PERSONNEL UPDATES

Asa regular column in each edition, the
Center for Defense Trade (CDT) profiles
several employees. For this edition, we have
selected an attorney-adviser, a special projects
officer, and a clerk.

Wolodymyr R. Sulzynsky joined the Office of
the Legal Adviser (L/PM) as an attorney-
adviser for Politico-Military Affairs on May 6,
1991. His previous experience in the Depart-
ment of Justice, where he supervised the
investigation and prosecution of national
security cases involving violations of export
control laws, will transfer directly to his new
position. In addition to his law degree, Mr.
Sulzynsky holds a Master of Arts (MA) in
National Security Studies and a Master of
Laws (LLM) in International and Compara-
tive Law from Georgetown University. A
Naval Reserve officer, he recently returned
from an active duty assignment during
Operation Desert Storm as the Naval Attache
at the American Embassy in Belgrade, Yugo-
slavia.

Andrew P. Church began his new duties as
Special Projects. Licensing Officer and Special
Assistant to the Chief, Arms Licensing Divi-
sion (ALD), in DTC in early May 1991. In this
capacity, he works on items of special interest

to DTC management. He tracks all license
applications that require Congressional
notification, and initiates any required action
to maintain both visibility and timeliness of
these specialized licenses. Mr. Church also
follows up on all “special” cases assigned by
the DTC licensing management team, espe-
cially cases over 30 days old and “emergency
cases.” His previous experience in the State
Department includes service as the acting
economic officer at the American Embassy in
Libreville, Gabon, through the summer intern
program. Having received his Master of
Science (MS) from Georgetown University’s
School of Foreign Service, he will serve as a
Presidential Management Intern (PMI) for the
next 2 years.

William C. McCann returned to the Office of
Defense Trade Controls (DTC) in June 1991
for his second summer as a clerk in the Com-
pliance Analysis Division. He recently re-
ceived his Bachelor’s degree in International
Studies from American University’s School of
International Service. He also was designated
a distinguished graduate of the Reserve
Officer Training Corps (ROTC), and received
his commission as a second lieutenant in the
Air Force. He will enter full-time active duty
for pilot training in March 1992.

Page 20

Defense Trade News, Volume 2, Number 3, July 1991



IDENTIFYING DEFENSE TRADE OPPORTUNITIES

Uses of the Advisory Opinion,Technical Data License, and Demonstration License

The dramatic political events of the last 2
years have created new challenges for the
defense trade industry. One of the questions
prospective exporters ask most frequently of
the Center for Defense Trade (CDT) is, “How
can a company determine if the State Depart-
ment will permit it to sell and export its
product to a specific country?” This article
outlines three possible procedures (the
advisory opinion request, the technical data
export license request, or the demonstration
license request) used to obtain the official
State Department position on a proposed
transaction.

The Advisory Opinion. One mechanism
used to determine the State Department’s
position is a letter of inquiry called an advi-
sory opinion request. The submitting firm
composes a letter outlining the product or
products proposed for export, the end use
and specific end user, and the prospective
buying country or countries, stating clearly in
the subject line that the letter is a request for
an advisory opinion. Upon receipt of the
letter, the Office of Defense Trade Controls
(DTC) will staff it to all appropriate Depart-
ment of State offices and outside agencies.
Once all comments are received, DTC will
send a formal advisory opinion letter to the
company, stating the official U.S. Govern-
ment position in principle.

An advisory opinion request is most appro-
priate when evolving technical data exist for
the article or service proposed for export; the
item or service is in the “concept exploration”
phase; the country may have had no previous
defense market requirement; or the defense
trade may have been tightly controlled. The
advisory opinion states the official position
regarding possible sales to the specific nation,
but does not authorize the company to take
any specific action. In other words, the

advisory opinion authorizes no export. By
contrast, the methods described below autho-
tize specific action.

Technical Data Export License. A second
method a company may use to determine the
U.S. Government position on a case is to
complete and submit a Form DSP-5 (Appli-
cation/License for Permanent Export of
Unclassified Defense Articles and Related
Technical Data) or a Form DSP-85 (Applica-
tion/License for Permanent/Temporary
Export or Temporary Import of Classified
Defense Articles and Related Classified
Technical Data) to export unclassified or
classified technical data. This submission is
in accordance with the normal procedures
and practices outlined in the International
Traffic in Arms Regulations (ITAR), section
125.

When approved, the DSP-5 or DSP-85 license
allows the company to export the technical
data associated with a proposed item to a
designated nation. The DSP-5 or DSP-85
license is the most practical method by which
a registrant may determine the Government’s
position on a proposal. In addition to directly
authorizing the technical data export, the
approved license provides U.S. Government
approval in principle to sell the actual item or
service to the country in question.

Demonstration License. A registrant may
also use a third avenue by submitting a Form.
DSP-73 (Application/License for Temporary
Export of Unclassified Defense Articles) to
demonstrate an item in a given country.
(Submit a Form DSP-85 if the item is classi-
fied.) This application, if approved, will
authorize the firm to demonstrate system
capabilities in a foreign destination.

The demonstration license is most appropri-
ate when another U.S. firm, NATO ally, or
other major non-NATO ally has previously

Page 14

Defense Trade News, Volume 2, Number 3, July 1991



LS

ORDERING INFORMATION: Use the GPO
order form (pg. 25) and enter S/N 044-000-
02310-5 in the PUBLICATIONS section. The
price is $4.00 per copy.

DISPATCH
TYPE: Subscription, magazine, 8 1/2" x 11."

FREQUENCY: Weekly, approximately 12 to
24 pages each Monday. ISSUED BY: U.S.
Department of State, Bureau of Public Affairs.

CONTENTS: Dispatch, now in its second
year, has one of the fastest growing subscrip-
tion bases of all federal publications. It
provides a timely, concise, informative, no-
frills view of U.S. foreign policy. The maga-
zine presents a diverse compilation of verba-
tim speeches, policy statements, and Congres-
sional testimony of the President and senior
members of the State Department to give a
world view from the U.S. perspective.

In its March 4, 1991 (Volume 2, Number 9),
edition, Dispatch featured “Kuwait is liber-
ated,” President Bush’s address to the nation
from the Oval Office on February 27, 1991.
The article “U.N. Security Council Resolution
on Iraq” contained the complete text of
Resolution 686, passed March 2, 1991, which
reaffirms all previous resolutions regarding
Iraq and further lists the U.N. demands
regarding Iraqi actions required to end all
coalition hostilities. Another article, “Interna-
tional Trade Agreements: Fast Track Proce-
dures,” is the forward to a report President
Bush submitted to Congress on March 1, 1991,
requesting the extension of fast track proce-
dures to facilitate passage of foreign trade
legislation. Additional articles addressed the
United States and Colombian war against
narcotics and the current State Department
perspective regarding “Soviet Disunion” and
the implications for U.S. foreign policy.

ORDERING INFORMATION: You may
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Electronic Service Subscription: Full texts of
Dispatch, as well as other key foreign policy
information, are available, before publica-
tion, by paid subscription in electronic form
on the Department of State’s Computer
Information Delivery Service (CIDS). For
more information, call the CIDS Message
Center at (703) 802-5700.

(Editors’ Note: If you are familiar with an interest-
ing publication that you would like to have
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Page 24

Defense Trade News, Volume 2, Number 3, July 1991



institutional links between the U.S. military
and the armed services of the three countries.
The programs will include courses on the role
of the military in a democratic society, the
importance of civilian oversight of the armed
services, and the protection of internationally
recognized human rights. Each country was
originally allocated $50,000 of IMET funding

for FY 1991. During the middle of the fiscal
year, the program levels were increased to
$200,000 for Czechoslovakia and Hungary,
and to $250,000 for Poland. For FY 1992, the
Administration has requested $75,000 in
IMET funds for each of these three nations.
Increased funding could become available as
program development matures. @

YUGOSLAVIA

Embargo Imposed on Sale and Export of Defense Items

The situation in Yugoslavia remains uncertain
with a danger of civil war and potential
repercussions for stability in the region. The
United States, in cooperation with the Euro-
pean Community (EC) nations, continues to
seek a peaceful solution to the crisis. Toward
that end, the United States and the EC have
embargoed the shipment of armaments,
military equipment, and related spare parts to
Yugoslavia and have approached other
nations to urge participation in this common
effort.

On July 11, 1991, the United States imposed
its embargo on the sale and export of defense
articles and services to Yugoslavia. The
Secretary of State formally authorized the
suspension of licenses for direct commercial
exports of items covered by the U.S. Muni-
tions List (USML). He approved a policy of
denial of government-to-government (Foreign
Military Sales) arms exports and suspended
future security assistance under the Interna-
tional Military Education and Training
(IMET) Program. All of these actions will
remain in effect until further notice.

