a.

be competitive, while at the same time, main-
taining adequate controls of U.S. technology
and sensitive munitions items. Approxi-
mately 60 representatives from various de-
fense attended the forum. Comments
from the audience mainly centered on clarifi-
cation of previously submitted written com-
ments on the proposed changes, and will be
given full consideration by officials working
on the revision.

FIRST MEETING OF DEFENSE TRADE
ADVISORY GROUP HELD

The Defense Trade Advisory Group
(DTAG)(see Defense Trade News, Volume 3,
Number 2, April 1992, page 7) held its first
meeting on July 10 at the State Department’s
Loy Henderson Auditorium. Nearly 80
people attended, 45 of them DTAG members
affiliated with defense firms, academia, and
other organizations. Richard A. Clarke, As-

sistant Secretary for Politico-Military Affairs,
opened the session by outlining why the
group was formed and the benefits that he
hoped will result from its activity. William
Schneider, Jr., President of International Plan-
ning Services was appointed Chairman of the
Group. Ambassador James Woolsey of the
law firm Shea & Gardner will serve as Vice
Chairman. The DTAG will be made up of
Policy, Regulatory, and Technical Working
Groups. Mr. Schneider will head the Policy
Group. The Regulatory Working Group will
be chaired by Ramona Hazera, International
Licensing Manager for Northrop Corporation,
and John B. Walsh, Vice President of Boeing
Defense & Space Group will head the Techni-
cal Working Group. A more detailed report
of the group’s membership, activities and
plans will be provided in the October issue of
Defense Trade News. # ~~

Nl

Personnel Updates

LCDR Paul James reported to DTC on June
15, replacing LCDR Nelson Hines. LCDR
James recently completed a tour of duty as
the Combat Systems Officer on the guided
missile destroyer USS Chandler (DDG-996),
which included two deployments to the Per-
sian Gulf in support of Operation Desert
Shield/Storm. LCDR James has also had
tours on board the USS Vandegrift (FFG-48),

USS Biddle (CG-34), USS Blakely (FF-1072)
and USS Mobile (LKA-115). A weapons spe-
cialist, he brings extensive experience with
guided missile, radar, and sonar systems. He
is a 1980 graduate of Harvard University. As
a Licensing Officer, he reviews Technical As-
sistance Agreements (TAAs) and Manufactur-
ing Licensing Agreements (MLAs), and is in-
volved in National Disclosure Policy issues. #

Page 20

Defense Trade News, Volume 3, Number 3, July 1992



money order for the desired registration pe-
tiod, documentation demonstrating authori-
zation to do business in the U.S., and a trans-
mittal letter signed by an authorized senior
officer of the intending registrant containing
the information outlined in section 122.2(b).
Complete registration before submitting li-
cense applications. The license application
form should contain the PM/DTC Company
Code in block 2. Export licenses cannot be
issued until the registration submission is
complete and all documentation required
under section 122.2 is received.

* To renew your registration with DTC,
you must submit a completed Form DSP-9, a
check made out to the Department of State, a
transmittal letter pursuant to 122.2(b) of the
ITAR, and documentation demonstrating that
you are authorized to do business in the U.S.
(e.g., a business license, state incorporation
certificate, etc.) Please do not send a check
without the above documents!

¢ If your company was not “in the busi-
ness” of manufacturing or exporting defense
articles or providing defense services from the
date of your expiration to the day that you are
renewing your registration, please make a
statement to that effect in your 122.2(b) trans-

mittal letter (for more information, refer
122.3(b) of the ITAR).

* Pay particular attention to blocks 12
and 13 of the Form DSP-9. All corporate sub-
sidiaries and corporate divisions in the busi-
ness of manufacturing and/or exporting de-
fense articles and services may not register
separately unless they are required by law to
file separate Federal income tax returns. If
you file separate Federal income tax returns,
this must be indicated in block 13.

Further Questions. You may direct any ques-
tions regarding registration to the Compli-
ance Analysis Division (CAD), DTC at (703)
875-6650. Lengthy or complicated registra-
tion problems and questions should be sub-
mitted in writing to Mr. Clyde G. Bryant, Jr.,
Chief of CAD. Inquiries should be mailed not
faxed to CAD. Please attach copies of all rele-
vant documents to your letter. If you wish to
receive a registration materials package,
please fax your request to (703) 875-5663. Be
sure to include the complete company name,
address, and the name of an individual to
contact. You can also request registration
materials by letter to DTC, for the attention of
CAD. See the inside back cover of this issue
for complete mailing addresses. #

Enforcement Action
Revocation of Licenses and Approvals

Sanctions Imposed on South African Com-
pany. On March 19, 1992, the U.S. Depart-
ment of Commerce revoked all export licenses
and other written approvals in which A.
Rosenthal (PTY) Ltd., with locations in
Namibia and South Africa, and two of its em-
ployees, Karl Cording and Ian Ace, appear or
participate in any manner or capacity. A.
Rosenthal (PTY) Ltd., Karl Cording, and Ian
Ace allegedly violated the Export Administra-
tion Regulations (codified at 15 C.F.R. Parts
768-799), issued pursuant to the Export Ad-
ministration Act of 1979 as amended (codified
at 50 U.S.C.A. app. 2401-2420). The defend-

ants are charged with violating the retransfer
provisions of the Export Administration
Regulations, in that they retransferred to
South Africa from Namibia, Commerce De-
partment-controlled shotguns by misrepre-
senting the shotguns’ end user and ultimate
destination.

Pursuant to the Arms Export Control Act
(AECA)(22 U.S.C. 2778) and the implementa-
tion of the ITAR (22 C.F.R. Parts 120-130), it is
the policy of the Department of State to deny
all export license applications and other re-
quests for approval directly or indirectly in-

Page 14

Defense Trade News, Volume 3, Number 3, July 1992



PIONEER
PRIMROSE ISLANDS
QUARTZ

RAHIM 3
RAVENS
REDESTOS

ROSE ISLANDS
RUBY ISLANDS
SENANQUE
SOUTH ISLANDS
STANDWEAR
STAR1

TIFON

TULIP ISLANDS
VIOLET ISLANDS
WEST ISLANDS

Tramp Pioneer Shipping Co., Ltd., Panama
Piranha Navigation Co., Ltd., Cyprus
Quartz Maritime, $.A., Panama

Pioneer Shipping Ltd., Malta

Antamallo Shipping Co., Ltd., Malta
Redestos Shipping Co., Ltd., Cyprus
Shipley Shipping Corp., Panama

Golden Comet Navigation Co., Ltd., Panama
Senanque Shipping Co., Ltd., Cyprus
South Islands Co., Ltd., Cyprus

Standwear Shipping Co., Ltd., Cyprus
Canapel, S.A., Panama

Senanque Shipping Co., Ltd., Cyprus
Pocho Navigation Co., Cyprus

Violet Navigation Co., Cyprus

West Islands Shipping Co., Cyprus

CUBA
CUBA
VIETNAM
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA
CUBA


Suggested Format for a Letter of Transmittal for a Technical Assistance Agreement

Instructions: Using letterhead stationery of the applicant, copy text in quotation marks (“..”) ex-
actly. Insert appropriate wording wherever text is italicized in brackets ([...]). Do not include the
quotation marks or brackets in the final transmittal letter. Include detailed pertinent background
information wherever appropriate in the transmittal letter, as it might assist reviewers.

[Unsert date]

“Mr. William B. Robinson

Director, Office of Defense Trade Controls
PM/DTC, SA-6, Room 200

USS. Department of State

Washington, D.C. 20522-0602”

“Subject: Proposed Technical Assistance Agreement (TAA) between [Insert U.S. company name] and
[Insert foreign party name and country].”

“Reference: [Insert information about all previous cases related to this TAA, including the original agree-
ment, amendments, and licenses].”

“Dear Mr. Robinson:”

“Submitted herewith are seven copies of this letter and eight copies of a proposed Technical Assis-
tance Agreement between [insert U.S. company name] and [insert foreign party name and country] for
the transfer of certain technical information and services necessary for [state the purpose of the Agree-
ment, and specify the commodity or technology to which it relates].”

“In accordance with 22 CFR 124.12, the following information is provided:”

“(a)(1) The DTC applicant code is [insert the applicant's registration number].”

“(a)(2) The licensee is [insert foreign party], located in [insert country and specific location of facility].
The scope of this agreement entails [insert U.S. company name] performing defense services
or disclosing technical data [insert specific details] to the licensee for the [identify the program,
modernization, upgrade, integration, etc., or other tasks to be performed] of [identify the USML cat-
egory, category title, manufacturer's end item nomenclature, and military designation; e.g., Category
Vil—Aircraft, Spacecraft, and Associated Equipment; Sikorsky UH-60L, Blackhawk]. The agree-
ment is desired to be valid through [insert the requested term expiration date].”

“(a)(3) [Identify relevant U.S. Government contract(s) under which equipment or technical data was gener-
ated, improved, or developed and supplied to the U.S. Government. State whether or not the equip-
ment or technical data was derived from any bid or other proposal to the U.S. Government. If neither
of the preceding statements applies, identify which branch of the U.S. military service is or might be
cognizant of the program].”

“(a)(4) “The highest U.S. military security classification of the equipment or technical data to be
transferred under the terms of this agreement is [insert the classification, e.g., Confidential, Se-
cret. State the highest foreign military security classification, and identify the classifying agency and
country].”

“(a)(5) [Insert a statement concerning patents as required by 22 CFR 124.12(a)(5)].”

“(a)(6) [Insert a statement indicating the actual or estimated value of the agreement. If the value is $250,000
or greater, prepare a separate letter regarding the payment or nonpayment of political contributions,

fees, or commissions as required by 22 CFR 130. Enclose the ‘Part 130 Statement’ as an attachment
to this transmittal letter].”

Defense Trade News, Volume 3, Number 3, July 1992 Page 5



U.S. Department of the Treasury

Office of Foreign Assets Control

“Specially Designated Vessels”
Vessels in which Sanctioned Governments and/or
Specially Designated Nationals have an Interest

July 1992


NS
CONTACTING THE CENTER FOR DEFENSE TRADE (CDT)

Center for Defense Trade

PM, Room 7321

Bureau of Politico-Military Affairs
U.S. Department of State
Washington, D.C. 20520-7321

(202) 647-6977 FAX: (202) 647-1346

Office of Defense Trade Controls (DTC) Office of Defense Trade Policy (DTP)
Postal Mailing Address

PM/DTC, SA-6, Room 200 PM/DTP, Room 7815

Office of Defense Trade Controls Office of Defense Trade Policy

Bureau of Politico-Military Affairs Bureau of Politico-Military Affairs

US. Department of State U.S. Department of State

Washington, D.C. 20522-0602 Washington, D.C. 20520-7815

Express Mail and Courier Delivery Address

PM/DTC, Room 200 PM/DTP, Room 7815

Office of Defense Trade Controls Office of Defense Trade Policy
Bureau of Politico-Military Affairs Bureau of Politico-Military Affairs
U.S. Department of State U.S. Department of State

1701 N. Fort Myer Drive (Nash St. Entrance) Washington, D.C. 20520-7815

Arlington, VA 22209-3113
Telephone Numbers

General Information: (703) 875-6644 General Information: (202) 647-4231
Licensing: (703) 875-6644 #3 Embassy Support: (202) 647-4231
Registration /Compliance: (703) 875-6650
Office Director and Deputies: (703) 875-7050
Defense Trade News: (703) 875-5660
Congressional Cases: (703) 875-6641
Commodity Jurisdictions: (703) 875-7041/5655
License Status Staff: (703) 875-6652
Automated License Status Systems:
ALISS (Telephonic): (703) 875-7374
ROBB (Electronic): (703) 875-6650

Facsimile Numbers

Licensing /Management/Forms: (703) 875-6647 PM/DITP: (202) 647-4232
Registration /Compliance/ROBB: (703) 875-5663 Center For Defense Trade: (202) 647-1346

Department of State Publication 9783
Bureau of Politico-Military Affairs
Revised July 1992


“Specially Designated Vessels”
April 21, 1992

Alphabetical listing of vessels in which Sanctioned Governments and/or Specially Designated Na-
tionals (Cuba and Vietnam) have an interest:

ACECHILLY Acechilly Navigation Co., Malta CUBA
ACEFROSTY Acefrosty Shipping Co., Malta CUBA
AGATE Agate Maritime, S.A., Panama VIETNAM.
ALEGRIA DE PIO Naviera Maritima de Arosa, Spain CUBA
ANAI1 Navigable Water Corp., Panama CUBA
AVIS FAITH Bradfield Maritime Corp. Inc., Panama CUBA
CARIBBEAN PRINCESS Caribbean Princess Shipping, Cyprus CUBA
CARIBBEAN SALVOR Antillana Salvage Co. Ltd., Malta CUBA
CARIBBEAN QUEEN Caribbean Queen Shipping, Cyprus CUBA
CASABLANCA Epamac Shipping Co., Ltd., Malta CUBA
CICLON Senanque Shipping Co., Ltd., Cyprus CUBA
COTTY Heywood Navigation Corp., Panama CUBA
CRIOLLO Senanque Shipping Co., Ltd., Cyprus CUBA
EAST ISLANDS East Island shipping co., Ltd., Cyprus CUBA
EMERALD ISLANDS Bettina Shipping Co., Ltd., Malta CUBA
FLYING DRAGON Flight Dragon Shipping Ltd., Malta CUBA
FRIGO HISPANIA Ace Indic Navigation Co., Malta CUBA
GRACE L. Elshippers Inc., Liberia CUBA
GRETE Grete Shipping Co., S.A., Panama CUBA
HERMANN Guamar Shipping Co., S.A., Panama; formerly

owned by Hermann Shipping Corp., Inc., Panama CUBA
HUNTSLAND Huntsland Navigation Co., Ltd., Malta CUBA
HUNTSVILLE Huntsville Navigation Co., Ltd., Malta CUBA
HURACAN Senanque Shipping Co., Ltd., Cyprus CUBA
HYALITE Whiteswan Shipping Co., Ltd., Cyprus CUBA
JADE STAR Pearl Star Maritime, S.A., Panama VIETNAM
KASPAR Kaspar Shipping, S.A., Panama CUBA
LAS COLORADOS Naviera Maritima de Arosa, Spain CUBA
LAURA Aimoros Shipping Co., Malta CUBA
LILAC ISLANDS Valletta Shipping Corp., Panama CUBA
LONG AN Pearl Star Maritime, $.A., Panama VIETNAM
LONG HAI Pearl Star Maritime, S.A., Panama VIETNAM -:
LONG THANH Mercury Shipping Co., Ltd., Malta VIETNAM
LOTUS ISLANDS Wadena Shipping Corp., Liberia CUBA
MAR AZUL Senanque Shipping Co., Ltd., Cyprus CUBA
NEPTUNE STAR Great Neptune Star Shipping, $.A., Panama VIETNAM
NEW PIONEER Pioneer Shipping, Ltd., Malta VIETNAM
NORTH ISLANDS North Islands Shipping Co., Cyprus CUBA
ONYX ISLANDS Maryol Enterprises, Inc., Panama CUBA
ORIENTAL JADE Aquamarine Maritime, S.A., Panama VIETNAM
PALMA MOCHA Naviera Maritima de Arosa, Spain CUBA
PAMIT C. Pamit C. Shipping Co., Ltd., Cyprus CUBA
PEONY ISLANDS Peony Shipping Co., Ltd., Cyprus CUBA

PINO DEL AGUA Naviera Maritima de Arosa, Spain CUBA


COMMODITY JURISDICTION
Smart Cards with encryption. ccL*
Initialized and personalized
Not initialized and personalized USML XII(b)
Software program for specification CCL ECCN 3D96G
electromagnetic analysis
Cathode Ray Tubes CCL ECCN 3A96G

Multibeam bathymetric sonar system © CCL ECCN 6A01A
Airborne weather radar CCL ECCN 15014
Reflectance spectrometer CCL ECCN 65996

COMMODITY JURISDICTION

Ruggedized Dot Matrix Printer with — USML XI(e)
EMI capability

Special daylight avionics switches CCL ECCN 9A94F
‘Transformers designed for Missiles  USMLIV(h)
Turbine Engine Ignition System CCL ECCN 6498F
‘Turbo-Prop Military Trainer Aircraft USML VIII(a)
Specially Designed Parts and
‘Components USML VIG)

Voice Privacy Device for Telephones = CCL**

** A specific Export Commodity Classification Number (ECCN) was not provided by the Department of Commerce. For the ECCN
number, please file a commodity classification request with the Bureau of Export Administration (BXA), Department of Commerce,

P.O. Box 273, Washington, DC 20044.

Continued from page 16

The amount decided upon is dependent, first,
upon the nature of the violation. If the viola-
tion is procedural (i-e., involving a paperwork
processing error or omission such as the fail-
ure to present a license where such license has
been procured or the failure to validate the
license) it is categorized as a “technical” viola-
tion, for which the monetary penalty amounts
are generally in the $250-$3,000 range. If the
violation involves the failure to obtain a li-
cense in advance of the exportation or impor-
tation, or the failure to secure a valid license,
it is considered a “substantive” violation. A
first substantive violation subjects the ex-
porter/importer to a forfeiture remission
amount in the $250-$2,500 range; a second
violation to a remission amount in the $500—
$5,000 range; and the third violation to a for-
feiture remission amount equal to 10% or
more of the value of the unlicensed merchan-
dise, but not less than $1,000. For violations

involving Bureau of the Census Foreign Trade
Statistics Regulations (failure to file the SED
or incorrect information on the SED), the for-
feiture remission amount is in the $150-$1,000
range.

Interagency Coordination Can Affect Remis-
sion Amount. In many cases Customs may
seek State, Commerce, Bureau of Alcohol and
Firearms or Office of Foreign Assets Control
advice and recommendation as to the forfei-
ture remission amount. This often results in a
decision amount outside the guidelines. This
amount is usually lower than the amount
prescribed under the EXP guidelines. In cer-
tain cases, however, it might be higher than
the prescribed amount, due to the presence of
an extraordinarily aggravating factor in the
case.

For additional information contact your local
District Director of Customs Office. #

Page 18

Defense Trade News, Volume 3, Number 3, July 1992



Blue Lantern Program
End-Use Checks in the Licensing Process

End-Use Checks are a Licensing and Control
Mechanism. Violations of arms export con-
trol laws and regulations are prejudicial to the
security, foreign policy, and commercial inter-
ests of legitimate trading partners. As recent
history makes clear, illicit trade in defense
technology, goods, and services can pose a
major threat to the U.S. and to friendly for-
eign countries. As one means of regulating
USS. commercial defense exports, and encour-
aging compliance with the Arms Export Con-
trol Act (AECA) and the International Traffic
in Arms Regulations (ITAR), the Department
of State initiates inquiries to establish the
bona fides of export transactions occurring
under its licensing jurisdiction.

Development of a Program. The applicant
for a license or other written approval of a
proposed transaction is responsible for the
accuracy of all information contained on the
application and its supporting documenta-
tion. Applicants must ascertain the specific
end use and end user prior to submitting an
application to the Office of Defense Trade
Controls (DTC) or claiming an exemption.

End-use checks have been conducted for a
number of years. As noted previously in De-
fense Trade News (Volume 2, Number 1, Janu-
ary 1991, pp. 12-13), DTC routinely identifies
license applications for end-use checks if con-
ditions exist that signal the possibility of ille-
gal exports or diversions. These conditions,
or warning flags, were listed in the aforemen-
tioned issue of Defense Trade News. In Sep-
tember 1990, using the cited and other crite-
tia, the Department of State formally initiated
a more systematic program, known as “Blue
Lantern,” designed to verify destinations and
end -use of U.S.-origin defense articles and
services. The program enlists the assistance
of U.S. diplomatic posts, the cooperation of
the U.S. Customs Service, and most impor-
tantly, foreign governments in the conduct of

pre-license checks (PLCs) and post-shipment
verifications (PSVs) of defense exports.

Since the program’s inception, several
hundred end-use checks have been initiated,
and DTC anticipates doing an increasing
number each year. “Blue Lantern” is a global
effort; no company, recipient country, or even
commodity category is “singled out” for re-
view. While some checks are random, the
vast majority are triggered by an evolving list
of export problem indicators, as previously
stated.

Pre-License Check Purposes. A PLC is an
effort to determine the reliability of overseas
parties as recipients of U.S.-origin defense
articles and services. Further, PLCs ensure
that the proposed disposition of the commod-
ity or technical data in question is consistent
with the normal business of the recipients as
well as with U.S. foreign policy and national
security interests. We also use PLCs to ensure
that the foreign party to an export under-
stands its responsibilities in terms of U.S. law.

Post-shipment Verification Aims. A PSV is
used to confirm that U.S. defense exports
have, in fact, been received by the designated
end user and that the exports are being used
in accordance with the terms and provisions
of the approved license.

Implementation of End-Use Checks. Desig-
nated personnel at U.S. diplomatic and consu-
lar posts are tasked to make end-use inquiries
on behalf of the U.S. Government. They usu-
ally work directly with the host government.
Where possible, and according to guidelines
established by the host government, these
US. officials also contact foreign private indi-
viduals and entities. Depending upon the
nature of a given export problem, the scope of
an inquiry might range from simple oral or
written contact to verify the bona fides of a
proposed transaction to physical inspection of
the export.

Page 10

Defense Trade News, Volume 3, Number 3, July 1992



“Attachments:”

“Letter of Transmittal, original, and 7 copies”
“Proposed Agreement, 8 copies”
“Certification Letter, per 126.13”

[Insert “Part 130 Statement”, if applicable]
[Insert “Form DSP-83", if applicable.]

Suggested Format for a Letter of Transmittal for a Manufacturing License Agreement

Instructions: Using letterhead stationery of the applicant, copy text in quotation marks (“..”) ex-
actly. Insert appropriate wording wherever text is italicized in brackets ([...]). Do not include the
quotation marks or brackets in the final transmittal letter. Include detailed pertinent background
information wherever appropriate in the transmittal letter, as it might assist reviewers.

[Insert date]

“Mr. William B. Robinson

Director, Office of Defense Trade Controls
PM/DTC, SA-6, Room 200

USS. Department of State

Washington, D.C. 20522-0602”

“Subject: Proposed Manufacturing License Agreement (MLA) between [Insert U.S. company name]
and [Insert foreign party name and country].”

“Reference: [Insert information about all previous cases related to this MLA, including the original agree-
ment, amendments, and licenses].”

“Dear Mr. Robinson:”

“Submitted herewith are seven copies of this letter and eight copies of a proposed Manufacturing
License Agreement between [insert U.S. company name] and [insert foreign party name and country] for
the transfer of certain technical information for the manufacture of [insert the manufacturer's end item
nomenclature and military designator].”

“In accordance with 22 CFR 124.12, the following information is provided:”

“(a)(1) The DTC applicant code is [insert the applicant's registration number].”

“(a)(2) The licensee is [insert foreign party], located in [insert country and specific location of facility).
The scope of this agreement entails [insert U.S. company name] providing production and
manufacturing assistance or other assistance [insert summarized details of the proposed transfer]
to the licensee for the production of [identify the USML category, category title, manufacturer's
end item nomenclature, and military designation; e.g., Category Vil—Aircraft, Spacecraft, and Asso-
ciated Equipment; Sikorsky UH-60L, Blackhawk]. The agreement is desired to be valid through
[insert the requested term expiration date]. The item will be sold to [identify the foreign end
user].”

“(a)(3) [Identify relevant U.S. Government contract(s) under which equipment or technical data was gener-
ated, improved, or developed and supplied to the U.S. Government. State whether or not the equip-
ment or technical data was derived from any bid or other proposal to the U.S. Government. If neither
of the preceding statements applies, identify which branch of the U.S. military service is or might be
cognizant of the program|.”

“(a)(4) “The highest U.S. military security classification of the equipment or technical data to be
transferred under the terms of this agreement is [insert the classification, e.g., Confidential, Se-

Defense Trade News, Volume 3, Number 3, July 1992 Page 7



“(a)(7) [State whether or not any Foreign Military Sales (FMS) credits or loan guarantees are or will be
involved in financing the agreement, and include the FMS case number, if known).”

“(b)(1) If the agreement is approved by the Department of State, such approval will not be con-
strued by [insert applicant’s name] as passing on the legality of the agreement from the stand-
point of antitrust laws or other applicable statutes, nor will [insert applicant’s name] construe
the Department's approval as constituting either approval or disapproval of any of the busi-
ness terms or conditions between the parties to the agreement.”

“(b)(2) The [insert applicant's name] will not permit the proposed agreement to enter into force until
it has been approved by the Department of State.”

“(b)(3) The [insert applicant's name] will furnish the Department of State with one copy of the signed
agreement within 30 days from the date that the agreement is executed, and will inform the
Department of its termination not less than 30 days prior to the expiration and provide in-
formation on the continuation of any foreign rights or the flow of technical data to the for-
eign party. If a decision is made not to conclude the proposed agreement, the [insert
applicant's name] will so inform the Department within 60 days.”

“To facilitate U.S. Government consideration of this request, the agreement contains the following
provisions currently required by the ITAR:”

“Pursuant to 22 CFR 124.8: CFR Section to Agreement Cross-Reference Index”

“124.8(a)” [List all ITAR clauses in alpha-numeric sequence. Next to each reference, insert the
“124.8(b)” specific location in this agreement where the required information is located.
“124.8(c)” Include article, section, paragraph, and page number.)

“124.8(d)”

“Pursuant to 22 CFR 124.9: CFR Section to Agreement Cross-Reference Index”

“124.9(a)” [List all ITAR clauses in alpha-numeric sequence. Next to each reference, insert the
“124.9(b)” specific location in this agreement where the required information is located.
“124.9(c)” Include article, section, paragraph, and page number.]

“124.9(d)”

“124.9(e)”

“124.9(f)”

“This agreement relates to the following U.S. Munitions List (USML) Categories: XVI—Technical
Data, XIX—Defense Services, and [list all applicable USML Categories and Category Titles]. These cat-
egories [insert ‘are’ or ‘are not’) designated as Significant Military Equipment (SME).”

“A Nontransfer and Use Certificate, Form DSP-83, as required for SME, classified articles or classi-
fied technical data [insert ‘is’ or ‘is not’] attached in accordance with 22 CFR 124.11.”

[In accordance with 22 CFR 126.8, if applicable, insert a statement regarding ‘Prior Approval or Prior Notifi-
cation’ and a history of licenses to export data and hardware related to this submission.]

“If you require additional information, please contact [insert the name of the applicant's licensing point
of contact] at telephone number [insert area code and number).”

[Insert the U.S. Government agencies, office symbols, names, and phone numbers of personnel who are famil-
iar with the item and/or the business effort. Do not include PM/DTC personnel.)

“Sincerely,”

[Insert the Signature Block. The person who signs the letter must be a U.S. person who is an empowered
official of the applicant.)

Page 6 Defense Trade News, Volume 3, Number 3, July 1992



a

MARKING ATTACHMENTS

Attachments to license applications which a
company wishes to have returned should be
clearly marked “RETURN TO APPLICANT.”

DTC IN-HOUSE TRAINING SEMINARS

The Office of Defense Trade Controls (DTC)
offers in-house training seminars on export
licensing policies and procedures for defense
companies. The seminars can be specifically
tailored to the needs of individual firms, or
can provide general information for groups of
companies. If there is sufficient demand, two
seminars can be scheduled each month. At-
tendance is limited to 30 people per seminar.
The sessions are held in the DTC conference
room, 2d floor, 1701 N. Fort Myer Drive, Ar-
lington, Virginia. For more information, com-
plete and mail the tear-out Training Request
Form on page 25.

ATTACHING PREVIOUS LICENSES

If, on a license application, a previous license
is cited which might serve as a precedent for
the current application, or for which the cur-
rent application is an “unshipped balance,”
the applicant should attach a copy of the pre-
vious license, including any proviso letter.
This will facilitate licensing and could prevent
delays.

REGISTRATION EXPIRATION

Applicants are reminded to check the expira-
tion date of their registration. The first four
digits of the registration code indicates the
month and year of expiration. The registra-
tion expires on the last day of the month indi-
cated. For example, registrant code 1092-4444

indicates that the applicant's registration ex-
pires on October 31, 1992. Registrants should
apply for renewal at least 60 days in advance
of the expiration date.

PUBLICLY AVAILABLE DTC
DOCUMENTS

The Department of State maintains a public
reading room at the main State Department
building at Room 1239, 2201 C Street, NW,
Washington, D.C. The file regarding defense
trade controls contains documents relating to
debarments, consent agreements, and civil
penalty orders. Also available are copies of
comments submitted on proposed changes to
the ITAR.

If you wish to visit the reading room and re-
view the documents relating to munitions
controls, the hours are from 8:15 am to 4 pm,
Monday through Friday. In order to gain
access to the Department, please call Mrs.
Olga Luck at (202) 647-8484. You may also
obtain copies of the documents at a cost of 25¢

per page.

For those individuals outside the Washing-
ton, D.C. area, copies of documents may be
requested under the Freedom of Information
Act. Your written request should be submit-
ted to the Office of Freedom of Information,
Department of State, Room 1239, Washington,
D.C. 20520. The request must identify what
documents you want.

PUBLIC HEARING ON REGULATION
CHANGES

The Center for Defense Trade hosted an open |
forum at the State Department’s Dean ;
Acheson Auditorium in Washington, D.C., on |
June 29 to allow public comment on proposed
changes to the International Traffic in Arms
Regulations (ITAR). The meeting opened

with remarks from Mr. Richard A. Clarke,
Assistant Secretary of State for Politico-Mili-
tary Affairs. Mr. Clarke pointed out for the
attendees the difficult task faced by the team
revising the regulations—balancing the need

to ease controls to allow American industry to

Defense Trade News, Volume 3, Number 3, July 1992

Page 19



“This agreement relates to the following U.S. Munitions List (USML) Categories: XVII—Technical
Data, XIX—Defense Services, and [list all applicable USML Categories and Category Titles]. These cat-
egories [insert ‘are’ or ‘are not’] designated as Significant Military Equipment (SME).”

“A Nontransfer and Use Certificate, Form DSP-83, as required for SME, classified articles, or classi-
fied technical data [insert ‘is’ or ‘is not’] attached in accordance with 22 CFR 124.11.”

[In accordance with 22 CFR 126.8, if applicable, insert a statement regarding ‘Prior Approval or Prior Noti-
fication’ and a history of licenses to export data and hardware related to this submission.]

“If you require additional information, please contact [insert the name of the applicant's licensing point
of contact] at telephone number [insert area code and number].”

[Insert the U.S. Government agencies, office symbols, names, and phone numbers of personnel who are famil-

iar with the item and/or the business effort. Do not include PM/DTC personnel.]

“Sincerely,”

[Insert the Signature Block. The person who signs the letter must be a U.S. person who is an empowered

Official of the applicant.]

“Attachments:”

“Letter of Transmittal, original, and 7 copies”
“Proposed Agreement, 8 copies”
“Certification Letter, per 126.13”

[Insert “Part 130 Statement”, if applicable]
[Insert “Form DSP-83", if applicable.] #

THE TRANSMITTAL LETTER

DO In the Reference Section, cite all related prior
agreements and all concurrently submitted DSP-5s or
other applications.

(1 Ensure that the ‘CER Section to Agreement Cross-
Reference Index’ section lists the ITAR clauses in nu-
merical sequence, regardless of location in the agree-
ment. Include specific location for each clause by ar-
ticle, section, paragraph, and page number in the main
body of the agreement.

THE MAIN BODY OF THE AGREEMENT

D For ITAR Section 124.8(d) information, clearly
identify the end user (for TAAs) or the sales territory
(for MLAs).

0) Except as noted in other areas of these guidelines,
use 124.9 and 124.10 clauses verbatim; do not “bend”
the wording.

0 In MLAs, ITAR Section 124.10(a)(4) clause, insert
the specific location in the agreement instead of the
ITAR language. Ensure that the paragraphs cited are
numbered from the agreement, not from the ITAR.

0 In MLAs, ITAR Section 124.10(A)(5) clause, spe-
cific which party (either the applicant or the licensee)
will provide the annual report.

Guidelines to Facilitate Processing Agreements

O In MLAs, ITAR Section 124.10(a)(6) clause, specify
the licensee and the country (or countries) of ultimate
designation or approved sales territory instead of the
parenthetical phrase. EXCEPTION: When numerous
countries are involved, include a statement with the
mandatory clause: “The licensee agrees to customize the
parenthetical phrase above on a transaction-by-transac-
tion basis, showing explicitly the specific country or
countries involved in each transaction (i.e., sale or other
transfer).”

