1. Implementation of the Dual/Third Country National Rule in the ITAR
Office of Defense Trade Controls Policy
Bureau of Political Military Affairs

2. Problems with the Old Rule
Nationality or Place of Birth was criteria for access to ITAR defense articles & technology
Equated citizens themselves to “proscribed” destinations
Absolute bar to citizens of §126.1(a) countries
Not a valid indicator of loyalty or trustworthiness
Overly broad criteria led to unintended results
Went beyond AECA requirement

3. Risks of Diversion
The intent of the new rule is to create a policy for transfers to certain dual-third country nationals in a manner that would prevent diversions of defense articles to unauthorized end-users.
The rule recognizes the vested interests within companies, organizations, foreign governments to carefully screen employees.

4. Risks of Diversion Front companies Individual profiteers
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. Dual/Third Country National Rule
Applies only to transfers to licensed end-users and consignees (and sub-licensees) - § (a)
Limited to transfers within the scope of the license and within scope of employment - § (a)
Regular, full-time employees, & embedded contractors – see also § (a)
Either clearance or screening required - § (c)
If screening option used, then NDA is required.

6. Substantive Contacts – §126.18 (c)
Government contacts
Business contacts
Allegiance
Proprietary interests
Foreign travel
Other contacts indicating a risk of diversion

7. Canadian Model
Exchange of Letters with Canada recognized the Controlled Goods Program (CGP) as an acceptable screening IAW (c)(2)

8. The New Rule
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. The New Rule does not
Force foreign end-users to layoff workers who are dual or third country nationals
Require 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. Summary
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

11. Implementing § 126.18 Guidance for non-agreement authorizations
Process for amending authorizations
Required changes
Submission options
Process for DDTC vetting of individuals
Implementation trends

12. Non-Agreement Authorizations
§ (a) applies to the transfer of defense articles exported under/within scope of:
Approved Export License (DSPs)
Other Written Authorizations (WDAs, GCs)
License Exemptions
No change in current policy
No need to specifically request or identify the use of §

13. First Required Change to Utilize § 126.18
Agreements must be amended to include updated §124.8(5) prior to using exemption:
“(5) 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 foreign person except pursuant to §§ and , as specifically authorized in this agreement, or where prior written approval of the Department of State has been obtained.”

14. Second Required Change to Utilize §126.18
§ 124.7(4) requires the identification of all countries of transfer
New required statement for delegation of DN/TCN vetting
“Transfers of defense articles, to include technical data, to dual nationals and/or third country nationals by foreign licensees (and its approved sublicensees – if applicable) must be conducted in accordance with the provisions of 22 CFR 124.8(5).”
Agreements must be amended to include this new language prior to using exemption:

15. Currently Approved Agreements
Amending to Utilize New Policy
Countries Restricted via Proviso

16. Currently Approved Agreements
Amending to Utilize New Policy
Amendment will:
Modify § 124.7(4) to update required language
Modify § 124.8(5) to reflect new clause
Must be executed prior to implementation of new policy
Submission
As a minor amendment pursuant to § 124.1(d)
Uploaded to the latest DSP-5 vehicle
As part of the next major amendment pursuant to §124.1(c)

17. Currently Approved Agreements
Countries Restricted via Proviso
If your agreement has a proviso specifically removing a country for dual/third country nationals
You need a Proviso Reconsideration
Major amendment must be submitted
Provisos must be specifically requested for deletion via a proviso reconsideration
There is no process for the “blanket” deletion of provisos

18. DDTC Vetting: General Correspondence Option
§ (c)(2) affords the option for DDTC to make the determination on substantive contacts
Should be requested in accordance with § 124.8(5) (“where prior written approval of the Department of State has been obtained”)
Submitted by foreign licensee (employer)
Support Documentation
Full legal name of specific individual, date/place of birth, copy of passport, resume, and a detailed job description
Information concerning substantive contact concerns
Applicable to any future agreement
Copy of GC provided to applicant upon request

19. DDTC Vetting: § 124.8(5) Option
§ (c)(2) affords the option for DDTC to make the determination on substantive contacts
Should be requested in accordance with § 124.8(5) (as specifically authorized in this agreement)
Follow the current guidance
Support Documentation
Full legal name of specific individual, date/place of birth, copy of passport, resume, and a detailed job description
Information concerning substantive contact concerns
Identified in Block 18 by full legal name
Specific to that agreement only!

20. Implementation Trends
Difficult to judge use of the exemption
Many companies adding as a proactive measure
§ (c)(2) vetting requests
Very few submissions received
Those received have been for non-countries of concern
Agreements concerns:
New § 124.8(5) verbatim statement missing
NDAs not consistent
Old § language

21. References DDTC Response Team 202-663-1282
DDTC Website: