[Federal Register Volume 78, Number 70 (Thursday, April 11, 2013)]
[Rules and Regulations]
[Pages 21523-21537]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08506]


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DEPARTMENT OF STATE

22 CFR Parts 120 and 126

RIN 1400-AD38
[Public Notice 8270]


Implementation of the Defense Trade Cooperation Treaty Between 
the United States and Australia

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State is amending the International Traffic 
in Arms Regulations (ITAR) to implement the Treaty Between the 
Government of the United States of America and the Government of 
Australia Concerning Defense Trade Cooperation, identify via a 
supplement to the ITAR the defense articles and defense services that 
cannot be exported pursuant to the licensing exemption created by the 
Treaty, and make certain other corrections to the supplement.

DATES: This rule is effective upon the entry into force of the Treaty 
Between the Government of the United States of America and the 
Government of Australia Concerning Defense Trade Cooperation. The 
Department will publish a final rule in the Federal Register providing 
the effective date of this rule.

FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Office of Defense Trade 
Controls Policy, Department of State, telephone (202) 663-2809 or email 
DDTCResponseTeam@state.gov. ATTN: Regulatory Change--Treaties.

SUPPLEMENTARY INFORMATION: The Department of State is amending the 
International Traffic in Arms Regulations (ITAR) pursuant to the 
Security Cooperation Act of 2010 (Pub. L. 111-266), with the inclusion 
of other changes. Title I of the Security Cooperation Act, the Defense 
Trade Cooperation Treaties Implementation Act of 2010, implements the 
Treaty Between the Government of the United States of America and the 
Government of Australia Concerning Defense Trade Cooperation (Treaty 
Doc. 110-10), and the Treaty Between the Government of the United 
States of America and the Government of the United Kingdom of Great 
Britain and Northern Ireland Concerning Defense Trade Cooperation 
(Treaty Doc. 110-7). The U.S.-UK treaty entered into force on April 13, 
2012. (See ``Implementation of the Defense Trade Cooperation Treaty 
Between the United States and the United Kingdom,'' 77 FR 16592, and 
``Announcement of Entry Into Force of the Defense Trade Cooperation 
Treaty Between the United States and the United Kingdom,'' 77 FR 
33089.) This rule amends the ITAR with regard to the U.S.-Australia 
treaty (the ``Treaty'').
    ITAR Sec.  120.1 is amended to provide updated authorities and 
editorial changes. ITAR Sec.  120.33 is added to provide a definition 
of ``Defense Trade Cooperation Treaty between the United States and 
Australia.'' New ITAR Sec.  120.35 defines the Implementing Arrangement 
pursuant to the Treaty. ITAR Sec.  126.16 is added to create the 
licensing exemption and provide guidance on its use. Supplement No. 1 
to part 126 is amended to identify

[[Page 21524]]

