-TAA) and
Manufacturing Licensing Agreement
(AG-MLA) applications for non-NATO
countries involving the production of
“Significant Military Equipment” (SME).

Significant Military Equipment (SME) is
defined in Section 120.19 of the International
Traffic in Arms Regulations (ITAR) as articles
for which special export controls are war-
ranted because of their capacity for substan-
tial military utility or capability. Articles
designated as SME are preceded by an aster-
isk in the U.S. Munitions List (USML, ITAR
Section 121.1). In addition, all classified
articles are designated as SME.

Congress’ role. The Arms Export Control Act
requires DTC to notify Congress at least 30
calendar days before issuing any license or
approval covered by Section 36(c), thereby
providing Congress with an opportunity to
review these specific commercial defense
transactions.

The AECA provides that licenses covered by
Section 36(c) may generally not be issued ifa
law prohibiting the proposed export is en-
acted within the 30-day period. No such laws
have been enacted in response to Section 36(c)
notifications.

Few in number, high in value. Of the
135,000 license applications that DTC re-
viewed in FY89, FY90, and FY91 to date, only
89 cases required Congressional notification.
Nonetheless, these 89 “Hill” cases represented
$11.8B in U.S. defense trade. Moreover,
although only 37 companies submitted these
89 Hill cases, these cases affect hundreds of
US. subcontractors and vendors.

Page 6

Defense Trade News, Volume 2, Number 2, April 1991



Page 19

Defense Trade News, Volume 2, Number 2, April 1997


only for Phase 1. Moreover, it should note
delivery schedules, relevant contractual
obligations, and any other information that
might be useful in the DTC and interagency
review process.

Point of contact. If you have any questions
concerning the progress of your Congres-
sional license application, call Rob Groesbeck
in the Arms Licensing Division at (703) 875-
5658. If your question, however, pertains to
specific details in the case itself, please contact
the licensing officer handling the case. *

A GUIDE TO AMENDMENT REQUESTS

DTC Now Accepting DSP-61 and DSP-73 Amendments

Many of the roughly 50,000 licenses that the
Office of Defense Trade Controls (DTC) issues
each year are later amended by DTC at the
applicant's request. Indeed, in 1990, DTC
received more than 5,000 amendment re-
quests, 80% of which were license amend-
ment requests.

The purpose of this article is to clarify DIC’s
current policies and procedures regarding
both license amendment requests and agree-
ment amendment requests. We ask that you
please use this article to help facilitate our
handling of amendment requests.

Amendment requests accepted for DSP-5s,
61s, and 73s. Previously, DTC only accepted
license amendment requests for DSP-5 li-
censes. DTC has revised this policy, and is
now also accepting amendment requests for
DSP-61 and DSP-73 licenses. (Thus, only
DSP-85 licenses are unamendable.)

Acceptable types of amendment requests.
DTC favorably considers four types of license
amendment requests. They are as follows:

* correcting typographical errors on the
license;

* adding US. freight forwarders or U.S.
consignors;

¢ changing the source of the commodity;
and

changing the foreign intermediate
consignee when the consignee acts only
as a forwarding agent for a hardware
shipment.

Major changes require new licenses. License
amendment requests cannot be used to make
substantial changes to a license. Rather,
major changes to an existing license require
submission of an entirely new license applica-
tion. Substantial changes include adding new
quantities or commodities, or changing the
country of ultimate destination, the end-use
or end-user, or the foreign consignee.

Amendments not needed in two instances.
Two common changes to licenses do not
require DTC-approved amendments. First,
an amendment is not needed to change the
US. port of entry or exit. However, the
company must notify DTC by letter of the
proposed change prior to export and send a
copy of this correspondence to the District
Director of Customs at the new port. (The
International Traffic in Arms Regulations
(ITAR) addresses this requirement in Section
123.24.)

Second, DTC has delegated authority to the
District Directors of U.S. Customs to permit
the shipment of defense articles identified on
any license when the total monetary value of
the export does not exceed the value on the
license by more than 10%. Therefore, neither
DTC authorization nor a new license or

Defense Trade News, Volume 2, Number 2, April 1991

Page 9



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atresia se Charge your order. ace
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Mail To: Superintendent of Documents, Government Printing Office, Washington, DC 20402-9325


United States Department of State ° Bureau of Politico-Military Affairs

Defense Trade News

The Bulletin of the Center for Defense Trade

Volume 2, Number 2 . Washington, D.C. ° April. 1991

Features

U.S. Moves Against Weapons of Mass Destruction
New Proliferation Control Regulations Issued

Defense Trade with Czechoslovakia, Hungary, and Poland
Some Exceptions for USML Exports Now Being Made

The Congressional Notification Process
Special Handling of All "Hill" Cases

A Guide to Amendment Requests
DTC Now Accepting DSP-61 and DSP-73 Amendments

Defense Trade Trends: East Asia and the Pacific
Strong Prospects for U.S. Exporters

ok,

DoD Criteria for "FMS-Only" Hardware Sales

mi NO! ©! OD! O11! &

4

Departments

vs. Customs at DTC 15
etentions and Seizures

Commodity Jurisdiction Determinations 18

Personnel Updates 20

Tips and Tidbits 22

Publications for Exporters 23

GPO, The Information Warehouse

Written and Edited by the Center for Defense Trade


a
DEFENSE TRADE TRENDS: EAST ASIA AND THE

PACIFIC

Strong Prospects for U.S. Exporters

Special features of the Asian market. The
East Asia and Pacific region presents unique
features that differentiate it from the other
two major defense markets of Europe and the
Middle East.

In Asia, the major customers are countries
with robust industrial economies, consider-
able absorptive capacity for sophisticated
equipment, and relative immunity to the
political and oil-income uncertainties affect-
ing the Middle East. Also, the level of secu-
rity threat faced by U.S. friends and allies in
Asia and the Pacific has not declined as
dramatically as has occurred in Europe
during the past 2 years.

Given these features, the Pacific region’s large
(27%) share of global U.S. defense exports
(commercial and government-to-government)
will most likely hold or increase in the near
term.

USS. advantages. Close political and security
ties give U.S. firms an edge in maintaining
their share of the major Asian and Pacific
markets. U.S. market shares recently reached
35-40% of the Australian and South Korean
markets, and 17% of the Japanese procure-
ment budget.

Competition from European suppliers, al-
though growing, is relatively slight. In Japan
and Korea, at least, the main challenge comes
from host country pressure for co-production
and “indigenization.” This pressure is ex-
pected to continue, in line with the defense
and industrial policies of both countries.

Characteristics of leading countries. The
US.’s three main defense trade partners in
this region—South Korea, Australia, and
Japan—all share some common characteris-
tics. All three have reached a high level of
industrial development and all three look to

the US. as their key security partner and
major defense supplier. They share these
characteristics with a fourth major market,
Taiwan—a case set apart, however, by special
political factors.

South Korea. Given the close U.S.-Republic
of Korea security relations, it is not surprising
that over 75% of the estimated $1.5B (late
1980s) of Korean overseas military procure-
ment came from U.S. sources. Furthermore,
there is little prospect of a major shift from
USS. sourcing in the early to mid-1990s,
despite aggressive marketing efforts by some
European firms.

However, there is growing eagerness on the
part of Korean industry to demonstrate its
export potential in the defense field. A
related trend will be increased Korean em-
phasis on offsets, co-production, and
retransfer rights. Korean purchases will likely
be heavily affected by the prospects for
technology transfer and the impetus to de-
velop commercial industries.

Australia. Australian defense policy empha-
sizes increasing self-reliance, while still
seeking access to sophisticated military
hardware at reasonable cost. For Australia,
such access is a major benefit of its alliance
with the U.S.

With $1.0-1.5B in annual purchases from the
US. during 1985-90, Australia is obviously a
leading defense customer. The outlook is for
continued U.S. sales in the Australian market,
particularly since the current Australian
emphasis on improving mobility and force
projection capabilities fits well with what the
USS. has to offer.

Japan. Japan’s recently published 1991-1995
Mid-Term Defense Plan (MTDP) continues
the policies of the 1986-1990 MTDP, though
ona lesser scale of acquisition and produc-

Page 12

Defense Trade News, Volume 2, Number 2, April 1991



aS

application should reflect only the unshipped
balance, and should include the appropriate
licensing documentation.

