	   Imported and Exported Defense Articles and Services
			     Vol. 57, No. 89
				 Part II
			       56 FR 19666
			Thursday, May 7, 1992

AGENCY: DEPARTMENT OF STATE; Bureau of Politico-Military Affairs
DOC TYPE: Proposed Rules
CFR: 22 CFR Parts 120, 122, 123, 124, 125, 126, 127 and 130
NUMBER: Public Notice 1621
DATES: Comments must be submitted on or before June 8, 1992.
CONTACT:  James Andrew Lewis, U.S. Department of State, Bureau of Politico-
  Military  Affairs  (202-647-6977), or Mal Zerdin or Allan Suchinsky, U.S.
  Department of State, Office of Defense Trade Controls (703-875- 6644).
ADDRESS:  Written  comments  should  be  sent  to  James Andrew Lewis, U.S.
  Department of State, Bureau of Politico-Military Affairs, room 7321, Main
  State, Washington, DC 20520-0602.
ACTION: Proposed rule.
SUMMARY:  This  proposed  rule  would  amend  the  regulations implementing
  section 38 of the *Arms* Export Control Act, which governs the import and
  export  of defense articles and services. The proposed rule would clarify
  existing  regulations  and  reduce  the regulatory burden on exporters of
  defense  articles.  As part of this major revision of the regulations, it
    is  proposed  that  the  name  ''*International*  *Traffic*  in  *Arms*
   Regulations'' be changed to ''Defense Trade Regulations.''...

WORD COUNT: 42,314
TEXT:
SUPPLEMENTARY   INFORMATION:   The   last   printing   of  the  regulations
implementing  section  38  of the *Arms* Export Control Act was in November
1989.   Since   that  time  there  have  been  numerous  revisions  to  the
regulations.  There  is  a  need  to  amend  the  complete text in order to
integrate these revisions.

    This  proposed  rule  clarifies and simplifies the current regulations.
Certain sections are consolidated while others are revised in the interests
of   clarity  and  consistency  with  provisions  found  elsewhere  in  the
regulations. To the extent possible, related sections are cross-referenced.
In  amending  the  regulations,  suggestions from the defense industry have
been considered and, in many cases, incorporated into the regulations.

    The  most  salient  proposed  changes  are  an increase in the validity
period  of  a  license  from  three  to  four  years  and a revision of the
definition of defense article that takes into account civil application and
functional   equivalence.   A  number  of  new  exemptions  from  licensing
requirements  are  also  proposed. These exemptions for defense articles or
components  will  cover  exports  under approved manufacturing or technical
assistance  agreements;  spare  parts  valued at$500 or less; intra-company
transfers  of  components  being  sent  abroad  for  assembly  and  return;
temporary imports for repair and servicing; and items which have previously
been licensed for temporary import to trade shows.

    Other  proposed  changes  include  a  clarification  of  the  commodity
jurisdiction  process,  which establishes a review period and specifies the
appeal  process  for  determinations. The definition of *public* domain has
been  expanded  and  clarified.  The  requirement  for  prior  approval  of
retransfers  would  be reduced for certain U.S.-origin components which are
not  significant  military  equipment  or  controlled  for  purposes of the
Missile  Technology  Control  Regime for the governments of NATO countries,
Australia, and Japan.

    This amendment involves a foreign affairs function of the United States
and  thus  is  excluded  from  the major rule procedures of Executive Order
12291  (46  FR  13193)  and  the  procedures  of  5  U.S.C.  553  and  554.
Nevertheless,  it is being published as a proposed rule in order to provide
the  *public*  with  an  opportunity  to  comment  and  provide  advice and
suggestions  regarding  the proposal. The period for submission of comments
will  close  30  days  from  date  of *publication*. 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.

Specific Changes

    The Office of Munitions Control was renamed the Office of Defense Trade
Controls  on  January  8,  1990.  All references to the Office of Munitions
Control  are  now  referred to as the Office of Defense Trade Controls. For
clarification,    all   references   to   the   Assistant   Secretary   for
Political-Military  Affairs  are replaced by ''Assistant Secretary of State
for Politico-Military Affairs.'' Due to a change in office designation, all
references to the Under Secretary of State for Security Assistance, Science
and   Technology   are   replaced   by   ''Under  Secretary  of  State  for
*International* Security Affairs.''

    Due  to  the  deletion,  consolidation  and addition of sections in the
regulations,  there has been extensive renumbering. Sections in which there
are  substantive  changes are noted below. These section designations refer
to  the  new  proposed section numbers. Every section in which changes have
been proposed is printed in its entirety in this notice.

Section 120.1 General

    Section   120.1(b)   adds   references   to  retransfer  approvals  for
clarification.

    Section  120.1(c)  adds  a  new paragraph. Specifies that exemptions in
this  subchapter  do  not  apply  to  exporters  who have been convicted of
violating certain U.S. criminal statutes or are debarred.

Section 120.2 Designation of Defense Articles and Defense Services

    Clarifies  the  procedure  for  designation  of  defense  articles  and
services by indicating that the concurrence of the Department of Defense is
required  for  any designation, and that other U.S. Government agencies may
be consulted as necessary.

Section  120.3  Policy and Criteria for Designating and Determining Defense
Articles and Services

    The  policy  on  designating  defense  articles  and  services has been
amended   to   take   into   consideration  civil  application,  functional
equivalence,   and   the  significance  of  the  military  or  intelligence
applicability of the articles and services.

Section 120.4 Commodity Jurisdiction

    Changes   title   from   ''Commodity   jurisdiction   procedure''   and
redesignates  Section  number (previously Sec. 120.5). Establishes specific
criteria  for determination of export licensing jurisdiction. Establishes a
review  period  and specifies the appeal process for commodity jurisdiction
determinations.

Section 120.5 Relation to Regulations of Other Agencies

    Redesignates  section  number  (previously  Sec.  120.4). Clarifies the
licensing roles and responsibilities of other U.S. Government agencies.

Section 120.7 Defense Article
    Clarifies the definition to specify the inclusion of components, parts,
accessories, attachments and associated equipment. Clarifies the definition
of models and mockups.

Section 120.8 Defense Service

    Modifies the definition to be consistent with the revised definition of
technical data (Sec. 120.23).

Section 120.10 Export

    Modifies  the  definition  to include transfers in the United States of
defense articles to embassies or other agencies of foreign governments.

Section 120.11 Foreign Person

    Modifies the definition to address the term 'intending citizen'.

Section 120.12 Import-Temporary

    Changes title from ''Intransit shipment'' and clarifies the definition.
Section 120.13 License

    Changes  wording  referring  to  temporary  import  to  agree with Sec.
120.12,  and  specifies  that  licenses  are  for  items controlled by this
subchapter.

    The  following  sections  replace  the existing text of each respective
section number, unless otherwise noted.

Section 120.14 Major Defense Equipment

    This is a new section which defines major defense equipment.

Section 120.16 Office of Defense Trade Controls

    Identifies the current name and address of the subject office.

Section 120.19 *Public* Domain

    Adds  methods  by  which  technical  data may be placed in the *public*
 domain.
Section 120.20 Reexport or Retransfer

    This is a new section which redefines reexport and retransfer.

Section 120.21 Significant Military Equipment

    Consolidates but does not modify the previous definition.

Section 120.22 Technical Assistance Agreement

    Clarifies the services covered under this type of agreement.

Section 120.23 Technical Data

    Modifies  the  definition  to  include  certain  types  of  *software*.
Clarifies   the   definition   by   explicitly   identifying  assembly  and
reconstruction of defense articles.

Section 120.24 Technology

    This is a new section which defines technology.
Section 120.28 Listing of Forms Referred to in This Subchapter

    Lists  the  specific  office  within  each  agency from which forms are
available.

Section   122.4   Notification  of  Changes  in  Information  Furnished  by
Registrants

    Provides  that mergers and acquisitions of registrants must be notified
to the Office of Defense Trade Controls.

Section 122.5 Maintenance of Records by Registrants

    Clarifies  what  records  are to be maintained during the mandatory six
year period for record maintenance.

Section 123.1 Requirement for Export or Temporary Import Licenses

    Enumerates  licensing  and  documentation  requirements including those
previously specified under 123.22.

Section 123.2 Import Jurisdiction
    Clarifies  the regulatory authority over temporary and permanent import
of defense articles into the U.S.

Section 123.3 Temporary Import Licenses

    Clarifies the requirements for temporary import licenses and associated
exemptions.

Section 123.4 Temporary Import License Exemptions

    Establishes  a  licensing  exemption  for  defense articles temporarily
imported  into  the U.S. for servicing and return to the country from which
they  were  imported.  Establishes  criteria  and procedures for use of the
exemption. References the new four year validity period for licenses.

Section 123.5 Temporary Export Licenses

    Establishes  criteria  and  procedures  for temporary export of defense
articles. References the new four year validity period for licenses.

Section 123.6 Foreign Trade Zones and U.S. Customs Bonded Warehouses
    Clarifies  the  procedure  for  handling  classified  defense  articles
including technical data.

Section  123.7  Exports  to  Warehouses  or Distribution Points Outside the
United States

    Clarifies  that  certain  exemptions  may  apply  to exports under this
subchapter.

Section  123.9 Country of Ultimate Destination and Approval of Reexports or
Retransfers

    Establishes  procedures  for  obtaining  approval  for  the reexport or
retransfer  or  change  in  end  use  of a defense article. Provides for an
exemption  for  the  reexport  of specified defense articles (which are not
significant  military  equipment  or controlled for purposes of the Missile
Technology  Control  Regime)  destined  for  NATO  countries, Australia, or
Japan.

Section 123.10 Non-Transfer and Use Assurances

    Modifies  the section to remove congressional notification. A new (Sec.
123.15)  is  created  to address congressional notifications. Clarifies the
assurances requirement by explicitly addressing usage assurances.

Section  123.11  Movements  of  Vessels  and  Aircraft  Covered by the U.S.
Munitions List Outside the United States

    Changes section title.

Section 123.12 Shipments Between U.S. Possessions

    Clarifies  that  licensing requirements under this section do not apply
to direct shipment of defense articles under this section.

Section 123.14 Import Certification/Delivery Verification Procedure

    Eliminates   specific  identification  of  countries  subject  to  this
procedure.

Section 123.15 Congressional Notification for Licenses

    Previously  covered  by Sec. 123.10(e). Provides additional information
to clarify the requirement.
Section 123.16 Exemptions of General Applicability

    Provides   for  additional  licensing  exemptions  for  the  export  of
unclassified  defense  articles and provides procedures for utilizing these
exemptions.   The   exemption  for  obsolete  nonautomatic  firearms  (Sec.
123.16(a))  is  moved  to Sec. 123.17. This section creates exemptions for:
The  export  of  unclassified  defense  articles in furtherance of approved
agreements;  spare  parts valued at$500 or less (this subsumes the previous
exemption   under   Sec.   123.19);  unclassified  defense  articles  being
temporarily  exported  to  trade shows when the article has previously been
licensed  for  this  purpose; and components being sent abroad for assembly
and return by the same company.

Section 123.17 Exports of Firearms and Ammunition

    Modifies  title to delete reference to ''for personal use.'' Moves Sec.
123.16(a) to Sec. 123.17(a).

Section 123.21 Duration, Renewal and Disposition of Licenses

    Modifies  title  to  add  the  word  ''duration.'' Changes the validity
period  for  licenses  from  three  to four years. Clarifies that a license
expires when the total value authorized has been shipped.

Section  123.22 Filing of Export Licenses and Shipper's Export Declarations
With District Directors of Customs

    Modifies  the  title to omit the words ''and intransit.'' Clarifies the
procedures  for filing of export licenses and Shipper's Export Declarations
With   District   Directors  of  Customs.  Explains  procedures  for  self-
endorsement of licenses when appropriate.

Section 123.23 Monetary Value of Shipments

    New  title.  Section  incorporates  the  provisions  of  previous  Sec.
123.25(d).

Section 123.25 Amendments to Licenses

    Creates new section to address the amendment process.

Section  124.1  Manufacturing  License  Agreements and Technical Assistance
Agreements
    Divides  previous  Sec.  124.1(b)  into  two  sections,  one addressing
substantive amendments, the other addressing minor amendments.

Section  124.7 Information Required in All Manufacturing License Agreements
and Technical Assistance Agreements

    New   title  combining  previous  titles  of  Secs.  124.7  and  124.8.
Consolidates  information  in  Secs.  124.7  and  124.8.  Adds requirements
relating to classified information.

Section 124.10 Nontransfer and Use Assurances

    Eliminates  reference to General Security of Information Agreements and
other foreign government security assurances.

Section 124.11 Congressional Notification for Agreements

    Creates  a new section which explains the requirements under the *Arms*
Export  Control  Act  that  certain agreements are subject to Congressional
notification prior to approval.

Section 124.12 Required Information in Letters of Transmittal
    Revises  the  reporting  requirement  threshold pursuant to section 130
to$500,000 or more. Adds a clause relating to sublicensing arrangements.

Section  124.14  Exports  to  Warehouses or Distribution Points Outside the
United States

    Specifies  that the exemption under Sec. 123.16(b)(1) may be applicable
for  the export of unclassified defense articles in furtherance of approved
agreements. Corrects misnumbered paragraphs.

Section 125.1 Exports Subject to This Part

    Clarifies  that  technical  data  authorized  for  export  may  not  be
retransferred from the authorized end-user without prior approval.

Section 125.2 Exports of Unclassified Technical Data

    Clarifies  the  licensing procedure for export (and return to the U.S.)
of  unclassified technical data. Calls for identification of any classified
technical  data or articles related to the unclassified technical data that
may  subsequently  be exported. Specifies the number of copies of technical
data   required   for   submission.  Incorporates  requirements  previously
contained in 125.7(b).

Section  125.3  Exports of Classified Technical Data and Classified Defense
Articles

    Deletes  reference  to  waiver  of  end-use  assurance  requirement for
countries which have security arrangements with the U.S.

Section 125.4 Exemptions of General Applicability

    Clarifies  that  if prior approval or prior notification are necessary,
those  requirements  must  first  be  met  before  any exemption under this
section may be used.

Section 125.6 Exemptions-Certification Requirements

    Title  change  to  include  the  word  ''Exemptions.''  Specifies  that
certifications  must  be in written form and retained by the exporter for a
period  of  six  years.  Clarifies  the  procedure for certification in the
absence of Customs or Postal officials.

Section  125.7  Procedures  for the Export of Classified Technical Data and
Other Classified Defense Articles

    Title  change (from 125.8) to include the words ''Procedures for the.''
Specifies  that only one copy of data or descriptive literature is required
for license renewals.

Section 125.8 Filing of Licenses for Exports of Unclassified Technical Data

    Clarifies the procedure for self-endorsement of licenses.

Section 126.1 Prohibited Exports and Sales to Certain Countries

    Revises  list  of  prohibitive  countries to reflect current policy and
country identifications.

Section 126.4 Shipments by or for the United States Government Agencies

    Clarifies  that  this  section  also  applies  to temporary imports and
temporary exports.

Section 126.5 Canadian Exemptions
    Clarifies that a license is not required for the permanent or temporary
import from Canada of certain defense articles.

Section 126.10 Disclosure of Information to the *Public*

    Reference  to  the  ''Under Secretary for Security Assistance, Science,
and   Technology''   is   replaced   by  ''Under  Secretary  of  State  for
*International* Security Affairs.''

Section 126.13 Required Information

    Includes  the  requirement  for  a  Technology Transfer Control Plan in
cases  when  foreign  nationals  are  employed  at  or assigned to security
cleared facilities.

Section 127.4 Authority of U.S. Customs Service Officers

    Specifies  the  authority  of  the Defense Investigative Service in the
case  of exports involving classified defense articles, including technical
data.

Section 127.10 Past Violations
    Clarifies  the  authority  of the Office of Defense Trade Controls with
respect  to  making exceptions to cases that have been denied and addresses
consultation with other offices and agencies.

Section 130 Political Contributions, Fees and Commissions

    The   reporting   requirement   threshold   is  increased  from$250,000
to$500,000.

List of Subjects

22 CFR Parts 120 and 125

    *Arms* and munitions, Classified information, Exports.

22 CFR Part 122

    *Arms*    and   munitions,   Exports,   Reporting   and   recordkeeping
requirements.

22 CFR Parts 123 and 126
    *Arms* and munitions, Exports.

22 CFR Part 124

    *Arms* and munitions, Exports, Technical assistance.

22 CFR Part 127

    *Arms*   and   munitions,   Crime,  Exports,  Penalties,  Seizures  and
forfeitures.

22 CFR Part 130

    *Arms*   and   munitions,   Campaign   funds,   Confidential   business
information, Exports, Reporting and recordkeeping requirements.

    Accordingly,  for  the  reasons  set  forth  in  the  preamble,  22 CFR
subchapter  M  is  proposed  to be amended by revising parts 120, 122, 123,
124, 125, 126, 127 and 130 to read as follows:

Subchapter M-Defense Trade Regulations
PART 120-PURPOSE, BACKGROUND AND DEFINITIONS

Sec.

120.1 General.

120.2 Designation of defense articles and defense services.

120.3  Policy and criteria for designating and determining defense articles
and services.

120.4 Commodity jurisdiction.

120.5 Relation to regulations of other agencies.

Definitions

120.6 General.

120.7 Defense articles.

120.8 Defense services.
120.9 District Director of Customs.

120.10 Export-permanent and temporary.

120.11 Foreign person.

120.12 Import-temporary.

120.13 License.

120.14 Major defense equipment.

120.15 Manufacturing license agreement.

120.16 Office of Defense Trade Controls.

120.17 Person.

120.18 Presiding Official.

120.19 *Public* domain.
120.20 Reexport or retransfer.

120.21 Significant military equipment.

120.22 Technical assistance agreement.

120.23 Technical data.

120.24 Technology.

120.25 United States.

120.26 U.S. criminal statutes.

120.27 U.S. person.

Forms

120.28 Listing of forms referred to in this subchapter.

    Authority: Sec. 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2778); E.O.
11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658.
Sec. 120.1 General.

    (a)  Purpose.  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.  It  is the purpose of this subchapter to
implement  this  authority.  The  statutory  authority  of the President to
promulgate  regulations  with  respect  to  exports of defense articles and
defense services was delegated to the Secretary of State by Executive Order
11958,  as  amended  (42 FR 4311). By virtue of delegations of authority by
the Secretary of State, these regulations are primarily administered by the
Director   of   the   Office   of   Defense   Trade   Controls,  Bureau  of
Politico-Military Affairs, Department of State (35 FR 5422).

    (b)  Eligibility.  Licenses  or  other approvals (other than retransfer
approvals  sought  pursuant  to  Secs. 123.9, 124.10, 125.1(c) and 125.3 of
this chapter) under this subchapter may be granted only to U.S. persons (as
defined  in  Sec.  120.27)  and foreign governmental entities in the United
States.  Foreign persons (as defined in Sec. 120.11) other than governments
are  not  eligible.  U.S.  persons who have been convicted of violating the
U.S. criminal statutes enumerated in Sec. 120.26, or who have been debarred
pursuant  to  part  127 of this chapter, are also generally ineligible (see
Sec.  127.6(c)  of this chapter). Applications for licenses or requests for
other  approvals  will  generally  be  considered only if the applicant has
registered  with  the Office of Defense Trade Controls pursuant to part 122
of  this chapter. All applications and requests for approval must be signed
by  a responsible official who is a  U.S. person and who has been empowered
by the registrant to sign such documents.

    (c)  The  exemptions  provided  in  this  subchapter  do  not  apply to
transactions  in  which the exporter or any party to the export (as defined
in  Sec. 126.7(e) of this chapter) has been convicted of violating the U.S.
criminal  statutes  enumerated  in Sec. 120.26 or debarred pursuant to part
127  of this chapter, unless an exception has been granted pursuant to Sec.
126.7(c) of this subchapter.
Sec. 120.2 Designation of defense articles and defense services.

    The  *Arms* Export Control Act (22 U.S.C. 2778(a) and 2794(7)) provides
that  the President shall designate the articles and services that shall be
deemed  to  be  defense  articles and defense services for purposes of this
subchapter.  The items so designated constitute the United States Munitions
List,  and are specified in part 121 of this chapter. Such designations are
made  by  the Department of State with the concurrence of the Department of
Defense.  A  determination  on whether a particular item is included on the
U.S. Munitions List may entail consultation among the Departments of State,
Commerce and Defense, and other agencies as may be appropriate.
Sec.  120.3  Policy  and  criteria  for designating and determining defense
articles and services.

    An  article  or  service  shall  be  designated  or  determined  by the
Department  of State to be a defense article or defense service (as defined
in Secs. 120.7 and 120.8) if it:

    (a)  Is  specifically  designed,  developed,  configured,  adapted,  or
modified for a military or intelligence application, and

    (b) Does not have significant civil applications, and

    (c)  Does  not  have  the performance capacity, technology and function
equivalent  to  those of an article or service used for civil applications;
or

    (d)  Has  significant  military or intelligence applicability such that
control  under  this subchapter is necessary to further world peace and the
security and foreign policy of the United States.

    The  intended use of the article or service after its export (i.e., for
a  military or civilian purpose) is not relevant in determining whether the
article or service is subject to the controls of this subchapter.
Sec. 120.4 Commodity jurisdiction.

    (a) The ''commodity jurisdiction'' procedure is used if doubt exists as
to  whether an article or service is covered by the U.S. Munitions List. It
may  also  be  used  for  consideration  of  redesignation of an article or
service currently covered by the U.S. Munitions List. The Office of Defense
Trade  Controls  shall  provide,  upon  written request, a determination of
whether  a  particular  article or service is covered by the U.S. Munitions
List.  The  determination,  consistent  with Secs. 120.2, 120.3, and 120.4,
entails  consultation  among the Departments of State and Defense and other
U.S.  Government agencies and industry as may be appropriate. The Office of
Defense  Trade  Controls  will  have  as  a  goal a ten day turn-around for
preliminary commodity jurisdiction decisions.

    (b)  Requests  shall  identify  the  article  or service, and include a
history   of   the   product's  design,  development  and  use.  Brochures,
specifications  and  any  other  documentation  related  to  the article or
service shall be submitted in seven collated sets.

    (c)(l)   Determination  that  an  article  or  service  does  not  have
significant  civil  applications  shall  be  made,  in accordance with this
subchapter,  on  a  case-by-case basis, taking into account the totality of
circumstances, including the following factors:

    (i) The number, variety and preponderance of civil applications;

    (ii)  The  nature,  function,  technology  and  capability of the civil
applications; and {pg 19670}

    (iii)  The  nature, function, technology and capability of the military
or intelligence applications.

    (2)  Determination  that  an  item  is  not a component the performance
capacity, technology and function of which are equivalent to those used for
civil  applications shall be made, in accordance with this subchapter, on a
case-by-case  basis,  taking  into  account  the totality of circumstances,
including the following factors:

    (i) The nature, function, and capability of the component;

    (ii)  Whether the component used in the defense article is identical to
those components developed for civil use.
    (3)   Determination   that  an  article  has  significant  military  or
intelligence  applications  such that it is necessary to control its export
as  a  munition  shall  be  made,  in accordance with this subchapter, on a
case-by-case  basis,  taking  into  account  the totality of circumstances,
including the following factors:

    (i) The nature, function, and capability of the component;

    (ii)  The  nature  of  controls  imposed by other nations on such items
(including COCOM and other multilateral controls), and

    (iii)  That dual use items should, as a general rule, be subject to the
regulatory jurisdiction of the Department of Commerce.

    (d)  Registration  with the Office of Defense Trade Controls as defined
in  part  122  of  this subchapter is not required prior to submission of a
commodity jurisdiction request. If it is determined that the commodity is a
defense article or service covered by the U.S. Munitions List, registration
is  required  for  exporters,  manufacturers,  and  furnishers  of  defense
articles and defense services (see part 122).

    (e)  If  after  45  days  the  Office of Defense Trade Controls has not
provided  a  commodity  jurisdiction  determination,  the applicant will be
notified  of  the  status  of  the  review  and  the  anticipated  time  of
completion.  Upon  notification of the CJ status, the applicant may request
in  writing  to  the  Assistant  Secretary  of  State for Politico-Military
Affairs that this determination be given expedited processing.

    (f)  A  person may appeal a commodity jurisdiction determination at any
time by submitting a written request for reconsideration to the Director of
the  Center  for  Defense Trade. This request should include a full written
explanation of why the person believes that a reconsideration is justified.
A  written  response  will  be  provided  within  30 days of receipt of the
appeal.
Sec. 120.5 Relation to regulations of other agencies.

    If  an  article  or  service is covered by the U.S. Munitions List, its
export   is  regulated  by  the  Department  of  State, except as indicated
otherwise  in  this  subchapter. For the relationship of this subchapter to
regulations  of  the  Department  of  Energy  and  the  Nuclear  Regulatory
Commission,  see  Sec.  123.20. The Treasury Department controls imports of
articles  and  services  covered  by  the  U.S.  Munitions Import List from
foreign  countries  by  persons  subject  to U.S. jurisdiction (31 CFR part
505).  Other  exports  which  are  not  subject  to  the  controls  of this
subchapter   are   generally  under  the  regulatory  jurisdiction  of  the
Department  of  Commerce pursuant to the Export Administration Act of 1979,
as  amended  (50 U.S.C. app. 2401 through 2420) and the implementing Export
Administration Regulations (15 CFR parts 768 through 799).

Definitions
Sec. 120.6 General.

    The definitions contained in this part (listed alphabetically) apply to
the  use of the defined terms throughout this subchapter unless a different
meaning  is  specified.  See also Secs. 130.2 through 130.8 for definitions
applicable to part 130.
Sec. 120.7 Defense articles.

    (a) Defense article means any equipment or technical data designated in
Sec.  121.1.  Such articles are described in Sec. 120.3. This term includes
models, mockups, technical data recorded or stored in any physical form and
other  such  items  that  reveal  technical data directly relating to items
designated  in  Sec. 121.1, or contain components as described in paragraph
(b)  of  this  section.  It does not include basic marketing information on
function or purpose or general system descriptions.
    (b)   Components,   parts,  accessories,  attachments,  and  associated
equipment specifically designed, developed, configured, adapted or modified
for  use  with  the  articles in (-NORTH-) are included under this section.
These  are  items that enable end items to function as such, can be used to
enhance  or  modify  the  performance  of  end items, or can be utilized in
conjunction with or in support of end items. Such articles are described in
Sec. 120.3.
Sec. 120.8 Defense services.

    Defense service means:

    (a)  The  furnishing  of  assistance to foreign persons, whether in the
United  States  or  abroad,  in  relation  to  defense  articles, including
training,  in  the  design, engineering, development, testing, manufacture,
production,   processing,   assembly,  use,  operation,  overhaul,  repair,
maintenance, modification, or reconstruction of defense articles; or

    (b)  The furnishing to foreign persons of any technical data controlled
under  this  subchapter  (see Sec. 120.23), whether in the United States or
abroad.
Sec. 120.9 District Director of Customs.
    District Director of Customs means the District Directors of Customs at
Customs  Headquarters  Ports  (other  than  the  port of New York City, New
York);  the  Regional  Commissioners  of  Customs, the Deputy and Assistant
Regional  Commissioners of Customs for Customs Region II at the Port of New
York,  New  York;  and  Port  Directors  at Customs ports not designated as
Headquarters Ports.
Sec. 120.10 Export-permanent and temporary.

    Export means:

    (1)  Sending or taking defense articles out of the United States in any
manner,  except  by  mere  travel  outside of the United States by a person
whose personal knowledge includes technical data; or

    (2) Transferring registration, control or ownership to a foreign person
of  any  aircraft, vessel, or satellite covered by the U.S. Munitions List,
whether in the United States or abroad; or

    (3)  Disclosing  or  transferring  in  the  United  States  any defense
articles  to  an embassy, any agency or subdivision of a foreign government
(e.g., diplomatic missions); or
    (4)  Disclosing  or  transferring  technical  data to a foreign person,
whether in the United States or abroad; or

    (5) Performing a defense service on behalf of, or for the benefit of, a
foreign person, whether in the United States or abroad.

A  launch  vehicle or payload shall not, by reason of the launching of such
vehicle,  be  considered an export for purposes of this subchapter. Most of
the  requirements  of  this  subchapter  relate only to exports, as defined
above.  However,  for  certain  limited  purposes,  the  controls  of  this
subchapter  apply  to  sales  and  other  transfers of defense articles and
defense services (see, e.g., Sec. 126.1) of this subchapter.
Sec. 120.11 Foreign person.

    Foreign  person  means  any  natural  person  who is not a ''citizen or
intending  citizen''  of  the  United States within the meaning of 8 U.S.C.
1324  b(a)(3). It also means any foreign corporation, business association,
partnership,  society,  trust, or any other entity or group that is not {pg
19671}  incorporated  or  organized to do business in the United States, as
well  as  *international* organizations, foreign governments and any agency
or subdivision of foreign governments (e.g., diplomatic missions). The term
''intending  citizen'' means a person who has been lawfully admitted to the
United  States for permanent residence (and maintains such residence) under
the  Immigration and Naturalization Act (8 U.S.C. 101(a), 1101(a), 60 Stat.
163).
Sec. 120.12 Import-temporary

    Temporary  import  means bringing into the United States from a foreign
country  any  defense  article  that  is to be returned to the country from
which it was shipped or taken, or any defense article that is in transit to
another  foreign destination. ''Temporary import'' includes withdrawal of a
defense  article  from a customs bonded warehouse or foreign trade zone for
the  purpose of returning it to the country of origin or country from which
it  was  shipped or for shipment to another foreign destination. (Permanent
imports  are  generally  regulated by the Department of the Treasury see 27
CFR parts 47, 178 and 179 .)
Sec. 120.13 License.

    License means a document bearing the word ''license'' which when issued
by  the  Director,  Office  of  Defense  Trade  Controls, or his authorized
designee,  permits  the  export  or  temporary import of a specific defense
article, defense service, or technical data controlled by this subchapter.
Sec. 120.14 Major defense equipment.
    Pursuant  to  section 47(6) of the *Arms* Export Control Act (22 U.S.C.
2794(6)  note),  major  defense  equipment  means  any  item of significant
military  equipment  (as  defined  in  Sec. 120.21 of the DTR) on the U. S.
Munitions  List having a nonrecurring research and development cost of more
than$50,000,000 or a total production cost of more than$200,000,000.
Sec. 120.15 Manufacturing license agreement.

    An  agreement  (e.g.,  contract) whereby a U.S. person grants a foreign
person  an  authorization  to manufacture defense articles abroad and which
involves or contemplates:

    (a) The export of technical data (as defined in Sec. 120.23) or defense
articles or the performance of defense services, or

    (b) the use by the foreign person of technical data or defense articles
previously exported by the U.S. person. (See part 124 of this chapter).
Sec. 120.16 Office of Defense Trade Controls.

    Office  of  Defense  Trade  Controls  means the Office of Defense Trade
Controls,   Bureau  of  Politico-Military  Affairs,  Department  of  State,
Washington, DC 20522-0602.
Sec. 120.17 Person.
    Person  means  a  natural  person  as  well  as a corporation, business
association, partnership, society, trust, or any other entity, organization
or   group,  including  governmental  entities.  If  a  provision  in  this
subchapter  does not refer exclusively to a foreign person (Sec. 120.11) or
U.S. person (Sec. 120.27), then it refers to both.
Sec. 120.18 Presiding official.

    Presiding  official  means  a  person authorized to conduct hearings in
administrative proceedings.
Sec. 120.19 *Public* domain.

    *Public*  domain  means  information  which  is  published and which is
generally accessible or available to the *public*:

    (1) Through sales at newsstands and bookstores;

    (2)  Through  subscriptions  which are available without restriction to
any individual who desires to obtain or purchase the published information;

    (3)  Through  second  class  mailing  privileges  granted  by  the U.S.
Government;
    (4)  At  libraries  open to the *public* or from which the *public* can
obtain documents;

    (5) Through patents available at any patent office;

    (6)  Through  unlimited distribution at a conference, meeting, seminar,
trade  show  or  exhibition,  generally  accessible to the *public*, in the
United States;

    (7) Through *public* release (i.e., unlimited distribution) in any form
(e.g.,  not  necessarily in published form) after approval by the cognizant
U.S. government department or agency (see also Sec. 125.4(b)(13)).
Sec. 120.20 Reexport or retransfer.

    Reexport or retransfer means the transfer by an authorized recipient of
defense  articles,  including technical data or defense services to another
person not previously authorized.
Sec. 120.21 Significant military equipment.

    (a)  Significant  military  equipment  means articles, as identified in
paragraph  (b)  of  this  section,  for  which  special export controls are
warranted  because  of  their  capacity for substantial military utility or
capability.  Section  47(6)  of  the  *Arms*  Export Control Act (22 U.S.C.
2794(6)  note)  refers  to certain significant combat equipment on the U.S.
Munitions   List.   The   terms   ''significant  military  equipment''  and
''significant  combat  equipment''  are  considered  to  be  equivalent for
purposes  of  that  section  of  the  *Arms*  Export  Control  Act and this
subchapter.

    (b) Significant military equipment includes:

    (1) All classified articles enumerated in Sec. 121.1.

    (2) items in Sec. 121.1 which are preceded by an asterisk.
Sec. 120.22 Technical assistance agreement.

    An  agreement  (e.g., contract) for the performance of defense services
or  the disclosure of technical data, as opposed to an agreement granting a
right  or  license  to  manufacture  defense  articles. Assembly of defense
articles  is  included  under  this  section, provided production rights or
manufacturing know-how are not conveyed. Should such rights be transferred,
Sec. 120.15 is applicable. (See part 124).
Sec. 120.23 Technical data.
    Technical data means, for purposes of this subchapter:

    (a)  Classified  information  relating  to defense articles and defense
services;

    (b) Information covered by an invention secrecy order;

    (c)  *Software* as defined in Sec. 121.8(f) directly related to defense
articles;

    (d)  Information,  other than *software* as defined in 120.23(c), which
is   required   for   the,  design,  development,  production,  processing,
manufacture,  assembly,  operation,  repair, maintenance or modification of
defense  articles.  This  includes, for example, information in the form of
blueprints,  drawings,  photographs, plans, instructions and documentation.
This  also  includes  information  that  advances  the  state of the art of
articles  on  the  U.S.  Munitions  List.  This definition does not include
information  concerning  general  scientific,  mathematical  or engineering
principles  commonly  taught in schools, colleges and universities. It also
does  not  include  basic  marketing  information on function or purpose or
general system descriptions of defense articles.
Sec. 120.24 Technology.
    Technology  means  the methods or means employed to develop, produce or
use  a U.S. Munitions List item. This includes technical data as defined in
Sec. 120.23, and technical assistance as per Sec. 120.22.
Sec. 120.25 United States.

    United  States  ,  when  used  in  the geographical sense, includes the
several  states,  the  Commonwealth  of Puerto {pg 19672} Rico, the insular
possessions  of  the  United  States,  the  District  of  Columbia, and any
territory   over   which   the   United  States  exercises  any  powers  of
administration, legislation, and jurisdiction.
Sec. 120.26 U.S. criminal statutes.

    For  purposes  of  this  subchapter,  the phrase U.S. criminal statutes
means:

    (a) Section 38 of the *Arms* Export Control Act (22 U.S.C. 2778);

    (b) Section 11 of the Export Administration Act of 1979 (50 U.S.C. App.
2410);

    (c) Sections 793, 794, or 798 of Title 18, United States Code (relating
to espionage involving defense or classified information);
    (d) Section 16 of the Trading with the Enemy Act (50 U.S.C. App. 16);

    (e)  Section  206  of the *international* Emergency Economic Powers Act
(relating  to  foreign  assets controls; 50 U.S.C. 1705); or Section 30A of
the  Securities  Exchange  Act of 1934 (15 U.S.C. 78dd-1) or section 104 of
the Foreign Corrupt Practices Act (15 U.S.C. 78dd-2);

    (f) Chapter 105 of Title 18, United States Code (relating to sabotage);

    (g)  Section  4(b)  of  the  Internal Security Act of 1950 (relating to
communication of classified information; 50 U.S.C. 783(b));

    (h)  Sections  57,  92,  101, 104, 222, 224, 225, or 226 of the Atomic
Energy Act of 1954 (42 U.S.C. 2077, 2122, 2131, 2134, 2272, 2274, 2275, and
2276);

    (i)  Section  601  of  the  National  Security Act of 1947 (relating to
intelligence identities protection; 50 U.S.C. 421);

    (j)  Section  603 (b) or (c) of the Comprehensive Anti-Apartheid Act of
1986 (22 U.S.C. 5113 (b) and (c)); and
    (k)  Section  371  of  Title  18,  United States Code (when it involves
conspiracy to violate any of the above statutes).
Sec. 120.27 U.S. person.

    U.S. person means a person (as defined in Sec. 120.17 of this part) who
is  a  citizen  or  national  of  the  United  States, or has been lawfully
admitted to the United States for permanent residence (and maintains such a
residence)  under  the  Immigration  and Nationality Act (8 U.S.C. 1101(a),
101(a), 60 Stat. 163). It also means any corporation, business association,
partnership,  society,  trust,  or  any other entity, organization or group
that  is  incorporated or organized to do business in the United States. It
also  includes  any  governmental (federal, state or local) entity. It does
not include any foreign person as defined in Sec. 120.11 of this part.

Forms
Sec. 120.28 Listing of forms referred to in this chapter.

    The  forms referred to in this chapter are available from the following
government agencies:

    (a)  Department  of  State, Office of Defense Trade Controls, room 7321
Main State, Washington, DC 20520-0602:
    (1)  Application/License  for  permanent export of unclassified defense
articles and related technical data (Form DSP-5).

    (2) Application for registration (Form DSP-9).

    (3)  Application/License  for  temporary import of unclassified defense
articles (Form DSP-61).

    (4)  Application/License  for  temporary export of unclassified defense
articles (Form DSP-73).

    (5) Nontransfer and use certificate (Form DSP-83).

    (6)  Application/License  for  permanent/temporary  export or temporary
import of classified defense articles and related classified technical data
(Form DSP-85).

    (7)  Authority  to  Export  Defense  Articles and Defense Services sold
under the Foreign Military Sales program (Form DSP-94).

    (b)  Department  of  Commerce,  Bureau  of  Export Administration, room
3886C, 14th and Pennsylvania Ave., Washington, DC 20230:
    (1)    *International*    Import    Certificate   (Form   BXA-645P/ATF-
4522/DSP-53).

    (2) Shipper's Export Declaration (Form No. 7525- V).

    (c)  Defense  Security  Assistance  Agency,  room  4E841, Department of
Defense, Washington, DC 20301-2800: Letter of Offer and Acceptance (DD Form
1513).

PART 122-REGISTRATION OF MANUFACTURERS AND EXPORTERS

122.1 Registration requirements.

122.2 Application for registration.

122.3 Registration fees.

122.4 Notification of changes in information furnished by registrants.

122.5 Maintenance of records by registrants.

    Authority: Sec. 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2778); E.O.
11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658.
Sec. 122.1 Registration requirements.

    (a)  General.  Any  person  who  engages  in  the  United States in the
business   of   either  manufacturing  or  exporting  defense  articles  or
furnishing  defense  services  is  required  to register with the Office of
Defense  Trade  Controls. Manufacturers who do not engage in exporting must
nevertheless register.

    (b) Exemptions. Registration is not required for:

    (1) Officers and employees of the United States Government acting in an
official capacity.

    (2)  Persons  whose  pertinent  business  activity  is  confined to the
production of unclassified technical data only.

    (3)  Persons  all  of  whose  manufacturing  and  export activities are
licensed under the Atomic Energy Act of 1954, as amended.

    (4)  Persons  who  engage  only  in  the  fabrication  of  articles for
experimental or scientific purpose, including research and development.
    (c)  Purpose.  Registration  is  primarily  a means to provide the U.S.
Government  with  necessary  information  on  who  is  involved  in certain
manufacturing  and  exporting  activities. Registration does not confer any
export rights or privileges. It is generally a precondition to the issuance
of any license or other approval under this subchapter.
Sec. 122.2 Application for registration.

    (a)   General.   The  Department  of  State  Form  DSP-9  (Registration
Statement)  and  the  transmittal  letter required by paragraph (b) of this
subsection  must  be  submitted by an intended registrant with a payment by
check  or money order payable to the Department of State of one of the fees
prescribed  in Sec. 122.3(a) of this subchapter. The Registration Statement
and  transmittal  letter  must  be  signed by a senior officer who has been
empowered  by  the intended registrant to sign such documents. The intended
registrant  shall  also  submit  documentation that demonstrates that it is
incorporated  or  otherwise authorized to do business in the United States.
The  Office  of  Defense  Trade  Controls  will  return  to  the sender any
Registration  Statement  that  is incomplete, or that is not accompanied by
the required letter or payment of the proper registration fee.

    (b)   Transmittal  letter.  A  letter  of  transmittal,  signed  by  an
authorized  senior officer of the intended registrant, shall accompany each
Registration Statement.

    (1)  The  letter  shall  state  whether  the intended registrant, chief
executive  officer,  president,  vice-presidents,  other senior officers or
officials  (e.g.  comptroller, treasurer, general counsel) or any member of
the board of directors:

    (i)  Has  ever  been  indicted for or convicted of violating any of the
U.S. criminal statutes enumerated in Sec. 120.26 of this subchapter; or

    (ii)  Is  ineligible to contract with, or to receive a license or other
approval to import defense articles or defense {pg 19673} services from, or
to receive an export license or other approval from, any agency of the U.S.
Government.

    (2)  The  letter  shall also declare whether the intended registrant is
owned  or  controlled by foreign persons (as defined in Sec. 120.11 of this
subchapter).  If  the intended registrant is owned or controlled by foreign
persons,  the  letter  shall  also state whether the intended registrant is
incorporated  or  otherwise  authorized to engage in business in the United
States.
    (c)  Definition. For purposes of this section, ''ownership'' means that
50  percent  or  more  of the outstanding voting securities of the firm are
owned  by  one  or more foreign persons. ''Control'' means that one or more
foreign  persons  have  the authority or ability to establish or direct the
general  policies or day-to-day operations of the firm. Control is presumed
to  exist  where  foreign persons own 25 percent or more of the outstanding
voting securities if no U.S. persons control an equal or larger percentage.
The standards for control specified in 22 CFR 60.2(c) also provide guidance
in determining whether control in fact exists.
Sec. 122.3 Registration fees.

    (a)  Fees.  A person who is required to register may do so for a period
of  1  to  5  years  upon submission of a completed form DSP-9, transmittal
letter, and payment of a fee as follows:
 1 year            $250
 2 years            500
 3 years            700
 4 years            850
 5 years            1,000

    (b)  Lapses  in  registration.  A  registrant  who  fails  to  renew  a
registration  after  its  lapse  and, after an intervening period, seeks to
register  again must pay registration fees for any part of such intervening
period during which the registrant engaged in the business of manufacturing
or exporting defense articles or defense services.

    (c)  Refund of fee. Fees paid in advance for future years of a multiple
year registration will be refunded upon request if the registrant ceases to
engage  in  the  manufacture  or  export  of  defense  articles and defense
services. A request for a refund must be submitted to the Office of Defense
Trade  Controls  prior  to  the beginning of any year for which a refund is
claimed.
Sec. 122.4 Notification of changes in information furnished by registrants.

    (a) A registrant must, within five days of the event, notify the Office
of Defense Trade Controls by registered mail if:

    (1) Any of the persons referred to in Sec. 122.2(b) are indicted for or
convicted of violating any of the U.S. criminal statutes enumerated in Sec.
120.26  of  this  subchapter,  or become ineligible to contract with, or to
receive a license or other approval to export or temporarily import defense
articles or defense services from any agency of the U.S. government; or
    (2)  There  is  a  material  change in the information contained in the
Registration  Statement,  including  a  change  in the senior officers; the
establishment,  acquisition  or  divestment  of  a  subsidiary  or  foreign
affiliate;  a merger; a change of location; or the dealing in an additional
category of defense articles or defense services.

    (b)  A  registrant  must notify the Office of Defense Trade Controls by
registered  mail  at  least  60  days  in  advance  of any intended sale or
transfer  to  a foreign person of ownership or control of the registrant or
any  entity  thereof.  Such  notice  does  not  relieve the registrant from
obtaining  the  approval  required  under this subchapter for the export of
defense  articles  or  defense  services to a foreign person, including the
approval  required prior to disclosing technical data. Such notice provides
the  Office  of  Defense  Trade  Controls with the information necessary to
determine  whether  the  authority of section 38(g)(6) of the *Arms* Export
Control  Act  regarding  licenses  or  other approvals for certain sales or
transfers  of  articles  or  data  should  be invoked (see Secs. 120.10 and
126.1(e) of this subchapter).

    (c) The new entity formed when a registrant merges with another company
or acquires, or is acquired by, another company or a subsidiary or division
of another company shall advise the Office of Defense Trade Controls of the
following:

    (1) The new firm name and all previous firm names being disclosed;

    (2)  The registration number that will survive and those that are to be
discontinued (if any);

    (3)  The  license  numbers  of all licenses on which unshipped balances
will  be shipped under the surviving registration number, since any license
not the subject of notification will be considered invalid; and

    (4)  Amendments  to  agreements  approved  by  the  Office  of  Defense
(-NORTH-)trols  to  change  the  name  of  a party to those agreements. The
registrant must, within 60 days of this notification, provide to the Office
of  Defense  Trade Controls a signed copy of an amendment to each agreement
signed  by  the  new U.S. entity, the foreign licensee, and the former U.S.
licensor. Any agreements not so amended will be considered invalid.

    (d)  Prior approval by the Office of Defense Trade Controls is required
for any amendment making a substantive change.
Sec. 122.5 Maintenance of records by registrants.
    (a)  A  person  who  is  required  to  register  must  maintain records
concerning   the   manufacture,  acquisition  and  disposition  of  defense
articles;  the  provision of defense services; and information on political
contributions,  fees,  or commissions furnished or obtained, as required by
part  130.  All  such  records must be maintained for a period of six years
from  the  date  of expiration of the license, from the end of the validity
period of technical assistance or manufacturing license agreements, or from
the  date  of  completion  of  other  activity  to  which they pertain. The
Director,  Office  of  Defense  Trade  Controls,  may proscribe a longer or
shorter period in individual cases.

    (b)  Records  maintained  under  this section shall be available at all
times  for  inspection and copying by the Director, Office of Defense Trade
Controls  or  a  person  designated  by  the  Director (the Director of the
Diplomatic  Security  Service or a person designated by the Director of the
Diplomatic  Security  Service  or another designee), or the Commissioner of
the U.S. Customs Service or a person designated by the Commissioner.

PART 123- LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

Sec.
123.1 Requirement for export or temporary import licenses.

123.2 Import jurisdiction.

123.3 Temporary import licenses.

123.4 Temporary import license exemptions.

123.5 Temporary export licenses.

123.6 Foreign trade zones and U.S. Customs bonded warehouses.

123.7  Exports  to  warehouses  or  distribution  points outside the United
States.

123.8  Special  controls on vessels, aircraft and satellites covered by the
U.S. Munitions List.

123.9  Country  of  ultimate  destination   and  approval  of  reexports or
retransfers.

123.10 Non- transfer and use assurances.
123.11 Movements of vessels and aircraft covered by the U.S. Munitions List
outside the United States.

123.12 Shipments between U.S. possessions.

123.13 Domestic aircraft shipments via a foreign country.

123.14 Import certificate/delivery verification procedure.

123.15 Congressional notification for licenses.

Exemptions

123.16 Exemptions of general applicability.

123.17 Exports of firearms and ammunition.

123.18  Firearms  for  personal use of members of the U.S. Armed Forces and
civilian employees of the U.S. Government.

123.19 Canadian and Mexican border shipments.
123.20 Nuclear materials.

Procedures

123.21 Duration, renewal and disposition of licenses.

123.22  Filing  of  export  licenses and Shipper's Export Declarations with
District Directors of Customs.

123.23 Monetary value of shipments.

123.24 Shipments by mail.

123.25 Amendments to licenses.

    Authority: Sec. 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2778); E.O.
11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658.
Sec. 123.1 Requirement for export or temporary import licenses.

    (a) Any person who intends to export or to import temporarily a defense
article  must  obtain  a  license from the Office of Defense Trade Controls
prior  to  the  export  or temporary import, unless the export or temporary
import  qualifies for an exemption under the provisions of this subchapter.
Applications for export must be made as follows:

    (1) Applications for licenses for permanent export must be made on Form
DSP-5 (unclassified);

    (2) Applications for licenses for temporary export must be made on Form
DSP-73 (unclassified);

    (3) Applications for licenses for temporary import must be made on Form
DSP-61 (unclassified); and

    (4)  Applications  for  the  export  or  temporary import of classified
defense articles or classified technical data must be made on Form DSP-85.

    (b)  Applications  for  Department  of  State  export  licenses must be
confined to proposed exports of defense articles including technical data.

    (c)  As a condition to the issuance of a license or other approval, the
Office  of  Defense  Trade  Controls  may require all pertinent documentary
information regarding the proposed transaction and proper completion of the
application form as follows:
    (1)  Form  DSP-5,  DSP-61, DSP-73, and DSP-85 applications must have an
entry  in  each  block  where space is provided for an entry. All requested
information must be provided.

    (2)  Attachments  and  supporting technical data or brochures should be
submitted  in  seven copies. Two copies of any freight forwarder lists must
be  submitted.  If the request is limited to renewal of a previous license,
two  sets of any attachment (including freight forwarder lists) and one set
of supporting technical data or brochures should be submitted.

    (3)  A  certification letter signed by a responsible official empowered
by  the  applicant  must  accompany  all  application submissions (see Sec.
126.13).

    (4)  An  application  for  a  license under this part for the permanent
export  of defense articles sold commercially must be accompanied by a copy
of  a  purchase order, letter of intent or other appropriate documentation.
In cases involving the U.S. Foreign Military Sales program, three copies of
the  relevant  Department  of  Defense  Form  1513 are required, unless the
procedures of Sec. 126.4(c) or 126.6 are followed.

    (5) Form DSP-83, duly executed, must accompany all license applications
for  the  permanent  export  of  significant  military equipment, including
classified  hardware  or  classified  technical  data (see Secs. 123.10 and
125.3).

    (6) A statement concerning the payment of political contributions, fees
and commissions must accompany a permanent export application if the export
involves   defense  articles  or  defense  services  valued  in  an  amount
of$500,000  or more and is being sold commercially to or for the use of the
armed forces of a foreign country or *international* organization (see part
130).

    (d)   Provisions  for  furnishing  the  type  of  ''defense  services''
described  in Sec. 120.8(a) of this subchapter are contained in part 124 of
this subchapter. Provisions for the export or temporary import of technical
data  and  classified  defense  articles  are contained in part 125 of this
subchapter.

    (e)  A  request  under  the  provisions  of section 38(e) of the *Arms*
Export  Control  Act  (22  U.S.C.  2778(e))  for  confidential treatment of
information  provided  to the Department of State must be made by letter to
the Office of Defense Trade Controls.
    (f)  A request for a license for the export of unclassified information
(DSP-5)   related  to  a  classified  defense  article  shall  specify  any
classified  information and material that subsequently will be required for
export in the event of a sale.
Sec. 123.2 Import jurisdiction.

    The  Department  of  State  regulates  the  temporary import of defense
articles.  Permanent imports of defense articles into the United States are
regulated  by  the Department of the Treasury (see 27 CFR parts 47, 178 and
179).
Sec. 123.3 Temporary import licenses.

    A  license  (DSP-61)  issued by the Office of Defense Trade Controls is
required  for  the  temporary  import and subsequent export of unclassified
defense  articles,  unless  exempted from this requirement pursuant to Sec.
123.4. Unless so exempted, this requirement applies to:

    (a)  Temporary  imports of unclassified defense articles that are to be
returned directly to the country from which they were shipped to the United
States;

    (b)  Temporary imports of unclassified defense articles in transit to a
third country; and

    (c)  Temporary  imports of unclassified defense articles that are to be
incorporated   into  another  article,  or  modified,  enhanced,  upgraded,
altered,  improved  or  serviced in any other manner that changes the basic
performance  or  productivity of the article prior to return to the country
from which they were shipped to the United States or prior to shipment to a
third country.

A  bond  may  be required as appropriate. (See part 125 of this chapter for
license requirements for technical data and classified defense articles.)
Sec. 123.4 Temporary import license exemptions.

    (a)  General.  District   Directors of Customs may permit the temporary
import  (and  subsequent export) without a license, for a period of up to 4
years,  of unclassified U.S.-origin defense articles (including any article
manufactured  abroad  pursuant  to U.S. Government approval) if the article
temporarily imported:

    (1)  Is  serviced  (e.g.,  inspection,  testing, calibration or repair,
including  overhaul,  reconditioning  and  one-to-one  replacement  of  any
defective  articles,  parts  or components, but excluding any modification,
enhancement,  upgrade  or  other  form  of  alteration  or improvement that
changes  the  basic  performance  or  productivity  of the article), and is
subsequently  returned  to the country from which it was imported. Shipment
may  be made by the U.S. importer or a foreign government representative of
the country from which the goods were imported; or

    (2)  Is to be incorporated into another article which has been licensed
by the Office of Defense Trade Controls for permanent export; or

    (3)  Is  imported  for  the  purpose  of  exhibition,  demonstration or
marketing  in the United States and is subsequently returned to the country
from which it was imported; or

    (4)  Has  been  rejected  for permanent import by the Department of the
Treasury and is being returned to the country from which it was shipped; or
{pg 19675}

    (5)  Is  approved for such import under the U.S. Foreign Military Sales
(FMS)  program pursuant to an executed U.S. Department of Defense Letter of
Offer and Acceptance (DD Form 1513); or

    (6) Is being returned to Canada (see Sec. 126.5 for exceptions).
    (b)  Requirements.  To  use  an  exemption  under  Sec.  123.4(a),  the
following criteria must be met:

    (1)  The  temporary  import  must meet the eligibility requirements set
forth in Sec. 120.1(b) of this subchapter;

    (2)  At  the  time  of  export,  the  ultimate  consignee  named on the
Shipper's  Export  Declaration  (SED)  must  be  the  same  as  the foreign
consignee or end-user of record named at the time of import; and

    (3)  As  stated  in Sec. 126.1 of this subchapter, the temporary import
must  not  be  from  or  on  behalf  of a proscribed country listed in that
section  unless an exception has been granted in accordance with Sec. 126.3
of this subchapter.

    (c)  Procedures.  To  the  satisfaction  of  the  District  Director of
Customs,   the  importer  and  exporter  must  comply  with  the  following
procedures:

    (1) At the time of import-

    (i)  File and annotate the applicable U.S. Customs document (e.g., Form
CF  3461,  7512,  7501,  7523  or  3311)  to read: ''This shipment is being
imported''  in  accordance  with and under the authority of 22 CFR 123.4'',
and

    (ii)  Include,  on  the  invoice  or other appropriate documentation, a
complete  list  and  description  of the defense article(s) being imported,
including  quantity and, where possible, the serial, model, unique part and
National  Stock number, as well as the number of any licenses, FMS cases or
other  written approvals under which the defense article was authorized for
initial export; and

    (2)  At  the time of export, file with the District Director of Customs
at  the port of exit a Shipper's Export Declaration (Department of Commerce
Form  7525-V)  and  include  on  the  SED or as an attachment the following
information:

    (i)  The  U.S.  Customs  entry  document  number  or a copy of the U.S.
Customs documentation under which the article was imported;

    (ii)   A   statement  that  indicates  the  nature  of  any  one-to-one
replacements of defective articles, parts or components; and
    (iii)  The following statement: ''This shipment entered the U.S. and is
being  exported in accordance with and under the authority of 22 CFR 123.4.
The  exporter  hereby  certifies  that  this  export  meets the eligibility
requirements set forth in 22 CFR 120.1(b).''
Sec. 123.5 Temporary export licenses.

    (a)  General.  The Office of Defense Trade Controls may issue a license
for  the  temporary  export of unclassified defense articles (DSP-73). Such
licenses are valid only if:

    (  1  )  The article will be exported for a period of less than 4 years
and will be returned to the United States; and

    (  2  ) Transfer of title will not occur during the period of temporary
export.  Accordingly,  articles  exported  pursuant  to  a temporary export
license  may  not be sold or otherwise permanently transferred to a foreign
person  while they are overseas under a temporary export license. A renewal
of  the  license or other written approval must be obtained from the Office
of  Defense  Trade  Controls if the article is to remain outside the United
States beyond the period for which the license is valid.

    (b)  Requirements.  Defense  articles  authorized  for temporary export
under  this  section  may  be shipped only from a port in the United States
where  a  District  Director  of  Customs is available, or from a U.S. Post
Office,  as appropriate. The license for temporary export must be presented
to  the  District  Director  of  Customs  or  to  the  Postmaster who, upon
verification,  will  endorse  the  exit  column  on the reverse side of the
license.  (In  some instances, self-endorsement will be necessary. See Sec.
123.22(d)).  The endorsed license for temporary export is to be retained by
the  licensee.  In  the case of a military aircraft or vessel, the endorsed
license  must  be carried on board such vessel or aircraft as evidence that
it  has been duly authorized by the Department of State to leave the United
States temporarily.

    (c) Upon the return to the United States of defense articles covered by
a  license  for temporary export, the license will be endorsed in the entry
column  by  the  District  Director  of  Customs.  This  procedure shall be
followed  for  all  exits  and entries made during the period for which the
license  is valid. The licensee must send the used license to the Office of
Defense  Trade  Controls  immediately  upon  expiration  or after the final
return of the defense articles approved for export, whichever occurs first.
Sec. 123.6 Foreign trade zones and U.S. Customs bonded warehouses.

    Foreign  trade  zones and U.S. Customs bonded warehouses are considered
integral  parts of the United States for the purpose of this subchapter. An
export  license  is  therefore not required for shipment between the United
States  and a foreign trade zone or a Customs bonded warehouse. In the case
of  classified  defense  articles  or technical data, the provisions of the
Department  of  Defense  Industrial  Security  Manual will apply. An export
license  is  required  for  all shipments of articles on the U.S. Munitions
List from foreign trade zones and U.S. Customs bonded warehouses to foreign
countries, regardless of how the articles reached the zone or warehouse.
Sec.  123.7 Exports to warehouses or distribution points outside the United
States.

    Unless  the  exemption  under  Sec.  123.16(b)(1) is used, a license is
required  to  export  defense articles to a warehouse or distribution point
outside  the  United  States  for  subsequent  resale  and will normally be
granted  only  if an agreement has been approved pursuant to Sec. 124.14 of
this subchapter.
Sec.  123.8 Special controls on vessels, aircraft and satellites covered by
the U.S. Munitions List.

    (a)  Transferring  registration  or  control to a foreign person of any
aircraft,  vessel, or satellite on the U.S. Munitions List is an export for
purposes of this subchapter and requires a license or written approval from
the  Office of Defense Trade Controls. This requirement applies whether the
aircraft,  vessel,  or satellite is physically located in the United States
or abroad.

    (b)  The  registration  in a foreign country of any aircraft, vessel or
satellite covered by the U.S. Munitions List which is not registered in the
United  States  but  which  is  located in the United States constitutes an
export.  A  license  or  written  approval from the Office of Defense Trade
Controls  is  therefore  required.  Such  transactions may also require the
prior    approval   of   the   Maritime   Administration,   Department   of
Transportation,  or  the  Federal  Aviation  Administration,  Department of
Transportation or other agencies of the U.S. Government.
Sec.  123.9  Country  of  ultimate destination and approval of reexports or
retransfers.

    (a) The country designated as the country of ultimate destination on an
application  for  an  export  license, or on a Shipper's Export Declaration
where an exemption is claimed under this subchapter, must be the country of
ultimate  end-use.  The written approval of the Department of State must be
obtained  before  reselling, transferring, transshipping, or disposing of a
defense  article  in  any  country  other  than  the  country  of  ultimate
destination  as  stated  on  the export license, or on the Shipper's Export
Declaration  in  cases where an exemption is claimed under this subchapter.
Exporters  must  ascertain  {pg  19676}  the specific end- user and end-use
prior  to submitting an application to the Office of Defense Trade Controls
or  claiming  an exemption under this subchapter. End-use must be confirmed
and should not be assumed.

    (b)  The  exporter  shall  incorporate  the  following  statement as an
integral  part of the Shipper's Export Declaration, the bill of lading, and
the  invoice whenever defense articles on the U.S. Munitions List are to be
exported:

    These commodities are authorized by the U.S. Government for export only
to  (country  of  ultimate  destination), for use by (end-user) and for the
purpose  of  (end-  use).  They  may  not be resold, diverted, transferred,
transshipped,  or  otherwise be disposed of in any other country, either in
their  original  form  or  after being incorporated through an intermediate
process  into  other  end-items,  without the prior written approval of the
U.S. Department of State.

    (c)  A  U.S.  person  or  a  foreign person requesting approval for the
reexport  or  retransfer,  or change in end-use, of a defense article shall
submit  a  written  request which shall be subject to all the documentation
required  for a permanent export license (see Sec. 123.1) and shall contain
the following:

    (1)  The  license number under which the defense article was previously
authorized for export from the United States;

    (2) A precise description, quantity and value of the defense article;

    (3) A description of the new end-use; and

    (4) Identification of the new end-user.

    (d)  The  written approval of the Office of Defense Trade Controls must
be   obtained   before   reselling,   transferring,   transshipping   on  a
non-continuous  voyage,  or  disposing  of a defense article in any country
other  than  the  country of ultimate destination, or anyone other than the
authorized end-user, as stated on the Shipper's Export Declaration in cases
where  an  exemption is claimed under this subchapter, except for reexports
to  a  government  of  a  NATO  country, Australia or Japan, of U.S.-origin
components incorporated into a foreign defense article, provided:

    (1)  The  U.S.-origin  components were previously authorized for export
from the United States, either by a license or an exemption;

    (2)  The  U.S.-origin components are not significant military equipment
and are not identified in part 121 of this subchapter as Missile Technology
Control Regime (MTCR) items; and

    (3)  The  person  reexporting  the defense article must provide written
notification  to the Office of Defense Trade Controls of the retransfer not
later  than 15 days following the reexport. The notification must state the
articles being reexported and the recipient government.

    (4)  In  certain  cases, the Office of Defense Trade Controls may place
retransfer restrictions on a license prohibiting use of this exemption, and
require the end-user to provide a DSP-83.
Sec. 123.10 Non-transfer and use assurances.

    (a)  An  application  for  a  license  to  export  significant military
equipment,  including  classified  articles  and classified technical data,
defined  in  Sec.  120.23  must  be  accompanied  by  a nontransfer and use
certificate  (Form  DSP-83)  at  the  time  of  submission to the Office of
Defense  Trade  Controls.  This  form  is  to  be  executed  by the foreign
consignee,  foreign end-user, and the applicant. The certificate stipulates
that,  except  as  specifically authorized by prior written approval of the
Department  of  State,  the foreign consignee and foreign end-user will not
reexport, resell or otherwise dispose of the significant military equipment
enumerated  in the application outside the country named as the location of
the  foreign  end-use,  and  will  only  use the equipment for the purposes
indicated on the license.

    (b)  The Office of Defense Trade Controls may also require a DSP-83 for
the export of any other defense articles or defense services.

    (c)  When  a DSP-83 is required for an export of any defense article or
defense  service  to  a  non-governmental  foreign  end-user, the Office of
Defense  Trade  Controls  may require as a condition of issuing the license
that the appropriate authority of the government of the country of ultimate
destination  also  execute  the  certificate.  This  means that the foreign
government  undertakes  not  to  authorize  the  reexport, resale, or other
disposition  of  the  defense articles or defense service enumerated in the
application  without  ensuring  that  the prior written consent of the U.S.
Government has been obtained.
Sec. 123.11 Movements of vessels and aircraft covered by the U.S. Munitions
List outside the United States.
    (a)  General.  A license issued by the Office of Defense Trade Controls
is  required  whenever  a  privately-owned  aircraft  or vessel on the U.S.
Munitions List makes a voyage outside the United States.

    (b)  Exemption.  An  export  license  is  not required when a vessel or
aircraft referred to in section (a) departs from the United States and does
not  enter  the  territorial  waters or airspace of a foreign country if no
defense  articles  are  carried as cargo. Such a vessel or aircraft may not
enter  the  territorial  waters  or  airspace  of  a foreign country before
returning  to  the  United  States,  or carry as cargo any defense article,
without  a  temporary  export  license (Form DSP-73) from the Department of
State. (See Sec. 123.5).
Sec. 123.12 Shipments between U.S. possessions.

    An  export license is not required for the shipment of defense articles
between  the  United  States,  the  Commonwealth  of  Puerto Rico, and U.S.
possessions.  A  license  is  required,  however, for the export of defense
articles from these areas to foreign countries.
Sec. 123.13 Domestic aircraft shipments via a foreign country.

    A  license is not required for the shipment by air of a defense article
from  one  location  in the United States to another location in the United
States via a foreign country. The pilot of the aircraft must, however, file
a  written  statement  with the District Director of Customs at the port of
exit in the United States. The original statement must be filed at the time
of exit with the District Director of Customs. A duplicate must be filed at
the  port  of  reentry with the District Director of Customs, who will duly
endorse  it and transmit it to the District Director of Customs at the port
of exit. The statement will be as follows:

Statement

    Domestic  Shipment  Via  a  Foreign  Country  of  Articles  on the U.S.
Munitions List.

    Under  penalty  according to Federal law, the undersigned certifies and
warrants that all the information in this document is true and correct, and
that  the  equipment listed below is being shipped from (U.S. port of exit)
via  (foreign  county)  to  (U.S.  port  of  entry),  which  is  the  final
destination in the United States. Description of Equipment
Quantity ---
Equipment ---
Value ---
Signed ---
Endorsement: Customs Inspector.
Port of Exit ---
Date ---
Signed ---

Endorsement Customs Inspector.
Port of Entry ---
Date ---
Sec. 123.14 Import certificate/delivery verification procedure.

    The  United  States  and  a  number of foreign countries have agreed on
procedures  designed  to  assure  that  a  commodity  imported  into  their
territory  will  not  be  diverted,  transshipped, or reexported to another
destination  except  in  accordance  with export control regulations of the
importing  country.  This  is  known  as  the  Import  Certificate/Delivery
Verification  Procedure  (IC/DV) and may be invoked with respect to defense
articles.

    (a) Exports. The Department of State may require the IC/DV procedure on
proposed  exports  of defense articles to non- government entities in those
countries  participating in IC/DV procedures. In such cases, U.S. exporters
must  submit  both an export license application (the completed Form DSP-5)
and   the   original   Import  Certificate,  which  must  be  provided  and
authenticated  by  the  government  of the importing country. This document
verifies  that the foreign importer complied with the import regulations of
the  government of the importing country and that the importer declared the
intention  not  to  divert,  transship  or  reexport the material described
therein  without  the  prior approval of that government. After delivery of
the  commodities to the foreign consignee, the Department of State may also
require  U.S. exporters to furnish Delivery Verification documentation from
the  government  of the importing country. This documentation verifies that
the  delivery  was  in  accordance  with  the  terms of the approved export
license.  Both the ''Import Certificate'' and the ''Delivery Verification''
must be furnished to the U.S. exporter by the foreign importer.

    (b)  Triangular transactions. When a transaction involves three or more
countries  that  have adopted the IC/DV procedure, the governments of these
countries  may  stamp  a  triangular symbol on the Import Certificate. This
symbol  is  usually placed on the Import Certificate when the applicant for
the Import Certificate (the importer) states either:

    (1)  That  there is uncertainty whether the items covered by the Import
Certificate   will   be  imported  into  the  country  issuing  the  Import
Certificate;
    (2)  That  he or she knows that the items will not be imported into the
country issuing the Import Certificate; or

    (3)  That, if the items are to be imported into the country issuing the
Import  Certificate,  they  will  subsequently  be  reexported  to  another
destination.  Thus,  it  is  possible  that  the ultimate consignee and the
country  of  ultimate  destination  will  not  coincide  with  that  of the
importer.  All  parties, including the ultimate consignee in the country of
ultimate destination, must be shown on the completed Import Certificate.
Sec. 123.15 Congressional notification for licenses.

    All exports of major defense equipment, as defined in Sec. 120.14, sold
under  a  contract  in  the  amount  of$14,000,000  or  more, or of defense
articles  and  defense  services  sold  under  a  contract  in  the  amount
of$50,000,000  or  more,  may  take  place only after the Office of Defense
Trade Controls notifies the exporter through issuance of a license or other
approval  that  30 calendar days have elapsed since receipt by the Congress
of the certification required by 22 U.S.C. 2776(c)(1) and that Congress has
not  enacted  a joint resolution prohibiting the export. Persons who intend
to  export  defense articles and defense services pursuant to the exemption
in  Sec.  126.5  under the circumstances described in the first sentence of
this  subsection must notify the Office of Defense Trade Controls by letter
of the intended export and provide a signed contract and a DSP-83 signed by
the  applicant,  the  foreign consignee and end-user. Such exports may take
place  after  the Office of Defense Trade Controls notifies the exporter by
letter  that 30 calendar days have elapsed since receipt by the Congress of
the  required  certification and there has been no joint resolution enacted
by the Congress prohibiting the reexport or retransfer.

Exemptions
Sec. 123.16 Exemptions of general applicability.

    (a)  The  following exemptions apply to exports of unclassified defense
articles  for  which no approval is needed from the Office of Defense Trade
Controls.   Refer  to  Sec.  123.22(c)  for  Shipper's  Export  Declaration
requirements.  These  exemptions  do  not  apply to proscribed destinations
under Sec. 126.1.

    (b) The following exports are exempt from the licensing requirements of
this subchapter.