Formal notification appeared in the Federal
Register (Volume 58, Number 139, Friday, July
19, 1991, page 3332). The notice reads as
follows:

Suspension of Munitions Export Licenses to
Yugoslavia

Agency: Department of State.
Action: Notice.

Summary: Notice is hereby given that all
licenses and approvals to export or otherwise
transfer defense articles and defense services
to Yugoslavia pursuant to section 38 of the
Arms Export Control Act are suspended.

Effective Date: July 11, 1991.

For Further Information Contact:

Rose Biancaniello

Chief, Arms Licensing Division
Office of Defense Trade Controls
Bureau of Politico-Military Affairs
Department of State
(703-875-6644).

Supplementary Information: Effective
immediately, it is the policy of the U.S. Gov-
ernment to deny all applications for licenses
and other approvals to export or otherwise
transfer defense articles to Yugoslavia. In
addition, U.S. manufacturers and exporters
and any other affected parties are hereby
notified that the Department of State has
suspended all licenses and approvals autho-
rizing the export of or other transfers of
defense articles or defense services to Yugo-
slavia.

Defense Trade News, Volume 2, Number 3, July 1991

Page 5



CHECKLIST FOR AMENDMENTS
1. Did you submit the amendment in
duplicate (two copies)?

2. Did you submit a new 126.13 statement
when the amendment adds a new party to the
export?

3. Did you provide a copy of the license
being amended?

4. Did you provide a self-addressed
mailing label?

ATTACHMENTS FOR YOUR
REQUESTS

When you submit a request (CJ, amendment,
DSP-5, etc.) and accompanying amendments
to the Office of Defense Trade Controls
(DTC), our staff initially reviews your sub-
mission for completeness and assigns a case
number. Frequently, we cannot determine
request completeness because the submitter
has not assembled or properly collated the
attachments.

Since only the company and person(s) sub-
mitting the documents can accurately deter-
mine what constitutes a “set” of attachments,
we ask that you assemble, collate, and, if
necessary, clearly indicate each set of attach-
ments. Failure to do so may result in a Return
Without Action (RWA).

THE MAJOR DEFENSE EQUIPMENT
(MDE) LIST

The MDE List is an appendix in both the
Security Assistance Management Manual
(SAMM) and the Foreign Military Sales
Financial Management Manual (DOD 7290.3),
' which are published by the Defense Institute
of Security Assistance Management (DISAM).

The MDE List is also available separately as a
subscription item for $15.00 for 3 years,
prepaid. Mail orders to:

DISAM

ATIN: DISAM/DIPR

Building 125, Area B

Wright-Patterson Air Force Base,

OH 45433-5000

Call (513) 255-2994-3669 for information
regarding the most recent publication date.

ADDRESSES FOR SHIPMENTS

DTC will not accept post office box addresses
for any U.S. or foreign consignors, consignees,
and intermediate consignees listed in the
body of a license application as taking part in
a shipment. Street addresses are required.

DTC REGISTRANT CODES

The DTC Registrant Code is a nine-position
number with two distinct sections. The first
section is composed of four numbers. The first
two digits indicate the month the registration
will expire (on the last day). The next two
digits indicate the year in which the registra-
tion expires.

The last five positions are the company’s
specific identity number. Numbers may
occupy all five positions or four numbers may
follow a hyphen. Examples:

0991-1234 expires on September 30, 1991. The company
specific identity number is “-1234”.

019612345 expires on January 31, 1996. The company’s
specific identity number is “12345”.

ENHANCING U.S,
COMPETITIVENESS

Some countries and foreign entities report-
edly are turning away from American suppli-
ers to avoid U.S. export controls. The Depart-
ment of State, consistent with its regulatory
obligations, seeks to improve the competitive-
ness of U.S. defense manufacturers. Toward
that end, the Center for Defense Trade (CDT)
is preparing for the October issue of Defense
Trade News an article on how to obtain ap-
proval in principle for a list of prospective
third-country transfers.

Defense Trade News, Volume 2, Number 3, July 1991

Page 21



el
READER QUESTIONNAIRE
Dear Reader,

Please give us your opinion. We would like to know how we are doing in providing useful and.
timely articles in Defense Trade News. Complete this survey and return as soon as possible.

1. My association with defense trade is Manufacturing Exporting Attorney___Consultant
Freight Forwarder Embassy Customs Armed Forces, Other U.S. Government Agency
Other (specify)

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

3. Rank the following topics or columns according to your interest:

1 Much Interest 2 Some interest 3 Slight Interest 4 No Interest
____ DEFENSE TRADE POLICY ____ TRADE LEGISLATION ___. COMPLIANCE CASES/TIPS.
____ DTC PROCEDURES ____ LICENSING PROCEDURES ___. FEDERAL REGISTER NOTICES
____ US CUSTOMS AT DTC. ____ PERSONNEL UPDATES ___ TIPS & TIDBITS
____ PUBLICATIONS FOR EXPORTERS. ____ LETTERS TO THE DIRECTOR ____ QUESTION & ANSWER:
___. COMMODITY ____ SUMMARIES OF PROSECUTED

JURISDICTION DETERMINATIONS COURT CASES
____ OTHER

(Specify)

4, Article length is generally: too long too short about right

5. [have an article idea:

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

Excellent Good Fair Poor

Your Overall Opinion
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7. This is a quarterly publication (Jan., Apr., July, Oct.).

Publication is ____too frequent about right too infrequent

8. When GPO publishes Defense Trade News for subscription, my firm will require copies.

COMMENTS:



a

UNITED STATES DEPARTMENT OF STATE
TELEPHONE DIRECTORY

TYPE: Publication, paper-bound book, 8 1/2"
x 11," approximately 200 pages.

FREQUENCY: Recurring, usually bi-annual,
in spring and fall. ISSUED BY: U.S. Depart-
ment of State, Bureau of Information Manage-
ment.

CONTENTS: This telephone directory is both
an alphabetical and organizational directory
of the Department of State and related agen-
cies. The short introductory section contains
an alphabetical index to organizations.

The first major section contains an organiza-
tional directory of the Department of State,
the Arms Control and Disarmament Agency
(ACDA), the Agency for International Devel-
opment (AID), and the International Develop-
ment Cooperation Agency (IDCA). This
section, combined with the organizational
charts in the very back of the directory,
provide an overview of the Department's
structures.

The second major section is an alphabetical
listing of employees and their phone num-
bers.

The third major section is the Foreign Service
Post Telephone Directory and includes Key
Officers of Foreign Service Posts: A Guide for
Business Representatives. (This section has
proven to be very popular with industry and
is also available separately in a3 3/4" x 81/2"
format. See the review above.) Additional
information included in this section but not in
the pocket edition are local holidays by
country, a world time table, and worldwide
weather by country and by month. This
section is particularly valuable for the interna-
tional marketing manager or for the frequent
international traveler.

The fourth major section, General Informa-
tion, contains information primarily of use to
State Department employees and those
conducting business in the Washington, D.C.,
area.

ORDERING INFORMATION: Use the
PUBLICATIONS section of the GPO order
form. Enter S/N 044-000-02315-6 for the
Spring 1991 edition. The cost is $11.00 per
copy, available on a one-time order or stand-
ing order basis with a deposit account.

FOREIGN CONSULAR OFFICES IN THE
UNITED STATES

TYPE: Publication, booklet, paper-bound, 8
1/2" x 11," approximately 75 pages.

FREQUENCY: Recurring, usually semi-
annually in March and September. ISSUED
BY: U.S. Department of State, Office of
Protocol.

CONTENTS: This publication includes the
complete and official listings of foreign
consular offices in the United States, together
with their jurisdictions and recognized consu-
lar officers. Compiled with the full coopera-
tion of the foreign missions in Washington,
D.C., it is offered as a convenience to organi-
zations and persons that need to contact or
work with consular representatives of foreign
governments.

It is designed to assist government agencies,
state tax officials, international trade organi-
zations, chambers of commerce, and judicial
authorities in their dealings with foreign
consular offices in the United States. Trade
with other regions of the world has become
increasingly important to the U.S. economy.
Moreover, commercial transactions are often
complicated by numerous restrictions, licens-
ing requirements, quotas, and other measures
adopted by the individual countries. Because «
the regulations affecting trade and travel are
the particular province of a nation’s consular
service, foreign consular offices are a valuable
source of information on entrance require-
ments, consignment of goods, and transship-
ment arrangements. Lastly, in many in-
stances, such offices can offer guidance on the
needs and preferences of potential importers
abroad.

