revisions to the dual/third national rule in the itar directorate of defense trade controls bureau...

Revisions to theDual/Third National Rule

in the ITAR

Directorate of Defense Trade Controls Bureau of Political Military Affairs

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Old (Current) Rule

• Equated citizens themselves to “proscribed” destinations

• Absolute bar to citizens of §126.1(a) countries

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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

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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)

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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

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

Pending Dual/Third National Rule

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Substantive Contacts

• Government contacts • Business contacts• Allegiance• Proprietary interests• Other contacts indicating a risk of

diversion

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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

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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

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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

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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

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