THE AGREEMENT SUBMISSION PACKET

0 Submit cases likely to require Congressional ap-
proval with agreements already signed by all parties.

When more than one country is involved, submit
all basic (ie., initial) agreements excluding territories
COCOM (Coordinating Committee on Multilateral
Export Controls) review. After the basic agreement is
approved, submit an amendment to add COCOM terri-
tories.

O Submit at least three additional complete packets
of MLAs: with sales territory on more than three conti-
nents, or which require Congressional notification. #

Detense Trade News, Volume 3, Number 3, July 1992

Page 9



Training—Relief Is Just A Letter Away

Are export procedures giving you or your employees headaches? The Office of Defense Trade
Controls (DTC) can design a seminar on export licensing policies and procedures with your specific
needs in mind. Seminars are held in DTC’s main conference room on the second floor at 1701 N.
Fort Myer Drive, Arlington, VA.

DIC normally holds two seminars per month if demand warrants. Seating constraints limit attend-
ance to 30 people per seminar. Normal training sessions are half-day, but they can be extended
according to the needs of the participants. Small companies are encouraged to apply for these
training sessions. We combine participants from different companies each month to make up a
session. Larger companies might have enough personnel to take up all of the available spaces in a
session, in which case, we will schedule a special session for that company.

In order to request a training seminar, please complete the application below and return it to DTC.

1. Type(s) of Training Desired

Completion of Applications Registration Requirements
Country Licensing Policies Congressional Requirements
COCOM Requirements Agreement Requirements
U.S. Customs EXODUS Program Commodity Jurisdiction Requests
Processing of Requests Licensing Foreign Nationals
Other subject areas you wish covered:

(fold on this line)

2. Number of individuals wishing to attend from your firm.

3. Please list the primary U.S. Munitions List category(ies) of defense articles, services, and/or tech-
nical data in which your firm usually deals.

1. 2. 3. 4.
4, Name of Company /Individual
DTC Registration Code
Address
Point of Contact
Phone ( ) - ( ) -
Direct Line DataFax

5. Would your company be interested in briefing DTC about your products or services?

Yes No


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

Defense Trade News

The Bulletin of the Center for Defense Trade

Volume 3, Number 3 ° Washington, D.C. . July. 1992
Features
Technology Transfer 3

Technical Assistance and Manufacturing License Agreements and Offshore Procurement

Blue Lantern Program 1 0
End-Use Checks in the Licensing Process

Ombudsman Compliance Procedure 1 1
A Program for Prevention

CDT/SIA Conierence on Defense Trade 1 2
Precedes Farnborough Air Show

Licenses for the Farnborough Air Show 1 3
Time Is Running Out

How To Avoid Registration Problems 1 3
Planning Ahead Is the Key to Success

Enforcement Action 1 4
Revocation of Licenses and Approvals

re
Departments

U.S. Customs at DTC 16
Commodity Jurisdiction Determinations 17
Tips and Tidbits 19
Personnel Updates 20
Vessels in Which Specially Designated Nationals have an Interest 21
Training Form 25

Written and Edited by the Center for Defense Trade


* Anotice should be prominently
placed at the firm’s job sites and offices an-
nouncing the ombudsman’s name, telephone
number, and the purpose of the program.

¢ An operating procedure should be
developed pertaining to the information re-
ceived by the ombudsman. When informa-
tion received by the ombudsman, in his or her
opinion, merits inquiry, the ombudsman may
conduct an investigation or request that the
company assist in the conduct of an investiga-
tion. At the conclusion of any such investiga-

tion, the ombudsman shall prepare a report
for the company’s president, detailing the
substance of the allegations, the evidence re-
vealed by the investigation, and the ombuds-
man’s findings and recommendations.

e Atleast annually, the ombudsman is
to conduct a review of the company’s compli-
ance with applicable export laws and regula-
tions and the procedures of the company per-
taining to the export of defense articles and
furnishing defense services. A written report
of his or her findings should be provided to
the president of the company.

CDT/SIA Conference on Defense Trade

Precedes Farnborough Air Show

The Center for Defense Trade and the Society
for International Affairs will cosponsor the
1992 Conference on Defense Trade, “Security
in the 1990s: Cooperation in Defense Trade”
on Friday, September 4, in London. The con-
ference will precede the Farnborough Interna-
tional Air Show, which will be held the week
of September 6-13.

Organized as a separate but complementary
event to Farnborough, the conference is a
must for marketing, strategic planning, and
compliance executives from companies en-
gaged in trade with or from the United States.
It will provide U.S. and foreign industry rep-
resentatives with a better understanding of
the export policies and controls governing
US. goods, services, and technical data in
today’s ever changing global marketplace.

The conference is scheduled from 8:30 am to
5 pm at the London Marriott Hotel. During
the course of the day there will be a number
of panel discussions which will address such

topics as European Community (EC) 1992 and
the Implications for U.S.-European Defense
Trade; Changes in U.S. Defense Trade Regula-
tions; and Nuclear and Missile Proliferation
Policies. There will also be individual speak-
ers giving talks on New Policy Initiatives in
Export Controls; Export Challenges in Eastern
Europe and the Newly Independent States of the
Former Soviet Union; and Technology Transfer,
Foreign Investment, and the U.S. Defense
Department's Role.

Key U.S. Government officials responsible for
formulating and implementing defense trade
policy from the Departments of State, Com-
merce, and Defense and the Arms Control
and Disarmament Agency will also be avail-
able throughout the conference to discuss
issues on an individual basis.

Individuals with questions about the confer-
ence or who wish to register should contact
Ms. Fae Daniels at (703) 765-1955. Her fac-
simile number is (703) 765-6759. #

Page 12

Defense Trade News, Volume 3, Number 3, July 1992



Importance of End-Use Checks. End-use
checks are a key component of the State
Department's effort to prevent illegal defense
exports and technology transfer. The “Blue
Lantern” program has been highly successful
in this regard. It has weeded out potential as
well as flagrant violations of the AECA and
the ITAR. Some cases have resulted in denial,
suspension, or revocation of export licenses,
and in the prosecution of individuals for vio-
lations of the AECA and the ITAR.

It is also noteworthy that “Blue Lantern”
has been lauded by other governments. Most
participants in the defense export process are
fully committed to the resolution of problems
and doubts regarding the end use of defense
articles, technical data, or defense services.
While DTC is committed to implementing a
timely process, the need for thorough review
sometimes causes delay in license processing.
The “Blue Lantern” program is an invaluable
mechanism in the U.S. Government's commit-
ment to legitimate, fair, and competitive de-
fense trade practices throughout the world. #

Ombudsman Compliance Procedure

A Program for Prevention

Voluntary Compliance Mechanisms Encour-
aged. Exporters are encouraged to imple-
ment procedures to ensure compliance with
sections 38, 39, and 40 of the Arms Export
Control Act (AECA) and the International
Traffic in Arms Regulations (ITAR). One
means is to develop a detailed export compli-
ance manual (see Defense Trade News, Volume
2, Number 1, January 1991, pp. 14-15). Em-
ployment of an independent ombudsman is
another compliance mechanism a firm can
voluntarily institute.

Ombudsman Condition to Relief from Sanc-
tions. In some cases, such as those involving
debarred persons or persons no longer de-
barred but subject to ineligibility under Sec-
tion 38(g)(4) of the AECA (Defense Trade News,
Volume 3, Number 2, April 1992, pp. 14-16),
an ombudsman may serve as an assurance
that the transgressions have been adequately
redressed. The Department of State, there-
fore, may recommend the ombudsman
mechanism to such persons seeking reinstate-
ment of their export privileges.

The Ombudsman Role. The ombudsman
should include, at a minimum, the following
features:

¢ The appointment of an experienced,
independent attorney to serve as ombudsman

for company employees on issues pertaining
to export control laws and as the arms export
control compliance representative.

© The attorney and the attorney’s firm
should certify that they have no financial in-
terest in or other relationship with the ex-
porter except for the receipt of fees for profes-
sional services rendered pursuant to their
duties as outside counsel.

¢ A publication should be prepared for
general distribution to all employees which
includes the name, address, and telephone
number of the ombudsman. The company
publication should advise employees that the
ombudsman is available for consultation on
any question the employee might have con-
cerning issues pertaining to export control
laws. Each employee will also be informed in’
that publication of the obligation to report to
the ombudsman any information regarding
any suspected violation of law or regulation.

* To facilitate the disclosure of informa-
tion, the identity of the reporting individual
will, at the individual’s request, be held in
strict confidence by the ombudsman, to the
extent authorized by law and consistent with
the attorney’s professional ethical obligations.

Defense Trade News, Volume 3, Number 3, July 1992

Page 11



cret. State the highest foreign military security classification, and identify the classifying agency and
country.]”

“(a)(5) [Insert a statement concerning patents as required by 22 CFR 124.12(a)(5)].”

“(a)(6) [Insert a statement indicating the actual or estimated value of the agreement. If the value is
$250,000 or greater, prepare a separate letter regarding the payment or nonpayment of political con-
tributions, fees, or commissions as required by 22 CFR 130. Enclose the ‘Part 130 Statement’ as an
attachment to this transmittal letter.|”

“(a)(7) [State whether or not any Foreign Military Sales (FMS) credits or loan guarantees are or will be
involved in financing the agreement, and include the FMS case number, if known.]”

“(b)(1) If the agreement is approved by the Department of State, such approval will not be con-
strued by [insert applicant's name] as passing on the legality of the agreement from the stand-
point of antitrust laws or other applicable statutes, nor will [insert applicant's name] construe
the Department's approval as constituting either approval or disapproval of any of the busi-
ness terms or conditions between the parties to the agreement.”

“(b)(2) The [insert applicant’s name] will not permit the proposed agreement to enter into force until
it has been approved by the Department of State.”

“(b)(3) The [insert applicant’s name] will furnish the Department of State with one copy of the signed.
agreement within 30 days from the date that the agreement is executed, will inform the De-
partment of its termination not less than 30 days prior to the expiration, and provide infor-
mation on the continuation of any foreign rights or the flow of technical data to the foreign
party. If a decision is made not to conclude the proposed agreement, the [insert applicant's
name] will so inform the Department within 60 days.”

“To facilitate U.S. Government consideration of this request, the agreement contains the following
provisions currently required by the ITAR:”

“Pursuant to 22 CFR 124.8: CFR Section to Agreement Cross-Reference Index”

“124.8(a)” [List all ITAR clauses in alpha-numeric sequence. Next to each reference, insert the
“124.8(b)” specific location in this agreement where the required information is located.
“124.8(c)” Include article, section, paragraph, and page number.]

“124.8(d)”

“Pursuant to 22 CFR 124.9: CFR Section to Agreement Cross-Reference Index”

“124.9(a)” [List all ITAR clauses in alpha-numeric sequence. Next to each reference, insert the
“124.9(b)” — specific location in this agreement where the required information is located.
“124,9(c)” Include article, section, paragraph, and page number.|

“124.9(d)”

“124.9(e)”

“124,9()”

“Pursuant to 22 CFR 124.10: CFR Section to Agreement Cross-Reference Index”

“124.10(a)(1)” [List all ITAR clauses in alpha-numeric sequence. Next to each reference, insert the
“124.10(a)(2)” specific location in this agreement where the required information is located.
“124.10(a)(3)” Include article, section, paragraph, and page number.]

“124.10(a)(4)”

“124,10(a)(5)” Customize the language of the (a)(5) and (a)(6) clauses to accurately reflect
“124.10(a)(6)” this agreement—Do not copy these verbatim from the ITAR.]
“124.10(b)(1)” [If Significant Military Equipment is involved, insert these two required clauses.]
“124.10(b(2)”

Page 8 Defense Trade News, Volume 3, Number 3, July 1992



This publication is designed as an unofficial reference tool listing “Specially Designated Ves-
sels,” i.e., Vessels in which Sanctioned Governments and/or Specially Designated Nationals (Cuba
and Vietnam only) have an interest to assist the public in complying with the various programs
administered by the Office of Foreién Assets Control. A list of vessels in which Iraq has an interest
is published separately (56 FR 13584, April 3, 1991) and will appear at a later date in Defense Trade
News. These lists are not intended as a substitute for official listings published in the Federal Regis-
ter. New Federal Register notices with regard to Specially Designated Vessels may be published at
any time. Users are advised to check the Federal Register routinely for additional names or other
changes to these lists. Current information with regard to these lists may be obtained by calling the
Office of Foreign Assets Control.

WARNING: Vessels identified on these lists are blocked property in which a sanctioned govern-
ment has an interest and are subject to all the prohibitions applicable to that sanctioned govern-
ment. This means that the vessels cannot be used in any manner by U.S. persons and that the ves-
sels will be taken into custody if they enter U.S. waters.

For further information contact the:
OFFICE OF FOREIGN ASSETS CONTROL
U.S. Department of the Treasury

1500 Pennsylvania Avenue NW
Washington, D.C. 20220

Phone: (202) 622-2420
Data Fax: (202) 622~1657


Oe

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

OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE $300

Address Correction Requested
* Ms. Lora Lumpe ;
Federation of American Scientists
307 Massachusetts Ave., N.E.
Washington, DC 20002-

BULK RATE

POSTAGE & FEES PAID

U.S. Department of State
Permit No. G-130

SMON Opes Bsuajaq e}eIS yo JUOWEdA|g *S'N

ze6 Aine

EON ‘E “10A


el

extensions, novations, and transfers of obliga-
tions to different business entities, must re-
ceive DTC’s prior written approval before
becoming effective (Section 124.1(b)). Do not
submit amendments that only alter delivery
or performance schedules or other minor ad-
ministrative amendments that do not affect
the duration or scope of the agreement or
information that must be included in the
agreement, for approval. One copy of all such
minor amendments must be submitted to
DTC within 30 days, however, after the
amendment is signed or executed.

License Requirements for Offshore Procure-
ment (Section 124.13). Using a DSP-5, U.S.
persons may be authorized to export unclassi-
fied technical data to foreign persons for off-
shore procurement of defense articles pro-
vided all of the following conditions are met:

© The contract or purchase order for
offshore procurement limits delivery of the
defense articles to be produced only to the
person in the U.S. or to an agency of the U.S.
Government.

¢ The technical data of U.S. origin to be
used in the foreign manufacture does not dis-
close the details of the design, development,
production, or manufacture of defense ar-
ticles.

¢ The contract or purchase order be-
tween the person in the United States and the
foreign person:

— limits the use of the technical data to
the manufacture of the defense articles
required by the contract or purchase order
only;

— prohibits the disclosure of the data to
any other person except duly qualified
subcontractors within the same country;

— prohibits the acquisition of any rights
in the data by any foreign person;

— requires the foreign person, including
subcontractors, to destroy or return to the
person in the United States all of the tech-
nical data exported pursuant to the con-
tract or purchase order upon fulfillment of
their terms;

— requires delivery of the defense ar-
ticles manufactured abroad only to the
person in the United States or to an
agency of the U.S. Government; and

— provides that any equipment manu-
facturing subcontracts between foreign
persons in the approved country for deliv-
ery pursuant to the contract or purchase
order contain all the aforementioned limi-
tations.

¢ The person in the United States pro-
vides DTC with a copy of each contract, pur-
chase order, or subcontract for offshore pro-
curement at the time it is accepted. Each such
contract, purchase order, or subcontract must
clearly identify the article to be produced and
must identify the license number or exemp-
tion under which the technical data was ex-
ported.

¢ Licenses issued pursuant to Section
124.13 of the ITAR must be renewed upon
their expiration if offshore procurement is to
extend beyond the period of validity of the
license. If the technical data involved in an
offshore procurement arrangement is other-
wise exempt from the licensing requirements
of Section 126.4 or Section 126.5, the DSP-5 is
not required. The exporter must, however,
comply with all other requirements of Section
124.13. #

Page 4

Defense Trade News, Volume 3, Number 3, July 1992



a

volving the aforementioned entities. In ac-
cordance with the authority under the AECA
and the ITAR, on March 19, 1992, the Depart-
ment of State suspended all existing licenses
and other approvals that authorize the export
or transfer by, for, or to A. Rosenthal (PTY)
Ltd. (located in Namibia and South Africa),
Karl Cording, and Ian Ace, and their subsid-
iaries and associated companies, of defense
articles and services. The suspension will
remain in force until the Commerce Depart-
ment denial order is lifted.