Defense Trade News, Volume 2, Number 3, July 1991

Page 23



Establish local contacts. Consult with the
company’s freight forwarders, brokers, or
agents. Invite them to participate in your
company compliance program. If you have
any questions regarding export/import
clearance regulations and procedures, request
a meeting with Customs. Attend industry
trade association meetings or conferences
when your local Customs District Office
presents updates. Get to know your Customs
representatives.

Plan ahead. Whenever possible, coordinate
your actions with your freight forwarder,
broker, or agent prior to the import/export to
assure proper compliance with regulations.
Make each familiar with your products and
the required documents. You are ultimately
responsible for your representatives’ actions.

When in Doubt... If there is a doubt
about licensing requirements, ask your agent
not to enter or present your freight for clear-
ance prior to seeking a license determination
from the proper government agency.

Detentions by Customs. There could be
several important reasons why a shipment is
detained:

* insufficient or lack of required informa-
tion on documentation;

* lack of a required license; or
® late filing of documentation.

If your shipment is detained, you can help
expedite the detention by providing the
notifying Customs official with specific
information on the detained shipment. The
information you can provide may include:

* any correspondence regarding license
determinations from a government agency for
the item detained;

* technical and background information
of the item; or

* any reasons why you believe the item
does not require a license.

If the detaining officer feels that a formal
license determination is required by the State
Department's Office of Defense Trade Con-
trols (DTC), the process may take approxi-
mately 14 days. This time period may vary
depending upon your ability to supply the
required information in a timely manner to
your local Customs officers. Each detention is
handled on a case-by-case basis.

Upon receiving an official written notice from
DIC, the detaining Customs officer will
contact you to inform you of the shipments
release or seizure.

If you receive notice that your shipment is
seized, you should:

* communicate with the local Customs
District Office, specifically the Fines, Penalty,
and Forfeiture (FP&F) officer, and

* ask the FP&F officer for advice on filing
a petition for administrative relief and the
early release procedure.

If your goods have been seized by Customs,
and either you or your freight forwarder has
obtained the necessary license, ask the FP&F
officer about the “early release program,”
which may result in the release of the seized
goods within 48 hours after a bond is estab-
lished with Customs. Seizures cases under
investigation by the U.S. Customs Office of
Enforcement are not eligible for the early
release program.

Additional questions or information can be
obtained through your local District Director
of Customs Office. @

Page 18

Defense Trade News, Volume 2, Number 3, July 1991



¢ The reduction of the likelihood of U.S.
forces having to be employed, through in-
creased deterrence by regional forces and the
enhanced capability of regional states to deal
with small contingencies on their own;

¢ The ability of U.S. forces to operate
jointly with regional states (as Saudi and U.S.
F-15s and AWACS [airborne warning and
control system] did so well in Desert Storm)
in peacetime to deter aggression and in
combat to counter aggression;

¢ The enhancement of U.S. influence
among key regional decision makers through
years of experience in dealing with U.S.
armed forces and politico-military officials;

The creation of sufficient confidence in
their own defensive capabilities and coopera-
tion with us, that these key regional decision-
makers are willing to engage in arms control
of increasingly ambitious and effective di-
mensions.

Fourth, it is not U.S. arms transfers that have
been the problem in the Middle East’s
becoming over armed and falling into wars.
Patriots to Israel, AWACS to Saudi Arabia,
M-60s to Egypt, F-16s to Bahrain, I-Hawks to
the U.A.E.: They have not been the problem.

No Middle East state with which the United
States had an ongoing military relationship at
the time has been an aggressor. It was not

Kuwait that invaded Iraq. It was not Tunisia
that attacked Libya.

We have such relations with Morocco, Tuni-
sia, Egypt, Israel, Jordan, Kuwait, Bahrain,
Saudi Arabia, and Oman. They are not the
problem.

I believe the problems of aggression have
come from the governments of Libya, Syria,
Iraq, and Iran. Thus, U.S. arms transfers are
not the problem.

Some point to Jran as an example of how U.S.
arms transfers can fall into the wrong hands.
Iran, however, is an example of how we can
effectively ground a force by pulling the plug

on spare parts and technicians when a gov-
ernment changes from friend to enemy, as
they rarely may.

The U.S. does not transfer arms willy-nilly to
any regime that seeks them. It provides them
to responsible, friendly, and peace-seeking
governments.

We have an excellent record and we do not
need new regulations or legislation to prevent
U.S. excesses which do not exist in the first
place.

Fifth, U.S. arms transfers have helped us to
seek responsible goals in the region. The
Congress appropriated $3 billion for arms
transfers to Egypt and Israel last year. Why
did the Congress do that?

It did it because arms transfers to these two
countries helped ensure their own security
and, in feeling more secure, give them a real
stake in peace.

Arms transfers were a key element in the
good relations that the U.S. had with Saudi
Arabia, Egypt, and Turkey before the war.
Had we refused arms to those countries we
would not have had the influence with them,
they would not have had the confidence in us,
and they would not have had the high-quality
interoperable weapons needed to participate
in the coalition against Iraq.

The next time someone asks what good have
arms transfers gotten us in our relations with
Middle Eastern states, ask them whether they
think the courageous stands taken by Presi-
dents Mubarak [of Egypt] and Ozal [of Tur-
key] and King Fahd [of Saudi Arabia] would
have been possible if the U.S. had denied
them arms transfers.

Sixth, halting arms transfers to the region
while we seek an international system to
regulate them is a self-defeating meat-
cleaver approach.

What would happen if we did halt arms
transfers to the region while we negotiate?
Probably the same thing that would have
happened if we had ceased to improve and

Page 10

Defense Trade News, Volume 2, Number 3, July 1997



a
Tape Edge Before Mailing

POSTAGE AND FEES PAID
DEPARTMENT OF STATE
STASOI

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


Eastern European countries to advanced
goods and technologies they need to rebuild
their economies.

The new agreement continues the trend
toward reducing controls on export of dual-
use technology to civilian end users in Po-
land, Hungary, and Czechoslovakia. These
three emerging Eastern European democra-
cies are in the process of adopting U.S.- and
COCOM-recommended export control mea-
sures to protect imported strategic technol-
ogy. Favorable treatment to these three
countries, however, does not apply with
respect to the two other COCOM lists—the
International Atomic Energy List and Interna-
tional Munitions List.

General features of the new dual-use list
include nine broad product categories; greater
specificity in the descriptions of the items

controlled; alignment of control parameters
with current industry technical standards;
decontrol of readily available “off-the shelf”
items in everyday commerce; and improved
harmonization within the customs tariff
system.

COCOM liberalization of strategic exports
represents approximately a 50 percent reduc-
tion of existing export controls following a 33
percent reduction in the list agreed to by
COCOM in June 1990. Full implementation of
the Core List by the COCOM members is
expected by September 1, 1991.

COCOM nations have agreed that individual
countries will continue controlling goods and
technologies dropped from the COCOM
Industrial List that could contribute to the
development of nuclear, chemical, and bio-
logical weapons and the missiles to deliver
them. ®

JOINT CONFERENCE ON DEFENSE TRADE

CDT and SIA Cosponsor Briefing in Paris for Industry

The Center for Defense Trade (CDT), in
conjunction with the Society for International
Affairs (SIA), held a Joint Conference on
Defense Trade at the American Embassy in
Paris on June 12, just prior to the Paris Air
Show. Mr. Charles Duelfer, Director of the
Politico-Military Affairs (PM) Bureau’s
Center for Defense Trade, and Ms. Wendy
Kenyon, President of SIA, cochaired the
conference. The conference provided both
European defense firms and representatives
of U.S. defense firms operating in Europe an
overview of U.S. policy and practice in
defense trade, specifically in the area of
international cooperation.

Assistant Secretary for Politico-Military
Affairs Richard Clarke opened the conference
with an assessment of the President’s Middle
East Arms Control Initiative and explained
the U.S. intent behind the proposal. He

emphasized that, while U.S. and allied techni-
cal superiority had decisively won the day in
the Persian Gulf, there was a requirement for
the major suppliers—the United States, the
United Kingdom, France, the Soviet Union,
and China—to take action to prevent the sort
of disproportionate military growth under-
taken by Iraq.

Noting that arms transfers were not in them- \
selves the cause of Middle East instability,
Mr. Clarke focused on the need for the major
suppliers to reach a common understanding
of the kinds of exports that would contribute
to stability in the region. He also highlighted
the U.S proposal to ban weapons of mass
destruction from the Middle East. When
addressing conventional arms transfers, Mr.
Clarke stressed that the U.S. proposal sought
to lend transparency to the sales the major
suppliers make to the region; not to do away
with them.