defense articles that may not be exported and defense services that may 
not be furnished through the exemption.
    In addition, the supplement is amended to make the following 
corrections and clarifications: the phrase, ``defense articles and 
services related to'' is removed from the row regarding USML Category I 
articles, and the USML citation for armored plates is changed from USML 
Category XIII(c) to XIII(e).
    On November 22, 2011 (76 FR 72246, RIN 1400-AC95), the Department 
published for public comment a proposed rule to amend the ITAR to 
implement the Defense Trade Cooperation Treaty between the United 
States and the United Kingdom and the Defense Trade Cooperation Treaty 
between the United States and Australia, and to identify, via a 
supplement, the defense articles that may not be exported and the 
defense services that may not be furnished through use of the licensing 
exemptions created by the treaties. The comment period ended December 
22, 2011. Fifteen parties filed comments that applied to the Treaty. 
The Department's evaluation of the comments and recommendations 
follows.
    The majority of commenting parties expressed support for the 
Treaty's intention of facilitating defense exports with one of the 
United States' closest allies. However, the commenting parties 
expressed concern that the exemption is overly complicated and its 
requirements too burdensome to be truly workable. The Department 
appreciates these comments and believes the clarifying edits made in 
this final rule make application of the exemption clearer.
    Several commenting parties requested additional guidance for 
various aspects of the exemption described in ITAR Sec.  126.16. As 
part of Treaty implementation, the Department's Directorate of Defense 
Trade Controls (DDTC) has posted Frequently Asked Questions (FAQs) on 
its Web site (www.pmddtc.state.gov). These FAQs address these requests 
for guidance.
    Two commenting parties recommended that the Department add a 
definition for defense articles to ITAR Sec.  126.16(a)(1) to clarify 
that ''defense articles'' also includes technical data for purposes of 
the exemption. The Department does not believe this change is necessary 
as the definition for ``defense articles'' in ITAR Sec.  120.6 clearly 
identifies technical data as within its scope. Unless specifically 
indicated otherwise, the use of the term ``defense article'' includes 
technical data.
    One commenting party requested clarification of the term ``access'' 
as used in ITAR Sec.  126.16(a)(1)(iv), indicating that it is common 
for U.S. Customs and Border Protection (CBP) to authorize a physical 
manipulation of a container, which would seemingly result in an 
intermediate consignee having ``access'' to an item in the shipment. 
The Department believes the meaning of ``access'' is plain, and does 
not include situations such as this, where there is a directive from a 
CBP official to open a container for the purpose as stated. Another 
party requested that the Department place in this section a reference 
to ITAR Sec.  126.16(k), which discusses intermediate consignees. The 
Department accepted this recommendation and has revised the section 
accordingly.
    One commenting party expressed concern that the process by which 
the U.S. Government would obtain records, as provided in ITAR Sec.  
126.16(l) and other sections of the exemption, is unclear. These 
sections are not intended to identify the process by which record 
requests are made, and therefore were not revised to provide this 
information. (The records-request process would be the same for ITAR 
Sec.  126.16(l) as for requests made pursuant to any other section of 
the ITAR.)
    One commenting party noted that ITAR Sec.  126.16(a)(4) seemed to 
limit transfers just to exports to the United States. The Department 
has revised this section to clarify that it applies to transfers within 
the Approved Community.
    Two commenting parties requested that the Department change the 
word ``required'' to ``pursuant to'' in ITAR Sec.  126.16(a)(4)(iii). 
This change was not accepted because the word ``required'' is a 
requirement of the Treaty.
    In response to the recommendation of two commenting parties, the 
Department revised ITAR Sec.  126.16(a)(5) regarding the applicability 
of this exemption to defense articles delivered via the Foreign 
Military Sales program.
    Three commenting parties recommended that the Department include an 
explanation of the vetting process for the Australian Community in ITAR 
Sec.  126.16(d). The Department did not accept this recommendation for 
the rule itself, but notes that the vetting requirements are identified 
in the Treaty and Implementing Arrangement, which are available on 
DDTC's Web site.
    Three commenting parties requested that the Department provide 
additional guidance on requesting confirmation of Treaty eligibility 
for operations, programs, and projects that cannot be publicly 
identified (i.e., are classified). For this information, the Department 
refers inquiries by members of the approved community to both the DDTC 
Web site and the appropriate defense authority.
    One commenting party inquired whether the Department will publish a 
complete list of U.S. Government contracts that are Treaty eligible. 
The Department will not do so. The U.S. Department of Defense has 
updated the Defense Federal Acquisition Regulation Supplement (DFARS) 
and certain contract clauses, which will identify Treaty eligibility 
when incorporated into a contract.
    Three commenting parties requested that ITAR Sec.  126.16(g)(1) be 
clarified to indicate whether it applies to marketing to members of the 
Approved Community, or requested its removal. This provision is part of 
the Treaty's Exempted Technology List, and therefore cannot be removed. 
However, the Department revised ITAR Sec.  126.16(g)(1) to indicate 
that marketing to members of the Australian Community is covered so 
long as it is for an approved Treaty end-use and meets the other 
requirements of this section.
    One commenting party recommended removal of ITAR Sec.  126.16(g)(4) 
or, in the alternative, adding the parenthetical ``(or foreign 
equivalent)'' after ``Milestone B.'' The Department cannot remove this 
paragraph as it is part of the Treaty's Exempted Technology List. The 
Department also cannot add the parenthetical as there is no equivalent 
in Australia to ``Milestone B.''
    One commenting party requested changes to ITAR Sec.  126.16(g)(5) 
to allow for the export of embedded exempted technologies in certain 
circumstances. The Department is not, at this time, prepared to broaden 
this provision to include embedded exempted technologies.
    Two commenting parties commented on the complexity of using ITAR 
Sec.  126.16(h) with a diverse supply chain and requested clarification 
on the applicability of ITAR Sec.  123.9(e) to this exemption. The 
Department appreciates the diverse nature of global supply chains, but 
believes the mechanisms provided in ITAR Sec.  126.16(h) are no more 
onerous than current retransfer or reexport requirements. Further, as 
indicated in ITAR Sec.  126.16(h)(5), any retransfer, reexport, or 
change in end-use under ITAR Sec.  126.16(h) shall be made in 
accordance with ITAR Sec.  123.9.
    In response to the recommendation of two commenting parties, the 
Department has deleted ``any citizen of

