By Tom Reynolds, Export Solutions

Earlier this month, the Directorate of Defense Trade Controls (DDTC) proposed a new amendment that could have significant impact on U.S. and foreign companies who are struggling to be ITAR compliant.  The proposal would basically eliminate the need for licensed foreign companies to obtain separate approval from DDTC for the transfer of technical data to employees who are dual nationals or third country nationals.

If this proposal becomes final, DDTC would create a new exemption in the ITAR regulations.  This exemption would allow licensed foreign companies to transfer technical data to other foreign nationals in their employment, provided the transfer takes place completely within the licensed country.  Other conditions would also need to be met (such as obtaining security clearances or Non-Disclosure Agreements with the individual employees).

This new proposal would not extend to dual nationals or third country nationals who are contract employees or employees of other companies (sublicensees) listed on the license.  It would also introduce a new requirement, where companies must determine if dual/third country national employees maintain “substantive contact” with countries listed in ITAR 126.1.

This proposal comes on the heels of new export control reforms announced by President Obama and Defense Secretary Robert Gates earlier this year.  (Read more about those proposals here and here.)  It’s also a new departure from the current BIS methodology, which considers only a person’s most recent country of nationality for licensing purposes.  Many had hoped that DDTC and BIS would adopt the same standards under these proposed reforms.  But so far, that doesn’t seem to be the case.

These types of requirements place additional legal burdens on companies, since many (including those in the USA) are prohibited from discriminating against employees based solely on their national origin.  It’s a fine line to walk between discrimination and export control violations, isn’t it?  Wouldn’t it be nice for some clarity on the issue between the U.S. Justice Department and the U.S. Department of State?

Need some clarity on your company's approach to export compliance?  Buy our ITAR manual today.  It's full of policies and procedures to help you comply.

Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in ITAR and EAR compliance.