Defense Trade News, Volume 2, Number 3, July 1991

Page 7



The licenses and approvals that have been
suspended include manufacturing license and
technical assistance agreements involving
Yugoslavia. This action also precludes the
use in connection with Yugoslavia of any
exemptions from license or other approval
requirements included in the International
Traffic in Arms Regulations (ITAR) (22 CFR
parts 120-130).

This action has been taken pursuant to
sections 38 and 42 of the Arms Export Control
Act (22 U.S.C. 2778, 2791) and §126.7 of the
ITAR in furtherance of the foreign policy of
the United States.

Dated: July 20, 1991
Richard A. Clarke
Assistant Secretary of State
for Politico-Military Affairs

SOUTH AFRICA

Arms Restrictions Remain in Force

On July 10, 1991, the President signed Execu-
tive Order Number 12769, terminating the
major economic sanctions imposed against
South Africa pursuant to Title III of the
Comprehensive Anti-Apartheid Act of 1986
(CAAA) (Public Law 99-440). Section 317 of
the CAAA codified the preexisting arms
embargo imposed by the Department of State
in implementation of the mandatory arms
embargo imposed by the UN Security Council
in resolution 418 on November 4, 1977.
Section 318 required that no State Department
export license be issued without 30 days’
advance notification to Congress and pro-
vided for expedited Congressional review of
such licenses.

Although the aforementioned statutory
provisions are no longer in force, South Africa
is still subject to the arms embargo and
certain policy restrictions. Exceptions to this
policy may be made only if the Assistant
Secretary for Politico-Military Affairs deter-
mines that (1) the item proposed for transfer
is not covered by. UN Security Council resolu-
tion 418 and (2) the item in question is to be
exported solely for commerial purposes and.
not for use by the armed forces, police, or
other security forces of South Africa, or for
any other similar purpose.

Because the CAAA codified preexisting
policy, the only legal effect of the termination
of the CAAA sanctions, with respect to
defense articles and services, is that the 30
days’ notice to Congress is no longer required
before approval of any munitions license. @

COCOM UPDATE

Agreement Reached on New Strategic Goods Core List

On May 23, 1991, the Coordinating Commit-
tee on Multilateral Export Controls (COCOM)
agreed to a new system of export controls for
dual-use goods and technologies. The multi-
lateral agreement will result in significant
reductions in controls on microprocessors,
machine tools, aircraft, avionics, and propul-
sion systems as well as other areas.

The agreement reached at the May COCOM
High Level Meeting culminates a year-long
review of dual-use goods and technologies to
reflect the dramatic political transformations
that have taken place in Central and Eastern
Europe since 1989. The new dual-use interna-
tional Industrial List (also known as the “Core
List”) balances COCOM’s objective to main-
tain a strong, coordinated Western security
posture and a desire to widen access by

Page 6

Defense Trade News, Volume 2, Number 3, July 1991



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 (TAR 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.

COMMODITY
A Polymer, Film and Technical Data

JURISDICTION
CCL 67996

Aircraft Time, Events, and Fault indicators CCL 6598F.

Automatic Tracking Antenna System  USML XI (a) » -
and Telemetry Receiver
Cargo Hooks ccL*

Software (for Cat. IV items)that analyses. USML. XIX
impact and penetration against armor

Computer Scrambler Chips USML XHI (b)
Continuous High Speed Roll-Film Printer CCcL*
Electronic Mail Software Program , CccL*
Fiber Optic Transceiver USML XE {a)
High Power Solid State Amplifiers CCL 6598F

Inflatable Support System for Radar Cross. USML XI.
Section measurement

Miniature Altitude Reference System | USML VIII {g)

Non-DES Scrambling Software Program CCL 799
Non-Radiation Hardened Integrated Circuits CCL*
Pallet Elevator, Dumbwaiter and USML VI (b)
Torpedo Handling Equipment 7
Radiation Hardened Integrated Circuits USML XI (e)

Satellite Blanket Material USML VII ().
Water Testing Kit CCL*

“COMMODITY JURISDICTION
‘Aircraft Jet Engine CCL 1460
Hot Section Technology USML XVII
” Automated Financial Software Program CcCL*
‘Avionics Cavities a ccL*
Cathode Ray Tubes cCL*
Computer Software Test Program CCL 799
~ Computerized Firing Range Circuits ccL*
©. Exploding Bridge Wire USML IV (c)
Gas Turbine Aircraft Engine USML VII (c)
High Cycle Batteries CCL 6299G
Infra-Red Viewers, TV Cameras, USML XI (a)
Monitors,Lenses, Accessories, Cards.
and Filters .
‘Non-DES based software file CCL GTDR
‘Security Program
Non-JAN/QPL qualified Data Bus ProductsCCL 6599G
‘Non-TEMPEST Ruggedized Printers ccL*
Radar Altimeter System USML xian?
Reverse Osmosis Water Purification
Units/Systems
Without NBC Filters ccL*
With NBC Filters USML XIV (c)
The NBC Filters USML XIV (e)
‘Thermal coatings cCL*
Wide-band Millimeter Amplifiers CCL 1537A

* 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.

Defense Trade News, Volume 2, Number 3, July 1997

Page 19



the transfer of weapons of mass destruction
and their components and precursors, bring
transparency to the arms transfer process, and
bring about responsible arms transfer behav-
ior. France has offered to host those talks
beginning on July 8, and all five powers (U.S.,
U.K., USSR, France, and China) have agreed
to attend. I will return to detail this aspect of
the President’s proposal in a moment.

Third, the President boldly proposed the
elimination of all surface-to-surface ballistic
missiles in the inventories of states in the
region. Asa first step, he called for a freeze
on production, acquisition, and testing of
those missiles.

Fourth, he called for the rapid completion of
the treaty to ban chemical weapons [CW] and.
its early application in the region. To acceler-
ate that process, he announced several new
US. positions including the unconditional
destruction of all of our CW stocks and the
renouncement of the right of retaliation upon
entry into force of the treaty.

Fifth, the President declared that we would
seek to strengthen the treaty banning biologi-

cal weapons at a special meeting in Septem-
ber.

Sixth, recognizing that progress on CBW
[chemical and biological weapons] will be
assisted by movement in the nuclear area, the
President reiterated our call for full-scope
safeguards and NPT [Non-Proliferation
Treaty] adherence in the region. He also
added a call for on-site verification to ensure
that no country in the area was engaged in
enriching fuel to weapons-grade material. In
the long term, we seek the Mubarak plan of a
region free of all weapons of mass destruc-
tion, but we know that can only come when
the peace process comes to fruition.

We have been heartened by the support this
package has received. The Paris five power
meeting will address it further, as will the G-7
summit in London on July 15th. We have
had, and will continue to have, talks with
regional states on the specifics of the pro-
posal.

Arms Transfers

As I turn to the details of the second point of
the President's plan, let me put forward six
propositions that frame our view of arms
transfers to the Middle East.

First, we must prevent another Iraq. The
Iraqi regime had procured 6,000 main battle
tanks. That force was clearly in excess of
Iraq's legitimate self-defense requirements
and constituted an offensive threat. No
international regime existed to note this
build-up and address its threatening implica-
tions. No agreed standard existed to say that
it was wrong. We want to fix that.

Second, arms transfers as a phenomenon
are not inherently good or evil. No respon-
sible international security analyst believes
that the transfer of the Patriot missile to Israel
was inherently evil or unwise. Similarly, no
one would think that transferring the Toma-
hawk cruise missile to Libya would be any-
thing other than criminal lunacy. These
extreme examples demonstrate the point that
whether to transfer arms per se is not the
question, rather the policy choice is what
arms go to which recipients.