[[Page 21525]]

such countries'' from ITAR Sec.  126.16(h)(8).
    Ten commenting parties commented on the marking requirements 
provided in ITAR Sec.  126.16(j). Of most concern was a perception that 
the requirements of this section made using the exemption overly 
burdensome and costly. Various suggestions were provided, ranging from 
removal of the requirement to rewording of certain sections. The 
majority of these commenting parties requested removal of the 
requirement in paragraph (j)(2) for exporters to remove Treaty 
markings. The Department appreciates these comments; however, apart 
from minor clarifying changes, the marking requirements have not been 
removed or revised because they are made pursuant to the Treaty and its 
Implementing Arrangement.
    One commenting party requested that the Department revise the text 
of the statement required by ITAR Sec.  126.16(j)(5) to indicate that 
the items being exported are USML items and authorized only for export 
to Australia under the Treaty. The Department accepted this suggestion 
and revised the text accordingly.
    One commenting party requested that registered brokers be included 
in ITAR Sec.  126.16(k)(1)(ii). Australian intermediate consignees must 
meet the requirements of this section. If a registered broker meets 
these requirements, then it may be an intermediate consignee for 
purposes of this exemption. However, simply being a registered broker 
does not automatically qualify an entity as an Australian intermediate 
consignee.
    One commenting party recommended changing ``all exports'' in ITAR 
Sec.  126.16(l)(1) to ``their exports'' to acknowledge that the U.S. 
exporter may not be aware or have record of a reexport/retransfer 
request submitted by an Australian Community member. The Department 
accepted this recommendation and has revised the section accordingly.
    One commenting party requested clarification of whether ITAR Sec.  
126.16(l)(1)(x) referred to the USML category or security 
classification. The Department revised this section to make clear that 
it refers to security classification.
    The Department accepted the recommendation of one commenting party 
to remove reference to ``defense services'' in ITAR Sec.  126.16(l)(2).
    Two commenting parties requested that the Department clarify 
whether ITAR Sec.  126.16(m) required exporters to submit negative 
reports. Reporting requirements under this section are contingent on 
meeting the requirements of ITAR Sec.  130.9.
    Two commenting parties requested clarification on whether the 
congressional notification requirement under the Treaty is identical to 
that required under normal license authorization processes. The 
Department confirms that the requirement is the same.
    Ten commenting parties submitted comments regarding the scope and 
text of Supplement No. 1 to part 126. In particular, comments indicated 
concern that the supplement was too broad and possibly excluded too 
much to make the exemption useful. The Department appreciates these 
comments, and has made clarifying edits to Supplement No. 1 to the 
extent possible within the confines of the Treaty, the Implementing 
Arrangement, and the Exempted Technology List.
    For clarification, the Department has added, ``prior to movement,'' 
to the text of ITAR Sec.  126.16(j)(1), which is in conformance with 
the requirements of the Treaty's Implementing Arrangement.
    Having thoroughly reviewed and evaluated the written comments and 
recommended changes, the Department has determined that it will accept, 
and hereby adopt with the noted changes, the proposed rule, as it 
pertained to the Treaty, as a final rule, to be effective when the 
Treaty enters into force.

Regulatory Analysis and Notices

Administrative Procedure Act

    The Department of State is of the opinion that controlling the 
import and export of defense articles and services is a foreign affairs 
function of the United States government and that rules implementing 
this function are exempt from sections 553 (rulemaking) and 554 
(adjudications) of the Administrative Procedure Act (APA). In addition, 
this rulemaking is implementing the provisions of a treaty between the 
United States and Australia and related amendments to the Arms Export 
Control Act. Although the Department is of the opinion that this rule 
is exempt from the rulemaking provisions of the APA, the Department 
published this rule with a 30-day provision for public comment and 
without prejudice to its determination that controlling the import and 
export of defense services is a foreign affairs function (RIN 1400-
AC95). This rule is effective upon the entry into force of the Treaty 
Between the Government of the United States of America and the 
Government of Australia Concerning Defense Trade Cooperation (Treaty 
Doc. 110-10). Once the Treaty is in force, exporters must be able to 
utilize the Treaty for qualifying exports of defense articles.

