1. Defense Trade Advisory Group ITAR Update Priorities Plenary Session November 28, 2012

2. Issue Evaluate 15 tasks identified by DDTC Recommend the order in which they should be accomplished. Provide reasoning behind the recommended priorities Consider the USG actions to date, and level of effort associated with each task. Respect continuance with Export Control Reform effort DTAG may recommend other tasks with explanations and rationale for priority. 2

3. Task 2 Working Group Members Marjorie Alquist, Lord Corporation Bryon Angvall – Boeing Corp Lisa Bencivenga – Lisa Bencivenga LLC Ginger Carney – Global Connections Export Compliance Greg Bourn - Finmeccanica Dava Casoni – USC Inst for Creative Tech Rebecca Conover – Intel Corp Steve Cope – Avion BJ Demery – Bell Helicopter Kim DePew – GE Aviation Barbara Dudas – Northrop Grumman Andrea Dynes – General Dynamics Jason Frye – American Systems Alfred Furrs – Johns Hopkins UniversityAPL Dana Goodwin – Trade Link Systems Larry Keane - NSSF Sal Manno - Inmarsat Christine McGinn – Interglobal Trade Consulting Beth Mersch – Northrop Grumman Mike Miller – Univ of Central Florida Terry Otis – Otis Associates LLC Ramzi Robana – Global Integrated Svcs Bill Schneider – Internat’l Planning Svcs George Sevier – Sam Sevier LLC Olga Torres – Holland and Knight William Wade - Consultant Bruce Weinrod – Nat’l Defense Univ Co-Chaired by Ginger Carney, Sal Manno 3

4. Task List New definitions – levels of maintenance* Revised definition of defense services* New exemption for replacement parts* Revised definition of public domain* License exemption for certain defense articles incorporated into commercial end-items* Brokering update* Australia Defense Trade Cooperation Treaty implementation regulations* Updated “by or for” the USG exemption USG program licenses Elimination of foreign party signature requirement on TAAs Revised definition of technical data Clarification of records maintenance requirement Revise temporary import license requirements to apply only for those items that are on the USMIL Development of a single form for use by all agencies for export applications Revise exemptions referring to transshipments * Indicates previous publication as proposed rules Task Benefit Ease Status 1 2 3 4

5. USG Process Actions associated with each task: Development of the proposed rule Submission to OMB for interagency coordination Publication of the proposed rule Reconciliation of public comments/development of the final rule Submission to OMB for publication approval Publication of final rule Note: Given the limited resources available to the USG for this regulatory effort, only one task can be worked at any given time 5

6. Prioritization Process Reviewed list, discussed methodology Agreed to principles: Benefit to USG Benefit to industry and academia Consistent with Export Control Reform Current progress in USG process Each member assigned High, Medium, or Low to each task Priority established based on vote count Establish rationale for top seven 6

7. Prioritization (1) 1. Brokering update* 2. Revised definition of defense services* 3. New definitions levels of maintenance* 4. Revised definition of public domain* 5. New exemption for replacement parts* 6. Revised definition of technical data 7. License exemption for certain defense articles incorporated into commercial end-items* 7

8. Prioritization (2) 8. Updated “by or for” the USG exemption 9. Revise exemptions referring to transshipments 10. Elimination of foreign party signature requirement on TAAs 11. Clarification of records maintenance requirement 12. Revise temporary import license requirements to apply only for those items that are on the USMIL 13. Development of a single form for use by all agencies for the export applications 14. USG program licenses 15. Australia Defense Trade Cooperation Treaty implementation regulations* 8

9. Priority Rationale – Brokering Update 1. Brokering Update Benefit to USG - Clarity of definition leads to fewer ITAR violations and voluntary disclosures. Will lead to fewer registrations. Increases transparency (goal of ECR). Benefit to Industry – Fewer licensable activities; fewer ITAR violations/voluntary disclosures; improve industry's ability to operate in an international market. 9

10. Priority Rationale – Defense Services 2. Revised definition of defense services Benefit to USG - Clarity of definition leads to fewer ITAR violations and voluntary disclosures. May lead to fewer licensable activities. Furthers USG goal of interoperability with foreign partners. Benefit to Industry – Fewer licensable activities; fewer ITAR violations/voluntary disclosures; improved ability to sell abroad. 10

11. Priority Rationale – Levels of Maintenance 3. New definitions for levels of maintenance Benefit to USG – Clarity of definition leads to fewer ITAR violations/voluntary disclosures. Furthers USG goal of interoperability with foreign partners. Benefit to industry – New definition explicitly excludes “organizational-level maintenance”; Provides clarity; enhances industry’s ability to comply with ITAR. 11

12. Priority Rationale – Public Domain 4. Revised definition of public domain Benefit to USG – immediate workload reduction by not having to process non-essential applications; ability to focus on essential applications; industry compelled to exercise due diligence. Benefit to industry – reconciles definitions in ITAR and EAR; clarity of definition; a tie to “defense services” reduces license applications for services based on public domain data. 12

13. Priority Rationale – Replacement Parts 5. New exemption for replacement parts Benefit to USG – Eliminates duplicative work since the parts would have been approved in a TAA or as part of the system hardware license. Furthers USG goal of interoperability with foreign partners. Benefit to Industry – increasing the exemption limit to $1500 and the number of annual shipments to 48 enhances industry’s ability to support urgent requirements for allies and friendly nations. 13

14. Priority Rationale – Definition Technical Data 6. Revised definition of technical data Benefit to USG – Furthers USG goal of interoperability with foreign partners; clarity in ITAR Benefit to Industry – Clarity of definition improves industry’s ability to comply with the ITAR; reduces the number of violations and voluntary disclosures 14

15. Priority Rationale – Defense Articles into Commercial End-Items 7. License exemption for certain defense articles incorporated into commercial end-items Benefit to USG – Furthers USG goal of interoperability with foreign partners; lowers licensing burden for USG; ensures consistency with USG decisions on QRS-11 case and see- through rule Benefit to Industry – same benefits as for “defense services” and “public domain”; may lead to fewer licensable activities; may increase ability to sell abroad 15

16. Option to identify additional tasks Tasking: “The DTAG may recommend, and may include in their prioritization, tasks not listed. Recommendations should be sufficiently documented in the report to allow the Department to understand and potentially action the recommendation(s).” Additional tasks, perhaps assigned to DTAG for clarification/definition 16

17. Additional Task Recommendations (1) Overlapping, disconnected definitions: harmonize updated definitions as they relate to each other in ITAR and EAR Electronic transmission of technical data; cloud storage – DDTC is working on this topic; recommend this as a new task for DTAG due to the scope and complexity of the task, and to provide industry input 17

18. Additional Task Recommendations (2) Reporting requirements – interspersed throughout the ITAR. Recommend consolidating the reporting requirements into a guidebook. DN/TCN exemption (126.18); varying implementation questions 18

19. Additional Task Recommendations (3) Broad-reaching Advisory Opinions which impact definitions Include ITAR Citations in USG Guidance and a topical index to such Guidance 19

20. Summary / Conclusions Professional diversity of the working group was very beneficial to arriving at a prioritization of the tasks. Addressed only top 7 in rationale/detail The top 7 tasks will take months to complete Recommend another reassessment of priorities in 6-12 months – re- task DTAG? Highest recommended priority always takes priority Future DTAG tasking suggestions can help clarify issues for DDTC resolution 20

21. Questions?