Third, arms transfers should not be an
end in themselves but should be an instru-
ment to other goals. I mentioned the transfer
of the Patriot to Israel: that helped keep Israel
out of a war. Similarly, the arms transfers
associated with the Camp David agreement
helped to bring Egypt and Israel into a peace.
Among the goals we seek to reinforce or
achieve by arms transfers to the Middle East
are:

© The deterrence of aggression against
friendly states by (a) demonstrating a close
military cooperation with the U.S. and (b)
providing the capability to make aggression
costly;

* The further integration of small militar-
ies such as those of the GCC [Gulf Coopera-
tion Council] to achieve economies of scale,
regional cooperation, and credible deterrence;

Defense Trade News, Volume 2, Number 3, July 1991

Page9



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791



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

Defense Trade News

The Bulletin of the Center for Defense Trade

Volume 2, Number 3 -

Washington, D.C. duly 1997

Features

Middle East Arms Control Initiative
President Announces Nonproliferation Proposals

Eastern Europe
Defense Trade with Poland, Hungary, and Czechoslovakia

Yugoslavia
Embargo Imposed on Sale and Export of Defense Items

South Africa
Arms Restrictions Remain in Force

COCOM Update
Agreement Reached on New Strategic Commodities Core List

CDT and SIA Cosponsor Briefing in Paris for Industry

Arms Control, Arms Transfers, and U.A.E. Helicopters
Statement by Assistant Secretary of State for Politico-Military Affairs

Compliance Function at CDT
Statement by Director of Center for Defense Trade

Identifying Defense Trade Opportunities
Uses of the Advisory Opinion, Technical Data License, and Demonstration License

Inertial Navigation Systems
Change in International Traffic in Arms Regulations

SSS.

3

4

5

6

6

Joint Conference on Defense Trade 7
8

12

14

15

Departments

U.S. Customs at DTC 17
Commodity Jurisdiction Determinations 19
Personnel Updates 20
Tips and Tidbits 21
Publications for Exporters 22
Reader and Training Questionnaires 27

Written and Edited by the Center for Defense Trade


COMPLIANCE FUNCTION AT CDT

Statement by Director of Center for Defense Trade

The Center for Defense Trade (CDT) has received
several expressions of interest from its readership
about compliance issues related to defense trade.
Many specific compliance matters will be dis-
cussed in future editions of Defense Trade
News. In this issue, we are providing a back-
ground statement made by CDT Director Charles
Duelfer before the House Ways and Means
Subcommittee on Oversight on May 1, 1991.

“Thank you for the opportunity to appear
here today to discuss the defense trade com-
pliance function at the Department of State.

“T will be speaking today primarily of export
control or enforcement in the context of
exports produced, designed, or modified for
military use. I would differentiate here those
articles and services covered by the United
States Munitions List (USML) from those
exports that, under the Export Administration
Act, are also subject to certain controls to
ensure consistency with our foreign policy
(e.g., controls on terrorism equipment, crime
equipment, chemical /biological precursors,
and nuclear controls).

State’s Role. “On the eve of World War II,
the Congress enacted the Neutrality Act of
1939. By terms of this statute ‘every person
who engages in the business of manufactur-
ing, exporting or importing any arms, ammu-
nition or implements of war’ was required to
register with the Secretary of State and obtain
a license, which in turn required notification
to the Department of State of the purchaser
and terms in each deal. Export or attempt to
export without a license was made unlawful.
Under this statute, the Department of State
began to administer a comprehensive arms
licensing program.

“The legal basis for State’s current authority
to control munitions is the Arms Export
Control Act (AECA) and its implementing
regulations, the International Traffic in Arms

Regulations, or ITAR. The latter specifies, in
the form of the USML, articles and services
that are under State’s jurisdiction as well as
the requirements for licensing. The State
Department’s involvement in export control
of defense articles and services—including
enforcement—however, is fundamentally a
question of foreign policy and national secu-
rity.

State’s Defense Trade Function. “As a result
of a dramatic increase in the volume of muni-
tions export license applications, defense
trade staffing in the State Department was
found to be inadequate, and system enhance-
ments were needed to keep pace with the
growing and increasingly complex workload.
In order to address these needs, the old Office
of Munitions Control was revamped and the
Center for Defense Trade was established on
January 8, 1990. The reorganization of the
State defense trade function also included the
injection of substantial new resources and the
undertaking of a thorough workload reduc-
tion initiative. Creation of the position I now
hold, Deputy to the Assistant Secretary for
Politico-Military Affairs and Director of the
Center for Defense Trade, was designed to
provide full-time, senior-level leadership on
commercial defense trade issues.

“Tn addition to an early emphasis on making
the licensing process more effective and
efficient, we were also cognizant of the fact
that the ability to control the destination and
ultimate use of U.S. defense goods is critical
to the conduct of our foreign relations and the
safeguarding of our national security inter-
ests. Therefore, in addition to revamping our
licensing mechanism, we have been working
to reinforce our compliance efforts. I should
note that these two activities go hand-in-hand
and are mutually supportive. For example,
we have installed a new computer and system
for licensing. This now allows us to manipu-
late our database in ways that are very help-
ful in our compliance activities.

Page 12

Defense Trade News, Volume 2, Number 3, July 1991



a

maintain our forces while negotiating START
[Strategic Arms Reduction Talks] and CFE
[Conventional Armed Forces in Europe]. We
would diminish our ability to influence the
outcomes we seek.

North Korea, Brazil, South Africa, and others
will continue to export even if we were to get
the other members of the five powers to halt.
We will not get the other five powers to halt
pending talks or after them.

Moreover, the Administration cannot support
any agreement that would prohibit such sales
that are necessary for the security of our
friends. I cannot imagine that the Congress
would either. Therefore, holding up such
sales cannot be justified on the grounds of a
possible future international agreement that
would prevent them. The only thing that
holding up such sales will accomplish is the
diminution of U.S. influence in a region that
this nation thought so critical 6 months ago
that we sent a half million Americans there
and fought a war.

Helicopters to the U.A.E.

Now let us turn to the case at hand. The
Administration began consulting Congress
last October about its plans to sell 20 helicop-
ters to the U.A.E. Now we have formally
notified that sale.

The U.A.E. is not now and never will be a
threat to the security and stability in the
Middle East. Indeed, it is a force for peace.
The U.A.E. provided support to the U.S. Navy
during Operation Earnest Will in 1987. It did
so despite threats of retaliation from Iran.

Before any state (including Kuwait) asked us
to act against Iraq’s threats of war last sum-
mer, the U.A.E. proposed combined U.S.—
U.AE. military action to deter Iraq. U.S. Air
Force aircraft landed in the U.A.E. a week
before the invasion of Kuwait.

I went to the U.A.E. immediately after the
invasion, and they offered us anything we
wanted to prosecute a war against Iraq. They
did this before many of our more traditional
allies.

In the war, U.S. aircraft bombed Iraq from the
U.A.E. US. ships, including aircraft carriers,
operated out of U.A.E. ports. The small
Emirates air force bombed Iraqi forces. Its
small army was part of the joint Arab force
that punched into Kuwait City.

The U.A.E. transferred $4 billion to the U.S. to
offset our costs in the war. Even in Washing-
ton, $4 billion is a lot of money.

Is this the kind of nation that we should snub
by refusing them 20 helicopters?

Now the U.A.E. is planning with us a closer
military relationship. That relationship is part
of what I discussed 4 days ago in Abu Dhabi.

My opposite number there asked me, “How
will I explain to my people that we should
expand our military cooperation with the U.S.
and fund some U.S. military activities if you
refuse to sell us arms?” I had no answer to
that question, nor do I think there is any good
answer to explain to such a friendly, coura-
geous country that could never threaten
anyone why we will not help it defend itself.

These helicopters will help it to defend its oil
platforms in the Gulf. Such platforms were
attacked by Iran in 1987. They will permit the
U.A. to contribute more effectively to the
GCC’s combined force to deter Iraq.

The technology involved is not new to the
region. Israel, Egypt, and Saudi Arabia
already have bought the same helicopter.

Refusing to sell these 20 helicopters to the
U.AE. would be folly indeed.

Defense Trade News, Volume 2, Number 3, July 1991

Page 11



el
DEFENSE TRADE NEWS

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

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CONTACTING THE CENTER FOR DEFENSE TRADE (CDT)

Director, 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

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

USS. 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 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
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/DTP: (202) 647-1346
Registration /Compliance/ROBB: (703) 875-5663

Department of State Publication 9783
Bureau of Politico-Military Affairs
Revised July 1991


Other speakers included U.S. Ambassador
Walter J.P. Curley; Mr. Ranieri Tallarigo,
Chairman of the Coordinating Committee on
Multilateral Export Controls (COCOM); Mr.
William Rudman, Director of the Defense
Technology Security Administration (DTSA);
Mr. Glenn Rudd, Deputy Director of the
Defense Security Assistance Agency (DSAA);
Mr. Michael Richey of DTSA; Mr. Scott Miller
of PM's Office of Defense Trade Policy (DTP);
and Ms. Rose Biancaniello of PM’s Office of
Defense Trade Controls (DTC).

In addition to Mr. Clarke’s discussion of the
US. proposal for arms control in the Middle
East, general topics included: DOD’s role in
technology transfer, the arms licensing pro-
cess, recent policy developments in the U.S.
Government, the future of cooperative pro- 3
grams, and the role of the U.S. Customs _—~
Service.