    (1)  District  Directors  of  Customs  may  permit the export without a
license  of  defense  articles being exported in furtherance of an approved
manufacturing   license   agreement,   technical  assistance  agreement  or
distribution agreement provided that:

    (i)  The  defense  articles  to  be  exported  support  the activity as
identified in the agreement; and

    (ii) Any provisos or limitations placed on the authorized agreement are
adhered to; and

    (iii)  The  exporter certifies on the Shipper's Export Declaration that
the  export  is  exempt from the licensing requirements of this subchapter.
This  is  done  by  writing,  ''The  defense  articles  exported under this
exemption  is  that  equipment  which  has been approved under AG (identify
agreement number).''; and

    (iv)  The  total value of all shipments does not exceed the total value
authorized in the agreement; and

    (v)  Any  U.S.  person  using  this  exemption  must report annually in
writing  to  the  Office of Defense Trade Controls all shipments made under
this  exemption. Annual reports shall be filed not later than the thirtieth
day after the close of the calendar year.
    (2)  District  Directors of Customs may permit the export of components
or  spare  parts (except barrels, cylinders, receivers (frames) or complete
breech  mechanisms  covered  under  Category  I(a) of Sec. 121.1) without a
license  when  the  total value does not exceed$500 in a single transaction
when:

    (i)  The  components  or  spare  parts  are being exported to support a
defense article previously authorized for export; and

    (ii)  The spare parts or components are not going to a distributor, but
to a previously approved end-user of the defense articles; and

    (iii)  The  spare parts or components are not to be used to enhance the
capability of the defense article.

    (iv)  Under  this exemption, exporters shall not split orders so as not
to exceed the dollar value, or exceed 24 shipments per calendar year to the
same ultimate consignee.

    (v)  The exporter must certify on the Shipper's Export Declaration that
the  export  is  exempt from the licensing requirements of this subchapter.
This  is  done  by  writing, ''The spare parts or components exported under
this  exemption  are to support a defense article previously authorized for
export and will be used only by the previously authorized end-user.''

    (vi)  Any  U.S.  person  using  this  exemption must report annually in
writing  to  the  Office of Defense Trade Controls all shipments made under
this  exemption. Annual reports shall be filed not later than the thirtieth
day after the close of the calendar year.

    (3)  District  Directors  of  Customs  may  permit the export without a
license, of packing cases specially designed to carry defense articles.

    (4)  District  Directors  of  Customs  may  permit the export without a
license,  of unclassified models or mock- ups of defense articles, provided
that  such  models  or  mock-ups  are  nonoperable  and  do  not reveal any
technical  data  in  excess  of  that  which is exempted from the licensing
requirements  of  Sec.  125.4(b)  and do not contain components covered {pg
19678}  by  the  U.S.  Munitions List (see Sec. 120.7(b)). U.S. persons who
avail  themselves  of  this  exemption  related to models and mock-ups must
provide  a  written  certification to the District Director of Customs that
these  conditions are met. This exemption does not imply that the Office of
Defense  Trade Controls will approve the export of any defense articles for
which models or mocks-ups have been exported pursuant to this exemption.
    (5)  District  Directors  of  Customs  may  permit the temporary export
without  a  license  of  unclassified  defense  articles  to  any  *public*
exhibition,  trade  show,  air  show  or  related event if that article has
previously been licensed for a *public* exhibition, trade show, air show or
related  event  and  the  license  is  still  valid. U.S. persons who avail
themselves  of  this  exemption must provide a written certification to the
District Director of Customs that these conditions are met. Any U.S. person
using  this  exemption  must  report  annually  in writing to the Office of
Defense  Trade  Controls  all  shipments  made under this exemption. Annual
reports  shall be filed not later than the thirtieth day after the close of
the calendar year.

    (6) For exemption for firearms and ammunition for personal use see Sec.
123.17.

    (7)  For exemption for firearms for personal use of members of the U.S.
Armed Forces and civilian employees see  Sec. 123.18.

    (8) For exports to Canada refer to Sec. 126.5.

    (9)  District  Directors  of  Customs  may  permit the temporary export
without  a  license by a U.S. person of any unclassified minor component or
part to a subsidiary, affiliate or facility owned or controlled by the U.S.
person  (see  Sec.  122.2(c))  if  the  component or part is to be used for
manufacture,  assembly,  processing,  testing,  production, or modification
provided:

    (i)  To use this exemption, the U.S. person must be registered with the
Office of Defense Trade Controls and comply with all requirements set forth
in part 122 of this subchapter;

    (ii)  The  defense article must be returned to the United States unless
the  prior  written  approval  of  the  Office of Defense Trade Controls is
obtained;

    (iii)  The  exemption  granted  in this section may not be used for any
defense  article found in Category I, II, IV or VIII(g) of part 121 of this
subchapter;

    (iv) This exemption does not apply to the export of technical data; and

    (v)  No  defense  article  exported under this exemption may be sold or
transferred  without  the  appropriate  license  from the Office of Defense
Trade Controls; and
    (vi)  Any  U.S.  person  using  this  exemption must report annually in
writing  to  the  Office of Defense Trade Controls all shipments made under
this  exemption. Annual reports shall be filed not later than the thirtieth
day after the close of the calendar year.
Sec. 123.17 Exports of firearms and ammunition.

    (a)  District  Directors  of  Customs  may  permit the export without a
license  of nonautomatic firearms covered by Category I(a) of Sec. 121.1 if
they  were  manufactured  in  or  before  1898, as well as replicas of such
firearms.

    (b)  District  Directors  of  Customs may permit U.S. persons to export
temporarily  from  the  United States without a license not more than three
nonautomatic  firearms  in  Category  I(a)  of Sec. 121.1 and not more than
1,000 cartridges therefor, provided that:

    (1)  A  declaration  by  the U.S. person and an inspection by a customs
officer is made;

    (2)  The  firearms  and  accompanying  ammunition must be with the U.S.
person's  baggage or effects, whether accompanied or unaccompanied (but not
mailed); and
    (3)  They  must  be for that person's exclusive use and not reexport or
other transfer of ownership. The foregoing exemption is not applicable to a
crew-  member  of  a vessel or aircraft unless the crew-member declares the
firearms  to  a Customs officer upon each departure from the United States,
and declares that it is his or her intention to return the articles on each
return  to  the  United  States. It is also not applicable to the personnel
referred to in Sec. 123.18.

    (c) District Directors of Customs may permit a foreign person to export
without  a  license  such  firearms  in  Category  I(a)  of  Sec. 121.1 and
ammunition  therefor  as  the foreign person brought into the United States
under   the   provisions  of  27  CFR  178.115(d).  (The  latter  provision
specifically  excludes from the definition of importation the bringing into
the United States of firearms and ammunition by certain foreign persons for
specified purposes.)

    (d)  District  Directors  of  Customs may permit U.S. persons to export
without  a  license  ammunition  for  nonautomatic  firearms referred to in
paragraph  (a)  of  this  section  if  the  quantity  does not exceed 1,000
cartridges  (or  rounds)  in  any shipment. The ammunition must also be for
personal  use  and  not  for  resale  or  other  transfer of ownership. The
foregoing  exemption is also not applicable to the personnel referred to in
Sec. 123.18.
Sec.  123.18  Firearms for personal use of members of the U.S. Armed Forces
and civilian employees of the U.S. Government.

    The  following exemptions apply to members of the U.S. Armed Forces and
civilian  employees  of  the  U.S.  Government  who  are U.S. persons (both
referred  to  herein  as  ''personnel''). The exemptions apply only to such
personnel  if  they are assigned abroad for extended duty. These exemptions
do not apply to dependents.

    (a)  Firearms.  District  Directors  of Customs may permit nonautomatic
firearms  in Category I(a) of Sec. 121.1 and parts therefor to be exported,
except by mail, from the United States without a license if:

    (1)  They  are  consigned  to  servicemen's  clubs abroad for uniformed
members of the U.S. Armed Forces; or,

    (2)  In  the  case  of a uniformed member of the U.S. Armed Forces or a
civilian  employee  of the Department of Defense, they are consigned to the
personnel  for  personal  use  and  not  for  resale  or  other transfer of
ownership,  and  if the firearms are accompanied by a written authorization
from the commanding officer concerned; or
    (3)  In the case of other U.S. Government employees, they are consigned
to  such personnel for personal use and not for resale or other transfer of
ownership,  and the Chief of the U.S. Diplomatic Mission or his designee in
the  country  of destination has approved in writing to Department of State
the  import  of  the  specific  types  and quantities of firearms into that
country. The exporter shall provide a copy of this written statement to the
District Director of Customs.

    (b)  Ammunition. District Directors of Customs may permit not more than
1,000  cartridges (or rounds) of ammunition for the firearms referred to in
paragraph  (a)  of  this  section  to be exported (but not mailed) from the
United  States without a license when the firearms are on the person of the
owner  or with his baggage or effects, whether accompanied or unaccompanied
(but not mailed).
Sec. 123.19 Canadian and Mexican border shipments.

    A  shipment originating in Canada or Mexico which incidentally transits
the  United  States  en  route to a delivery point in the same country that
originated  the  shipment  is exempt from the requirement for an in transit
license.
Sec. 123.20 Nuclear materials.
    (a)  The  provisions  of  this  subchapter do not apply to equipment in
Category  VI(e) and Category XVI of Sec. 121.1 to the extent such equipment
is  under  the {pg 19679} export control of the Department of Energy or the
Nuclear Regulatory Commission pursuant to the Atomic Energy Act of 1954, as
amended, and the Nuclear Non-Proliferation Act of 1978.

    (b)  A  license  for  the  export  of any machinery, device, component,
equipment,  or technical data relating to equipment referred to in Category
VI(e) will not be granted unless the proposed export comes within the scope
of  an  existing  Agreement  for  Cooperation  for  Mutual Defense Purposes
concluded  pursuant  to the Atomic Energy Act of 1954, as amended, with the
government  of the country to which the article is to be exported. Licenses
may be granted in the absence of such an agreement only

    (1)  If  the  proposed export involves an article which is identical to
that in use in an unclassified civilian nuclear power plant,

    (2)  If  the  proposed  export  has  no  relationship  to naval nuclear
propulsion, and

    (3) If it is not for use in a naval propulsion plant.
Procedures
Sec. 123.21 Duration, renewal and disposition of licenses.

    (a)  A license is valid for a period of four years. The license expires
when  the  total  value  authorized  has  been  shipped or when the date of
expiration has been reached, whichever occurs first. Defense articles to be
shipped   thereafter  require  a  new  application  and  license.  The  new
application  should  refer  to  the  expired license. It should not include
references  to  any  defense  articles  other  than  those of the unshipped
balance of the expired license.

    (b)  Unused,  expired, expended, suspended, or revoked licenses must be
returned immediately to the Department of State.
Sec.  123.22  Filing  of  export licenses and Shipper's Export Declarations
with District Directors of Customs.

    (a)  As  required,  the recipient of an export license must deposit the
license  with  the  District Director of Customs at the port of exit before
shipping  the  defense  article  in question, unless subsection (d) or Sec.
125.9  applies.  (For exports by mail, see Sec. 123.24.). If necessary, the
export  may  be made through another port if the exporter complies with the
procedures  established  by  the  U.S. Customs Service. Before shipping any
defense article, the exporter must also file a Shipper's Export Declaration
(Department  of Commerce Form 7525-V) with the District Director of Customs
at the port of exit.

    (b)  Before  any export occurs, the District Director of Customs at the
port  of  exit  must  authenticate  the  Shipper's  Export Declaration, and
endorse  the  license  to  show  the  shipments actually made. The District
Director  of  Customs  will  return  a copy of each authenticated Shipper's
Export  Declaration  to the Office of Defense Trade Controls. Every license
will  also  be returned when the total value authorized has been shipped or
when the date of expiration is reached, whichever occurs first.

    (c)  An  exporter  must  also  file a Shipper's Export Declaration with
District  Directors  of  Customs  or Postmasters in those cases in which no
export  license is required because of an exemption in this subchapter. The
exporter  must  certify  that  the  export  is  exempt  from  the licensing
requirements of this subchapter. This is done by writing ''22 CFR (identify
section)   applicable''   on  the  Shipper's  Export  Declaration,  and  by
identifying the section under which an exemption is claimed. A copy of each
such  declaration  must be mailed immediately by the exporter to the Office
of Defense Trade Controls.
    (d)  If  a  license  for  the  export of unclassified defense articles,
including  technical  data,  is  used but not endorsed by U.S. Customs or a
Postmaster    for   whatever   reason   (e.g.,   electronic   transmission,
unavailability   of  Customs  officer  of  Postmaster,  etc.),  the  person
exporting  the article must self- endorse the license, showing when and how
the  export  took  place,  provide  an  explanation why the license was not
endorsed  by  an  authorized  official, and return it within 15 days to the
Office of Defense Trade Controls.
Sec. 123.23 Monetary value of shipments.

    District  Directors of Customs are authorized to permit the shipment of
defense  articles  identified  on  any  license when the total value of the
export  does  not exceed the aggregate monetary value (not quantity) stated
on the license by more than ten percent.
Sec. 123.24 Shipments by mail.

    An  export  license for defense articles being sent abroad by mail must
be  filed  with  the  postmaster  at the post office where the equipment is
mailed.  A  Shipper's  Export Declaration (U.S. Department of Commerce Form
7525-  V)  must be filed with and be authenticated by the postmaster before
the  article  is actually sent. The postmaster will endorse each license to
show  the  shipments made. Every license must be returned by the postmaster
to the Office of Defense Trade Controls upon completion of the mailings.
Sec. 123.25 Amendments to licenses.

    (a)  General.  The  Office  of  Defense  Trade  Controls may approve an
amendment  to  a  license  for  permanent  export  of  unclassified defense
articles  (DSP-5), temporary export (DSP-73) and temporary import (DSP-61).
A  suggested amendment format is available from the Office of Defense Trade
Controls.

    (b) The following includes those amendments to a license that generally
will  be  considered: addition of U.S. freight forwarder or U.S. consignor;
change  due  to  an  obvious  typographical  error;  change  in  source  of
commodity;  and  change  of foreign intermediate consignee if that party is
only  transporting  the  equipment  and  will not process (e.g., integrate,
modify) the equipment. For changes in U.S. dollar value see Sec. 123.23.

    (c)  The  following  types  of  proposed  amendments  to  a license are
considered  ''substantial''  in nature and will not be approved: additional
quantity; changes in commodity, country of ultimate destination, end-use or
end-user,  foreign  consignee  and  foreign  intermediate  consignee if the
export  is  for technical data; and extension of duration. A new license is
required  for any of those changes. Any new license submission must reflect
only the unshipped balance of quantity and dollar value.

PART   124-   MANUFACTURING   LICENSE   AGREEMENTS,   TECHNICAL  ASSISTANCE
AGREEMENTS, AND OTHER DEFENSE SERVICES

Sec.

124.1 Manufacturing license agreements and technical assistance agreements.

124.2 Exemptions for training and military service.

124.3 Exports of technical data in furtherance of an agreement.

124.4  Deposit  of  signed  agreements  with  the  Office  of Defense Trade
Controls.

124.5 Proposed agreements that are not concluded.

124.6   Termination  of  manufacturing  license  agreements  and  technical
assistance agreements.

124.7  Information  required  in  all  manufacturing license agreements and
technical assistance agreements.

124.8  Clauses  required  both  in  manufacturing  license  agreements  and
technical assistance agreements.

124.9 Additional clauses required only in manufacturing license agreements.

124.10 Non-transfer and use assurances.

124.11 Congressional notification for agreements.

124.12 Required information in letters of transmittal.

124.13  Procurement by United States persons in foreign countries (offshore
procurement).

124.14  Exports  to  warehouses  or  distribution points outside the United
States.

    Authority: Sec. 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2778); E.O.
11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658.
Sec.  124.1  Manufacturing  license  agreements  and  technical  assistance
agreements.

    (a)  General. The approval of the Office of Defense Trade Controls must
be  obtained before the defense services described in Sec. 120.8(a) of this
subchapter  may  be  furnished.  In order to obtain such approval, the U.S.
person  must  submit a proposed agreement with the foreign person concerned
to  the  Office  of  Defense  Trade Controls. Such agreements are generally
characterized as either ''Manufacturing license agreements'' or ''technical
assistance  agreements'' as defined in Sec. 120.15 and Sec. 120.22, and may
not  enter  into  force without the prior written approval of the Office of
Defense  Trade  Controls.  Once approved, the defense services described in
the  agreements  may  generally  be  provided  without further licensing in
accordance  with  Secs.  124.3  and  125.4(b)(2).  The requirements of this
section  apply  whether or not technical data is to be disclosed or used in
the  performance  of the defense services described in Sec. 120.8(a) (e.g.,
all  the  information  relied  upon  by  the  U.S. person in performing the
defense  service  is in the *public* domain or is otherwise exempt from the
licensing  requirements  of  this  subchapter pursuant to Sec. 125.4). This
requirement  also  applies to the training of foreign military forces, both
regular and irregular, in the use of defense articles. Technical assistance
agreements  must  be  submitted  in  such cases. (In exceptional cases, the
Office  of  Defense  Trade  Controls,  upon  written request, will consider
approving  the  provision of defense services described in Sec. 120.8(a) by
granting   a  license  under  part  125.  Also,  see  Sec.  126.8  for  the
requirements  for  prior  approval  of  proposals  relating  to significant
military equipment.)

    (b)  Amendments. Changes to the scope of approved agreements, including
modifications,  upgrades, or extensions must be submitted for approval. The
amendments may not enter into force until approved by the Office of Defense
Trade Controls.

    (c)   Minor   Amendments.  Amendments  which  only  alter  delivery  or
performance  schedules,  or  other minor administrative amendments which do
not  affect  in  any manner the duration of the agreement or the clauses or
information  which  must  be  included  in  such  agreements because of the
requirements  of  this  part, do not have to be submitted for approval. One
copy  of  all  such  minor  amendments  must  be submitted to the Office of
Defense Trade Controls within thirty days after they are concluded.
Sec. 124.2 Exemptions for training and military service.

    (a)  Technical assistance agreements are not required for the provision
of training only in the basic operation and maintenance of defense articles
lawfully exported or authorized for export to the same recipient.
    (b)  Services performed as a member of the regular military forces of a
foreign  nation  by U.S. persons who have been drafted into such forces are
not deemed to be defense services for purposes of Sec. 120.8.
Sec. 124.3 Exports of technical data in furtherance of an agreement.

    (a)  Unclassified  technical  data.  District  Directors  of Customs or
postal  authorities may permit the export without a license of unclassified
technical  data  if the export is in furtherance of a manufacturing license
or technical assistance agreement which has been approved in writing by the
Office  of  Defense  Trade Controls. The export is not authorized without a
license  if  it exceeds the scope or limitations of the relevant agreement.
The  U.S.  party  to  the  agreement  must certify that the export does not
exceed  the  scope of the agreement and any limitations imposed pursuant to
this  part.  The  approval  of the Office of Defense Trade Controls must be
obtained for the export of any unclassified technical data which may exceed
the terms of the agreement.

    (b)  Classified technical data. The export of classified information in
furtherance  of  an  approved manufacturing license or technical assistance
agreement which provides for the transmittal of classified information does
not  require  further  approval  from  the Office of Defense Trade Controls
when:
    (1)  The  United  States  party  certifies to the Department of Defense
transmittal  authority  that the classified information does not exceed the
technical or product limitations in the agreement; and

    (2)  The  United  States  party  complies  with the requirements of the
Department   of   Defense   Industrial   Security   Manual  concerning  the
transmission  of  classified  information,  and  any  other requirements of
cognizant U.S. departments or agencies.
Sec. 124.4 Deposit of signed agreements with the Office of Trade Controls.

    The  United  States  party  to  a  manufacturing license or a technical
assistance agreement must file one copy of the concluded agreement with the
Office  of  Defense  Trade  Controls not later than 30 days after it enters
into force.
Sec. 124.5 Proposed agreements that are not concluded.

    The United States party to any proposed manufacturing license agreement
or  technical  assistant  agreement must inform the Office of Defense Trade
Controls  if  a  decision  is   made  not  to  conclude  the agreement. The
information  must  be  provided within 60 days of the date of the decision.
These  requirements  apply  only  if  the approval of the Office of Defense
Trade  Controls  was  obtained  for  the agreement to be concluded (with or
without any provisos).
Sec.  124.6  Termination  of manufacturing license agreements and technical
assistance agreements.

    The  United  States  party  to  a  manufacturing license or a technical
assistance  agreement  must  inform the Office of Defense Trade Controls in
writing of the impending termination of the agreement not less than 30 days
prior to the expiration date of such agreement.
Sec. 124.7 Information required in all manufacturing license agreements and
technical assistance agreements.

    The   following   information   must   be   included  in  all  proposed
manufacturing  license  agreements and technical assistance agreements. The
information should be provided in terms which are as precise as possible.

    (a)  The agreement must describe the defense article to be manufactured
and  all  defense  articles  to be exported, including any test and support
equipment  or  advanced  materials.  They  should  be described by military
nomenclature,  contract  number,  Federal  stock number, nameplate data, or
other specific information. Only those defense articles specifically listed
in  the  agreement  will  be  eligible  for  export  under  exemption  Sec.
123.16(b)(1).
    (b)  The  agreement  must  describe  the assistance and technical data,
including  the  design and manufacturing know-how involved, to be furnished
and any manufacturing rights to be granted;

    (c) The agreement must specify its duration; and

    (d)  The agreement must specifically identify the countries or areas in
which  manufacturing, production, processing, {pg 19681} sale or other form
of transfer is to be licensed.

    (e) The agreement must describe any classified information involved and
identify,  from Department of Defense form DD254, the address and telephone
number of the U.S. Government office that classified the information.

    (f)   For   agreements  that  may  require  the  export  of  classified
information,  the  Defense Investigative Service cognizant security offices
that  have  responsibility  for  the  facilities of the U.S. parties to the
agreement shall be identified. The facility security clearance codes of the
U.S. parties shall also be provided.
Sec.  124.8  Clauses  required both in manufacturing license agreements and
technical assistance agreements.
    The following statements must be included both in manufacturing license
agreements and in technical assistance agreements:

    (a)  ''This  agreement  shall  not  enter  into force, and shall not be
amended  or  extended, without the prior written approval of the Department
of State of the U.S. Government.''

    (b)  ''This  agreement  is  subject  to  all  United  States  laws  and
regulations  relating to exports and to all administrative acts of the U.S.
Government pursuant to such laws and regulations.''

    (c)  ''The  parties  to  this  agreement  agree  that  the  obligations
contained  in  this  agreement  shall  not  affect  the  performance of any
obligations  created  by  prior contracts or subcontracts which the parties
may have individually or collectively with the U.S. Government.''

    (d)  ''No  liability  will  be  incurred  by  or attributed to the U.S.
Government  in connection with any possible infringement of privately owned
patent  or proprietary rights, either domestic or foreign, by reason of the
U.S. Government's approval of this agreement.''

    (e)  ''The  technical  data or defense service exported from the United
States  in  furtherance of this agreement and any defense article which may
be produced or manufactured from such technical data or defense service may
not  be  transferred  to  a person in a third country or to a national of a
third  country  except  as specifically authorized in this agreement unless
the prior written approval of the Department of State has been obtained.''

    (f) ''All provisions in this agreement which refer to the United States
Government  and  the Department of State will remain binding on the parties
after the termination of the agreement.''
Sec.  124.9  Additional  clauses  required  only  in  manufacturing license
agreements.

    (a)  Clauses  for  all  manufacturing license agreements. The following
clauses must be included only in manufacturing license agreements:

    (1)  ''No  export, sale, transfer, or other disposition of the licensed
article  is  authorized  to  any  country  outside  the  territory  wherein
manufacture  or  sale is herein licensed without the prior written approval
of  the  U.S.  Government unless otherwise exempted by the U.S. Government.
Sales  or  other  transfers  of  the  licensed  article shall be limited to
governments of countries wherein manufacture or sale is hereby licensed and
to  private  entities seeking to procure the licensed article pursuant to a
contract  with any such government unless the prior written approval of the
U.S. Government is obtained.''