Regulatory Flexibility Act

    Since the Department is of the opinion that this rule is exempt 
from the provisions of 5 U.S.C. 553, there is no requirement for an 
analysis under the Regulatory Flexibility Act.

Unfunded Mandates Reform Act of 1995

    This rulemaking does not involve a mandate that will result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any year, and it 
will not significantly or uniquely affect small governments. Therefore, 
no actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Executive Order 13175

    The Department of State has determined that this rulemaking will 
not have tribal implications, will not impose substantial direct 
compliance costs on Indian tribal governments, and will not preempt 
tribal law. Accordingly, the requirement of Executive Order 13175 does 
not apply to this rulemaking.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rulemaking is not a major rule within the meaning of the Small 
Business Regulatory Enforcement Fairness Act of 1996.

Executive Orders 12372 and 13132

    This rulemaking will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this rulemaking does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement. The 
regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on Federal programs and activities do 
not apply to this rulemaking.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic,

[[Page 21526]]

environmental, public health and safety effects, distributed impacts, 
and equity). These executive orders stress the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. The Department has reviewed this 
regulation to ensure its consistency with the regulatory philosophy and 
principles set forth in these executive orders. The Department also has 
determined that this rule is not a ``significant regulatory action'' 
under section 3(f) of Executive Order 12866.

Executive Order 12988

    The Department of State has reviewed this rulemaking in light of 
sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate 
ambiguity, minimize litigation, establish clear legal standards, and 
reduce burden.

Paperwork Reduction Act

    This rule does not impose any new reporting or recordkeeping 
requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 
35.

List of Subjects in 22 CFR Parts 120 and 126

    Arms and Munitions, Exports.

    Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, parts 120 and 126 are amended as follows:

PART 120--PURPOSE AND DEFINITIONS

0
1. The authority citation for part 120 is revised to read as follows:

    Authority:  Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 
(22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub. 
L. 105-261, 112 Stat. 1920; Pub. L. 111-266; Section 1261, Pub. L. 
112-239; E.O. 13637, 78 FR 16129.

0
2. Section 120.1 is amended by revising paragraph (a) to read as 
follows:


Sec.  120.1  General authorities and eligibility.

    (a) Section 38 of the Arms Export Control Act (22 U.S.C. 2778), as 
amended, authorizes the President to control the export and import of 
defense articles and defense services. The statutory authority of the 
President to promulgate regulations with respect to exports of defense 
articles and defense services was delegated to the Secretary of State 
by Executive Order 13637. This subchapter implements that authority. By 
virtue of delegations of authority by the Secretary of State, these 
regulations are primarily administered by the Deputy Assistant 
Secretary of State for Defense Trade and Regional Security and the 
Managing Director of the Directorate of Defense Trade Controls, Bureau 
of Political-Military Affairs.
* * * * *
0
3. Section 120.33 is added to read as follows:


Sec.  120.33  Defense Trade Cooperation Treaty between the United 
States and Australia.

    Defense Trade Cooperation Treaty between the United States and 
Australia means the Treaty between the Government of the United States 
of America and the Government of Australia Concerning Defense Trade 
Cooperation, done at Sydney, September 5, 2007. For additional 
information on making exports pursuant to this treaty, see Sec.  126.16 
of this subchapter.
0
4. Section 120.35 is added to read as follows:


Sec.  120.35  Australia Implementing Arrangement.

    Australia Implementing Arrangement means the Implementing 
Arrangement Pursuant to the Treaty between the Government of the United 
States of America and the Government of Australia Concerning Defense 
Trade Cooperation, done at Washington, March 14, 2008, as it may be 
amended.

PART 126--GENERAL POLICIES AND PROVISIONS

0
5. The authority citation for part 126 is revised to read as follows:

    Authority:  Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 
Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 
2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp., 
p. 899; Sec. 1225, Pub. L. 108-375; Sec. 7089, Pub. L. 111-117; Pub. 
L. 111-266; Section 7045, Pub. L. 112-74; Section 7046, Pub. L. 112-
74; E.O. 13637, 78 FR 16129.
0
6. Section 126.16 is added to read as follows:


Sec.  126.16  Exemption pursuant to the Defense Trade Cooperation 
Treaty between the United States and Australia.