Amending agreements. As with proposed
license amendments, proposed agreement
amendments (including extensions) must also
be submitted to DTC for approval and may
not enter into force until approved. Also as
with license amendments, two types of
agreement amendments do not have to be
pre-approved. They are:

* amendments that only alter delivery or
performance schedules; and,

* amendments that represent minor
administrative changes that do not
affect the duration or scope of the
agreement or the clauses or information
that must be included in such agree-
ments under the ITAR.

For these minor agreement amendments,
however, the company must submit an
information copy of the amendment to DTC
within 30 days. (Agreement amendments are
addressed in ITAR Section 124.1(b).)

Submitting agreement amendment requests.
Agreement amendment requests should be
submitted in writing with a cover letter
explaining the proposed change. The cover
letter should follow the format of ITAR
Section 124.12 (unless it is a request for an
extension, a change in company name, or
another “minor” change).

A copy of the proposed amendment and a
signed certification letter (per ITAR Section
126.13) must also be submitted with each
request. (Please note that Distribution Agree-
ment (AG-DIS) amendments need also be
submitted in accordance with ITAR Sections
124.13 and 124,14.)

Updating old agreements. If the proposed
amendment is for an agreement that is more
than 6 years old (i.e., issued prior to Jan-
uary 1, 1985), the company should review the
clauses required by ITAR Sections 124.9 and
124.10 to make sure that they are current in
the agreement. If the clauses are outdated,
the company should include the current
clauses in its submittal of the proposed
amendment. (Failure to update these clauses
will result in the proposed amendment being
returned without action.)

One officer handling most agreement
amendments. All Manufacturing License
(AG-MLA) and Technical Assistance Agree-
ment (AG-TAA) amendment requests are
handled by licensing officer Sue Plant. Distri-
bution Agreement (AG-DIS) amendment
requests, which are much more infrequent,
are reviewed by the officer handling the
commodity involved (as identified in the
article “Licensing Officers’ Workload Assign-
ments”). #

Defense Trade News, Volume 2, Number 2, April 1991

Page 11



Hill cases now reviewed faster. Since the
creation of the special tracking system, the
average licensing time for Hill cases—al-
though still lengthy—has been reduced 39%.
For the 13 Hill cases received and issued since
August 1, 1990, the average |

eS

aS
ee

undertakes actions to facilitate the handling

sarily delayed at any point. As necessary, he
of these cases.

Throughout all three stages of the review
process, Groesbeck tracks the progress of
each case to ensure it does not get unneces-

time.

icensing

for the 25 Hill cases

ime

licensing

these 13 cases, two were held for 1-4 weeks
per request of the applicant.) By comparison,
the average I ti

received in FY89 was 143 business days, or

was 88 business days, or four months. (Of

seven months.

Timeframes for each review stage. For each
stage in the review process, DTC has set time
guidelines. For the first stage, DTC seeks to
adhere to the timeframes established for all
staffed cases, whether Hill cases or not. That
is, 10 business days for initial DTC review, 15

A joint effort for further gains. In an effort to

further reduce the 1

days for interagency review, and 10 days for

final DTC review.

‘ime, DTC is

icensing ti

identifying areas in each stage where it can
expedite the handling of Hill cases.

In stage two, DTC has set a deadline of 10

f the draft

ion letter,

interagency review o!

days for

ional notifi

Congress

ilitate the
review of Hill cases. In addition to providing

the required informati

industry can also help fac:
with any applicat

ti and 5 days Likewise,
for preparation of the final Hill package. In

stage three,
the indivi

‘ical

H handles each case as quickly as

idual case and the legislative envi-

ion normally submitted
it is recommended that

ion,

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Defense Trade News, Volume 2, Number 2, April 1991

Page 8



DTC Expands Telephone Hours

DTC is continuing its efforts to improve its
telephone system and services. To this end,
we are expanding our public telephone hours
effective immediately.

The new telephone hours are from 11 am to
5 pm weekdays. These expanded hours
nearly double the time when the DTC staff is
available to answer public queries.

Note: Appointment hours will remain 2 pm
to5 pm.

Federal Express Return Packages

Frequently, registrants request that the Office
of Defense Trade Controls (DTC) return an
approved license application via the Federal
Express overnight delivery system. We honor
these requests whenever the return bill of
lading is properly completed to reflect that
the registrant is paying the service charge.
DTC does not have a Federal Express account
or a funding line to pay for these services.