The information exchanged at this meeting is
intended to encourage more cooperative
ventures between companies within the
Atlantic Alliance and to support a robust,
collective defense-industrial base that pro-
vides the best security at the lowest cost.@

ARMS CONTROL, ARMS TRANSFERS, AND UNITED
ARAB EMIRATES HELICOPTERS

Statement by Assistant Secretary of State for Politico-Military Affairs

The following is a statement by Richard A. Clarke,
Assistant Secretary of State for Politico-Military
Affairs, before the Subcommittees on Arms
Control, International Security and Science, and
on Europe and the Middle East, House Foreign
Affairs Committee, Washington, D.C., June 27,
1991.

Thave just returned from a 2-week mission to
Paris to plan for five power talks on arms
control in the Middle East and to five Gulf
nations to consult with them on arms control
and post-war security structures. I welcome
this opportunity to brief this committee on
those issues and to discuss with you the sale
of 20 helicopters to the United Arab Emirates
(U.A.E.).

First, I would like to review the President’s
arms control proposal for the Middle East.
Second and more narrowly, I propose to focus
on that element of the initiative that pertains
to arms transfers. Third and most specifi-
cally, I will address the arms transfer before
this committee, the U.A.E. helicopters.

Arms Control

Amns control is virtually an unknown phe-
nomenon to governments in the region. They
have sought security in secrecy, not transpar-
ency. They have sought peace through arms
alone and not through limitations. Thus,
while we may have ambitious plans for arms
control in the region, we know that we are at
the beginning of what will be a long process.
It is a process that will move in parallel with
the political track and can feed back and
reinforce political progress.

With President Bush’s Colorado Springs plan,
we have started down that long path. Let me
quickly review the six parts of that proposal:

First, an arms embargo on Iraq and the
elimination of its weapons of mass destruc-
tion: I met with leaders of the U.N. Special
Commission charged with that latter task last
week in Bahrain and can report that their
difficult mission is well underway.

Second, we have proposed a meeting of the
five powers who are the largest exporters of
arms to establish a system to prevent destabi-
lizing exports of conventional arms, eliminate

Page 8

Defense Trade News, Volume 2, Number 3, July 1991



PUBLICATIONS FOR EXPORTERS

Department of State Publications

In this edition, we highlight publications from
the U.S. Department of State that are of
interest to the exporting community and
international travelers.

RESOURCE GUIDE TO DOING BUSINESS
IN CENTRAL AND EASTERN EUROPE

TYPE: Publication, booklet, paper-bound,
33/4" x 8 1/2" (pocket-size), approximately
40 pages.

FREQUENCY: First release, April 1991.
ISSUED BY: U.S. Department of State, Bureau
of Public Affairs.

CONTENTS: This booklet contains useful
information for businesses wanting to capital-
ize on the potential $40 billion market in
Poland, Czechoslovakia, Hungary, Romania,
Yugoslavia, and Bulgaria. It opens with an
overview of the dramatic political and eco-
nomic changes in Central and Eastern Europe
(CEE) since 1989. The first major section,
“U.S. Government Initiatives,” outlines the
monetary and technical assistance that the
United States offers in both bilateral and
multilateral channels to these emerging
democratic, market-economy countries.

The next section, “Enhancing Private-Sector
Opportunities,” encourages U.S. companies to
create market niches and compete with
Western Europe in this region. The booklet
offers tips on approaching the CEE market
and on seeking U.S. Government assistance.
It also lists U.S. Embassies in the region that
can help companies make contacts with
businesses and officials.

The next section offers additional contacts
and information including private-sector
business councils and CEE trade development
offices in the United States. The last pages
include a glossary of U.S. trade terms, a list of

US. and Foreign Commercial Service District
Offices, and a list of additional publications,
both from the U.S. Government and the
private sector, which regularly feature articles
and information about trade in Central and
Eastern Europe.

ORDERING INFORMATION: Use the
Government Printing Office (GPO) order
form on page 25. In the PUBLICATIONS
section, enter Stock Number (S/N) 044-000-
12311-3. The price per issue is $1.00.

KEY OFFICERS OF FOREIGN SERVICE
POSTS: GUIDE FOR BUSINESS
REPRESENTATIVES

TYPE: Subscription, booklet, paper-bound,
33/4" x 8 1/2" (pocket-size), approximately
110 pages.

FREQUENCY: Tri-annually in January, May,
and September. ISSUED BY: U.S. Department
of State, Office of Information Services.

CONTENTS: The introduction describes the
duties of the key officers with whom Ameri-
can business representatives would most
likely have contact when visiting an Embassy,
mission, consulate general, or consulate
abroad. The book then details the specific
structure of Foreign Service posts by country,
lists the positions and individuals at that post,
and gives the post’s current mailing address,
telex, fax, and telephone numbers. This is
important for finding the correct person to
contact for business assistance, etc.

ORDERING INFORMATION: Use the GPO
order form on page 25. To subscribe, enter
List ID “KOFS” in the SUBSCRIPTION
section. The price is $5.00 per year. To order
the Summer 1991 edition without subscribing,
complete the PUBLICATIONS section of the
order form. Enter S/N 744-006-00020-1. The
single-issue price, currently $1.75, will in-
crease to $2.75 in early 1992.

Page 22

Defense Trade News, Volume 2, Number 3, July 1991



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‘STA-SO1

EDITOR, DEFENSE TRADE NEWS
U.S. Department of State
Washington, D.C. 20522-0602


EASTERN EUROPE

Defense Trade with Poland, Hungary, and Czechoslovakia

The Center for Defense Trade (CDT) has
received numerous inquiries from U.S.
industry regarding U.S. Government policy
for U.S. Munitions List (USML) exports to
Eastern Europe. The following is a status
report on this area, as well as CDT’s view of
future policy directions. (For additional
information on trade with Eastern Europe,
order the State Department's new booklet,
Resource Guide to Doing Business in Central and
Eastern Europe, which is reviewed on page
20.)

Political Developments Affect Export
Controls, Throughout the Cold War era, U.S.
policy has been to deny license applications
for the export of USML items to certain
countries. These have included the Eastern
European nations listed in Section 126.1 of
the International Traffic in Arms Regulations
(ITAR).

Because of the dissolution of the Warsaw
Pact and major democratic reforms in Poland,
Hungary, and Czechoslovakia over the past 2
years, as of July 12, 1991, all three countries
have been approved for removal from the
USML list of proscribed destinations. A
notice will soon be published in the Federal
Register to notify exporters of the change in
policy and amending the ITAR accordingly.

The Office of Defense Trade Controls (DTC),
in consultation with other offices in State and
Defense, will continue to review munitions
license applications for Poland, Hungary, and
Czechoslovakia on a case-by-case basis. Prior
to the approved removal of these countries
from the list of prohibited destinations, DTC
granted a number of exceptions for exports to
these countries. Such license requests will
remain subject to special scrutiny, because
the effectiveness of these countries’ export
control systems remains untested. Applica-
tions proposing to sell USML items for
civilian or nonlethal end use have the best

chance of being approved. Requests for
export will be considered for ITAR-controlled
commodities that may involve the following
non-military sectors: public health and safety,
environmental, non-nuclear energy-produc-
ing equipment and facilities, education,
banking and financial services, civilian tele-
communications, civil transportation, and
food production and processing equipment
and facilities. As of this writing, the United
States will generally not consider license
applications for the sale of significant military
equipment (SME) or components of an offen-
sive nature to these Eastern European nations.
Similarly, large end items (e.g., tanks, military
aircraft, etc.) will not be considered for direct
commercial sale at this time.

Because the United States is concerned about
the possibility that sensitive U.S. technologies
may be diverted to unauthorized end users, it
has encouraged these Eastern European
nations to set up effective export control
regimes and to establish retransfer safeguards
in order to prevent diversion of munitions
and other controlled items. The new govern-
ments have been receptive to U.S. recommen-
dations, and there is reason to believe that
they will implement improved export con-
trols.

Security Assistance Policy. Czechoslovakia,
Hungary, and Poland remain ineligible to
receive government-to-government sales of
defense articles and services under the Arms
Export Control Act (AECA). The Support for
East European Democracy (SEED) Act of 1989
[Section 2(b)(1)(E)], however, sets as a U.S.
policy goal the “establishment of non-partisan
military, security, and police forces” in East-
ern European nations.

To support the SEED objective, the United
States has initiated International Military
Education and Training (IMET) programs
with Poland, Hungary, and Czechoslovakia.
These IMET grants are meant to encourage

Page 4

Defense Trade News, Volume 2, Number 3, July 1991



sold a comparable item to the proposed
country; the item to be demonstrated is well-
developed; and the international market for
the item in question is well established.