    (2)  ''It  is  agreed  that sales by licensee or its sublicensees under
contracts  made through the U.S. Government will not include either charges
for  patent  rights  in  which  the  U.S.  Government  holds a royalty-free
license,  or  charges for data which the U.S. Government has a right to use
and disclose to others, which are in the *public* domain, or which the U.S.
Government has acquired or is entitled to acquire without restrictions upon
their use and disclosure to others.''

    (3)  ''If  the U.S. Government is obligated or becomes obligated to pay
to  the licensor royalties, fees, or other charges for the use of technical
data  or patents which are involved in the manufacture, use, or sale of any
licensed  article,  any royalties, fees or other charges in connection with
purchases  of  such licensed article from licensee or its sublicensees with
funds  derived  through the U.S. Government may not exceed the total amount
the  U.S.  Government  would  have  been  obligated  to  pay  the  licensor
directly.''

    (4)  ''If the U.S. Government has made financial or other contributions
to  the  design  and  development  of any licensed article, any charges for
technical  assistance  or  know-how relating to the item in connection with
purchases of such articles from licensee or sublicensees with funds derived
through  the U.S. Government must be proportionately reduced to reflect the
U.S. Government contributions, and subject to the provisions of  paragraphs
(a)  (2)  and  (3)  of  this  section, no other royalties, or fees or other
charges  may  be  assessed against U.S. Government funded purchases of such
articles.  However,  charges  may  be  made  for  reasonable  reproduction,
handling,   mailing,  or  similar  administrative  costs  incident  to  the
furnishing of such data.''

    (5)  ''The  parties  to  this  agreement agree that an annual report of
sales  or  other  transfers  pursuant  to  this  agreement  of the licensed
articles, by quantity, type, U.S. dollar value, and purchaser or recipient,
shall  be provided by (applicant or licensee) to the Department of State.''
This  clause  must  specify  which party is obligated to provide the annual
report.  Such  reports  may be submitted either directly by the licensee or
indirectly  through  the  licensor, and may cover calendar or fiscal years.
Reports  shall be deemed proprietary information by the Department of State
and will not be disclosed to unauthorized persons. (See Sec. 126.10(b).)

    (6)  ''(Licensee)  agrees  to incorporate the following statement as an
integral  provision  of  a  contract, invoice or other appropriate document
whenever the licensed articles are sold or otherwise transferred:

    These commodities are authorized for export by the U.S. Government only
to  (country of ultimate destination or approved sales territory). They may
not  be  resold,  diverted,  transferred,  transshipped,  or  otherwise  be
disposed  of  in  any other country, either in their original form or after
being  incorporated  through  an intermediate process into other end-items,
without the prior written approval of the U.S. Department of State.

    (b)  Special  clause  for  agreements  relating to significant military
equipment.  With  respect to an agreement for the production of significant
military equipment, the following additional provisions must be included in
the agreement:

    (1)  ''A  completed  nontransfer  and  use certificate (DSP-83) must be
executed  by  the foreign end-user and submitted to the Department of State
of the United States before any transfer may take place.''

    (2)  ''The  prior  written  approval  of  the  U.S.  Government must be
obtained before entering into a commitment for the transfer of the licensed
article  by  sale  or  otherwise to any person or government outside of the
approved sales territory.''
Sec. 124.10 Nontransfer and use assurances.

    A  nontransfer  and  use  certificate  (Form  DSP-83) (see Sec. 123.10)
signed  by  the  applicant and the foreign party to a manufacturing license
agreement  or  technical assistance agreement is required as a condition to
the  approval  of  any such agreement which relates to significant military
equipment,  classified articles or classified technical data. The Office of
Defense  Trade  Controls may at its option require that this certificate or
{pg  19682}  a  comparable  undertaking  be  provided  before approving any
agreement  that  does  not  relate  to  significant military equipment. The
Office  of  Defense  Trade  Controls may also require as a condition to the
approval  of  the  agreement  that  an appropriate authority to the foreign
party's  government  also  execute  the  certificate,  or  that the foreign
government  concerned provide undertakings comparable to those contained in
the  Form  DSP-83  (e.g.,  in  a  diplomatic  note).  Agreements  involving
classified  articles  or classified technical data must be accompanied by a
nontransfer  and  use certificate signed by an authorized representative of
the foreign government concerned.
Sec. 124.11 Congressional notification for agreements.

    Regardless  of  dollar  value,  a  Technical  Assistance Agreement or a
Manufacturing  License  Agreement  for or in a country not a member of NATO
that  involves  the  manufacture abroad of any item of significant military
equipment  (as  defined  in Sec. 120.21) covered by the U.S. Munitions List
shall be certified to Congress as required by 22 U.S.C. 2776(d). The Office
of  Defense Trade Controls approves no applications requiring congressional
notification  until  30  calendar  days  have  elapsed since receipt by the
Congress  of  the  required  certification,  and  there  has  been no joint
resolution enacted by Congress prohibiting the agreement.
Sec. 124.12 Required information in letters of transmittal.

    (a)  An  application  for  the  approval  of a manufacturing license or
technical assistance agreement with a foreign person must be accompanied by
an  explanatory  letter. The original letter and seven copies of the letter
and eight copies of the proposed agreement shall be submitted to the Office
of Defense Trade Controls. The explanatory letter shall contain:

    (1)   A   statement  giving  the  applicant's  Defense  Trade  Controls
registration number.

    (2)  A  statement  identifying  the  licensee  and  the  scope  of  the
agreement.

    (3)  A  statement  identifying the U.S. Government contract under which
the  equipment  or technical data was generated, improved, or developed and
supplied  to  the  U.S.  Government, and whether the equipment or technical
data was derived from any bid or other proposal to the U.S. Government.

    (4)  A  statement  giving  the  military security classification of the
equipment or technical data.

    (5)  A statement identifying any patent application which discloses any
of  the  subject  matter  of  the equipment or technical data covered by an
invention secrecy order issued by the U.S. Patent and Trademark Office.

    (6)  A  statement  of  the  actual or estimated value of the agreement,
including  the  estimated  value  of all defense articles to be exported in
furtherance of the agreement or amendments thereto. If the value is$500,000
or  more,  an  additional  statement  must be made regarding the payment of
political  contributions, fees or commissions, pursuant to Part 130 of this
subchapter.

    (7)  A  statement indicating whether any foreign military sales credits
or loan guarantees are or will be involved in financing the agreement.

    (b) The following statements must be made in the letter of transmittal:
    (1)  ''If  the  agreement  is approved by the Department of State, such
approval  will  not  be  construed  by  (the  applicant)  as passing on the
legality  of  the  agreement from the standpoint of antitrust laws or other
applicable  statutes,  nor  will  (the applicant) construe the Department's
approval  as  constituting  either  approval  or  disapproval of any of the
business terms or conditions between the parties to the agreement.''

    (2)  ''The  (applicant) will not permit the proposed agreement to enter
into force until it has been approved by the Department of State.''

    (3)  ''The  (applicant)  will  furnish the Department of State with one
copy  of  the  signed agreement (or amendment) within 30 days from the date
that  the  agreement  is  concluded  and  will inform the Department of its
termination  not  less  than  30  days  prior  to  expiration  and  provide
information  on  the  continuation  of  any  foreign  rights or the flow of
technical  data to the foreign party. If a decision is made not to conclude
the  proposed agreement, the applicant will so inform the Department within
60 days.''

    (4)  ''If  this  agreement  grants any rights to sublicense, it will be
amended  to  require that all sublicensing arrangements incorporate all the
provisions of the basic agreement that refer to the U.S. Government and the
Department of State (i.e., 22 CFR 124.9 and 124.10).''
Sec.  124.13  Procurement  by  United  States  persons in foreign countries
(offshore procurement).

    Notwithstanding the other provisions in part 124, the Office of Defense
Trade  Controls  may  authorize by means of a license (DSP-5) the export of
unclassified  technical data to foreign persons for offshore procurement of
defense articles, provided that:

    (a)  The  contract  or  purchase  order for offshore procurement limits
delivery  of  the defense articles to be produced only to the person in the
United States or to an agency of the U.S. Government; and

    (b)  The  technical  data  of  U.S.-origin  to  be  used in the foreign
manufacture  does  not  disclose  the  details  of the design, development,
production or manufacture of defense articles; and

    (c)  The  contract  or  purchase order between the person in the United
States and the foreign person:

    (1)  Limits  the  use  of  the technical data to the manufacture of the
defense articles required by the contract or purchase order only; and
    (2)  Prohibits  the  disclosure  of the data to any other person except
duly qualified subcontractors within the same country; and

    (3)  Prohibits the acquisition of any rights in the data by any foreign
person; and

    (4)  Provides  that  any  subcontracts  between  foreign persons in the
approved  country for manufacture of equipment for delivery pursuant to the
contract  or  purchase  order contain all the limitations of this paragraph
(c); and

    (5)  Requires  the foreign person, including subcontractors, to destroy
or  return  to  the  person  in the United States all of the technical data
exported  pursuant  to  the  contract or purchase order upon fulfillment of
their terms; and

    (6)  Requires delivery of the defense articles manufactured abroad only
to  the person in the United States or to an agency of the U.S. Government;
and

    (d)  The  person  in  the  United States provides the Office of Defense
Trade  Controls with a copy of each contract, purchase order or subcontract
for  offshore  procurement  at the time it is accepted. Each such contract,
purchase  order  or  subcontract  must  clearly  identify the article to be
produced  and must identify the license number or exemption under which the
technical data was exported; and

    (e) Licenses issued pursuant to this section must be renewed upon their
expiration  if  offshore  procurement  is  to  extend  beyond the period of
validity  of  the  license.  If  the technical data involved in an offshore
procurement arrangement is otherwise exempt from the licensing requirements
pursuant  to  Sec.  126.4 or Sec. 126.5, the DSP-5 referred to in the first
sentence of this section is not required. However, the exporter must comply
with the other requirements of this section. {pg 19683}
Sec. 124.14 Exports to warehouses or distribution points outside the United
States.

    (a)  General.  Agreements  (e.g.,  contracts)  between U.S. persons and
foreign  persons  for  the warehousing and distribution of defense articles
must  be approved by the Office of Defense Trade Controls before they enter
into  force.  Such  agreements  will  be  limited  to  unclassified defense
articles  and must contain conditions for special distribution, end-use and
reporting.  Licenses  for  exports  pursuant  to  such  agreements  must be
obtained prior to exports of the defense articles unless an exemption under
Sec. 123.16(b)(1) is applicable.

    (b)   Required   Information.  Proposed  warehousing  and  distribution
agreements  (and  amendments  thereto)  shall be submitted to the Office of
Defense  Trade  Controls  for  approval.  The following information must be
included in all such agreements:

    (1)  A  precise  description of the defense articles involved including
test  and  support equipment covered by the U.S. Munitions List. This shall
include  when  applicable  the  military  nomenclature,  the  Federal stock
number,  nameplate  data,  and  any control numbers under which the defense
articles  were  developed  or  procured  by the U.S. Government. Only those
defense  articles specifically listed in the agreement will be eligible for
export under exemption Sec. 123.16(b)(1);

    (2)  A  detailed  statement of the terms and conditions under which the
defense articles will be exported and distributed;

    (3) The duration of the proposed agreement;

    (4)  Specific  identification of the country or countries that comprise
the  distribution  territory.  Distribution must be specifically limited to
the governments of such countries or to private entities seeking to procure
defense  articles  pursuant  to  a  contract  with  a government within the
distribution  territory.  Consequently,  any  deviation from this condition
must  be  fully  explained and justified. A nontransfer and use certificate
(DSP-83)  will  be  required  to  the  same  extent  required  in licensing
agreements under Sec. 124.9(b).

    (c)  Required  statements. The following statements must be included in
all warehousing and distribution agreements:

    (1) ''This agreement shall not enter into force, and may not be amended
or  extended, without the prior written approval of the Department of State
of U.S. Government.''

    (2)  ''This  agreement  is  subject  to  all  United  States  laws  and
regulations related to exports and to all administrative acts of the United
States Government pursuant to such laws and regulations.

    (3)  ''The  parties  to  this  agreement  agree  that  the  obligations
contained  in  this  agreement  shall  not  affect  the  performance of any
obligations  created  by  prior contracts or subcontracts which the parties
may have individually or collectively with the U.S. Government.''
    (4)  ''No  liability  will  be  incurred  by  or attributed to the U.S.
Government  in connection with any possible infringement of privately owned
patent  or  proprietary rights, either domestic or foreign by reason of the
U.S. Government's approval of this agreement.''

    (5)  ''No  export,  sale, transfer, or other disposition of the defense
articles covered by this agreement is authorized to any country outside the
distribution  territory without the prior written approval of the Office of
Defense Trade Controls of the U.S. Department of State.''

    (6)  ''The  parties  to  this  agreement agree that an annual report of
sales  or  other  transfers  pursuant  to  this  agreement  of the licensed
articles,  by quantity, type, U.S. dollar value, and purchaser or recipient
shall  be provided by (applicant or licensee) to the Department of State.''
This  clause  must  specify  which party is obligated to provide the annual
report.  Such  reports  may be submitted either directly by the licensee or
indirectly  through  the  licensor, and may cover calendar or fiscal years.
Reports  shall be deemed proprietary information by the Department of State
and will not be disclosed to unauthorized persons. (See Sec. 126.10(b).)

    (7)  ''(Licensee)  agrees  to incorporate the following statement as an
integral  provision  of  a  contract, invoice or other appropriate document
whenever  the  articles  covered  by  this  agreement are sold or otherwise
transferred:

    These commodities are authorized for export by the U.S. Government only
to  (country of ultimate destination or approved sales territory). They may
not  be  resold,  diverted,  transferred,  transshipped,  or  otherwise  be
disposed  of  in  any other country, either in their original form or after
being  incorporated  through  an intermediate process into other end-items,
without the prior written approval of the U.S. Department of State.

    (8) ''All provisions in this agreement which refer to the United States
Government  and  the Department of State will remain binding on the parties
after the termination of the agreement.''

    (9) Additional clause. Unless the articles covered by the agreement are
in  fact  intended  to be distributed to private persons or entities (e.g.,
sporting   firearms   for  commercial  resale,  cryptographic  devices  and
*software*  for  financial and business applications), the following clause
must be included in all warehousing and distribution agreements: ''Sales or
other  transfers of the licensed article shall be limited to governments of
the countries in the distribution territory and to private entities seeking
to  procure  the  licensed article pursuant to a contract with a government
within the distribution territory, unless the prior written approval of the
U.S. Department of State is obtained.''

    (d)  Special  clauses  for  agreements relating to significant military
equipment.  With respect to agreements for the warehousing and distribution
of significant military equipment, the following additional provisions must
be included in the agreement:

    (1)  A  completed  nontransfer  and  use  certificate  (DSP-83) must be
executed  by  the  foreign end-user and submitted to the U.S. Department of
State before any transfer may take place.

    (2)  The prior written approval of the U.S. Department of State must be
obtained before entering into a commitment for the transfer of the licensed
article  by  sale  or  otherwise  to  any  person or government outside the
approved distribution territory.

    (e)  Transmittal  Letters.  Requests  for  approval  of warehousing and
distribution  agreements  with  foreign persons must be made by letter. The
original  letter  and  seven  copies  of the letter and seven copies of the
proposed  agreement  shall  be  submitted  to  the  Office of Defense Trade
Controls. The letter shall contain:
    (1)   A   statement  giving  the  applicant's  Defense  Trade  Controls
registration number.

    (2) A statement identifying the foreign party to the agreement.

    (3)  A  statement  identifying  the  defense articles to be distributed
under the agreement.

    (4)  A  statement  identifying any U.S. Government contract under which
the  equipment  may have been generated, improved, developed or supplied to
the  U.S. Government, and whether the equipment was derived from any bid or
other proposal to the U.S. Government.

    (5)  A  statement  that  no  classified  defense articles or classified
technical data are involved.

    (6)  A statement identifying any patent application which discloses any
of the subject matter of the equipment or related technical data covered by
an  {pg  19684}  invention  secrecy  order  issued  by  the U.S. Patent and
Trademark Office.

    (f)  Required  clauses.  The  following  statements must be made in the
letter of transmittal:

    (1)  ''If  the  agreement  is approved by the Department of State, such
approval will not be construed by (applicant) as passing on the legality of
the  agreement  from  the  standpoint of antitrust laws or other applicable
statutes,  nor  will  (the applicant) construe the Department's approval as
constituting either approval or disapproval of any of the business terms or
conditions between the parties to the agreement.''

    (2)  ''The  (applicant) will not permit the proposed agreement to enter
into force until it has been approved by the Department of State.''

    (3)  The (applicant) will furnish the Department of State with one copy
of the signed agreement (or amendment thereto) within 30 days from the date
that  the  agreement  is  concluded,  and will inform the Department of its
termination  not  less  than  30 days prior to expiration. If a decision is
made not to conclude the proposed agreement, the (applicant) will so inform
the Department within 60 days.

PART  125-LICENSES  FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED DEFENSE
ARTICLES
Sec.

125.1 Exports subject to this part.

125.2 Exports of unclassified technical data.

125.3 Exports of classified technical data and classified defense articles.

Exemptions

125.4 Exemptions of general applicability.

125.5 Exemptions for plant visits.

125.6 Certification requirements.

Procedures

125.7  Procedures  for  the  export  of classified technical data and other
classified defense articles.

125.8 Filing of licenses for exports of unclassified technical data.
125.9  Filing  of  licenses  for  exports  of classified technical data and
classified defense articles.

    Authority: Sec. 38, *Public* Law 90-629, 90 Stat. 744 (22 U.S.C. 2778);
E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658.
Sec. 125.1 Exports subject to this part.

    (a)  The  export controls of this part apply to the export of technical
data and the export of classified defense articles. Information which is in
the  ''*public* domain'' (see Secs. 120.19 and 125.4(b)(13)) is not subject
to the controls of this subchapter.

    (b)  A  license  for the export of technical data and the exemptions in
Sec. 125.4 may not be used for foreign production purposes or for technical
assistance  unless the approval of the Office of Defense Trade Controls has
been  obtained.  Such  approval  is generally provided only pursuant to the
procedures specified in Part 124 of this subchapter.

    (c)  Technical  data  authorized  for  export  may  not  be reexported,
transferred  or  diverted  from the country of ultimate end-use or from the
authorized  foreign  end-user (as designated in the license or approval for
export)  or  disclosed  to  a national of another country without the prior
written approval of the Office of Defense Trade Controls.

    (d)  The  export controls of this part apply to the exports referred to
in  paragraph  (a)  of  this  section  regardless of whether the person who
intends  to  export  the  technical  data  produces or manufactures defense
articles if the technical data is determined by the Office of Defense Trade
Controls to be subject to the controls of this subchapter.

    (e)  The  Provisions  of this subchapter do not apply to technical data
related  to articles in Category VI(e) and Category XVI. The export of such
data  is  controlled by the Department of Energy and the Nuclear Regulatory
Commission  pursuant  to the Atomic Energy Act of 1954, as amended, and the
Nuclear Non-Proliferation Act of 1978.
Sec. 125.2 Exports of unclassified technical data.

    (a)  General.  A  license (DSP-5) issued by the Office of Defense Trade
Controls  is required for the export (and return to the U.S. if applicable)
of  unclassified  technical  data  unless  the  export  is  exempt from the
licensing  requirements  of  this subchapter. If the unclassified technical
data  is  related to a classified defense article, any classified technical
data  or  defense articles that may subsequently be required to be exported
must  be described, along with the address and telephone number of the U.S.
Government  office  that classified the information. In the case of a plant
visit,  details  of  the  proposed  discussions  must be transmitted to the
Office  of  Defense  Trade Controls for an appraisal of the technical data.
Seven  copies  of the technical data or the details of the discussions must
be  provided. Only one copy must be provided if a renewal of the license is
requested.

    (b)  Patents.  A license issued by the Office of Defense Trade Controls
is required for the export of technical data whenever the data exceeds that
which  is  used  to support a domestic filing of a patent application or to
support  a  foreign  filing  of  a  patent application whenever no domestic
application  has been filed. Requests for the filing of patent applications
in   a  foreign  country,  and  requests  for  the  filing  of  amendments,
modifications or supplements to such patents, should follow the regulations
of  the  U.S. Patent and Trademark Office in accordance with 37 CFR part 5.
The export of technical data to support the filing and processing of patent
applications  in  foreign countries is subject to regulations issued by the
U.S. Patent and Trademark Office pursuant to 35 U.S.C. 184.

    (c)   Disclosures.   Unless   otherwise   expressly  exempted  in  this
subchapter,  a  license  is  required  for  the oral, visual or documentary
disclosure  of technical data by U.S. persons to foreign persons. A license
is  required  regardless  of  the  manner  in  which  the technical data is
transmitted  (e.g.,  in  person,  by  telephone, correspondence, electronic
means, etc.). A license is required for such disclosures by U.S. persons in
connection with visits to foreign diplomatic missions and consular offices.
Sec.  125.3  Exports  of  classified  technical data and classified defense
articles.

    (a)  A  request  for  authority  to  export defense articles, including
technical  data,  classified  pursuant  to Executive Order 12356, successor
orders, or other legal authority must be submitted to the Office of Defense
Trade  Controls  for approval. The application must contain full details of
the  proposed  transaction.  It  should  also  list  the  facility security
clearance  code  of all U.S. parties on the license and include the Defense
Investigative  Service  cognizant  security office of the party responsible
for packaging the commodity for shipment. A nontransfer and use certificate
(Form DSP-83) executed by the applicant, foreign consignee, end-user and an
authorized  representative  of  the  foreign  government  involved  will be
required.

    (b)  Classified  technical  data  which  is  approved  by the Office of
Defense  Trade  Controls  either  for  export or reexport after a temporary
import  will  be  transferred  or  disclosed  only  in  accordance with the
requirements  in  the Department of Defense Industrial Security Manual. Any
other  requirements imposed by cognizant U.S. departments and agencies must
also be satisfied.

    (c)  The  approval  of  the  Office  of  Defense Trade Controls must be
obtained  for  the  export  of technical data by a U.S. person to a foreign
person  in  the  U.S. or in a foreign country unless the proposed export is
exempt under the provisions of this subchapter. {pg 19685}

    (d)  All  communications relating to a patent application covered by an
invention  secrecy  order  are  to  be  addressed  to  the  U.S. Patent and
Trademark Office (See 37 CFR 5.11).

Exemptions
Sec. 125.4 Exemptions of general applicability.

    (a)  The  following  exemptions  apply to exports of technical data for
which  no  license  or  other approval is needed from the Office of Defense
Trade  Controls.  These  exemptions,  except  for paragraph (b)(13) of this
section,  do  not  apply  to  exports to proscribed destinations under Sec.
126.1.  If Sec. 126.8 requirements are applicable, they must be  met before
an  exemption  under  this  section may be used. Transmission of classified
information  must comply with the requirements of the Department of Defense
Industrial Security Manual and the exporter must certify to the transmittal
authority  that the technical data does not exceed the technical limitation
of the authorized export.

    (b) The following exports are exempt from the licensing requirements of
this subchapter.