    (a) Scope of exemption and required conditions. (1) Definitions. 
(i) An export means, for purposes of this section only, the initial 
movement of defense articles or defense services from the United States 
Community to the Australian Community.
    (ii) A transfer means, for purposes of this section only, the 
movement of a previously exported defense article or defense service by 
a member of the Australian Community within the Australian Community, 
or between a member of the United States Community and a member of the 
Australian Community.
    (iii) Retransfer and reexport have the meaning provided in Sec.  
120.19 of this subchapter.
    (iv) Intermediate consignee means, for purposes of this section, an 
entity or person who receives, but does not have access to, defense 
articles, including technical data, for the sole purpose of effecting 
onward movement to members of the Approved Community (see paragraph (k) 
of this section).
    (2) Persons or entities exporting or transferring defense articles 
or defense services are exempt from the otherwise applicable licensing 
requirements if such persons or entities comply with the regulations 
set forth in this section. Except as provided in Supplement No. 1 to 
part 126 of this subchapter, Port Directors of U.S. Customs and Border 
Protection and postmasters shall permit the permanent and temporary 
export without a license from members of the United States Community to 
members of the Australian Community (see paragraph (d) of this section 
regarding the identification of members of the Australian Community) of 
defense articles and defense services not listed in Supplement No. 1 to 
part 126 of this subchapter, for the end-uses specifically identified 
pursuant to paragraphs (e) and (f) of this section. The purpose of this 
section is to specify the requirements to export, transfer, reexport, 
retransfer, or otherwise dispose of a defense article or defense 
service pursuant to the Defense Trade Cooperation Treaty between the 
United States and Australia. All persons must continue to comply with 
statutory and regulatory requirements outside of this subchapter 
concerning the import of defense articles and defense services or the 
possession or transfer of defense articles, including, but not limited 
to, regulations issued by the Bureau of Alcohol, Tobacco, Firearms and 
Explosives found at 27 CFR parts 447, 478, and 479, which are 
unaffected by the Defense Trade Cooperation Treaty between the United 
States and Australia.
    (3) Export. In order for an exporter to export a defense article or 
defense service pursuant to the Defense Trade Cooperation Treaty 
between the United States and Australia, all of the following 
conditions must be met:
    (i) The exporter must be registered with the Directorate of Defense 
Trade Controls (DDTC) and must be eligible, according to the 
requirements and prohibitions of the Arms Export Control Act, this 
subchapter, and other provisions of United States law, to obtain an 
export license (or other forms of authorization to export) from any 
agency of the U.S. Government without

[[Page 21527]]

