Defense Security Technology Administration Overview of Licensing

1. Defense Security Technology Administration Overview of Licensing Todd E. Willis Division Chief, Dual-Use Licensing Defense Technology Security Administration U.S. Department of Defense

2. Agenda • Overview of International Traffic in Arms Regulations (ITAR) • Key terms • License requirements • Defense Technology Security Administration (DTSA) • Mission • License Directorate • Commodity Jurisdiction Overview • Exporting Technology • Technology license vs. Deemed Export License Review • Export Control Reform • Four singulars

3. Overview of ITAR 3

4. Licensing Authority/DTSA Role • U.S. export laws divide the authority for export licensing • Arms Export Control Act: Department of State for defense articles • Export Administration Act: Department of Commerce for dual-use items • Expeditiously coordinate, develop and adjudicate the DoD position on licenses, regulations and other actions received from the licensing regulatory authority for review. • Ensure recommendations fully address DoD technology security policies, support and protect the warfighter, and prevent the diversion and proliferation to programs or entities of national security concern.

5. Important ITAR Terms Designation of Defense Articles and Defense Services (120.2): • The Arms Export Control Act provides that the President shall designate the articles and services deemed to be defense articles and defense services for purposed of the ITAR. The items so designated constitute the United States Munitions List (USML) and are specified in part 121 of the ITAR. Such designations are made by the Department of State with the concurrence of the Department of Defense. For a determination on whether a particular item is included on the USML see Commodity Jurisdiction. (120.4)

6. Important ITAR Terms General Authorities and Eligibility: • Section 38 of the Arms Export Control Act (22 U.S.C. 2778) authorizes the President to control the export and import of defense articles and defense services. Defense Article (120.6): • Any item or technical data designated in 121.1 of the ITAR; this includes technical data recorded or stored in any physical form; models, mock-ups or other items that reveal technical data directly relating to items designated. It does not include basic marketing information on function or purpose or general system descriptions. Defense Services (120.9): • The furnishing of assistance (including training) to foreign persons, whether in the United States or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles.

7. Important ITAR Terms Technical Data (120.10): • Information, which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions and documentation; • Classified information related to defense articles/services; • Information covered by an invention secrecy order; • Software directly related to defense articles; • Definition does not include information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities or information in the public domain. It does not include basic marketing information on function or purpose for general system descriptions of defense articles.

8. Important ITAR Terms Public Domain (120.11): • Information which is published and which is generally accessible or available in the public. • Through sales at newsstands and bookstores; • Through subscriptions which are available without restriction to any individual who desires to obtain or purchase the published information; • Through second class mailing privileges granted by the USG; • At libraries open to the public or from the public can obtain documents; • Through patents available at any patent office; • Through unlimited distribution at a conference, meeting, seminar, trade show or exhibition, generally accessible to the public in the United States; • Through public release in any form after approval by the cognizant USG department or agency; • Through fundamental research

9. ITAR Exemptions Shipments by or for USG Agencies (126.4): • A license is not required for the temporary import, or temporary export, of any defense article, including technical data or the performance of a defense service, by or for any agency of the USG for official use by such an agency, or for carrying out any foreign assistance, cooperative project or sales program authorized by law and subject to control by the President by other means. (see further details within Part 126.4) Canadian Exemptions (126.5): see details in ITAR 9

10. Is a License Required? The license question is much more straight forward with a munitions item: • Step 1: Is your item a defense article or service listed in the ITAR? • If yes, a license is required to export anywhere outside the U.S. • In no, are you subject to another export jurisdiction? • Don’t know, submit a commodity jurisdiction through the Directorate of Defense Trade Controls (DDTC).

11. Overview of DTSA 11

12. Other Regulatory Agencies • U.S. Department of State - Directorate of Defense Trade Controls • U.S. Department of Justice - Drug Enforcement Administration • U.S. Department of Interior - Fish & Wildlife Service • U.S. Department of Energy • U.S. Nuclear Regulatory Commission • U.S. Department of Treasury - Office of Foreign Assets Control • U.S. Department of Commerce - Office of Patent & Trademarks • U.S. Department of Agriculture • U.S. Department of Health and Human Services - Food & Drug Administration NOTE: DTSA is not a Regulatory Agency, but is the only USG agency that reviews and provides national security input on both dual-use and munitions license applications

13. DTSA’s Mission & Strategic Goals Mission Statement: “To promote United States national security interests by protecting critical technology while building partnership capacity” Strategic Goals: • Preserve the U.S. defense edge by preventing the proliferation and diversion of technology that could prove detrimental to U.S. national security • Engage U.S. allies and partners to increase interoperability and protect critical technologies • Facilitate the health of the U.S. industrial base • Align and utilize resources to support DTSA's mission • Empower people and make DTSA a great place to work