    (1)  Technical  data, including classified information, to be disclosed
pursuant  to  an  official  written  request  or  directive  from  the U.S.
Department of Defense;

    (2) Technical data, including classified information, in furtherance of
a  manufacturing  license or technical assistance agreement approved by the
Department  of  State  under part 124 of this subchapter and which meet the
requirements of Sec. 124.3;

    (3) Technical data, including classified information, in furtherance of
a  contract  between  the exporter and an agency of the U.S. Government, if
the  contract  provides  for  the export of the relevant technical data and
such data does not disclose the details of design, development, production,
or manufacture of any defense article;
    (4)   Copies  of  technical  data,  including  classified  information,
previously  authorized  for export to the same recipient. Revised copies of
such  technical  data  are  also  exempt  if  they pertain to the identical
defense  article,  and if the revisions are solely editorial and do not add
to  the  content of technology previously exported or authorized for export
to the same recipient;

    (5)  Technical  data  in the form of basic operations, maintenance, and
training  information  relating  to  a defense article lawfully exported or
authorized for export to the same recipient. This exemption applies only to
exports  by  the  original exporter. Intermediate or depot-level repair and
maintenance  information  may be exported only under a license or agreement
approved specifically for that purpose;

    (6) Technical data related to firearms not in excess of caliber .50 and
ammunition   for   such   weapons,  except  detailed  design,  development,
production or manufacturing information;

    (7) Technical data, including classified information, being returned to
the original source of import;

    (8) Technical data directly related to classified information which has
been  previously  exported or authorized for export in accordance with this
part  to the same recipient, and which does not disclose the details of the
design, development, production, or manufacture of any defense article;

    (9)  Technical  data,  including classified information, sent by a U.S.
corporation  to a U.S. person employed by that corporation overseas or to a
U.S.  Government  agency.  This  exemption is subject to the limitations of
Sec. 125.1(b) and may be used only if:

    (i)  The  technical  data is to be used overseas solely by U.S. persons
and

    (ii)  If the U.S. person overseas is an employee of the U.S. Government
or  is  directly  employed  by  the  U.S.  corporation and not by a foreign
subsidiary;

    (10)  Disclosures  of  unclassified  technical data in the U.S. by U.S.
institutions  of higher learning to foreign persons who are their bona fide
and full time regular employees. This exemption is available only if:

    (i)  The employee's permanent abode throughout the period of employment
is in the United States:
    (ii)  The  employee is not a national of a country to which exports are
prohibited pursuant to Sec. 126.1; and

    (iii)  The  institution  informs  the  individual  in  writing that the
technical  data may not be transferred to other foreign persons without the
prior written approval of the Office of Defense Trade Controls;

    (11)  Technical  data,  including classified information, for which the
exporter, pursuant to an arrangement with the Department of Defense or NASA
which  requires such exports, has been granted an exemption in writing from
the  licensing  provisions  of  this  part  by  the Office of Defense Trade
Controls.   Such  an  exemption  will  normally  be  granted  only  if  the
arrangement  directly  implements an *international* agreement to which the
United  States  is  a  party  and if multiple exports are contemplated. The
Office  of  Defense  Trade Controls, in consultation with the relevant U.S.
Government  agencies,  will  determine  whether the interests of the United
States   Government   are  best  served  by  expediting  exports  under  an
arrangement through an exemption (see also paragraph (b)(3) of this section
for a related exemption);

    (12) Technical data which is specifically exempt under part 126 of this
subchapter; or
    (13)  Technical  data  approved  for  *public* release (i.e., unlimited
distribution)  by  the cognizant U.S. Government department or agency. This
exemption  is  applicable  to  information  approved  by the cognizant U.S.
Government  department  or  agency  for *public* release in any form (e.g.,
*publications* ,  speeches,  conference  papers, movies, etc.). It does not
require  that  the  information  be  published  in order to qualify for the
exemption.
Sec. 125.5 Exemptions for plant visits.

    (a)  A  license  is  not required for the oral and visual disclosure of
unclassified  technical  data during the course of a classified plant visit
by a foreign person, provided:

    (1)  The  classified  visit  has  itself  been authorized pursuant to a
license issued by the Office of Defense Trade Controls; or

    (2)  The  classified visit was approved in connection with an actual or
potential  government-to-government program or project by a U.S. Government
agency  having  classification  jurisdiction  over  the  classified defense
article  or  classified technical data involved under Executive Order 12356
or other applicable Executive Order; and
    (3)  The unclassified information to be released is directly related to
the  classified  defense  article  or technical data for which approval was
obtained  and  does  not  disclose  the details of the design, development,
production  or  manufacture  of  any other defense articles. In the case of
U.S. Government approved visits, the requirements of the Defense Industrial
Security Manual (Department of Defense Manual 5220.22M) must be met.

    (b)  The  approval  of  the  Office  of  Defense  Trade Controls is not
required  for the disclosure of oral and visual classified information to a
foreign  person  during  the  course  of  a  plant  visit  approved  by the
appropriate U.S. Government agency if:

    (1)  The  requirements  of the Defense  Industrial Security Manual have
been met,

    (2)  The  classified  information is directly related to that which was
approved by the U.S. Government agency, {pg 19686}

    (3) It does not exceed that for which approval was obtained, and

    (4)  It  does  not  disclose  the  details  of the design, development,
production or manufacture of any defense articles.
    (c) A license is not required for the disclosure to a foreign person of
unclassified  technical  data  during  the  course of a plant visit (either
classified  or  unclassified)  approved  by  the  Office  of  Defense Trade
Controls  or a cognizant U.S. Government agency provided the technical data
does  not  contain  information  in excess of that approved for disclosure.
This  exemption  does  not  apply to technical data which could be used for
design, development, production or manufacture of a defense article.
Sec. 125.6 Certification requirements.

    (a)  To  claim  an exemption for the export of technical data under the
provisions  of  Secs.  125.4  and  125.5, an exporter must certify that the
proposed  export  is  covered  by a relevant paragraph of that section. The
certification  referred  to in this section consists of marking the package
or   letter   containing  the  technical  data:  ''22  CFR  125.  (identify
subsection) applicable'' and identifying the specific paragraph under which
the  exemption  is claimed. This certification must also be made in written
form and retained in the exporter's files for a period of six years. In the
case  of  unclassified  technical  data,  District Directors of Customs may
require that the certification be made on a Shipper's Export Declaration.

    (b)  If  a District Director of Customs or Postmaster is unavailable at
the  time  of  export,  or if the export is via oral, visual, or electronic
means, the exporter must also complete a written certification as indicated
in (a) of this section.

Procedures
Sec. 125.7 Procedures for the export of classified technical data and other
classified defense articles.

    (a)  All  applications  for  the  export  or reexport after a temporary
import  of  classified  technical data or other classified defense articles
must  be  submitted to the Office of Defense Trade Controls on Form DSP-85.
Applications will be accepted from U.S. nationals only.

    (b)  An application for the export of classified technical data must be
accompanied  by  seven  copies of the data and a completed Form DSP-83 (see
Sec.  123.10).  An  application  for the export of other classified defense
articles must be accompanied by seven copies of descriptive information and
a  completed  Form  DSP-83.  Only  one  copy  of  the  data  or descriptive
literature  must  be provided if a renewal of the license is requested. All
classified materials accompanying an application must be transmitted to the
Office  of  Defense  Trade  Controls in accordance with the requirements of
section II of the Defense Industrial Security Manual (Department of Defense
Manual Number 5220.22-M).
Sec. 125.8 Filing of licenses for exports of unclassified technical data.

    (a)  Licenses  for  the  export  of unclassified technical data must be
presented  to the appropriate District Director of Customs or Postmaster at
the  time  of  shipment  or  mailing.  The  District Director of Customs or
Postmaster  will endorse and transmit the licenses to the Office of Defense
Trade Controls in accordance with the instructions contained on the reverse
side of the license.

    (b)  If a license for the export of unclassified technical data is used
but not endorsed by U.S. Customs or a Postmaster for whatever reason (e.g.,
electronic  transmission,  unavailability of Customs officer or Postmaster,
etc.), the person exporting the data must self-endorse the license, showing
when  and how the export took place, provide an explanation why the license
was not endorsed by an authorized official, and return it within 15 days to
the Office of Defense Trade Controls.
Sec.  125.9 Filing of licenses for exports of classified technical data and
classified defense articles.

    Licenses  for  the  export  of  classified technical data or classified
defense  articles will be forwarded by the Office of Defense Trade Controls
to  the  Defense  Investigative  Service  of  the  Department of Defense in
accordance  with  the  provisions  of  the Department of Defense Industrial
Security  Manual.  The Office of Defense Trade Controls will forward a copy
of  the  license  to  the  applicant  for  the applicant's information. The
Defense  Investigative  Service  will  return  the  endorsed license to the
Office  of  Defense Trade Controls upon completion of the authorized export
or expiration of the license, whichever occurs first.

PART 126-GENERAL POLICIES AND PROVISIONS

Sec.

126.1 Prohibited exports and sales to certain countries.

126.2 Temporary suspension or modification of this subchapter.

126.3 Exceptions.

126.4 Shipments by or for United States Government agencies.

126.5 Canadian exemptions.

126.6 Foreign military aircraft and naval vessels, and the Foreign Military
Sales program.

126.7  Denial,  revocation,  suspension, or amendment of licenses and other
approvals.

126.8  Proposals  to  foreign  persons  relating  to  significant  military
equipment.

126.9 Advisory opinions.

126.10 Disclosure of information to the *public*.

126.11 Relation to other provisions of law.

126.12 Continuation in force.

126.13 Required information.

    Authority:  Secs. 38, 42, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2778,
2780);  E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; E.O. 11322, 32 FR
119,  3  CFR,  1966-1970  Comp.,  p. 606, 22 U.S.C. 2658; Sec. 317, Pub. L.
99-440,  100  Stat.  1086 (22 U.S.C. 5067); E.O. 12571, 51 FR 39505, 3 CFR,
1986 Comp., p. 238.
Sec. 126.1 Prohibited exports and sales to certain countries.

    (a)  General.  It  is the policy of the United States to deny licenses,
other  approvals,  exports  and  imports  of  defense  articles and defense
services,  destined  for  or  originating in certain countries. This policy
applies  to  Albania,  Armenia,  Azerbaijan,  Bulgaria, Byelarus, Cambodia,
Cuba, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova,
Mongolia,  North Korea, Romania, Russia, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan  and Vietnam. This policy also applies to countries with respect
 to  which  the  United  States  maintains an *arms* embargo (for countries
identified  in  the  Federal  Register  )  or  whenever an export would not
otherwise  be  in  furtherance  of world peace and the security and foreign
policy  of the United States. The exemptions provided in the regulations in
this  subchapter,  except Secs. 123.17 and 125.4(b)(13) of this subchapter,
do  not  apply  with  respect  to  exports to or originating in any of such
proscribed countries or areas.

    (b)  Shipments.  A  defense  article  licensed  for  export  under this
subchapter  may  not  be  shipped  on  a vessel, aircraft or other means of
conveyance  which is owned or operated by, or leased to or from, any of the
proscribed countries or areas.
    (c) South Africa. South Africa is subject to an *arms* embargo and thus
to the policy specified in paragraph (a) of this section. Exceptions may be
made  to  this policy only if the Assistant Secretary for Politico-Military
Affairs determines that:

    (1)  The  item  is  not  covered  by  United  Nations  Security Council
Resolution 418 of November 4, 1977; and

    (2)  The  item is to be exported solely for commercial purposes and not
for use {pg 19687} by the armed forces, police, or other security forces of
South Africa or for any other similar purpose.

    (d)  Terrorism.  Exports  to countries which the Secretary of State has
determined  to have repeatedly provided support for acts of *international*
terrorism  are  contrary to the foreign policy of the United States and are
thus  subject  to the policy specified in paragraph (a) of this section and
the  requirements of section 40 of the *Arms* Export Control Act (22 U.S.C.
2780)  and the Omnibus Diplomatic Security & Anti-terrorism Act of 1986 (22
U.S.C.  4801  Note).  The countries in this category are: Cuba, Iran, Iraq,
Libya,  North Korea and
 Syria. The same countries are identified in section
6(j) of the Export Administration Act, as amended (50 U.S.C. App. 2405(j)).
    (e)  Proposed  Sales.  No  sale  or transfer and no proposal to sell or
transfer  any  defense articles, defense services or technical data subject
to  this  subchapter may be made to any country referred to in this section
(including the embassies or consulates of such a country), or to any person
acting on its behalf, whether in the United States or abroad, without first
obtaining  a  license  or other written approval from the Office of Defense
Trade Controls. In accordance with paragraph (a) of this section, it is the
policy  of  the  Department of State to deny licenses and approvals in such
cases.  Any  person  who  knows or has reason to know of such a proposed or
actual  sale,  or  transfer, of such articles, services or data must inform
the Office of Defense Trade Controls.
Sec. 126.2 Temporary suspension or modification of this subchapter.

    The Director, Office of Defense Trade Controls, may order the temporary
suspension  or  modification  of  any  or  all  of  the regulations of this
subchapter in the interest of the security and foreign policy of the United
States.
Sec. 126.3 Exceptions.

    In  a case of exceptional or undue hardship, or when it is otherwise in
the  interest  of  the  United  States  Government, the Director, Office of
Defense  Trade  Controls  may  make  an exception to the provisions of this
subchapter.
Sec. 126.4 Shipments by or for United States Government agencies.

    (a) A license is not required for the temporary import, or temporary or
permanent  export,  of any defense article, including technical data or the
performance  of  a  defense  service,  by  or  for  any  agency of the U.S.
Government:

    (1) For official use by such an agency, or

    (2)  For  carrying  out  any foreign assistance, cooperative project or
sales  program authorized by law and subject to control by the President by
other  means. This exemption applies only when all aspects of a transaction
(export,  carriage,  and  delivery  abroad) are effected by a United States
Government  agency,  pursuant  to written direction under a U.S. government
contract  or  when the export is covered by a United States Government Bill
of  Lading.  This exemption, however, does not apply when a U.S. Government
agency  acts  as  a  transmittal agent on behalf of a private individual or
firm,  either as a convenience or in satisfaction of security requirements.
The  approval  of  the  Office  of  Defense Trade Controls must be obtained
before  defense articles previously exported pursuant to this exemption are
permanently   transferred  (e.g.,  property  disposal  of  surplus  defense
articles overseas) unless:

    (i)  The  transfer  is  pursuant  to  a  grant,  sale,  lease,  loan or
cooperative project under the *Arms* Export Control Act or a sale, lease or
loan under the Foreign Assistance Act of 1961, as amended, or

    (ii)  The  defense  articles  have  been  rendered useless for military
purposes beyond the possibility of restoration.

    (b)  This  section  does  not authorize any department or agency of the
U.S.  Government to make any export which is otherwise prohibited by virtue
of other administrative provisions or by any statute.

    (c) A license is not required for the temporary import, or temporary or
permanent  export,  of  any  classified  or  unclassified defense articles,
including  technical  data  or  the  performance  of a defense service, for
end-use  by  a  U.S.  Government  Agency  in  a  foreign  country under the
following circumstances:

    (1)  The  export or temporary import is pursuant to a contract with, or
written direction by, an agency of the U.S. Government; and
    (2) The end- user in the foreign country is a U.S. Government agency or
facility,   and  the  defense  articles  or  technical  data  will  not  be
transferred to any foreign person; and

    (3) A Shipper's Export Declaration (SED), required under Sec. 123.22(c)
of  this  subchapter,  and  a  written  statement  by  the contracting U.S.
Government  Agency certifying that these requirements have been met must be
presented  at  the  time  of export to the appropriate District Director of
Customs  or Department of Defense transmittal authority. A copy  of the SED
and  the written certification statement shall be provided to the Office of
Defense Trade Controls immediately following the export.
Sec. 126.5 Canadian exemptions.

    (a)  General.  District Directors of Customs and postmasters may permit
the  export  without  a  license of any unclassified defense article or any
unclassified  technical  data  to Canada for end-use in Canada or return to
the  United  States,  or  from  Canada for end-use in the U.S. or return to
Canada, with the exception of the articles or related technical data listed
in paragraph (b) of this section.

    (b)  Exceptions.  The  exemptions  of  this section do not apply to the
following articles and related technical data:
    (1) Fully automatic firearms in Category I(a) which are not for end-use
by  the  Federal  Government,  or  a  Provincial or Municipal Government of
Canada;

    (2)  Nuclear  weapons  strategic  delivery  systems and all components,
parts,  accessories, attachments specifically designed for such systems and
associated equipment;

    (3) Nuclear weapon design and test equipment listed in Category XVI;

    (4) Naval nuclear propulsion equipment listed in Category VI(e);

    (5) Aircraft listed in Category VIII(a);

    (6)  Submersible  and oceanographic vessels and related articles listed
in Category XX (a) through (d).

    (c)  Related  requirements.  The  foregoing exemption from obtaining an
export  license  does  not  exempt  an  exporter  from  complying  with the
requirements  set  forth in Sec. 123.15 or from filing the Shipper's Export
Declaration required by Sec. 123.25.
    (d)  Part  124  agreements.  The  requirements  of  Part  124  of  this
subchapter  must  be  complied  with in the situations contemplated in that
part.  For  example, the exemptions of this section may not be used for the
manufacture  in  Canada  of defense articles except pursuant to an approved
manufacturing  license  agreement,  technical  assistance  agreement  or an
offshore procurement arrangement under the provisions of Sec. 124.13.
Sec.  126.6  Foreign  military  aircraft and naval vessels, and the Foreign
Military Sales program.

    (a) General. A license is not required if:

    (1)(i)  The  article or technical data to be exported was sold, leased,
or   loaned   by  the  Department  of  Defense  to  a  foreign  country  or
*international*  organization  pursuant to the *Arms* Export Control Act or
the Foreign Assistance Act of 1961, as amended, and {pg 19688}

    (ii)  The article or technical data was delivered to representatives of
such a country or organization in the United States; and

    (iii)  The  article or technical data is to be exported from the United
States  on  a  military  aircraft  or  naval  vessel  of that government or
organization.
    (b)  Foreign  military  aircraft  and  naval  vessels. A license is not
required for the entry into the United States of military aircraft or naval
vessels of any foreign state if no overhaul, repair, or modification of the
aircraft  or  naval vessel is to be performed. However, Department of State
approval  for  overflight (pursuant to the 49 U.S.C. 1508) and naval visits
must  be  obtained  from the Bureau of Politico-Military Affairs, Office of
*International* Security Operations.

    (c) Procedures for the Foreign Military Sales program.

    (1) General. District Directors of Customs are authorized to permit the
export   and  temporary  import  of  classified  and  unclassified  defense
articles,  defense  services  and  technical  data without a license if the
articles  or  technical  data  were  sold,  leased  or  loaned by the (U.S.
Department   of   Defense   to   foreign   governments  or  *international*
 organizations under the Foreign Military Sales (FMS) program of the *Arms*
Export  Control  Act.  This procedure may be used only if a proposed export
is:

    (i)  Pursuant to an executed U.S. Department of Defense Letter of Offer
and Acceptance (DD Form 1513); and
    (ii) Accompanied by a properly executed DSP-94; and

    (iii) Made by the relevant foreign diplomatic mission of the purchasing
country  or  its  authorized  freight  forwarder, provided that the freight
forwarder  is registered with the Office of Defense Trade Controls pursuant
to  part  122  of  this  subchapter, and, if classified defense articles or
technical  data  are  involved,  has the requisite U.S. Government security
clearance   and  a  transportation  plan  has  been  approved  as  in  Sec.
1265.6(a)(1) of this section and the defense articles or technical data are
shipped  in  compliance  with the Department of Defense Industrial Security
Manual.

    (2) Filing and documents.

    (i)  The original copy of completed Form DSP-94, together with one copy
of  the  corresponding  authenticated  DD  Form 1513 and a Shipper's Export
Declaration,  must  be  filed  with the District Director of Customs at the
port  of  exit  prior  to  actual shipment. An executed DD Form 1513 is one
which has been signed by:

    (A)   An   authorized   Department   of   Defense   representative  and
countersigned  by  the  Comptroller,  Defense  Security  Assistance  Agency
(DSAA), and

    (B) By an authorized representative of the foreign government.

    (ii)  SED or Outbound Manifest. The Shipper's Export Declaration or, if
authorized, the outbound manifest, must be annotated as follows:

    This  shipment  is  being exported under the authority of Department of
State  Form  DSP-94.  It  covers FMS Case (case identification), expiration
date  XXX. 22 CFR 126.6 applicable. The U.S. Government point of contact is
XXX, telephone number XXX.
Sec.  126.7  Denial,  revocation,  suspension, or amendment of licenses and
other approvals.

    (a)  Policy.  Licenses or approvals shall be denied or revoked whenever
required by any statute of the United States (see Secs. 127.6 and 127.10 of
this  subchapter).  Any application for an export license or other approval
under this subchapter may be disapproved, and any license or other approval
or  exemption  granted  under this subchapter may be revoked, suspended, or
amended without prior notice whenever:

    (1)  The  Department of State deems such action to be in furtherance of
world  peace,  the  national  security  or the foreign policy of the United
States, or is otherwise advisable; or

    (2)  The  Department  of  State  believes  that  22  U.S.C.  2778,  any
regulation  contained  in  this  subchapter,  or  the  terms  of  any  U.S.
government  export  authorization  (including the terms of a manufacturing
license  or technical assistance agreement, or export authorization granted
pursuant to the Export Administration Act, as amended) has been violated by
any  party to the export or other person having significant interest in the
transaction; or

    (3) An applicant is the subject of an indictment for a violation of any
of the U.S. criminal statutes enumerated in Sec. 120.26 of this subchapter;
or

    (4)  An  applicant or any party to the export or the agreement has been
convicted of violating any of the U.S. criminal statutes enumerated in Sec.
120.26 of this subchapter; or

    (5)  An  applicant  is  ineligible  to  contract  with, or to receive a
license  or  other  authorization  to  import  defense  articles or defense
services from, any agency of the U.S. Government; or
    (6)  An  applicant, any party to the export or agreement, or any person
who  has  a  significant  interest  in  the  transaction has been debarred,
suspended, or otherwise is ineligible to receive an export license or other
authorization  from  any  agency  of the U.S. government (e.g., pursuant to
debarment  by  the  Department  of Commerce under 15 CFR part 388 or by the
Department of State under part 127 or 128 of this subchapter); or

    (7)  An  applicant  has  failed  to  include  any of the information or
documentation  expressly required to support a license application or other
request   for  approval  under  this  subchapter  or  as  required  in  the
instructions in the applicable Department of State form.

    (b)  Notification.  The  Office  of  Defense Trade Controls will notify
applicants  or  licensees  or  other  appropriate  United States persons of
actions  taken  pursuant  to paragraph (a) of this section. The reasons for
the  action  will  be stated as specifically as security and foreign policy
considerations permit.

    (c)  Reconsideration.  If  a  written request for reconsideration of an
adverse decision is made within 30 days after a person has been informed of
the  decision,  the  U.S. person will be accorded an opportunity to present
additional  information.  The  case  will then be reviewed by the Office of
Defense Trade Controls.

    (d)  Reconsideration of Certain Applications. Applications for licenses
or  other  requests  for  approval  denied  for repeated failure to provide
information  or  documentation  expressly  required  will  normally  not be
reconsidered  during  the  thirty day period following denial. They will be
reconsidered  after  this  period  only  after  a final decision is made on
whether  the applicant will be subject to an administrative penalty imposed
pursuant  to  this  subchapter.  Any  request  for reconsideration shall be
accompanied  by  a  letter  explaining  the  steps  that have been taken to
correct  the failure and to ensure compliance with the requirements of this
subchapter.

    (e) Special Definition. For purposes of this section, the term party to
the export means:

    (1)  The  chief  executive  officer, president, vice- presidents, other
senior  officers  and  officials  (e.g.,  comptroller,  treasurer,  general
counsel) and any member of the board of directors of the applicant;

    (2)  The  freight  forwarders  or  designated  exporting  agent  of the
applicant; and
    (3) Any consignee or end-user of any item to be exported.
Sec.  126.8  Proposals to foreign persons, relating to significant military
equipment.