To insure proper, prompt return of your
Federal Express package, follow these instruc-
tions when completing your Federal Express
Airbills:

1. Complete one airbill to send the package to
us.

¢ Fill in your Federal Express Account
Number in the top left box if you have
an account.

¢ Fill in all information in Block #1,
Sender, regarding you or your com-
Pany.

¢ For Block #2, Recipient, fill the appro-
priate person or Division [either Arms
Licensing Division (ALD) or Registra-
tion/Compliance Division (CAD)] and
the corresponding phone number
[(703) 875-6644 for ALD or (703) 875-
6650 for CAD]. For Company, enter
Office of Defense Trade Controls, PM/
DTC, 1701 N. Fort Myer Dr., Rm. 200,
Arlington, VA, 22209-3113.

¢ For Block #3, Payment, check the
appropriate square. Use square 1 if
you have a Federal Express Account.
Use square 4 if you want to bill your
credit card. (Fill in your credit card
account number and expiration date
on the shaded blue line below squares
2and 3. NOTE: Do not use square 2
because DTC cannot accept billing as a
recipient.)

¢ Complete the rest of the form, indicat-
ing the services and special handling
you desire.

¢ Attach this airbill to the outside of the
package.

2. Complete another airbill for us to send a
return package to you.

¢ For Block #1, Sender, fill the appropri-
ate person or Division [either Arms
Licensing Division (ALD) or Registra-
tion/Compliance Division (CAD)] and
the corresponding phone number
[(703) 875-6644 for ALD or (703) 875-
6650 for CAD]. For Company, enter
Office Defense Trade Controls, PM/
DTC, 1701 N. Fort Myer Dr., Rm 200,
Arlington, VA, 22209-3113.

¢ Fill in all information in Block #2,
Recipient, regarding you or your
company. (This information is prob-
ably identical to Block #1 of the first
airbill.)

Page 22

Defense Trade News, Volume 2, Number 2, April 1991



DEFENSE TRADE NEWS
United States Department of State
Washington, D.C. 20522-0602

OFFICIAL BUSINESS

SMAN aprAL asuazaq ayey}s Jo juauyIedaq *s'N

Teel tudy

POSTAGE & FEES PAID
U.S. Department of State
Permit No. G-130

PENALTY FOR PRIVATE USE $300

Address Correction Requested

ZON ‘ZTIOA


Industry’s role. The cooperation of U.S.
industry is needed to make the new regula-
tions work effectively. The regulations were
developed with substantial input from
industry.

The Administration believes that the regula-
tions are sensitive to the importance of U.S.
exports to U.S. economic vitality. In many
cases, they have been refined or restricted in
scope to meet industry concerns and mini-
mize the burden on legitimate commerce.
Public comment on the new regulations is
welcome.

Export controls not the only tool. The U.S.
Government is also using other means to deal
with the threat of weapons of mass destruc-
tion. Executive Order 12735, issued on
November 16, 1990, gives the U.S. Govern-
ment authority, under specified circum-
stances, to impose sanctions on foreign
countries that use, or make substantial
preparations to use, chemical or biological
weapons, and on foreign companies that aid
their CBW programs.

The President has made the early conclusion
of a comprehensive global ban on chemical
weapons a top foreign policy priority. In
addition, the U.S. will also seek to strengthen
the 1972 Convention on Biological and Toxin
Weapons at the September 1991 Review
Conference.

Points of contact. Within the U.S. Govern-
ment, the primary players on the Enhanced
Proliferation Control Initiative (EPCI) and the
resultant EAR regulations are the Bureau of
Export Administration (BXA) at the Depart-
ment of Commerce and the Bureau of Politico-
Military Affairs (PM) at the Department of
State.

The best points of contact for further informa-
tion on these new proliferation control regula-
tions would be the two offices, one in each of
these bureaus, that have primary responsibil-
ity for this initiative: the BXA Office of Tech-
nology and Policy Analysis (BXA/OTPA) and
the PM Office of Weapons Proliferation Policy
(PM/PRO). You can contact James
Seevaratnam of BXA/OTPA at (202) 377-5695
or Jim Davis of PM/PRO at (202) 647-1129. #

Page 4

Defense Trade News, Volume 2, Number 2, April 1991



DEPARTMENTS

U.S. CUSTOMS AT DTC

Detentions and Seizures

Within the U.S. Government, the U.S. Cus-
toms Service is the lead agency responsible
for enforcing the various export control laws
and regulations administered by both the
Departments of State and Commerce. This
responsibility includes, when appropriate,
detaining and seizing goods going through
US. ports.