14. Defense Technology Security Administration Director, Defense Technology Security Administration (DTSA) Mr. James Hursch Military Assistant, DTSA Deputy Director, DTSA Mr. Anthony Aldwell LicensingDirectorate TechnologyDirectorate PolicyDirectorate International Security SpaceDirectorate Management Directorate --Personnel --Security --Logistics --Comptroller --Info Technology --Info Assurance -- Regional Policy -- Negotiations/Liaison -- Capabilities/Systems -- Assessments/CFIUS -- Secretariat NDPC -- FG Disclosure Policy -- Security Surveys -- General Security Agmt -- NATO Security Policy -- FN Pers Assgn Policy -- Monitor Int’l Sec Prgm -- Int’l Sec Tng Oversight -- License Reviews -- Commodity Jurisdictions -- Voluntary & Directed Disclosures -- Regulations -- Aeronautical -- Electronics -- Information & Communications -- Sensors & Lasers -- Missiles & Space -- NBC/Land/Naval/ Materials/Machine Tools -- Space Monitoring -- License Monitoring -- Tech Exchanges -- Tech Data Reviews

15. 2010 License Reviewed Munitions Dual Use 38,907 Licenses Reviewed 19,049 Licenses Reviewed 1 Jan - 31 Dec 2010

16. DoD Munitions License Review Timeline (Calendar Days) Reply to DTSA within 25 days Case Received from State/DTC (Electronic/Paper) Created at DTSA No Referred to DoD Reviewers "Prescreen" OR Yes 14 Day Extension (if DTSA approved) Position to State/DTC within 2 days Potential Escalation by DoD Reviewers w/in 2 days Draft Decision by DTSA w/in 2 days LDF→LDM Escalation Process Escalate Yes No Position to State/DTC Position to State/DTC

17. DTSA reviews Commodity Jurisdictions and Commodity Classifications when requested by DoS or DoC DoD Role in CJ / CCATS Process • Both the CCL and USML are used as measures for appropriate export control • Important considerations: • Legacy of Development • Capability • Performance equivalents • Sales history • Precedents

18. Regulatory Basis of DoD Review International Traffic in Arms Regulations (ITAR), 22 CFR § 120.3 An article may be designated a “defense article” if it: (a) Is specifically designed, developed, configured, adapted, or modified for a military application; and (i) Does not have a predominant civil application, and (ii) Does not have a performance equivalent (defined by form, fit and function) to articles used for civil applications, OR (b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence capability such that control under the ITAR is necessary. The intended use of the article or service after its export is not relevant in determining whether an item is a defense article.

19. Hints for CJ Submittals • Reviewing Audience for CJ submission – some technical, some not so technical: • (1) DoD/DoC Engineers • (2) Senior Decision Makers [NON-TECHNICAL!] • Be forthcoming in providing complete descriptions of the item and its development • Be brief and to the point • Identify current civil and military uses; any other potential uses • Compare and Contrast the civil and military variants/usage • Provide details on any “differences” between variants • What is required to use for military mission? • Sales and Export History, if any • Comparable Items and Foreign Availability • Avoid Legal Speak and no marketing hyperbole please ! • Appropriate jurisdictional control is the ultimate goal

20. DoD 2010 CJ Positions 917 License Decisions 1 Jan - 31 Dec 2010

21. Exporting Critical Technology 21

22. Exporting Critical Technology The balance in protecting technology: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. “ Chinese Proverb “If we guard our toothbrushes and diamonds with equal zeal, we will lose fewer toothbrushes and more diamonds,” McGeorge Bundy National Security Advisor for President Kennedy and Johnson “…allow the nation to focus on controlling critical technologies and items that maintain U.S. military technology advantage.” Robert M. Gates Secretary of Defense April 20, 2010 on export control reform

23. Exporting Critical Technology - EAR What is a technology export? • EAR, Part 772.1 Technology is “Specific information necessary for the “development”, “production”, or “use” of a product.” • Controlled information leaving the U.S. is a technology export. What is a deemed export? • EAR, Part 734.2(b)(2)(ii) “Release in the United States of technology or source code subject to the Export Administration Regulations to a foreign national. Such release is “deemed” to be an export to the home country of the foreign national.” 23

24. Exporting Critical Technology - ITAR What is a technology export? Technical Data (120.10): • Information, which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions and documentation; (See full definition in ITAR Part 120.10) What is a deemed export? • Under ITAR, the export to the foreign national considers citizenship and place of birth (if different); • Federal Register noticed published in April 2011, requires U.S. entity to verify compliance and no release of ITAR controlled information without prior USG approval. 24

25. How to improve your license processing times • Communication: Early and Often • On sensitive technologies going to sensitive countries, make sure you make early contact with LDD licensing officers. • Don’t be afraid to call the assigned DoD licensing officers • Complete Licensing Packages • Ensure license application is completely filled out and has correct information • Ensure all supporting documentation is completed and accurate • More details outlining specifics of the transaction are always welcomed; this is critical in technology transactions. • Complete due diligence on all end-users • Review Entity List, Unverified List and applicable USG public list • Ensure all end-user certificates are completed and delivered with the application • Set realistic expectations with your customer • Educate your customer on the U.S. exports licensing process and responsibilities

26. U.S. Munitions List (USML) – Part 121 26

27. USML – Part 121 • Category I: Firearms, Close Assault Weapons and Combat Shotguns • Category II: Guns and Armament • Category III: Ammunition/Ordnance • Category IV: Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines • Category V: Explosives and Energetic Materials, Propellants, Incendiary Agents and Their Constituents • Category VI: Vessels of war and Special Navel Equipment • Category VII: Tanks and Military Vehicles • Category VIII: Aircraft and Associated Equipment • Category IX: Military Training equipment and Training • Category X: Protective Personnel Equipment and Shelters • Category XI: Military Electronics • Category XII: Fire Control, Range Finder, Optical and Guidance and Control Equipment 27

28. USML – Part 121 • Category XIII: Auxiliary Military Equipment • Category XIV: Toxicological Agents, Including Chemical Agents, Biological Agents and Associated Equipment • Category XV: Spacecraft Systems and Associated Equipment • Category XVI: Nuclear Weapons, Design and Testing Related Items • Category XVII: Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated • Category XVIII: Directed Energy Weapons • Category XIX: reserved • Category XX: Submersible Vessels, Oceanographic and Associated Equipment • Category XXI: Miscellaneous Articles 28

29. USML – Examples • Unmanned Aerial Vehicles (UAVs): Category VIII – Aircraft and Associated Equipment (a) Aircraft, including but not limited to helicopters, non-expansive balloons, drones, and lighter-than-air aircraft, which are specifically designed, modified, or equipped for military purposes. This includes but is not limited to the following military purposes: Gunnery, bombing, rocket or missile launching, electronic and other surveillance, reconnaissance, refueling, aerial mapping, military liaison, cargo carrying or dropping, personnel dropping, airborne warning and control, and military training. 29

30. USML – Examples • Satellites: Spacecraft Systems and Associated Equipment (a) Spacecraft, including communications satellites, remote sensing satellites, scientific satellites, research satellites, navigation satellites, experimental and multi-mission satellites. NOTE TO PARAGRAPH (a): Commercial communications satellites, scientific satellites, research satellites and experimental satellites are designated as SME only when the equipment is intended for use by the armed forces of any foreign country. 30

31. Export Control Reform 31

32. Export Control Reform • Secretary Gates noted: • “We need a system that dispenses with the 95 percent of “easy” cases and lets us concentrate our resources on the remaining 5 percent. • “By doing so, we will be better able to monitor and enforce controls on technology transfers with real security implications while helping to speed the provision of equipment to allies and partners who fight alongside us in coalition operations.” • If addressed properly, national security and efficiency are not mutually exclusive. • Reform is driven by national security.

33. Structure of the New Export Control System • On August 31, 2010, the President announced that the Administration is moving forward on a fundamentally new U.S. export control system. • The system will be based on the four singles that Secretary Gates mentioned in his April speech: • Single export control licensing authority • Single control list • Single primary enforcement coordination agency • Single IT system to process all licenses

34. Way Ahead • Single Licensing Agency • Creation of the Single Licensing Agency (SLA) will likely require legislation • The Task Force has draft legislation which they expect to discuss with new congressional leaders in January 2011 • Single IT System • Memorandum of Agreement (MOA) signed with State in February 2010 – initial operational capability expected by June 2011 • MOA signed with Commerce in October 2010 – initial operational capability projected for June 2012 • Enforcement Coordination Center – • Work on-going to implement EO

35. Licensing Directorate Michael Laychak Director Licensing Directorate 703-325-4116 Michael.Laychak@dtsa.mil Kenneth Oukrop Munitions Division Chief Licensing Directorate 703-325-3990 Kenneth.Oukrop@dtsa.mil Todd Willis Dual-Use Division Chief Licensing Directorate 703-325-3672 Todd.Willis@dtsa.mil DDTC Website: http://www.pmddtc.state.gov/index.html DTSA Website: http://www.dtsa.mil/

36. Questions?