Will the new UK exemption help your ITAR compliance?

Earlier this month, DDTC made final a new exemption for certain exports to the United Kingdom in §126.17 of the ITAR. This exemption is pursuant to the recent Defense Trade Cooperation Treaty between the United States and the United Kingdom. How much is this new exemption going to help your company’s ITAR compliance? And more importantly, will it actually result in fewer license applications for you to manage (and for DDTC to process)?

A quick look at the new 126.17 reminds me of the Canadian exemption (§126.5) in a number of ways. Namely:

1. Recipients of these exports must be members of the “United Kingdom Community” in order for the exemption to apply. That means any and all entities located in the UK, right? Wrong. See paragraph (d) of the exemption for more details on who does/does not qualify.
2. The end user must be the UK or US government. This is very similar to the Canadian exemption in 126.5.
3. All other re-exports/re-transfers to an entity not covered under this exemption require prior approval from DDTC. (No surprises there.)
4. There’s a 20-page list of USML defense articles and defense services which are not covered by this exemption. You can read it in Supplement 1 to Part 126 of the ITAR.
5. There are a variety of marking and recordkeeping requirements related to use of this exemption. See paragraphs (k) and (l).

So, what do you think? Will 126.17 actually make ITAR compliance easier for companies? My guess is that U.S. companies who are heavily involved in defense trade with the UK will find this exemption helpful. However, I suspect that many other organizations will find it easier to simply apply for the license.