This post was written by Joelle E.K. Laszlo.

In an effort to update U.S. policy to “enhanc[e] support to allies and friends, improv[e] efficiency in licensing, and reduc[e] unintended consequences,” the State Department (“State” or “the Department”) has proposed to revise the definition of “defense service” in the International Traffic in Arms Regulations (“ITAR”). While the proposed revisions, which are currently up for public comment, provide some helpful streamlining and clarification, providers of these kinds of services are likely to find the changes do not go as far as they would like. Whether State will further modify the definition of “defense service” to accommodate concerns about its breadth is uncertain, given that the Department has already declined some tailoring recommendations offered by the Defense Trade Advisory Group (“DTAG”), the body which coordinates formally with industry on U.S. export policy.

The current definition of “defense service” in section 120.9 of the ITAR includes three paragraphs describing the types of assistance to foreign persons that require advance licensing or the proper application of an exemption thereto. The proposed revisions would alter each paragraph and add a fourth, and would also add a new section enumerating certain activities that do not constitute defense services, as follows:

  • First, paragraph 120.9(a)(1) would not include the furnishing of assistance using only data in the “public domain,” as that term is defined in section 120.11 of the ITAR. Though this change will bring a welcome reduction in the scope of control over defense services, as noted early on the definition of “public domain” has its own foibles, particularly that it does not expressly include information available on the Internet. Other revisions to paragraph 120.9(a)(1) would add controls for assistance provided in the “intermediate or depot level repair or maintenance” of defense articles, as those terms would be defined in a new paragraph 120.38. Finally, and likely to be well received by industry, the new section 120.9(a)(1) would exempt from control any assistance provided in the “operation” and “use” of defense articles.
  • Second, paragraph 120.9(a)(2) would be replaced by a new, more detailed paragraph addressing the furnishing of assistance for the “integration” of any item on the U.S. Munitions List (“USML”) or the Commerce Control List into an end item or a component controlled as a defense article on the USML. Notably, the proposed revisions do not include a definition of “integration,” though State’s Supplementary Information offers that integration is a “systems engineering design process of uniting two or more things in order to form, coordinate, or blend into a functioning or unified whole,” and includes the “introduction of software to enable proper operation,” and “determining where to install something.”
  • Third, paragraph 120.9(a)(3) would be reworded to include any type of “training or providing advice to foreign units and forces . . . in the employment of defense articles,” regardless of whether such training involves the actual transfer of technical data. While improving on the paragraph’s current language, which controls all “military training of foreign units and forces,” these revisions also arguably narrow its scope. For example, by adding the reference to “the employment of defense articles,” the paragraph now appears to be focused on training for military operations, versus training for general readiness.
  • Fourth, a new paragraph 120.9(a)(4) would be added to control “[c]onducting direct combat operations for or providing intelligence services to a foreign person directly related to a defense article.” Clearly the intent of this revision is to include direct actions, as opposed to just assistance, in the scope of controlled defense services.
  • Fifth, a new section 120.9(b) would enumerate five kinds of activities that would not be considered defense services, including: (1) “[t]raining in the basic operation . . . or basic maintenance [as defined in new section 120.38] . . . of a defense article”; (2) employment of a U.S. citizen by a foreign person; (3) “[t]esting, repair, or maintenance of an item ‘subject to the Export Administration Regulations’ . . . that has been incorporated or installed into a defense article”; (4) “[p]roviding law enforcement, physical security or personal protective training, advice, or services to or for a foreign person . . . using only public domain data”; and (5) “[p]roviding assistance (including training) in medical, logistical (other than maintenance), or other administrative support services to or for a foreign person.”
    State is accepting comments on the proposed revisions until June 12, 2011. As with most things ITAR-related, the wording of the final rule will impact different exporters of defense services in very different ways. From the looks of the proposed revisions, life probably won’t get easier for many, though a step like this one is still a step in the right direction.