The EXODUS Command Center as the hub.
In 1982, U.S. Customs established a national
EXODUS Command Center at Customs
Headquarters in Washington, D.C. to coordi-
nate—and thereby maximize the effectiveness
of—the activities of the numerous EXODUS
inspection teams located at ports throughout
the country. Since then, for all port detentions
and seizures nationwide, the EXODUS Com-
mand Center has served as the central refer-
ence point for the EXODUS port teams.

The Center’s responsibilities. By maintain-
ing an extensive information system and
liaison network, the Command Center is
usually able to quickly resolve the thousands
of detentions and seizures that are referred to
it each year.

Specifically, the EXODUS Command Center
responds to port inquiries for export licensing
verifications and provides operational guid-
ance to inspection teams in the field. In
addition, the Center works to facilitate the
flow of critical investigative and intelligence
information to and from the various EXODUS
inspection teams and Customs investigative
groups at the ports.

Port experience mandatory for Center staff.
The staff at the Command Center consists of a
Supervisory Special Agent, Customs Inspec-
tors, a Program Analyst, and support person-
nel. Having all worked in an EXODUS port

team before coming to headquarters, the
Center's staff possesses a good deal of export-
related field experience.

After completing a tour of duty at the Com-
mand Center, staff members return to the
field with a stronger appreciation of how the
EXODUS program relates to the different
federal agencies, U.S. industry, and US.
national security and foreign policy.

Detentions and seizures: A six-step process.
Detention and seizure of a suspicious export
or import by U.S. Customs ordinarily pro-
ceeds according to the following six-step
process.

* Port Inspection and Detention: The U.S.
Customs EXODUS inspectors at the
numerous ports of exit and entry
throughout the U.S. routinely examine
export documents, shipper’s export
declarations, invoices, and airway bills,
as well as the export commodity itself.
For suspect items, the EXODUS inspec-
tor at the port detains the shipment.

Referral to the Command Center: Having
detained the shipment, the EXODUS
inspector at the port contacts the EXO-
DUS Command Center in Washington,
D.C. and relays the relevant information
about the shipment.

Referral to the Regulatory Office: The
EXODUS Command Center forwards
the detention information to the appro-
priate regulatory office in the federal
government for review. The Office of
Defense Trade Controls (DTC), for
example, gets all detention referrals for
defense articles and defense services.

Licensing Determination Made: The
regulatory office then makes a licensing
determination on the detention and
notifies the EXODUS Command Center

Defense Trade News, Volume 2, Number 2, April 1991

Page 15



ST
U.S. Customs District Offices
(in alphabetical order by city)

Anchorage, AL (907) 271-4043 New York, NY (212) 466-5817
Baltimore, MD (301) 962-2666 New York, NY JFK Airport) (718) 917-1542
Boston, MA (617) 223-6598 Newark, NJ (201) 645-3760
Buffalo, NY (716) 846-4374 Nogales, AZ (602) 287-9163
Charleston, SC (803) 724-4312 Norfolk, VA (804) 441-6546
Charlotte Amalie, St. Thomas (809) 774-2530 Ogdensburg, NY (315) 393-0660
Chicago, IL (312) 353-6100 Pembina, ND (701) 825-6201
Cleveland, OH (216) 522-4284 Philadelphia, PA (215) 597-4605
Dallas/Ft. Worth, TX (214) 574-2170 Port Arthur, TX (409) 724-0087
Detroit, MI (313) 226-3177 Portland, ME (207) 780-3326
Duluth, MN (218) 720-5201 Portland, OR (503) 221-2865
El Paso, TX (915) 541-7435 Providence, RI (401) 528-5080
Great Falls, MT (406) 453-7631 St. Albans, VT (802) 524-6572
Honolulu, HI (808) 546-3115 St. Louis, MO (314) 425-3134
Houston/Galveston, TX (713) 225-2334 San Diego, CA (619) 293-5360
Laredo, TX (512) 723-2956 San Francisco, CA (415) 556-4340
Los Angeles/Long Beach, CA (213) 514-6001 San Juan, Puerto Rico (809) 723-2091
Miami, FL (305) 536-4101 Savannah, GA (912) 944-4256
Milwaukee, WI (414) 291-3924 Seattle, WA (206) 442-0554
Minneapolis, MN (612) 349-3990 Tampa, FL (813) 228-2381 _
Mobile, AB (205) 690-2106 Washington, D.C. (202) 566-8511
New Orleans, LA (504) 589-6353 Wilmington, NC (919) 343-4601

