DDTC’s proposed new rule on dual and third-country nationals (DN/TCN) becomes final August 15, 2011. We previously blogged about that new rule here, in case you missed it.
In preparation for the implementation of these provisions, DDTC has published a variety of guidelines and answers to frequently asked questions about the new 126.18 exemption. Thankfully, these documents provide more guidance on what – exactly – companies are expected to do when vetting their DN/TCN employees. This includes a recommended questionnaire and non-disclosure agreements to determine whether employees maintain “substantive contact” with countries not named in the license or agreement.
Interestingly, they’re also leaving the option open for companies to continue to have DN/TCN employees vetted by DDTC. If you choose this option, DDTC will continue to look at all nationalities held (including country of birth), as they have done in the past. If, however, you choose to claim the new 126.18 exemption, your company must instead consider the diversion risk presented by “substantive contact” with other countries. (There are other conditions which apply, too, such as whether the technical data in question is classified or unclassified.)
My favorite question from the sample DDTC questionnaire for DN/TCN employees is:
“Do you have contacts with any other individuals or groups involved in acquiring controlled defense articles, including technical data, illegally or otherwise circumventing export control laws? Please explain the nature of that contact.”
If your employees answer “YES” to this question, I would assume – at a minimum – you’d want to pull them away from any ITAR- or EAR-controlled work immediately. Following that, I’d recommend a frank discussion about why their associates are trying to break U.S. laws.
It will be interesting to see how this new rule plays out for companies. But one thing’s for sure: Having an experienced trade compliance specialist on your team will continue to be critical for any organization that is serious about U.S. export compliance.
Don Buehler is founder and president of Export Solutions, Inc., a consultancy firm which specializes in helping companies comply with ITAR and EAR.