    (a)  General.  Certain  proposals  to  foreign  persons for the sale or
manufacture  abroad  of  significant  {pg 19689} military equipment require
either  the  prior  approval  of,  or  prior notification to, the Office of
Defense Trade Controls.

    (1) Sale of significant military equipment: prior approval requirement.
The  approval  of the Office of Defense Trade Controls is required before a
U.S.  person  may  make a proposal or presentation designed to constitute a
basis  for  a  decision  on  the  part  of  any  foreign person to purchase
significant  military equipment on the U.S. Munitions List whenever all the
following conditions are met:

    (i)  The  value  of  the  significant  military  equipment  to  be sold
is$14,000,000 or more; and

    (ii)  The  equipment  is  intended  for  use by the armed forces of any
foreign   country  other  than  a  member  of  the  North  Atlantic  Treaty
Organization, Australia, New Zealand, or Japan; and
    (iii)  The  sale would involve the export from the United States of any
defense  article  or the furnishing abroad of any defense service including
technical data; and

    (iv)   The  identical  significant  military  equipment  has  not  been
previously  licensed  for  permanent  export or approved for sale under the
Foreign Military Sales Program of the Department of Defense, to any foreign
country.

    (2)   Sale   of  significant  military  equipment:  prior  notification
requirement.  The Office Defense Trade Controls must be notified in writing
at  least thirty days in advance of any proposal or presentation concerning
the   sale  of  significant  military  equipment  whenever  the  conditions
specified  in  paragraphs  (a)(1) (i) through (iii) of this section are met
and  the  identical  equipment  has  been previously licensed for permanent
export or approved for sale under the FMS Program to any foreign country.

    (3)   Manufacture  abroad  of  significant  military  equipment:  prior
approval  requirement. The approval of the Office of Defense Trade Controls
is  required  before  a  U.S.  person  may  make a proposal or presentation
designed  to  constitute  a basis for a decision on the part of any foreign
person  to  enter  into  any  manufacturing  license agreement or technical
assistance agreement for the production or assembly of significant military
equipment, regardless of dollar value, in any foreign country, whenever:

    (i)  The  equipment  is  intended  for  use  by the armed forces of any
foreign country; and

    (ii)  The  agreement would involve the export from the United States of
any  defense  article  or  the  furnishing  abroad  of  any defense service
including technical data.

    (b) Definition of ''Proposal or Presentation''. The terms ''proposal or
presentation  designed  to  constitute a basis for a decision to purchase''
and  to  ''enter into any agreement'' mean the communication of information
in  sufficient  detail that the person communicating that information knows
or  should know that it would permit an intended purchaser to decide either
to  acquire  the  particular  equipment  in  question  or to enter into the
manufacturing  license  agreement  or  technical  assistance agreement. For
example,   a  presentation  which  describes  the  equipment's  performance
characteristics,  price,  and  probable  availability  for  delivery  would
require   prior   notification  or  approval,  as  appropriate,  where  the
conditions specified in paragraph (a) of this section are met. By contrast,
the following would not require prior notification or approval: advertising
or  other  reporting in a *publication* of general circulation; preliminary
discussions  to  ascertain market potential; or merely calling attention to
the  fact  that  a  company  manufactures  a particular item of significant
military equipment.

    (c)  Satisfaction  of requirements. (1) The requirement of this section
for prior approval is met by any of the following:

    (i)  A  written  statement  from  the  Office of Defense Trade Controls
approving  the  proposed  sale  or  agreement  or approving the making of a
proposal or presentation.

    (ii)  A license issued under Sec. 125.2 or Sec. 125.3 for the export of
technical  data  relating  to the proposed sale or agreement to the country
concerned.

    (iii)  A  temporary  export license issued under Sec. 123.5 relating to
the  proposed  sale or agreement for a demonstration to the armed forces of
the country of export.

    (iv)  With  respect  to  manufacturing  license agreements or technical
assistance  agreements, the application for export licenses pursuant to the
two  preceding  subparagraphs  must state that they are related to possible
agreements of this kind.

    (2)  The  requirement  of this section for prior notification is met by
informing  the  Office of Defense Trade Controls by letter at least 30 days
before making the proposal or presentation. The letter must comply with the
procedures set forth in paragraph (d) of this section and must identify the
relevant  license,  approval,  or FMS case by which the identical equipment
had  previously been authorized for permanent export or sale. The Office of
Defense  Trade  Controls will provide written acknowledgement of such prior
notification   to   confirm   compliance  with  this  requirement  and  the
commencement of the 30-day notification period.

    (d)  Procedures.  Unless  a  license has been obtained pursuant to Sec.
126.8(c)(1)(ii)  or  (iii), a request for prior approval to make a proposal
or presentation with respect to significant military equipment, or a 30-day
prior  notification  regarding  the sale of such equipment, must be made by
letter  to the Office of Defense Trade Controls. The letter must outline in
detail  the intended transaction, including usage of the equipment involved
and  the country (or countries) involved. Seven copies of the letter should
be  provided  as  well  as seven copies of suitable descriptive information
concerning the equipment.
    (e)  Statement  to  accompany licensing requests. (1) Every application
for  an  export  license or other approval to implement a sale or agreement
which meets the criteria specified in paragraph (a) of this section must be
accompanied by a statement from the applicant which either:

    (i)  Refers  to  a  specific  notification  made or approval previously
granted with respect to the transaction; or

    (ii)  Certifies  that  no  proposal  or  presentation  requiring  prior
notification or approval has been made.

    (2)  The  Department  of State may require a similar statement from the
Foreign  Military  Sales  contractor concerned in any case where the United
States Government receives a request for a letter of offer for a sale which
meets the criteria specified in paragraph (a) of this section.

    (f)  Penalties.  In addition to other remedies and penalties prescribed
by law or this subchapter, a failure to satisfy the prior approval or prior
notification  requirements of this section may be considered to be a reason
for disapproval of a license, agreement or sale under the FMS program.

    (g)  License for technical data. Nothing in this section constitutes or
is  to  be construed as an exemption from the licensing requirement for the
export  of  technical data that is embodied in any proposal or presentation
made to any foreign persons.
Sec. 126.9 Advisory opinions.

    A  U.S. person desiring information as to whether the Office of Defense
Trade Controls would be likely to grant a license or other approval for the
export  of  particular defense articles or defense services to a particular
country  may  use  the Office of Defense Trade Controls informal ''Advisory
Opinions''  procedure.  These  opinions  are  advisory  only.  They are not
binding  on the Department of State and are revocable. {pg 19690} A request
for  an  advisory  opinion must be by letter. It must outline in detail the
equipment,  its usage, the security classification, if any, of the articles
or  related  technical  data,  and  the  country  or countries involved. An
original  and  seven copies of the letter must be provided along with seven
copies  of  suitable descriptive information concerning the defense article
or defense service.
Sec. 126.10 Disclosure of information to the *public*.

    (a)  General. Subchapter R of this title of CFR contains regulations on
the  availability  to  the  *public*  of  information  and  records  of the
Department  of  State.  The  provisions  of  Subchapter  R  apply  to  such
disclosures by the Office of Defense Trade Controls.

    (b)  Determinations  required  by  law. Section 38 of the *Arms* Export
Control  Act (22 U.S.C. 2778) provides that certain information required by
the  Department  of  State  in  connection  with  the licensing process may
generally  not  be  disclosed to the *public* unless certain determinations
relating  to  the  national  interest  are  made  in  accordance  with  the
procedures  specified  by  that  provision.  Any determinations required by
section   38(e)  shall  be  made  by  the  Under  Secretary  of  State  for
*International* Security Affairs.

    (c)  Information  required  under part 130. Part 130 of this subchapter
contains  specific provisions on the disclosure of information described in
that part.
Sec. 126.11 Relation to other provisions of law.

    The  provisions  in  this subchapter are in addition to, and are not in
lieu  of,  any other provisions of law or regulations. The sale of firearms
in the United States, for example, remains subject to the provisions of the
Gun  Control  Act of 1968 and regulations administered by the Department of
the  Treasury.  The  performance  of  defense services on behalf of foreign
governments  by  retired  military  personnel continues to  require consent
pursuant  to  part  3a  of this title. Persons who intend to export defense
articles  or  furnish  defense services should consequently not assume that
satisfying  the  requirements  of  this  subchapter  relieves  one of other
requirements of law.
Sec. 126.12 Continuation in force.

    All  determinations,  authorizations,  licenses, approvals of contracts
and  agreements and other action issued, authorized, undertaken, or entered
into  by  the  Department  of  State  pursuant to section 414 of the Mutual
Security  Act of 1954, as amended, or under the previous provisions of this
subchapter,  continue  in  full  force and effect until or unless modified,
revoked or superseded by the Department of State.
Sec. 126.13 Required information.

    (a)  All applications for licenses (DSP-5, DSP-61, DSP-73, and DSP-85),
all  requests  for approval of agreements and amendments thereto under part
124,  all  requests  for other written authorizations, and all 30-day prior
notifications  of  sales  of  significant  military  equipment  under  Sec.
126.8(c)  must  include a letter signed by a responsible official empowered
by  the  applicant  and  addressed to the Director, Office of Defense Trade
Controls, stating whether:
    (1)   The   applicant   or  the  chief  executive  officer,  president,
vice-presidents,  other  senior  officers  or officials (e.g., comptroller,
treasurer,  general counsel) or any member of the board of directors is the
subject  of an indictment for or has been convicted of violating any of the
U.S.  criminal  statutes enumerated in Sec. 120.26 of this subchapter since
the  effective date of the *Arms* Export Control Act, *Public* Law 94- 329,
90 Stat. 729 (June 30, 1976);

    (2)   The   applicant   or  the  chief  executive  officer,  president,
vice-presidents,  other  senior  officers  or officials (e.g., comptroller,
treasurer,  general  counsel)  or  any  member of the board of directors is
ineligible  to  contract with, or to receive a license or other approval to
import  defense  articles or defense services from, or to receive an export
license or other approval from, any agency of the U.S. Government;

    (3)  To  the best of the applicant's knowledge, any party to the export
as defined in Sec. 126.7(e) has been convicted of violating any of the U.S.
criminal  statutes  enumerated  in Sec. 120.26 of this subchapter since the
effective  date  of the *Arms* Export Control Act, *Public* Law 94- 329, 90
Stat. 729 (June 30, 1976), or is ineligible to contract with, or to receive
a  license or other approval to import defense articles or defense services
from,  or to receive an export license or other approval from any agency of
the U.S. Government; and

    (4)  The  natural person signing the application, notification or other
request  for approval, or notification (including the statement required by
this  subsection)  is  a citizen or national of the United States, has been
lawfully  admitted  to  the  United  States  for  permanent  residence (and
maintains  such  a  residence) under the Immigration and Nationality Act (8
U.S.C.  1101(a),  section  101(a)20,  60 Stat. 163), or is an official of a
foreign government entity in the United States.

    (b)  In  addition,  all  applications for licenses must include, on the
application  or  an addendum sheet, the complete names and addresses of all
U.S.  consignors  and  freight  forwarders,  and all foreign consignees and
foreign  intermediate  consignees involved in the transaction. If there are
multiple consignors, consignees or freight forwarders, and all the required
information  cannot  be included on the application form, an addendum sheet
and seven copies containing this information must be provided. The addendum
sheet  must  be marked at the top as follows: ''Attachment to Department of
State License Form (insert DSP-5, 61, 73, or 85, as appropriate) for Export
of  (insert  commodity)  valued  at  (insert U.S. dollar amount) to (insert
country  of  ultimate  destination).'' The Office of Defense Trade Controls
will  impress  one  copy of the addendum sheet with the Department of State
seal  and return it to the applicant with each license. The sealed addendum
sheet  must  remain  attached  to  the license as an integral part thereof.
District  Directors  of  Customs  and  Department  of  Defense  transmittal
authorities  will  permit  only those U.S. consignors or freight forwarders
listed  on the license or sealed addendum sheet to make shipments under the
license,  and  only  to  those  foreign  consignees named on the documents.
Applicants  should  list  all  freight  forwarders who may be involved with
shipments  under  the  license  to  ensure that the list is complete and to
avoid  the  need  for  amendments  to  the  list after the license has been
approved. If there are unusual or extraordinary circumstances that preclude
the  specific  identification  of  all  the  U.S.  consignors  and  freight
forwarders  and all foreign consignees, the applicant must provide a letter
of explanation with each application.

    (c)  In  cases  when  foreign  nationals are employed at or assigned to
security  cleared  facilities,  a  Technology Transfer Control Plan (format
available  from  the Defense Investigative Service) must be provided by the
applicant  with  the application. The facilities also shall comply with the
requirements of the Department of Defense Industrial Security Manual.

PART 127-VIOLATIONS AND PENALTIES
Sec.

127.1 Violations in general.

127.2 Misrepresentation and omission of facts.

127.3 Penalties for violations.

127.4 Authority of U.S. Customs Service officers.

127.5 Seizure and forfeiture in attempts at illegal exports.

127.6 Debarment.

127.7 Interim suspension.

127.8 Applicability of orders.

127.9 Civil penalty.

127.10 Past violations.
    Authority:  Sec.  38,  Pub.  L. 90- 629, 90 Stat. 744 (22 U.S.C. 2778);
E.O.  11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 401: 22 U.S.C.
2658.
Sec. 127.1 Violations in general.

    (a)  It  is unlawful (1) to export or attempt to export from the United
States  any  defense  article  or  technical data or to furnish any defense
service  for  which  a  license  or  written  approval  is required by this
subchapter without first obtaining the required license or written approval
from the Office  of Defense Trade Controls;

    (2)  To  import  or  attempt  to  import any defense article whenever a
license is required by this subchapter without first obtaining the required
license or written approval from the Department of State; or

    (3)  To violate any of the terms or conditions of licenses or approvals
granted pursuant to this subchapter.

    (b)  Any  person  who is granted a license or other approval under this
subchapter  is  responsible  for  the  acts  of  employees, agents, and all
authorized  persons  to whom possession of the licensed defense articles or
technical data has been entrusted regarding the operation, use, possession,
transportation,  and  handling  of  such defense articles or technical data
abroad.  All  persons  abroad  subject  to  U.S.  jurisdiction  who  obtain
temporary  custody  of a defense article exported from the United States or
produced  under  an agreement described in part 124 of this subchapter, and
irrespective  of  the  number  of  intermediate transfers, are bound by the
regulations of this subchapter in the same manner and to the same extent as
the original owner- transferer.

    (c)  A  person with knowledge that another person is then subject to an
order of debarment, or interim suspension, may not, directly or indirectly,
in  any  manner  or capacity, without prior disclosure of the facts to, and
written authorization of, the Office of Defense Trade Controls:

    (1) Apply for, obtain, or use any export control document as defined in
Sec. 127.2(b) for such debarred or suspended person; or

    (2) Order, buy, receive, use, sell, deliver, store, dispose of, forward
transport,  finance, or otherwise service or participate in any transaction
which  may  involve  any  defense  article  including technical data or the
furnishing  of  any  defense  service  for  which  a license or approval is
required  by  this subchapter for export from the United States, where such
debarred  or  suspended person may obtain any benefit therefrom or have any
direct or indirect interest therein.

    (d)  No  person  may  willfully  cause,  or aid, abet, counsel, demand,
induce,  procure  or permit the commission of any act prohibited by, or the
omission  of  any  act  required  by 22 U.S.C. 2778, 22 U.S.C. 2779, or any
regulation, license, approval, or order issued thereunder.
Sec. 127.2 Misrepresentation and omission of facts.

    (a)  It  is  unlawful  to  use  any  export or temporary import control
document  containing  a  false  statement  or misrepresenting or omitting a
material fact for the purpose of exporting any defense article or technical
data  or  the  furnishing  of  any  defense  service for which a license or
approval   is   required   by   this   subchapter.   Any  false  statement,
misrepresentation,  or  omission of material fact in an export or temporary
import  control  document will be considered as made in a matter within the
jurisdiction  of  a  department  or  agency  of  the  United States for the
purposes of 18 U.S.C. 1001, 22 U.S.C. 2778 and 22 U.S.C. 2779.

    (b)  For  the  purpose  of  this  section, ''export or temporary import
control documents'' include the following:

    (1) An application for a permanent export or a temporary import license
and supporting documents.

    (2) Shipper's Export Declaration.

    (3) Invoice.

    (4) Declaration of destination.

    (5) Delivery verification.

    (6) Application for temporary export.

    (7) Application for registration.

    (8) Purchase order.

    (9) Foreign import certificate.

    (10) Bill-of-lading.

    (11) Airway bill.
    (12) Nontransfer and use certificate.

    (13)  Any  other  document used in the regulation or control of defense
articles, defense services and technical data for which license or approval
is required by this subchapter.
Sec. 127.3 Penalties for violations.

    Any person who willfully:

    (a)  Violates  any  provision of section 38 or section 39 of the *Arms*
Export   Control  Act  (22  U.S.C.  2778  and  2779),  or  any  undertaking
specifically required by part 124 of this subchapter; or

    (b)  In  a  registration,  license  application  or  report required by
section  38  or section 39 of the *Arms* Export Control Act (22 U.S.C. 2778
and  2779)  or by any rule or regulation issued under either section, makes
any  untrue  statement of a material fact or omits a material fact required
to  be  stated  therein  or  necessary  to  make the statements therein not
misleading,  shall, upon conviction, be subject to fine or imprisonment, or
both, as prescribed by 22 U.S.C. 2778(c).

Sec. 127.4 Authority of U.S. Customs Service officers.
    (a) U.S. Customs Service officers may take appropriate action to ensure
observance  of  this subchapter as to the export or the attempted export of
any  defense article or technical data, including the inspection of loading
or  unloading of any vessel, vehicle, or aircraft. This applies whether the
export  is  authorized  by license or by written approval issued under this
subchapter.

    (b)  Upon the presentation to a customs officer of a license or written
approval authorizing the export of any defense article, the customs officer
may  require  the  production  of  other relevant documents and information
relating  to  the proposed export. This includes an invoice, order, packing
list,  shipping  document,  correspondence, instructions, and the documents
otherwise required by the U.S. Customs Service.

    (c)  In  the  case  of  exports  involving classified technical data or
defense  articles,  the  Defense Investigative Service may take appropriate
action  to  ensure observance of this subchapter with regards to compliance
with  the  Department  of  Defense  Industrial Security Manual and sections
127.1  and  127.2  of  this  subchapter.  Upon  a  request  to  the Defense
Investigative  Service  to  authorize  the export of any classified defense
article  or technical data, the Defense Investigative Service official or a
designated  government  transmittal authority may require the production of
other relevant documents and information relating to the proposed export.
Sec. 127.5 Seizure and forfeiture in attempts at illegal exports.

    (a) An attempt to export from the United States any defense articles in
violation  of  the  provisions  of  this  subchapter constitutes an offense
punishable  under  section  401  of  title  22  of  the United States Code.
Whenever  it  is  known  or  there  is  probable cause to believe that  any
defense  article  is  intended  to  be  or is being or has been exported or
removed from the United {pg 19692} States in violation of law, such article
and  any vessel, vehicle or aircraft involved in such attempt is subject to
seizure,  forfeiture and disposition as provided in section 401 of title 22
of the United States Code.

    (b)  Similarly, an attempt to violate any of the conditions under which
a  temporary export or temporary import license was issued pursuant to this
subchapter or to violate the requirements of Sec. 123.2 also constitutes an
offense punishable under section 401 of title 22 of the United States Code,
and such article, together with any vessel, vehicle or aircraft involved in
any  such  attempt  is  subject  to seizure, forfeiture, and disposition as
provided in section 401 of title 22 of the United States Code.
Sec. 127.6 Debarment.
    (a)  General.  In  implementing section 38 of the *Arms* Export Control
Act,  the  Assistant  Secretary  of State for Politico-Military Affairs may
prohibit any person from participating directly or indirectly in the export
of  defense  articles,  including  technical  data  or in the furnishing of
defense  services  for  which  a  license  or  approval is required by this
subchapter  for  any  of  the reasons listed below. Any such prohibition is
referred  to  as a debarment for purposes of this subchapter. The Assistant
Secretary  of  State  shall  determine  the  appropriate period of time for
debarment, which shall generally be for a period of three years.

    (b)  Grounds.  (1) The basis for a statutory debarment, as described in
paragraph  (c)  of this section, is any conviction for violating the *Arms*
Export Control Act (see Sec. 127.3 of this subchapter) or any conspiracy to
violate the *Arms* Export Control Act.

    (2)  The  basis  for administrative debarment, described in part 128 of
this  subchapter,  is  any  violation  of  22  U.S.C.  2778  or any rule or
regulation  issued  thereunder when such a violation is of such a character
as  to  provide a reasonable basis for the Office of Defense Trade Controls
to  believe  that  the  violator  cannot  be relied upon to comply with the
statute  or  these  rules  or  regulations  in  the  future,  and when such
violation is established in accordance with part 128 of this subchapter.
    (c)  Statutory Debarment. Section 38(g)(4) of the *Arms* Export Control
Act  prohibits  the issuance of licenses to persons who have been convicted
of  violating  the U.S. criminal statutes enumerated in Sec. 120.26 of this
subchapter. Discretionary authority to issue licenses is provided, but only
if  certain  statutory  requirements  are  met.  It  is  the  policy of the
Department  of  State not to consider applications for licenses or requests
for  approvals involving any person who has been convicted of violating the
*Arms*  Export  Control  Act  or conspiracy to violate that Act for a three
year  period  following  conviction.  Such individuals shall be notified in
writing  that  they are debarred pursuant to this policy. A list of persons
who have been convicted of such offenses and debarred for this reason shall
be published periodically in the Federal Register . Debarment in such cases
is  based  solely upon the outcome of a criminal proceeding, conducted by a
court  of  the  United  States,  that established guilt beyond a reasonable
doubt  in  accordance  with due process. The procedures of part 128 of this
subchapter are not applicable in such cases.

    (d)  Appeals. Any person who is ineligible pursuant to paragraph (c) of
this section may appeal to the Under Secretary of State for *International*
Security  Affairs  for  reconsideration of the ineligibility determination.
The  procedures  specified in Sec. 128.13 of this subchapter are applicable
in such appeals.
Sec. 127.7 Interim suspension.

    (a)  The Director of the Office of Defense Trade Controls is authorized
to  order  the  interim suspension of any person when the Director believes
that  grounds  for  debarment (as defined in Sec. 127.6 of this part) exist
and  where  and to the extent the Director finds that interim suspension is
reasonably  necessary  to  protect  world  peace or the security or foreign
policy  of  the  United States. The interim suspension orders prohibit that
person  from  participating  directly  or  indirectly  in the export of any
defense  article  for  which  a  license  or  approval  is required by this
subchapter.  The  suspended person shall be notified in writing as provided
in  Sec.  127.6(c) of this part (statutory debarment) or Sec. 128.3 of this
subchapter  (administrative  debarment)  of  this  subchapter, whichever is
appropriate.  In both cases, a copy of the interim suspension order will be
served  upon  that  person  in the same manner as provided in Sec. 128.3 of
this  subchapter.  The  interim  suspension  order  may  be  made effective
immediately,  without  prior  notice.  The  order  will  briefly recite the
relevant  facts,  state the grounds for issuance of the order, and describe
the  nature  and  duration  of  the  interim  suspension.  No person may be
suspended  for  a  period  exceeding  60 days unless proceedings under Sec.
127.6(c)  of  this  part  or under part 128 of this subchapter, or criminal
proceedings, are initiated before the expiration of that period.
    (b)  A  motion  or  petition  to vacate or modify an interim suspension
order  may  be  filed  at  any  time  with the Under Secr
etary of State for
*International*  Security  Affairs.  After a final decision is reached, the
Director  of the Office of Defense Trade Controls will issue an appropriate
order  disposing  of  the  motion  or petition and will promptly inform the
respondent accordingly.
Sec. 127.8 Applicability of orders.