Determining Which Avenue to Use. As an
end item or service matures, the type of
correspondence to determine marketability
may also change. For example, submitting an
advisory opinion request is appropriate when
a product is in the initial development stage

and its technical data are evolving. For a fully
developed production item or firm technical
data, a DSP-5, DSP-85, or DSP-73 application
may be more appropriate. These applications,
when approved, grant the authority to export
hardware and technical data. The company
must ultimately determine which avenue to
use based on the defense trade status of the
proposed market country, the developmental
stage of the item or defense service, and the
company’s marketing position. ©

INERTIAL NAVIGATION SYSTEMS

Change in International Traffic in Arms Regulations

The following rule change transfers to the
licensing jurisdiction of the Department of
Commerce FAA certified Inertial Navigation
Systems regardless of destination. Commerce
is in the process of taking the necessary steps
to reflect this change in the Commodity
Control List (CCL). We anticipate the Com-
merce final rule change will be available for
printing in the next Defense Trade News.

Formal notification appeared in the Federal
Register (Volume 56, Number 97, Monday,
May 20, 1991, page 23020). The notice reads
as follows:

Amendment to the International Traffic in
Arms Regulations (ITAR)

Agency: Department of State.
Action: Final Rule.

Summary: The Department of State has
determined, in consultation with the Depart-
ments of Defense and Commerce, that certain
Inertial Navigation Systems (and components
designed for such systems) should be trans-
ferred to the jurisdiction of the Department of
Commerce for export control purposes.
Accordingly, the United States Munitions List
has been amended to reflect this change.

Dates: This rule is effective as of June 19,
1991.

For Further Information Contact:

Rose Biancaniello, Chief,

Arms Licensing Division,

Office of Defense Trade Controls,
Bureau of Politico-Military Affairs,
Department of State (703-875-6644).

Supplementary Information: This final rule
amends the United States Munitions List,
which is part of the International Traffic in
Arms Regulations (ITAR) (22 CFR parts 120-
130). The ITAR in turn implements section 38
of the Arms Export Control Act (22 U.S.C.
2778).

Section 17(c) of the Export Administration
Act of 1979 (50 U.S.C. App. 2416 (c)) divided
export control jurisdiction over inertial navi-
gation systems and components between the
Departments of State and Commerce. Pursu-
ant to this statute and implementing regula-
tions, the Commerce Department assumed
jurisdiction over most inertial navigation
systems and components that are standard
equipment in civil aircraft, including spare
parts, spare units and related repair technical
data to be used exclusively for the mainte-
nance of such equipment and that are certi-
fied by the Federal Aviation Administration
(FAA) as being an integral part of such air-
craft. The Department of State retained
jurisdiction over such systems, components,
spares, and technical data only if they were
destined for certain countries. In addition,
the State Department retained jurisdiction
over all inertial navigation systems and

Defense Trade News, Volume 2, Number 3, July 1991

Page 15



DEPARTMENTS

U.S.
CUSTOMS

Helpful Hints to Speed Exports and
Avoid Detentions or Seizures

This is the third article in a series about the
export operations and programs conducted
by the U.S. Customs Service. The January
article presented an overview of EXODUS
and the April column described the EXODUS
Command Center, especially as the central
reference point for the six-step detention and
seizure process that EXODUS inspectors
follow when identifying suspicious exports.
In this article, we provide helpful hints to
speed your exports and to avoid detentions or
seizures.

The U.S. Customs Service, within the Depart-
ment of the Treasury, as mandated by law,
enforces the control and regulation of the
international movement of U.S. Munitions
List (USML) items exported from, temporarily
imported into, or transiting the United States.
In support of the Department of State, the
Customs Service (specifically the Export
Control Desks at the various Customs ports)
processes exports against your approved DSP
export licenses. The Customs Service continu-
ously strives to provide the legitimate trade
community with expedited service for regu-
lated goods.

Establish an Internal Compliance Program.
One of the best ways to avoid export clear-
ance problems is to institute an internal
compliance program. It is important that
those in a company who work in traffic, sales,
or marketing understand export controls and
the consequences of noncompliance.

Designated personnel should be responsible
for implementing the compliance program.
These personnel need to be trained and well
versed in export laws and related regulations.
Furthermore, company personnel should be
informed about who is in charge of the pro-
gram and should establish a compliance
communication channel within their com-

pany.

Review Each Transaction. To prevent inad-
vertent violations, there must be a system to
ensure that every export or import transaction
is reviewed by the people responsible for
internal compliance. To be effective, this
review should start with four questions:

1. Isa license required for the shipment?
2. Does a special exemption apply?

3. Does the company or entity have a
valid license for the shipment?

4. If required, is the proper documentation
prepared and filed?

Once the broad licensing questions have been
answered, compliance personnel must ask
whether the details of a particular transaction
match the conditions of the license. Such
questions include:

1. Are the consignees listed on the appli-
cation/license the ones who will ultimately
receive the shipment?

2. Are the items on the application/
license the ones that will be shipped?

3. Has the quantity authorized by the
license already been shipped? Has the license
expired?

Beyond the Compliance Program. Addi-
tional actions can enhance an active internal
compliance program. For those companies
that have compliance procedures imple-
mented, three other areas may strengthen
their export program.

Defense Trade News, Volume 2, Number 3, July 1991

Page 17



MIDDLE EAST ARMS CONTROL INITIATIVE

President Announces Nonproliferation Proposals

On May 29, 1991, the President announced.
six proposals for the Middle East intended to
counter the proliferation of nuclear, chemi-
cal, and biological weapons; the missiles that
could carry such arms; and destabilizing
transfers of conventional arms. These pro-
posals reflected U.S. consultations with
allies, governments in the region, and major
suppliers of arms and technology. The
President's initiative focused on the Middle
East and that region’s unique situation. It
was also meant to complement other initia-
tives announced by U.S. allies.

Specifically, the President’s Middle East
Arms Control Initiative called for: a meeting
of the five major arms supplying nations to
discuss establishment of guidelines for
restraints of destabilizing transfers; a freeze
on the acquisition, production, and testing of
surface-to-surface missiles by states in the
region, with a view toward ultimate elimina-
tion of such missiles; regional application of
existing international nuclear nonprolifer-
ation mechanisms; rapid completion of a
worldwide chemical weapons ban; and
strengthening of the treaty banning biologi-
cal weapons.

On July 8-9, representatives of the United
States, the Soviet Union, France, the United
Kingdom, and the People’s Republic of
China (the five major arms supplying na-
tions) met in Paris to discuss arms transfer
and nonproliferation matters. In a commu-
nique, they noted with concern the dangers
associated with excessive arms buildups and
the threats to peace and stability posed by
the proliferation of nuclear weapons, chemi-
cal and biological weapons, and missiles.
They undertook to seek effective weapons
control measures in an equitable, reasonable,
comprehensive, and balanced manner—on a
global and regional basis. They also agreed
to develop and maintain stringent national
and, as far as possible, harmonized controls

to ensure that weapons of mass destruction-
related equipment and materials are trans-
ferred for permitted purposes only and are not
diverted.

Finally, the representatives of the five major
suppliers expressed strong support for the
objective of creating a weapons of mass de-
struction-free zone in the Middle East. Critical
steps toward this goal would include a freeze
and ultimate elimination of ground-to-ground
missiles in the region; submission by all na-
tions in the region of all their nuclear activities
to International Atomic Energy Agency (IAEA)
safeguards; a ban on the importation and
production of nuclear weapons-usable materi-
als; and agreement by all states in the region to
undertake to become parties to the Chemical
Weapons Convention as soon as it is con-
cluded in 1992.

The five suppliers acknowledged that Article
51 of the U.N. Charter guarantees every state
the right of self defense, implying that a state
also has the right to acquire the means to
defend itself. However, they recognized that
indiscriminate arms and technology transfer
can threaten regional stability. Noting the
special role they have in fostering “greater
responsibility, confidence, and transparency”
in this sphere and the need for close consulta-
tion with recipient states, the suppliers de-
clared their intent to:

¢ observe restraint when considering
defense transfers under their respective na-
tional control procedures (with a view toward
developing agreed guidelines on this basis);

* develop modalities of consultation and
information exchanges on arms transfers to the
Middle East, as a matter of priority;

* convene a group of experts in Septem-
ber 1991 to develop a common approach to
such transfers;

¢ hold another plenary meeting in Octo-
ber 1991 in London; and

* schedule further meetings periodically
to review transfer issues. ®

Defense Trade News, Volume 2, Number 3, July 1997

Page 3



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USA.


Secretary of State
James A. Baker Ill

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
Brian |. McCleary

Managing Editor
Marsha F. Filtrante

Production Editor
Paula M. Lorfano

Design Consultant
Richard E. Florence

Contributing Editors

Major Mike Van Atta

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

Commodity Jurisdictions:

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. 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.


TRAINING QUESTIONNAIRE

The Office of Defense Trade Controls (DTC) will begin in-house training seminars on export licens-
ing policies and procedures in the fall of 1991. These seminars will be held in the DIC main confer-
ence room at 1701 N. Fort Meyer Drive, Arlington, VA.

We anticipate that the seminars will be half-day, but they can be extended according to the needs of
the participants. Attendance at each session is limited to 25 to 30 people due to seating constraints.
Large companies may have sufficient personnel to utilize the spaces in a single session. In many
instances, it may be necessary to combine personnel from different companies in the same seminar.
Whenever this occurs, we will attempt to ensure that there is a commonality of topics, and, if
possible, of business-type or USML Category interest.

In order to ensure that your training requirements will be addressed, it would be appreciated if you
would complete and return the following questionnaire as soon as possible.

1. TYPE(S) OF TRAINING DESIRED:

___ Completion of Applications ____ Registration Requirements
—_— Country Licensing Policies ___ Congressional Requirements
____ COCOM Requirements ___ Agreement Requirements
___ US. Customs EXODUS Program ____ Commodity Jurisdictions
____ Processing of Requests ___ Licensing Foreign Nationals

____. Other areas or topics you wish discussed: (specify)

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

3. Please list the primary ITAR Categories of the defense articles, services, and technical data in
which your firm usually deals.

1. 2. 3. 4.

4, COMPANY /INDIVIDUAL’S NAME AND POINT OF CONTACT (POC);
COMPANY NAME,

DTC REGISTRATION CODE -

ADDRESS

POINT OF CONTACT:

PHONE: ( ) a _
Area Code Direct Line DataFax

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

Yes No



State-Customs Cooperation. “Customs is our
enforcement arm. We are two sides of the
same coin. During the last year, the State
Department has expanded its working rela-
tionship with the U.S. Customs Service in the
area of enforcement and compliance. The
relationship has grown dramatically in terms
of case referrals, overall information ex-
changes, criminal investigations initiated, and
a better integration of U.S. Customs officers

. into our day-to-day DTC operations.

“Currently, Customs has two full-time em-
ployees on detail to the Compliance Division
of the Defense Trade Controls office (and a
third will be provided shortly). One position,
a Special Coordinator for Law Enforcement,
provides senior-level interaction on policy
and investigative enforcement matters, as
well as oversight in the screening of export
license applications for law enforcement
concerns. The second position, a program
analyst, is the main link between the Customs
EXODUS Command Center and the State
Department. This individual is responsible
for coordinating all communications from the
Customs operational field offices involving
detentions, seizures, license certifications, and
determinations with the two agencies’ head-
quarters.

“Also, State and Customs are working on the
development of a database interface that will
enable front line personnel in both organiza-
tions to communicate rapidly about several
aspects of enforcement, including the registra-
tion of persons in the defense trade business,
the status of ongoing investigations, the
disposition of requests for export licenses,
and the shipment of articles licensed by State.

The Compliance Work Program. “Areas of
particular scrutiny in State’s compliance
function include current and actual registra-
tion information, review (particularly in
terms of indictments or convictions) of offi-
cials empowered by firms to conduct defense
trade business, proper licensing to stem
illegal exports, and the bona fides of stated
destinations and end uSe of U.S. defense trade
articles and services.

“Our work program reflects these concerns:

¢ The initial and renewed registration of the
over 4,000 persons in the defense trade busi-
ness.

¢ End-use checks of which over 150 cases
have been conducted under a program initi-
ated in September 1990. Pre- and post-
shipment checks on articles and services
covered by the USML are conducted by
personnel assigned to U.S. diplomatic posts
abroad, including Customs where available.
This program has become a focal point for
review/analysis by the intelligence commu-
nity and Customs as well as a discussion
point with friendly governments.

¢ Assistance rendered to U.S. attorneys in
plea bargain cases, in indictment procedures,
and trial preparations.

© Records investigations to assist other
government agencies in documentation of
controlled items and verification concerning
controlled items.

¢ Suspensions and debarments of suspected.
or known violators of the AECA and ITAR.

Industry’s Role. “ Finally, I must note that we
have been successful in raising the awareness
of industry to compliance issues and con-
cerns. I find most firms I have dealt with
have taken extensive internal measures to
assure their activities are consistent with
munitions export regulations. I was heart-
ened to see the following quote in a trade
journal by a defense industry giant last
October:

‘..selling armaments should be done as an instrument of *
government policy. ...the world we are going to see is
going to be less and less stable so I would believe that it
is appropriate for governments to play a major hand in
deciding where exports should be made.’

“We believe there is an industry role in
compliance and are making every effort to
encourage private sector interest, emphasiz-
ing vigilance, compliance, and cooperation.”

Defense Trade News, Volume 2, Number 3, July 1991

Page 13



related equipment that did not meet the
criteria set forth above, as well as all technical
data related to the design, development,
production, or manufacture of any such
equipment.

Recently, the Department of State, in
consultation with the Departments of Defense
and Commerce, conducted a commodity
jurisdiction review of the inertial navigation
systems it controlled only for export to certain
countries. This review established that such
systems, components and related spares are
no longer appropriately considered to be
inherently military in character.

Accordingly, this rule amends the U.S.
Munitions List to reflect the transfer of these
items to Commerce Department jurisdiction.
It should be noted, however, that all other
inertial navigation systems, components,
spares, and related repair technical data
remain subject to Department of State juris-
diction, and as such may only be exported as
provided in the ITAR. In addition, all techni-
cal data related to design, development,
production, or manufacture of any inertial
navigation system remain subject to State
Department jurisdiction. The Commerce
Department is concurrently amending the
Commodity Control List to reflect the addi-
tion of these items.

The following amendment deals with a
foreign affairs function of the United States
and is thus excluded from the major rule
procedures of Executive Order 12291 (46 CFR
13193) and the procedures of 5 U.S.C. 553 and
554. Although the Department of State
believes that the public should generally have
an opportunity to comment on proposed.
ITAR amendments before they are promul-
gated as a final rule, this amendment simply
reflects an administrative determination
made in consultation with the Departments of
Commerce and Defense. Therefore, it is being
promulgated as a final rule. In addition, this
rule affects collection of information subject to
the Paperwork Reduction Act (44 U.S.C. 3501
et seq.), and will serve to reduce the burden
on exporters in that respect. The relevant
information collection is to be reviewed by
the Office of Management and Budget under
control no. 1405-0013.

List of Subjects in 22 CFR Part 121
Arms and munitions, Exports.

Accordingly, for the reasons set
forth in the preamble, it is proposed that
Title 22, chapter I, subchapter M (consist-
ing of parts 120-130) of the Code of Fed-
eral Regulations, be amended as set forth
below:

PART 121—THE UNITED STATES
MUNITIONS LIST

1. The authority citation for part 121
continues to read as follows:

Authority: Sec. 38, Arms Export
Control Act, 90 Stat. 744 (22 U.S.C. 2778);
E.O. 11958, 42 FR 4311; 22 U.S.C. 2658.

2. In § 121.1, paragraph (g) of Category
VIII is revised to read as follows:

§ 121.1 General. The United States Muni-
tions List.

* * * * *

*(g) Inertial navigation systems and all
specifically designed components, parts, and
accessories, except those systems or components
that are standard equipment in civil aircraft,
including spare parts and spare units to be used
exclusively for the maintenance of inertial naviga-
tion equipment incorporated in civil aircraft, and
that are certified by the Federal Aviation Adminis-
tration (FAA) as being an integral part of such
aircraft. All exports of technical data related to the
design, development, production or manufacture
of inertial navigation equipment (regardless of
accuracies) or its related parts, components or
subsystems are subject to the requirements of the
regulations contained in this subchapter. The
export of technical data related to the repair of
parts, components, or subsystems of inertial
navigation systems (including accelerometers and
gyroscopes) that are not certified by the FAA as
being an integral part of civil aircraft are subject to
the requirements of this subchapter. The provi-
sions of XI(e) and XII(c) are not applicable to such

exports of technical data.
* * * * *

Dated: March 22, 1991.
Reginald Bartholomew
Under Secretary of State for
International Security Affairs

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Defense Trade News, Volume 2, Number 3, July 1991