This action was taken pursuant to section
38(g)(4)(B) of the AECA (22 U.S.C.
2778(g)(4)(B)) and sections 126.7(a)(1),
126.7(a)(2), and 126.7(a)(6) of the ITAR (22
CER. 126.7(a)(1), (2), and (6), and the De-
partment of Commerce Order Denying Ex-
port Privileges to A. Rosenthal (PTY) Ltd.
(located in Namibia and South Africa), and
two of its employees, Karl Cording and Ian
Ace (March 19, 1992).

In accordance with 126.3 and 126.7 of the
ITAR, affected U.S. persons desiring review of
this decision with regard to a particular ex-
port may petition the Director, Office of De-
fense Trade Controls. Exceptions to this sus-
pension may be made on a case-by-case basis
where warranted by U.S. foreign policy or
security interests.

The suspension was published in the Fed-
eral Register (Volume 57, Number 73, Wednes-
day, April 15, 1992, page 13152) under Public
Notice 1607.

Sanctions Imposed for Illegal Transfers to
Iraq. On July 16, a grand jury in the District
of Columbia returned a criminal indictment
charging Delft Instruments N.V., a Dutch
company, and four employees of subsidiary
companies with conspiracy to export and the
actual export to Iraq and Jordan of night vi-
sion devices containing U.S. components in
violation of the Arms Export Control Act and
related criminal statutes. The indictment al-
leges that Delft and employees of its subsid-
iaries conspired from 1988 to December 1990
to send to Iraq and Jordan two thermal-imag-
ing system prototypes, including infrared
detectors made by Hughes Aircraft Co., and
scanners made by Litton Systems. The indict-
ment alleges that the prototypes were ex-
ported to Iraq and Jordan in April and De-
cember 1990, and that a thermal night-sight-
ing camera was exported to Iraq in December
1989, without approval from the Department
of State. The Delft employees named in the
indictment were Erick Vleeschdraager,
Frederick Van Hulten, Wim Janssen, and Ben
Keus.

On January 25, 1991, the Department of State
suspended all licenses and other approvals to
Delft and associated companies based on in-
formation that night vision equipment had
been transferred to Iraq in violation of the
Arms Export Control Act. The suspension
remains in effect. #

Detense Trade News, Volume 3, Number 3, July 1992

Page 15



Commodity Jurisdiction
Determinations

The following chart provides selected commodity juris-
diction (CJ) determinations. The commodity descrip-
tions are intentionally general to ensure the confidential-
ity of all proprietary information related to individual
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 Commerce Department’s Commerce Control List (CCL),
please submit a CJ request letter (ITAR 120.5). Please refer to the articles “A Checklist for Prepar-
ing CJ Requests” in Vol. 1, No. 3, September 1990, and “Class and Multiple CJ Requests” in Vol. 3,
No. 1, January 1992, for guidance in preparing the CJ request letter.

COMMODITY JURISDICTION COMMODITY JURISDICTION
Turbine Engine Ignition System CCL ECCN 6498F Specially designed components for USML VII(h)
Ruggedized Video Recorders and CCL ECCN 1572A military vehicles

Players Helix Traveling Wave Tubes (TWT)  CCL*
Floating Drydock CCL ECCN 6499G Specially designed for military use USML XI

. Frequency greater than 18 GHz USML XI

Accessories for Shotguns CCL ECCN 69996 Minimum peak power 2.1 kW USML XI
Microwave Amplifiers for Navy USML XII(c) Minimum CW power 300 watts USML XI

fire control system. Instantaneous band with 1 octave USML XI
Computer equipment designed USML X1(a) or higher

for military application Multi-protocol Network Software using

. DES

A rapid reloader for revolvers USML III(b) Object Code ccL*
Transformers designed for missiles USML IV(h) Source Code USML XIII(b)
Unmanned aerial vehicle USML VIII(a) Solar Window Film and Thermal
Ruggedized chassis for commercial = CCL** blanket material ccL

computers Intensified Multispectral Camera USML XII(a)
Rectifiers or Diodes CCL ECCN 65996 Accelerometers /Inertial Navigation

. , Systems USML VIII(g)

Single Sapphire Crystals for use USML IV(h) ystems
in tactical missiles used in missile systems
Miniature optical shaft encoders COLECCN 65990 Secure Telecommunications equipment USML XIII(b)
When designed for military USML Aircraft Constant Speed Drives and
equipment Electrical CCL ECCN 6498F
Commercial radio equipment CCL ECCN 6598F Turbo-Prop Military Trainer Aircraft USML VII(a)
Inflatable life vests CCL ECCN 64996 Specially designed parts and ;
Magnetic Cards and Terminals cc“ components USML VINIG)
sficati Software used in designing
Pe estonia Number cel propellant systems USML IV(h)
Commercial modem CCL ECCN 1527 Movement Detection System. USML XI(c)
‘Access control software cc" Airbome Communications System USMI. Xia)
Towed Acrial Targets USML IX) Telephone Switching Antenna USML X1\(a)
Signalling equipment used for fire CCL** Rotary Control Ball Valve designed for USML VIt)
and security alarms .S. Navy 7
Semi-finished forging for a space USML XiII(@) Heads-Up Display for civil aircraft. CCL ECCN 6398F
station model Management Software Program ccL*
‘Target Radar Simulator CCL ECCN 15014, Computer system for Acquisition and CCL **
Data Base Management System ccL* Logistics management
Commercial Engines used by the ccLTM Subscriber Television System ccL*
Military

Defense Trade News, Volume 3, Number 3, July 1992 Page 17



eT

Technology Transfer

Technical Assistance and Manufacturing License Agreements and Offshore Procurement

Introduction to the Process. The Office of
Defense Trade Controls (DTC) regularly
addresses questions that arise from the
emergence of new and highly complex tech-
nology. This article addresses Technical
Assistance Agreements (TAA), Manufactur-
ing License Agreements (MLA), and off-
shore procurement.

Agreements. American manufacturers or
exporters who wish to export technical data
to foreign companies or individuals, either
through TAAs or MLAs must submit de-
tailed documentation to DTC. To reduce
industry’s workload in preparing the docu-
mentation and to expedite DTC’s agreement
review process, all information required by
the International Traffic in Arms Regulations
(ITAR) can be provided by letters of trans-
mittal. Suggested formats for TAA and
MLA letters of transmittal can be found be-
ginning on page 5.

Offshore Procurement. The export of un-
classified technical data to foreign persons
for procurement by U.S. persons in foreign
countries (offshore procurement) must also
be approved in advance by DTC. This au-
thorization is conveyed by a permanent ex-
port license (DSP-5).

Defining our Terms. The official definitions
of agreements and technical data can be
found in Section 120 of the ITAR as indi-
cated below. These definitions are used by
Licensing officers when reviewing or decid-
ing on technology transfer cases:

¢ Manufacturing License Agreement:
(Section 120.14)

* Technical Assistance Agreement:
(Section 120.20)

¢ Technical Data: (Section 120.21)

Submitting Agreements for Approval. Un-
der the provisions of Part 124 of the ITAR, a
U.S. company wishing to transfer technical

data pursuant to an agreement must obtain
approval in advance by submitting the pro-
posed agreement to DTC. The agreement can-
not enter into force without DTC’s prior writ-
ten approval (Section 124.1(a)). Once this ap-
proval is obtained, and any provisos or limita-
tions are adhered to, the defense services de-
scribed in the agreement may generally be pro-
vided without further licensing under the pro-
visions of Section 125.4(b)(2) of the ITAR.
Hardware items that are to be exported in fur-
therance of the approved agreement, however,
still require the appropriate export license
(DSP-5 for unclassified articles, or DSP-85 for
classified articles).

Section 124.12 of the ITAR requires applicants
to submit eight copies of the proposed agree-
ment, each under cover of a letter of transmit-
tal. In addition, the applicant must include a
Certification Letter as required by Section
126.13 and, if applicable, a Nontransfer and
Use Certificate (DSP-83) and a Part 130 state-
ment (pertaining to political contributions,
fees, and commissions). Eight copies of de-
scriptive literature or technical data, such as
statements of work, memorandum of under-
standing, parts lists, or systems descriptions,
should accompany the proposed agreement.

In order to be approved, proposed agreements
must contain specific information and clauses
as outlined in Sections 124.8 through 124.10 of
the ITAR. The U.S. party to an agreement must
file one copy of the signed agreement with
DTC no later than 30 days after all parties have
signed (Section 124.12(b)(3)). If the decision is
made to terminate or not execute an approved
agreement, DTC must be notified within 60
days of that decision.

For guidelines on putting together your agree-
ment package for submission to DTC, see the
box on page 9.

Amending an Agreement. Any substantial
amendment to an agreement, including term

Defense Trade News, Volume 3, Number 3, July 1992

Page 3



Tape Edge Before Mailing

POSTAGE AND FEES PAID
DEPARTMENT OF STATE
‘STA-501

PM/DTC, SA-6, Room 200
ATTN: Training Seminars

Office of Defense Trade Controls
Bureau of Politico-Military Affairs
US. Department of State
Washington, D.C. 20522-0602


Secretary of State
James A. Baker III

Under Secretary
of State for
International Security
Affairs
Reginald Bartholomew

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

Director of the Center
for Defense Trade
Charles A. Duelfer

Executive Editor
Charles A. Ray

Managing Editor
Marsha S. Finley

Production Editor
Philip P. Schol

Layout Design
Paula M. Lorfano

Graphics Design
Richard E. Florence
Contributing Editors

Commodity Jurisdictions:
Major Gary Oncale

U.S. Customs at DTC:
Thomas R. Smith

Defense Trade News (ISSN 1051-2845) is a quarterly publication (January,
April, July, and 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 informa-
tion on developments about defense trade policy, licensing practices, and
compliance issues. The newsletter contains 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 and Address Changes: Firms registered with the Office of
Defense Trade Controls automatically receive this publication at their registered
address in the name of the registrant in Block 14 of Form DSP-9. Registrants
must notify the Office of Defense Trade Controls by registered mail, citing the
applicant code, whenever their mailing address changes (ITAR 122.4). Distri-
bution is also made to all U.S. Customs Regional and District offices and to all
Director of Industrial Security (DIS) cognizant offices. The editorial staff
maintains a separate mailing list of other interested persons and organizations.
Contact the Managing Editor, via mail or datafax, to add or change an address
on the editorial mailing list.

Copyright: Most of this publication’s contents are in the public domain and are
not copyrighted. Such items may be reprinted; citation of their source as
Defense Trade News is appreciated. Permission to reproduce any copyrighted
material (including photographs) must be obtained from its original source.

Limited Reprint Authorization: All addressees who are registered with the
Office of Defense Trade Controls may reproduce this entire publication (exclud-
ing postal mailing label) for distribution within their respective 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: Address to Editor, Defense
Trade News, PM/DTC, SA-6, Room 200, U.S. Department of State, Washing-
ton, D.C. 20522-0602.

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 in Washington, D.C. 20522-0602.


Licenses for the Farnborough Air Show

Time Is Running Out

The Farnborough Air Show is rapidly ap-
proaching. This year the exhibition will be
held from September 6 through 13. Compa-
nies planning to display equipment at the
show should, by now, have submitted their
requests for temporary export licenses (DSP-
73). Any organizations intending to partici-
pate that have not as yet submitted applica-
tions should rush them (either handcarried by
a company official or by courier service) to
the Office of Defense Trade Controls (DTC).

Because of the late date, no guarantees can be
made about the timeliness of approvals. DTC
will, however, make every effort to expedite
processing and issuance of licenses.

In order to ensure rapid identification of
requests in connection with the air show, all
requests should indicate “FOR FARNBOR-
OUGH AIR SHOW” in block 12 (Specific pur-
pose of temporary export) of the DSP-73. #

How to Avoid Registration Problems

Planning Ahead Is the Key to Success

A First, Key Step. Registration is the first
step in defense trade (22 CFR Part 122). All
persons engaged in the U.S. in either manu-
facturing or exporting of defense articles,
technical defense information, or defense ser-
vices are required to register with the Office
of Defense Trade Controls (DTC). Registra-
tion provides the U.S. Government with nec-
essary information about defense manufac-
turing and exporting activities. It enables the
US. Government to inform U.S. industry
about major policies and procedures. Regis-
tration is generally a precondition to the issu-
ance of any license or other approval under
the international Traffic in Arms Regulations
(22 CFR Section 122.1(c))

Registration at an early juncture will allow
DTC the opportunity to respond in a timely
manner to registration submissions and pre-
vent subsequent delays in export licensing.
With very few exceptions, only exporters who
have registered with DTC may submit export
license applications and receive approved
export licenses. All questions about registra-
tion should be answered (e.g., what is my
PM/DTC Company Code? Is my registration
current or expired? How do we renew our
registration?) by the applicant before submit-
ting export license applications to DTC.

Helpful Hints. By planning ahead and fol-
lowing the helpful hints listed below, you can
avoid spending precious time and money on
solving registration problems and incurring
lengthy licensing delays.

© Know and understand your PM/DTC
Company Code number (e.g., 1292-0000).
The first four digits indicate the month and
year of expiration (in this case, December
1992). All registrations are valid through the
last day of the month. Due to resource con-
straints, DTC does not normally notify regis-
trants of their expired status. The final four
digits of the code identify your firm.

¢ All registration records should be ad-
equately maintained and made readily acces-"
sible to the people in your firm who are in-
volved in the export licensing process.

* If possible, more than one person
should be trained in the registration process.
DTC receives a large volume of calls from
individuals who have taken over registration
duties from a person no longer with the com-
pany and who do not know how to register
with DTC.

e Any person wishing to register with
DTC must submit a Form DSP-9, a check or

Defense Trade News, Volume 3, Number 3, July 1992

Page 13



DEPARTMENTS

U.S.

Customs

Processing U.S. Customs Seizures

Upon seizure of merchandise for any export
control violation (includes embargoed mer-
chandise), U.S. Customs Fines, Penalties, and.
Forfeitures (FP&F) offices notify all interested
parties of the seizure. Interested parties in-
clude the importer or exporter and often ei-
ther the broker or freight forwarder involved
in the transaction.

Release Pending Adjudication. In most
cases, the importer/exporter, or agent on its
behalf, may request the early release of the
merchandise, pending Customs formal adju-
dication of the seizure /forfeiture case (where
an investigation is ongoing, early release may
be denied). The early release request should
be made as soon as possible after the seizure
of the merchandise, so as to preclude the ac-
cretion of storage charges. The request
should be directed, either in writing or by
telephone (with the telephone request fol-
lowed up by a fax message), to the FP&F offi-
cer in the district office handling the seizure
case.

If the value of the seized merchandise does
not exceed $100,000, the District Director has
jurisdiction over the case and will grant or, in
some cases, deny the early release request.
The FP&F officer will then notify the im-
porter/exporter or agent of the early release
decision. Usually the early release of the mer-
chandise will be conditioned upon the pay-
ment of a monetary deposit (which may be
paid by any interested party), the submission

of a Hold Harmless Agreement and the pay-
ment of any accrued storage charges.

If the value of the seized merchandise exceeds
$100,000, the early release request must be
transmitted to U.S. Customs headquarters, for
decision by the International Trade Compli-
ance Division, usually within the Penalties
Branch, or the Department of the Treasury.
The terms of the release will be communi-
cated to the field FP&F officer who, in turn,
will notify the importer/exporter or agent.

Early Release Decision Sometimes the Final
Decision. In many cases, particularly those
cases in which the violation is technical in
nature and the deposit amount is $1,000 or
less, the early release decision will be the final
decision in the case. An exporter/importer
may petition for further relief in these cases,
however, provided that new and different
information or evidence is presented to Cus-
toms in the supplemental petition.

As in the case with early release decisions, the
final decision in cases will be rendered by
either the district office, Customs headquar-
ters, or the Department of the Treasury, de-
pending upon the value of the seized mer-
chandise. The field has jurisdiction up to
$100,000, Customs headquarters up to
$500,000 (except for technical violations
where headquarters jurisdiction is unlimited),
and Treasury has jurisdiction in cases exceed-
ing $500,000.

Monetary Deposit/Forfeiture Guidelines.
The early release monetary deposit or final
decision forfeiture remission amounts (gener-
ally referred to as “penalty amounts”) are set
forth in the EXP section of the current Fines
and Penalties Handbook, which is available to
the public.

Continued on page 18

Page 16

Defense Trade News, Volume 3, Number 3, July 1992