restriction (see paragraphs (b) and (c) of this section for specific 
requirements);
    (ii) The recipient of the export must be a member of the Australian 
Community (see paragraph (d) of this section regarding the 
identification of members of the Australian Community). Australian non-
governmental entities and facilities that become ineligible for such 
membership will be removed from the Australian Community;
    (iii) Intermediate consignees involved in the export must not be 
ineligible, according to the requirements and prohibitions of the Arms 
Export Control Act, this subchapter, and other provisions of United 
States law, to handle or receive a defense article or defense service 
without restriction (see paragraph (k) of this section for specific 
requirements);
    (iv) The export must be for an end-use specified in the Defense 
Trade Cooperation Treaty between the United States and Australia and 
mutually agreed to by the U.S. Government and the Government of 
Australia pursuant to the Defense Trade Cooperation Treaty between the 
United States and Australia and the Implementing Arrangement thereto 
(the Australia Implementing Arrangement) (see paragraphs (e) and (f) of 
this section regarding authorized end-uses);
    (v) The defense article or defense service is not excluded from the 
scope of the Defense Trade Cooperation Treaty between the United States 
and Australia (see paragraph (g) of this section and Supplement No. 1 
to part 126 of this subchapter for specific information on the scope of 
items excluded from export under this exemption) and is marked or 
identified, at a minimum, as ``Restricted USML'' (see paragraph (j) of 
this section for specific requirements on marking exports);
    (vi) All required documentation of such export is maintained by the 
exporter and recipient and is available upon the request of the U.S. 
Government (see paragraph (l) of this section for specific 
requirements); and
    (vii) The Department of State has provided advance notification to 
the Congress, as required, in accordance with this section (see 
paragraph (o) of this section for specific requirements).
    (4) Transfers. In order for a member of the Approved Community 
(i.e., the United States Community and Australian Community) to 
transfer a defense article or defense service under the Defense Trade 
Cooperation Treaty within the Approved Community, all of the following 
conditions must be met:
    (i) The defense article or defense service must have been 
previously exported in accordance with paragraph (a)(3) of this section 
or transitioned from a license or other approval in accordance with 
paragraph (i) of this section;
    (ii) The transferor and transferee of the defense article or 
defense service are members of the Australian Community (see paragraph 
(d) of this section regarding the identification of members of the 
Australian Community) or the United States Community (see paragraph (b) 
of this section for information on the United States Community/approved 
exporters);
    (iii) The transfer is required for an end-use specified in the 
Defense Trade Cooperation Treaty between the United States and 
Australia and mutually agreed to by the Government of the United States 
and the Government of Australia pursuant to the terms of the Defense 
Trade Cooperation Treaty between the United States and Australia and 
the Australia Implementing Arrangement (see paragraphs (e) and (f) of 
this section regarding authorized end-uses);
    (iv) The defense article or defense service is not identified in 
paragraph (g) of this section and Supplement No. 1 to part 126 of this 
subchapter as ineligible for export under this exemption, and is marked 
or otherwise identified, at a minimum, as ``Restricted USML'' (see 
paragraph (j) of this section for specific requirements on marking 
exports);
    (v) All required documentation of such transfer is maintained by 
the transferor and transferee and is available upon the request of the 
U.S. Government (see paragraph (l) of this section for specific 
requirements); and
    (vi) The Department of State has provided advance notification to 
the Congress in accordance with this section (see paragraph (o) of this 
section for specific requirements).
    (5) This section does not apply to the export of defense articles 
or defense services from the United States pursuant to the Foreign 
Military Sales program. Once such items are delivered to the Australian 
Government, they may be treated as if they were exported pursuant to 
the Treaty and then must be marked, identified, transmitted, stored and 
handled in accordance with the Treaty, the Australia Implementing 
Arrangement, and the provisions of this section.
    (b) United States Community. The following persons compose the 
United States Community and may export or transfer defense articles and 
defense services pursuant to the Defense Trade Cooperation Treaty 
between the United States and Australia:
    (1) Departments and agencies of the U.S. Government, including 
their personnel acting in their official capacity, with, as 
appropriate, a security clearance and a need-to-know; and
    (2) Non-governmental U.S. persons registered with DDTC and 
eligible, according to the requirements and prohibitions of the Arms 
Export Control Act, this subchapter, and other provisions of United 
States law, to obtain an export license (or other forms of 
authorization to export) from any agency of the U.S. Government without 
restriction, including their employees acting in their official 
capacity with, as appropriate, a security clearance and a need-to-know.
    (c) An exporter that is otherwise an authorized exporter pursuant 
to paragraph (b) of this section may not export or transfer pursuant to 
the Defense Trade Cooperation Treaty between the United States and 
Australia if the exporter's president, chief executive officer, any 
vice-president, any other senior officer or official (e.g., 
comptroller, treasurer, general counsel); any member of the board of 
directors of the exporter; any party to the export; or any source or 
manufacturer is ineligible to receive export licenses (or other forms 
of authorization to export) from any agency of the U.S. Government.
    (d) Australian Community. For purposes of the exemption provided by 
this section, the Australian Community consists of:
    (1) Government of Australia authorities with entities identified as 
members of the Approved Community through the DDTC Web site at the time 
of a transaction under this section; and
    (2) The non-governmental Australian entities and facilities 
identified as members of the Approved Community through the DDTC Web 
site at the time of a transaction under this section; non-governmental 
Australian entities and facilities that become ineligible for such 
membership will be removed from the Australian Community.
    (e) Authorized End-uses. The following end-uses, subject to 
paragraph (f) of this section, are specified in the Defense Trade 
Cooperation Treaty between the United States and Australia:
    (1) United States and Australian combined military or counter-
terrorism operations;
    (2) United States and Australian cooperative security and defense 
research, development, production, and support programs;
    (3) Mutually determined specific security and defense projects 
where the Government of Australia is the end-user; or
    (4) U.S. Government end-use.