    For  the  purpose  of  preventing  evasion,  orders  of  the  Assistant
Secretary  of State for Politico-Military Affairs, debarring a person under
Sec.  127.6  and  orders of the Director, Office of Defense Trade Controls,
suspending  a  person  under Sec. 127.7 may be made applicable to any other
person who may then or thereafter (during the term of the order) be related
to  the  debarred  person  by  affiliation, ownership, control, position of
responsibility,  or  other   commercial  connection. Appropriate notice and
opportunity to respond to charges will be given.
Sec. 127.9 Civil penalty.

    (a)  The  Assistant  Secretary of State for Politico- Military Affairs,
Department  of  State  is authorized to impose a civil penalty in an amount
not  to exceed that authorized by 50 U.S.C. app. 2410(c) for each violation
of  22  U.S.C.  2778,  or any regulation, order, license or approval issued
thereunder. This civil penalty may be either in addition to, or in lieu of,
any other liability or penalty which may be imposed.

    (b) The Office of Defense Trade Controls may make

    (1) the payment of a civil penalty under this section or

    (2) the completion of any administrative action pursuant to part 127 or
128  of this subchapter a prior condition for the issuance, restoration, or
continuing validity of any export license or other approval.
Sec. 127.10 Past violations.

    (a)  General.  Pursuant to section 38 of the *Arms* Export Control Act,
licenses  or  other  approvals  may not be granted to persons who have been
convicted of violating any of the U.S. criminal statutes enumerated in Sec.
120.26  of  this  subchapter  or  who  are ineligible to receive any export
licenses  from  any  agency  of  the U.S. government, subject to a narrowly
defined  statutory  exception.  This provision establishes a presumption of
denial  for  licenses  or  other  approvals  involving  such  persons. This
presumption  is  applied  by  the  Office  of Defense Trade Controls to all
persons  convicted or deemed ineligible {pg 19693} in this manner since the
effective  date  of  the *Arms* Export Control Act, *Public* Law 94-329, 90
Stat. 729 (June 30, 1976).

    (b)  Policy.  It  is  the  policy  of  the  Department of State to deny
applications for licenses or other approvals that involve persons described
in  paragraph  (a)  of  this  section. An exception shall not be considered
unless  there are extraordinary circumstances surrounding the conviction or
ineligibility  to  export,  and  only if the applicant demonstrates, to the
satisfaction  of  the  Office of Defense Trade Controls, that the applicant
has  taken  appropriate  steps  to  mitigate  any law enforcement and other
legitimate  concerns,  and  to  deal  with  the causes that resulted in the
conviction,  ineligibility, or debarment. Any person described in paragraph
(a)  of this section who wishes to request consideration of any application
must  explain,  in  a  letter  to  the  Director,  Office  of Defense Trade
Controls,   the  reasons  why  the  Bureau  of  Politico-Military  Affairs,
Department  of  State  should  consider  the  application. If the Bureau of
Politico-Military   Affairs,   Department   of  State  concludes  that  the
application  and  written explanation have sufficient prima facie merit, it
shall  consult  with  the Office of the Legal Advisor and the Department of
the  Treasury  regarding  law enforcement concerns. The Department of State
may  also  request the views of other departments, including the Department
of  Justice. If the Office of Defense Trade Controls does grant the license
or  other  approval,  subsequent applications from the same person need not
repeat  the  information  previously provided. The applicant should instead
refer to the favorable decision.

    (c)  Debarred  persons.  Persons  debarred  pursuant  to  Sec. 127.6(c)
(statutory  debarment) of this part may not utilize the procedures provided
by  this  section while the debarment is in force. Such persons may utilize
only the procedures provided by Sec. 127.6(d) of this part.

PART 130-POLITICAL CONTRIBUTIONS, FEES AND COMMISSIONS

Sec.

130.1 Purpose.

Definitions

130.2 Applicant.

130.3 Armed forces.

130.4 Defense articles and defense services.
130.5 Fee or commission.

130.6 Political contribution.

130.7 Supplier.

130.8 Vendor.

Procedures

130.9  Obligation  to  furnish  information  to the Office of Defense Trade
Controls.

130.10  Information  to be furnished by applicant or supplier to the Office
of Defense Trade Controls.

130.11 Supplementary reports.

130.12 Information to be furnished by vendor to applicant or supplier.

130.13  Information  to  be furnished to applicant, supplier or vendor by a
recipient of a fee or commission.
130.14 Recordkeeping.

130.15 Confidential business information.

130.16 Other reporting requirements.

130.17 Utilization of and access to reports and records.

    Authority:  Sec.  39,  Pub.  L. 90-629, 82 Stat. 1326 (22 U.S.C. 2779);
E.O. 11958, 42 FR 4311, 3 CFR, 1977 Comp., p. 79; 22 U.S.C. 2658.
Sec. 130.1 Purpose.

    Section  39(a)  of  the  *Arms*  Export  Control  Act  (22 U.S.C. 2779)
provides  that  the  Secretary  of  State  shall prescribe regulations with
respect  to  reporting  on  certain  payments  relating to sales of defense
articles  and  defense services. The provisions of this part implement this
requirement.  Definitions  which  apply to this part are contained in Secs.
130.2 through 130.8.

Definitions
Sec. 130.2 Applicant.
    Applicant  means  any person who applies to the Office of Defense Trade
Controls for any license or approval required under this subchapter for the
export  of  defense  articles  or  defense  services  valued  in  an amount
of$500,000  or  more which are being sold commercially to or for the use of
the armed forces of a foreign country or *international* organization. This
term  also  includes  a person to whom the required license or approval has
been given.
Sec. 130.3 Armed forces.

    Armed  forces  means the army, navy, marine, air force, or coast guard,
as  well  as  the national guard and national police, of a foreign country.
This  term  also includes any military unit or military personnel organized
under or assigned to an *international* organization.
Sec. 130.4 Defense articles and defense services.

    Defense  articles  and  defense  services  have the meaning given those
terms  in  paragraphs  (3),  (4) and (7) of section 47 of the *Arms* Export
Control  Act  (22  U.S.C.  2794 (3), (4), (7)). When used with reference to
commercial sales, the definitions in Secs. 120.7 and 120.8 apply.
Sec. 130.5 Fee or commission.

    (a)  Fee  or  commission  means, except as provided in paragraph (b) of
this  section,  any loan, gift, donation or  other payment of$1,000 or more
made,  or  offered  or agreed to be made directly or indirectly, whether in
cash  or  in kind, and whether or not pursuant to a written contract, which
is:

    (1)  To or at the direction of any person, irrespective of nationality,
whether or not employed by or affiliated with an applicant, a supplier or a
vendor; and

    (2)  For  the  solicitation  or  promotion  or  otherwise to secure the
conclusion  of a sale of defense articles or defense services to or for the
use   of   the  armed  forces  of  a  foreign  country  or  *international*
 organization.

    (b) The term fee or commission does not include:

    (1)  A  political contribution or a payment excluded by Sec. 130.6 from
the definition of political contribution:

    (2)  A normal salary (excluding contingent compensation) established at
an  annual rate and paid to a regular employee of an applicant, supplier or
vendor;
    (3)  General  advertising  or  promotional expenses not directed to any
particular sale or purchaser; or

    (4)  Payments  made,  or  offered  or agreed to be made, solely for the
purchase  by  an  applicant,  supplier  or  vendor  of  specific  goods  or
technical,  operational  or  advisory  services,  which  payments  are  not
disproportionate in amount with the value of the specific goods or services
actually furnished.
Sec. 130.6 Political contribution.

    Political  contribution means any loan, gift, donation or other payment
of$1,000  or  more  made,  or  offered  or  agreed  to be made, directly or
indirectly, whether in cash or in kind, which is:

    (a)  To  or  for  the  benefit  of, or at the direction of, any foreign
candidate,  committee, political party, political faction, or government or
governmental subdivision, or any individual elected, appointed or otherwise
designated as an employee or officer thereof; and

    (b)  For  the  solicitation  or  promotion  or  otherwise to secure the
conclusion  of a sale of defense articles or defense services to or for the
use   of   the  armed  forces  of  a  foreign  country  or  *international*
organization.  Taxes,  customs  duties,  license  fees,  and  other charges
required  to  be  paid  by applicable law or regulation are not regarded as
political contributions. {pg 19694}
Sec. 130.7 Supplier.

    Supplier  means  any  person  who  enters  into  a  contract  with  the
Department  of Defense for the sale of defense articles or defense services
valued  in  an  amount  of$500,000  or  more under section 22 of the *Arms*
 Export Control Act (22 U.S.C. 2762).
Sec. 130.8 Vendor.

    Vendor   means   any  distributor  or  manufacturer  who,  directly  or
indirectly,  furnishes  to an applicant or supplier defense articles valued
in  an amount of$500,000 or more which are end-items or major components as
defined  in  Sec.  121.8.  It  also  means  any  person  who,  directly  or
indirectly,  furnishes  to  an  applicant  or  supplier defense articles or
services  valued  in  an  amount  of$500,000  or more when such articles or
services  are  to  be  delivered  (or  incorporated  in defense articles or
defense  services to be delivered) to or for the use of the armed forces of
a foreign country or *international* organization under:

    (a)  A  sale requiring a license or approval from the Office of Defense
Trade Controls under this subchapter; or

    (b)  A sale pursuant to a contract with the Department of Defense under
section 22 of the *Arms* Export Control Act (22 U.S.C. 2762).

Procedures
Sec. 130.9 Obligation to furnish information to the Office of Defense Trade
Controls.

    (a)(1)  Each applicant must inform the Office of Defense Trade Controls
as  to  whether applicant or its vendors have paid, or offered or agreed to
pay, in respect of any sale for which a license or approval is requested:

    (i) Political contributions in an aggregate amount of$5,000 or more, or

    (ii) Fees or commissions in an aggregate amount of$100,000 or more.

If  so,  applicant must furnish to the Office of Defense Trade Controls the
information specified in Sec. 130.10. The furnishing of such information or
an  explanation satisfactory to the Director of the Office of Defense Trade
Controls  as to why all the information cannot be furnished at that time is
a condition precedent to the granting of the relevant license or approval.
    (2)  The  requirements of this paragraph do not apply in the case of an
application  with respect to a sale for which all the information specified
in  Sec.  130.10  which  is  required  by this section to be reported shall
already have been furnished.

    (b)  Each  supplier must inform the Office of Defense Trade Controls as
to  whether  the supplier or its vendors have paid, or offered or agreed to
pay, in respect of any sale:

    (1) Political contributions in an aggregate amount of$5,000 or more, or

    (2) Fees or commissions in an aggregate amount of$100,000 or more.

If  so,  supplier  must furnish to the Office of Defense Trade Controls the
information  specified  in  Sec.  130.10.  The  information  required to be
furnished  pursuant to this paragraph must be so furnished no later than 30
days after the contract award to such supplier, or such earlier date as may
be  specified by the Department of Defense. For purposes of this paragraph,
a contract award includes a purchase order, exercise of an option, or other
procurement  action  requiring  a  supplier  to furnish defense articles or
defense  services  to the Department of Defense for the purposes of section
22 of the *Arms* Export Control Act (22 U.S.C. 2762).
    (c)  In  determining whether an applicant or its vendors, or a supplier
or its vendors, as the case may be, have paid, or offered or agreed to pay,
political  contributions in an aggregate amount of$5,000 or more in respect
of  any  sale  so  as to require a report under this section, there must be
included  in  the  computation  of  such  aggregate  amount  any  political
contributions  in respect of the sale which are paid by or on behalf of, or
at  the direction of, any  person to whom the applicant, supplier or vendor
has  paid,  or  offered or agreed to pay, a fee or commission in respect of
the  sale. Any such political contributions are deemed for purposes of this
part to be political contributions by the applicant, supplier or vendor who
paid or offered or agreed to pay the fee or commission.

    (d)  Any applicant or supplier which has informed the Office of Defense
Trade  Controls  under  this  section  that neither it nor its vendors have
paid,  or  offered  or  agreed  to  pay, political contributions or fees or
commissions  in  an aggregate amount requiring the information specified in
Sec.  130.10  to  be  furnished, must subsequently furnish such information
within  30  days after learning that it or its vendors had paid, or offered
or agreed to pay, political contributions or fees or commissions in respect
of  a  sale in an aggregate amount which, if known to applicant or supplier
at  the time of its previous communication with the Office of Defense Trade
Controls,  would  have  required  the  furnishing of information under Sec.
130.10  at  that  time.  Any report furnished under this paragraph must, in
addition  to  the  information  specified in Sec. 130.10 include a detailed
statement  of  the  reasons  why  applicant or supplier did not furnish the
information at the time specified in paragraph (a) or paragraph (b) of this
section, as applicable.
Sec.  130.10  Information  to  be furnished by applicant or supplier to the
Office of Defense Trade Controls.

    (a)  Every  person  required  under  Sec.  130.9 to furnish information
specified in this section in respect to any sale must furnish to the Office
of Defense Trade Controls:

    (1) The total contract price of the sale to the foreign purchaser;

    (2)  The  name, nationality, address and principal place of business of
the  applicant  or  supplier,  as  the case may be, and, if applicable, the
employer and title;

    (3) The name, nationality, address and principal place of business, and
if  applicable, employer and title of each foreign purchaser, including the
ultimate end-user involved in the sale;
    (4)  Except  as  provided in paragraph (c) of this section, a statement
setting forth with respect to such sale:

    (i)  The  amount  of  each  political  contribution paid, or offered or
agreed to be paid, or the amount of each fee or commission paid, or offered
or agreed to be paid;

    (ii)  The  date  or  dates  on  which each reported amount was paid, or
offered or agreed to be paid;

    (iii)  The recipient of each such amount paid, or intended recipient if
not yet paid;

    (iv) The person who paid, or offered or agreed to pay such amount; and

    (v)  The  aggregate  amounts  of political contributions and of fees or
commission, respectively, which shall have been reported.

    (b)  In  responding  to paragraph (a)(4) of this section, the statement
must:

    (1)  With  respect to each payment reported, state whether such payment
was  in  cash  or  in  kind.  If in kind, it must include a description and
valuation  thereof.  Where  precise  amounts  are  not  available because a
payment  has not yet been made, an estimate of the amount offered or agreed
to be paid must be provided;

    (2) With respect to each recipient, state:

    (i) Its name;

    (ii) Its nationality;

    (iii) Its address and principal place of business;

    (iv) Its employer and title; and

    (v) Its relationship, if any, to applicant, supplier, or vendor, and to
any foreign purchaser or end-user.

    (c)  In  submitting  a  report  required  by  Sec.  130.9, the detailed
information  specified in paragraph (a)(4) and (b) of this section need not
be included if the payments do not exceed.
    (1)$2,500 in the case of political contributions; and

    (2)$50,000  in  the  case  of fees or commissions. In lieu of reporting
detailed  information  with  respect to such payments, the aggregate amount
thereof   must   be   reported,   identified   as  miscellaneous  political
contributions or miscellaneous fees or commissions, as the case may be.

    (d)  Every  person  required  to  furnish  the information specified in
paragraphs  (a)  and  (b)  of  this  section  must  respond  fully  to each
subdivision of those paragraphs and, where the correct response is ''none''
or ''not applicable,'' must so state.
Sec. 130.11 Supplementary reports.

    (a)  Every  applicant  or  supplier who is required under Sec. 130.9 to
furnish   the   information   specified   in  Sec.  130.10  must  submit  a
supplementary  report  in  connection  with  each  sale in respect of which
applicant  or  supplier has previously been required to furnish information
if:

    (1)  Any  political  contributions aggregating$2,500 or more or fees or
commissions  aggregating$50,000 or more not previously reported or paid, or
offered or agreed to be paid by applicant or supplier or any vendor;
    (2) Subsequent developments cause the information initially reported to
be  no longer accurate or complete (as in the case where a payment actually
made  is  substantially  different  in  amount  from  a previously reported
estimate of an amount offered or agreed to be paid); or

    (3)  Additional  details  are  requested by the Office of Defense Trade
Controls  with  respect  to  any miscellaneous payments reported under Sec.
130.10(c).

    (b)  Supplementary  reports must be sent to the Office of Defense Trade
Controls  within  30  days  after  the payment, offer or agreement reported
therein  or, when requested by the Office of Defense Trade Controls, within
30 days after such request, and must include:

    (1)  Any  information specified in Sec. 130.10 required or requested to
be reported and which was not previously reported; and

    (2)  The  Defense  Trade  Control  license  number,  if  any,  and  the
Department or Defense contract number, if any, related to the sale.
Sec. 130.12 Information to be furnished by vendor to applicant or supplier.

    (a)  In  order  to  determine whether it is obliged under Sec. 130.9 to
furnish  the  information  specified in Sec. 130.10 with respect to a sale,
every  applicant  or supplier must obtain from each vendor, from or through
whom  the  applicant  acquired defense articles or defense services forming
the  whole  or  a  part of the sale, a full disclosure by the vendor of all
political  contributions or fees or commission paid, by vendor with respect
to such sale. Such disclosure must include responses to all the information
pertaining  to vendor required to enable applicant or supplier, as the case
may  be,  to comply fully with Secs. 130.9 and 130.10. If so required, they
must  include  the  information  furnished  by each vendor in providing the
information specified.

    (b)  Any vendor which has been requested by an applicant or supplier to
furnish  an  initial  statement  under  paragraph (a) of this section must,
except as provided in paragraph (c) of this section, furnish such statement
in  a  timely  manner  and  not  later  than  20 days after receipt of such
request.

    (c)  If the vendor believes that furnishing information to an applicant
or  supplier in a requested statement would unreasonably risk injury to the
vendor's  commercial  interests,  the  vendor  may  furnish  in lieu of the
statement  an abbreviated statement disclosing only the aggregate amount of
all  political  contributions  and  the  aggregate  amount  of  all fees or
commissions  which  have  been  paid,  or  offered or agreed to be paid, or
offered  or  agreed to be paid, by the vendor with respect to the sale. Any
abbreviated  statement  furnished  to  an  applicant or supplier under this
paragraph  must  be  accompanied  by  a  certification  that  the requested
information  has  been  reported  by  the  vendor directly to the Office of
Defense  Trade Controls. The vendor must simultaneously report fully to the
Office  of  Defense  Trade  Controls all information which the vendor would
otherwise  have  been required to report to the applicant or supplier under
this  section. Each such report must clearly identify the sale with respect
to which the reported information pertains.

    (d)(1) If upon the 25th day after the date of its request to vendor, an
applicant  or  supplier  has  not  received  from  the  vendor  the initial
statement  required  by  paragraph  (a)  of  this section, the applicant or
supplier  must  submit  to  the  Office  of Defense Trade Controls a signed
statement attesting to:

    (i)  The  manner  and  extent  of  applicant's or supplier's attempt to
obtain  from  the vendor the initial statement required under paragraph (a)
of this section;

    (ii) Vendor's failure to comply with this section; and
    (iii)  The  amount  of  time  which  has  elapsed  between  the date of
applicant's or supplier's request and the date of the signed statement;

    (2)  The  failure  of  a  vendor  to  comply with this section does not
relieve  any  applicant  or  supplier  otherwise  required by Sec. 130.9 to
submit  a  report  to  the Office of Defense Trade Controls from submitting
such a report.
Sec. 130.13 Information to be furnished to applicant, supplier or vendor by
a recipient of a fee or commission.

    (a) Every applicant or supplier, and each vendor thereof;

    (1)  In  order  to determine whether it is obliged under Secs. 130.9 or
130.12  to  furnish  information specified in Sec. 130.10 with respect to a
sale; and

    (2) Prior to furnishing such information, must obtain from each person,
if  any,  to  whom  it  has  paid,  or  offered  or agreed to pay, a fee or
commission  in  respect  of such sale, a timely statement containing a full
disclosure by such a person of all political contributions paid, or offered
or  agreed  to  be  paid,  by  it or on its behalf, or at its direction, in
respect  of  such  sale.  Such disclosure must include responses to all the
information  required  to  enable the applicant, supplier or vendor, as the
case may be, to comply fully with Secs. 130.9, 130.10, and 130.12.

    (b)  In  obtaining information under paragraph (a) of this section, the
applicant,  supplier  or vendor, as the case may be, must also require each
person  to  whom  a  fee  or commission is paid, or offered or agreed to be
paid,  to  furnish  from  time  to  time  such  reports  of  its  political
contributions  as  may  be  necessary  to enable the applicant, supplier or
vendor,  as  the  case  may  be,  to comply fully with Secs. 130.9, 130.10,
130.11, and 130.12.

    (c)  The applicant supplier or vendor, as the case may be, must include
any political contributions paid, or offered or agreed to be paid, by or on
behalf  of,  or  at  the  direction  of, any person to whom it has paid, or
offered  or  agreed  to  pay  a  fee  or  commission in determining whether
applicant,  supplier  or  vendor  is  required  by Secs. 130.9, 130.11, and
130.12 to furnish information specified in Sec. 130.10.
Sec. 130.14 Recordkeeping.

    Each  applicant,  supplier  and  vendor  must  maintain a record of any
information  it  was  required to furnish or obtain under this part and all
records  upon which its reports are based for a period of not less than six
years following the date of the report to which they pertain. {pg 19696}
Sec. 130.15 Confidential business information.

    (a)  Any  person who is required to furnish information under this part
may identify any information furnished hereunder which the person considers
to be confidential business information. No person, including any applicant
or supplier, shall publish, divulge, disclose, or make known in any manner,
any information so identified by a vendor or other person unless authorized
by law or regulation.

    (b) For purposes of this section, ''confidential business information''
means  commercial  or  financial  information  which  by law is entitled to
protection  from  disclosure.  (See,  e.g., 5 U.S.C. 552(b) (3) and (4); 18
U.S.C.  1905;  22  U.S.C.  2778(e);  Rule  26(c)(7), Federal Rules of Civil
Procedure).
Sec. 130.16 Other reporting requirements.

    The  submission  of reports under this part does not relieve any person
of  any  requirements  to  furnish  information  to  any federal, state, or
municipal  agency,  department or other instrumentality as required by law,
regulation or contract.
Sec. 130.17 Utilization of and access to reports and records.
    (a)  All  information  reported  and records maintained under this part
will be made available, upon request for utilization by standing committees
of  the Congress and subcommittees thereof, and by United States Government
agencies, in accordance with section 39(d) of the *Arms* Export Control Act
(22  U.S.C.  2779(d)),  and  reports  based  upon  such information will be
submitted  to Congress in accordance with sections 36(a)(8) and 36(b)(1) of
that Act (22 U.S.C. 2776(a)(8) and (b)(1).)

    (b)  All  confidential  business  information provided pursuant to this
part shall be protected against disclosure to the extent provided by law.

    (c)   Nothing   in  this  section  shall  preclude  the  furnishing  of
information  to  foreign  governments  for  law  enforcement  or regulatory
purposes  under  *international* arrangements between the United States and
any foreign government.

    Dated: March 26, 1992.

Charles A. Duelfer,

Director, Center for Defense Trade.
INTERNAL  DATA:  FR  Doc.  92-10222;  Filed  5-6-92;  8:45 am; BILLING CODE
4710-25-M