Defense Trade News, Volume 2, Number 2, April 1997 Page 17



U.S. Moves Against Weapons of Mass Destruction

New Proliferation Control Regulations Issued

In his March 6, 1991 address to a joint session
of Congress announcing the end of the Gulf
War, President Bush cited the need to control
the proliferation of weapons of mass destruc-
tion as one of four post-war challenges.
Reflecting longstanding Administration
concerns about this threat, three new regula-
tions designed to control the goods, technol-
ogy, and services that can contribute to
foreign countries’ chemical and biological
weapons (CBW) and missile programs were
recently published in the Federal Register.

These regulations amend the Export Adminis-
tration Regulations (EAR) of the Department
of Commerce; they do not affect the Depart-
ment of State’s International Traffic in Arms
Regulations (ITAR) or U.S. Munitions List
(USML) commodities or controls. The regula-
tions were published in the Wednesday,
March 13, 1991 Federal Register (Vol. 56, No.
49, Page 10,756).

Why the need? In the past, foreign help—
provided by companies in industrialized
nations in the form of whole chemical plants,
equipment for creating chemical and biologi-
cal weapons, and technical expertise—was
critical in enabling Iraq and other countries to
obtain weapons of mass destruction much
faster and easier than they otherwise could.

Despite the defeat of Iraq, the threat of chemi-
cal and biological weapons and missiles is
growing. Iraq is only the tip of the iceberg.
At least 20 countries have or are seeking
chemical weapons capabilities. Ten countries
have or are trying to create biological weap-
ons. New conflicts, especially in the Middle
East, could raise again the specter of lethal
missile, chemical and biological attacks on
civilian populations or American soldiers.

The response: The Enhanced Proliferation
Control Initiative. Last December, the
Enhanced Proliferation Control Initiative

(EPCI) was officially launched by the White
House, with the aim of improving U.S. and
international ability to control keystone goods
and technologies for weapons of mass de-
struction. Until these regulations, U.S. con-
trols had been limited—even in comparison
with many other Western countries. The U.S.
controlled only about one-fifth of the known
chemical weapons precursors, and no CBW-
related equipment.

On March 13, three new regulations imple-
menting EPCI were published. They impose
new export controls on 39 additional chemical
weapons precursors, on equipment usable for
chemical and biological weapons purposes,
and on whole chemical plants for producing
chemical weapons precursors. They also
require licenses for U.S. persons assisting
foreign chemical or biological weapons or
missile projects and for exports in which the
exporter knows or is informed by the U.S.
Government that the item is destined for a
foreign chemical or biological weapons or
missile project.

US. multilateral efforts. Recognizing that
the most effective export controls are those
applied multilaterally, the Administration has
initiated vigorous efforts to obtain foreign
support for proliferation controls comparable
to those being imposed by the U.S. These
efforts will build on the growing international
consensus for strong action to stem the spread
of weapons of mass destruction.

Initial discussions indicate that many U.S.
friends and allies are already working to
adopt similar controls or are willing to do so.
Over half of the “Australia Group” members
now control all 50 chemical weapons precur-
sors, and several are now controlling equip-
ment. (The “Australia Group” is an informal
grouping of 20 industrialized countries
committed to combatting chemical and
biological weapons proliferation.)

Defense Trade News, Volume 2, Number 2, April 1991

Page 3



How to Remit

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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 Ganuary, April, July, October)
of the Center for Defense Trade, Bureau of Politico-Military Affairs, U.S. Department of State. Its
Purpose is to provide American industry, the general public, Congress, and government agencies
with information on developments about cefense 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 addressed to the applicant signing DSP-9 Block 14 at the
registered address. Registrants must notify the Office of Defense Trade Controls by registered
mail, 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 who 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 200, 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 200, U.S.
Department 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 200
Office of Defense Trade Controls

Bureau of Politico-Military Affairs

US. Department of State
Washington, D.C. 20522-0602

PM/DTC Room 200
Office of Defense Trade Controls

Bureau of Politico-Military Affairs

USS. Department of State
1701 N. Fort Myer Drive
Arlington, VA 22209-3113

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

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

Telephone Numbers

General Information: (703) 875-6644
Licensing: (703) 875-6644 #3
Registration/Compliance: (703) 875-6650
Office Director and Deputies: (703) 875-7050
Defense Trade News: (103) 875-5660
Congressional Cases: (703) 875-5658
Commodity Jurisdictions: (703) 875-7041/5655
License Status Staff: (703) 875-6652
Automated License Status Systems:

ALISS (Tel

ROBB (Electronic): (703) 875-6650

Licensing/Management/Forms: (703) 875-6647

Registration/Compliance/ROBB: (703) 875-5663

lephonic): (703) 875-7374

Facsimile Numbers

General Information: (202) 647-4231

PM/DTP: (202) 647-1346


ES

tion. For example, the new MTDP is still
designed to meet the goal of protecting sea
Janes of communications out to 1,000 nautical
miles. In the 1980s, this policy drove defense
procurement, which grew steadily to its
current total of $8B. However, fiscal pressure
on further growth of the defense budget has
resulted in stabilization of procurement
spending over the period of the current
MITDP.

The emphasis on indigenous development
and co-production is at its most developed in
Japan; although some 90% of procured de-
fense items are produced indigenously, 80%
of that 90% is licensed from the U.S. Procure-
ment from other countries remains a rela-
tively negligible factor.

In certain areas, such as missile propulsion
systems and defense electronics, Japanese
industry has established a firm basis for local
research and development in the future. The
F-15 co-production project of the past decade
and the FSX co-development project of the

1990s are important stages in a longer-term
strategy for building indigenous design
capability for advanced fighter aircraft.

But, there are limits to the Japanese push for
co-production. Fiscal pressures will likely
increase, while government policy against the
export of defense articles will restrict the
potential market, driving up unit costs.

Taiwan. U.S. commercial and government-
to-government defense sales to Taiwan
amounted to some $660M in FY90, out of a
Taiwanese defense budget of nearly $5B.

Since the termination of U.S.-Taiwanese
diplomatic relations in 1979, the USS. defense
trade relationship with Taiwan has operated
under special constraints. These include the
August 17, 1982 U.S.-People’s Republic of
China Communique, which states that U.S.
“arms sales to Taiwan will not exceed, either
in qualitative or in quantitative terms, the
level of those supplied in recent years since
the establishment of diplomatic relations
between the United States and China.”

Defense Trade News, Volume 2, Number 2, April 1991

Page 13



of this determination. The determina-
tion states whether the commodity has
been properly licensed or not.

* Command Center Notifies the Port: The
Command Center advises the EXODUS
inspector at the local port to either
release the commodity if it has been
determined that the license is valid or
no license is required, or seize the
commodity if there has been an export
violation.

© Release or Seizure: The EXODUS inspec-
tor at the port notifies the exporter of
the determination and then either lifts
the detention or seizes the shipment.
After a shipment is seized, the matter is
turned over to the Office of Fines,
Penalties, and Forfeitures in the local
Customs District office. All communica-
tions from the exporter regarding the
seizure are handled by that office.

A large caseload. Since its establishment, the
Command Center has handled more than
15,000 referrals for export license verifica-
tions, about two-thirds of which have resulted

in seizures. In FY90 alone, there were nearly
1,800 detentions, of which a record 92%
resulted in seizures (valued at $162M).

EXODUS Liaison in DTC. Given the volume
of detentions of defense articles and services
that are referred to DTC, U.S. Customs has
detailed an EXODUS Liaison Officer to DTC.
This officer coordinates DTC’s handling of
detention referrals and works closely with
both the EXODUS Command Center and the
EXODUS port teams. (See the article “U.S.
Customs at DTC: The Positions and the
People” in the September 1990 edition for
more information.)

Local Customs offices as POCs. As pointed
out, the EXODUS Command Center was
established to support U.S. Customs field
personnel and to coordinate and expedite
internal U.S. Government operations. All
contact from private sector entities regarding
detentions or seizures should be directed to
the local U.S. Customs District Office at the
port of detention or seizure. The following
list provides all of the U.S. Customs District
Offices in alphabetical order by city. #

Page 16

Defense Trade News, Volume 2, Number 2, April 1991