[[Page 21528]]

    (f) Procedures for identifying authorized end-uses pursuant to 
paragraph (e) of this section:
    (1) Operations, programs, and projects that can be publicly 
identified will be posted on the DDTC Web site;
    (2) Operations, programs, and projects that cannot be publicly 
identified will be confirmed in written correspondence from DDTC; or
    (3) U.S. Government end-use will be identified specifically in a 
U.S. Government contract or solicitation as being eligible under the 
Treaty.
    (4) No other operations, programs, projects, or end-uses qualify 
for this exemption.
    (g) Items eligible under this section. With the exception of items 
listed in Supplement No. 1 to part 126 of this subchapter, defense 
articles and defense services may be exported under this section 
subject to the following:
    (1) An exporter authorized pursuant to paragraph (b)(2) of this 
section may market a defense article to members of the Australian 
Community if that exporter has been licensed by DDTC to export (as 
defined by Sec.  120.17 of this subchapter) the identical type of 
defense article to any foreign person and end-use of the article is for 
an end-use identified in paragraph (e) of this section.
    (2) The export of any defense article specific to the existence of 
(e.g., reveals the existence of or details of) anti-tamper measures 
made at U.S. Government direction always requires prior written 
approval from DDTC.
    (3) U.S.-origin classified defense articles or defense services may 
be exported only pursuant to a written request, directive, or contract 
from the U.S. Department of Defense that provides for the export of the 
classified defense article(s) or defense service(s).
    (4) U.S.-origin defense articles specific to developmental systems 
that have not obtained written Milestone B approval from the U.S. 
Department of Defense milestone approval authority are not eligible for 
export unless such export is pursuant to a written solicitation or 
contract issued or awarded by the U.S. Department of Defense for an 
end-use identified pursuant to paragraph (e)(1), (2), or (4) of this 
section.
    (5) Defense articles excluded by paragraph (g) of this section or 
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI 
(a)(3) electronically scanned array radar excluded by Note 2) that are 
embedded in a larger system that is eligible to ship under this section 
(e.g., a ship, an aircraft) must separately comply with any 
restrictions placed on that embedded defense article under this 
subchapter. The exporter must obtain a license or other authorization 
from DDTC for the export of such embedded defense articles (for 
example, USML Category XI (a)(3) electronically scanned array radar 
systems that are exempt from this section that are incorporated in an 
aircraft that is eligible to ship under this section continue to 
require separate authorization from DDTC for their export, transfer, 
reexport, or retransfer).
    (6) No liability shall be incurred by or attributed to the U.S. 
Government in connection with any possible infringement of privately 
owned patent or proprietary rights, either domestic or foreign, by 
reason of an export conducted pursuant to this section.
    (7) Sales by exporters made through the U.S. Government shall not 
include either charges for patent rights in which the U.S. Government 
holds a royalty-free license, or charges for information which the U.S. 
Government has a right to use and disclose to others, which is in the 
public domain, or which the U.S. Government has acquired or is entitled 
to acquire without restrictions upon its use and disclosure to others.
    (h) Transfers, retransfers, and reexports. (1) Any transfer of a 
defense article or defense service not exempted in Supplement No. 1 to 
part 126 of this subchapter by a member of the Australian Community 
(see paragraph (d) of this section for specific information on the 
identification of the Community) to another member of the Australian 
Community or the United States Community for an end-use that is 
authorized by this exemption (see paragraphs (e) and (f) of this 
section regarding authorized end-uses) is authorized under this 
exemption.
    (2) Any transfer or other provision of a defense article or defense 
service for an end-use that is not authorized by the exemption provided 
by this section is prohibited without a license or the prior written 
approval of DDTC (see paragraphs (e) and (f) of this section regarding 
authorized end-uses).
    (3) Any retransfer or reexport, or other provision of a defense 
article or defense service by a member of the Australian Community to a 
foreign person that is not a member of the Australian Community, or to 
a U.S. person that is not a member of the United States Community, is 
prohibited without a license or the prior written approval of DDTC (see 
paragraph (d) of this section for specific information on the 
identification of the Australian Community).
    (4) Any change in the use of a defense article or defense service 
previously exported, transferred, or obtained under this exemption by 
any foreign person, including a member of the Australian Community, to 
an end-use that is not authorized by this exemption is prohibited 
without a license or other written approval of DDTC (see paragraphs (e) 
and (f) of this section regarding authorized end-uses).
    (5) Any retransfer, reexport, or change in end-use requiring such 
approval of the U.S. Government shall be made in accordance with Sec.  
123.9 of this subchapter.
    (6) Defense articles excluded by paragraph (g) of this section or 
Supplement No. 1 to part 126 of this subchapter (e.g., USML Category XI 
(a)(3) electronically scanned array radar systems) that are embedded in 
a larger system that is eligible to ship under this section (e.g., a 
ship, an aircraft) must separately comply with any restrictions placed 
on that embedded defense article unless otherwise specified. A license 
or other authorization must be obtained from DDTC for the export, 
transfer, reexport, retransfer, or change in end-use of any such 
embedded defense article (for example, USML Category XI(a)(3) 
electronically scanned array radar systems that are excluded from this 
section by Supplement No. 1 to part 126 of this subchapter, Note 2 that 
are incorporated in an aircraft that is eligible to ship under this 
section continue to require separate authorization from DDTC for their 
export, transfer, reexport, or retransfer).
    (7) A license or prior approval from DDTC is not required for a 
transfer, retransfer, or reexport of an exported defense article or 
defense service under this section, if:
    (i) The transfer of defense articles or defense services is made by 
a member of the United States Community to Australian Department of 
Defence (ADOD) elements deployed outside the Territory of Australia and 
engaged in an authorized end-use (see paragraphs (e) and (f) of this 
section regarding authorized end-uses) using ADOD transmission channels 
or the provisions of this section (Note: For purposes of paragraph 
(h)(7)(i) through (iv) of this section, per Section 9(9) of the 
Australia Implementing Arrangement, ``ADOD Transmission channels'' 
includes electronic transmission of a defense article and transmission 
of a defense article by an ADOD contracted carrier or freight forwarder 
that merely transports or arranges transport for the defense article in 
this instance.);
    (ii) The transfer of defense articles or defense services is made 
by a member of the United States Community to an Approved Community 
member (either

