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Revisions to the Dual/Third National Rule in the ITAR

Revisions to the Dual/Third National Rule in the ITAR. Directorate of Defense Trade Controls Bureau of Political Military Affairs. Old (Current) Rule. Equated citizens themselves to “proscribed” destinations Absolute bar to citizens of §126.1(a) countries. Problem with the Old Rule.

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Revisions to the Dual/Third National Rule in the ITAR

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  1. Revisions to the Dual/Third National Rule in the ITAR Directorate of Defense Trade Controls Bureau of Political Military Affairs

  2. Old (Current) Rule • Equated citizens themselves to “proscribed” destinations • Absolute bar to citizens of §126.1(a) countries

  3. Problem with the Old Rule • Nationality or Place of Birth was criteria for access to ITAR defense articles & technology • Not a valid indicator of loyalty or trustworthiness • Overly broad criteria led to absurd results • Goes beyond AECA requirement

  4. The Real Risks of Diversion • Front companies • Some operate on behalf of governments • Some operate for private interests • Individual profiteers • Some specialize in certain destinations • Others are indiscriminate for ultimate destination(s)

  5. Trusted Community Concept • Export Control Reform review leading to new philosophy and approach • Shared national security interests with allies and partners • Shared interests in protecting proprietary data • Recognizes/protects national investments in defense-related technologies

  6. Pending Dual/Third National Rule Applies only to transfers to licensed end-users and consignees (and sub-licensees) Limited to transfers within the scope of the license and within scope of employment Regular, full-time employees only Clearance or screening required to qualify

  7. Substantive Contacts • Government contacts • Business contacts • Allegiance • Proprietary interests • Other contacts indicating a risk of diversion

  8. What the New Rule does • Ends the requirement for separate licensing for dual and third country nationals • Requires end-user employees have clearances or be screened for risk of diversion • Requires end-users have technology security programs

  9. What the New Rule does not do • Forces foreign end-users to layoff workers who are dual or third country nationals • Requires foreign end-users to layoff an employee because of his/her place of birth • Automatically disqualify anyone because of family ties, travel, or other contacts with foreign nationals

  10. Elements of an Effective Technology Security Program • An empowered export official with end-user • An empowered security officer/manager • On site physical security program • Access management for articles & data • Entry level screening • Recurring screening • Non-disclosure statements

  11. Canadian Controlled Goods Program • A good model for compliance • Shared assessment of security landscape • Risk management approach • Mutual interests in nonproliferation, human rights, and respective national security

  12. Closing Comments • New rule moves us away from mere nationality or place of birth as criteria • not a good measure of trustworthiness • no real nexus to national security • New rule recognizes core concern as risk of diversion • behavior/activities aimed at breach of security • Trusted community – mutual security interests • share our best defense technology

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