[[Page 21529]]

United States or Australian) that is operating in direct support of 
ADOD elements deployed outside the Territory of Australia and engaged 
in an authorized end-use (see paragraphs (e) and (f) of this section 
regarding authorized end-uses) using ADOD transmission channels or the 
provisions of this section;
    (iii) The reexport is made by a member of the Australian Community 
to ADOD elements deployed outside the Territory of Australia engaged in 
an authorized end-use (see paragraphs (e) and (f) of this section 
regarding authorized end-uses) using ADOD transmission channels or the 
provisions of this section;
    (iv) The reexport is made by a member of the Australian Community 
to an Approved Community member (either United States or Australian) 
that is operating in direct support of ADOD elements deployed outside 
the Territory of Australia engaged in an authorized end-use (see 
paragraphs (e) and (f) of this section regarding authorized end-uses) 
using ADOD transmission channels or the provisions of this section; or
    (v) The defense article or defense service will be delivered to the 
ADOD for an authorized end-use (see paragraphs (e) and (f) of this 
section regarding authorized end-uses); the ADOD may deploy the item as 
necessary when conducting official business within or outside the 
Territory of Australia. The item must remain under the effective 
control of the ADOD while deployed and access may not be provided to 
unauthorized third parties.
    (8) U.S. persons registered, or required to be registered, pursuant 
to part 122 of this subchapter and members of the Australian Community 
must immediately notify DDTC of any actual or proposed sale, 
retransfer, or reexport of a defense article or defense service on the 
U.S. Munitions List originally exported under this exemption to any of 
the countries listed in Sec.  126.1 of this subchapter or any person 
acting on behalf of such countries, whether within or outside the 
United States. Any person knowing or having reason to know of such a 
proposed or actual sale, reexport, or retransfer shall submit such 
information in writing to the Office of Defense Trade Controls 
Compliance, Directorate of Defense Trade Controls.
    (i) Transitions. (1) Any previous export of a defense article under 
a license or other approval of the U.S. Department of State remains 
subject to the conditions and limitations of the original license or 
authorization unless DDTC has approved in writing a transition to this 
section.
    (2) If a U.S. exporter desires to transition from an existing 
license or other approval to the use of the provisions of this section, 
the following is required:
    (i) The U.S. exporter must submit a written request to DDTC, which 
identifies the defense articles or defense services to be transitioned, 
the existing license(s) or other authorizations under which the defense 
articles or defense services were originally exported, and the Treaty-
eligible end-use for which the defense articles or defense services 
will be used. Any license(s) filed with U.S. Customs and Border 
Protection should remain on file until the exporter has received 
approval from DDTC to retire the license(s) and transition to this 
section. When this approval is conveyed to U.S. Customs and Border 
Protection by DDTC, the license(s) will be returned to DDTC by U.S. 
Customs and Border Protection in accord with existing procedures for 
the return of expired licenses in Sec.  123.22(c) of this subchapter.
    (ii) Any license(s) not filed with U.S. Customs and Border 
Protection must be returned to DDTC with a letter citing approval by 
DDTC to transition to this section as the reason for returning the 
license(s).
    (3) If a member of the Australian Community desires to transition 
defense articles received under an existing license or other approval 
to the processes established under the Treaty, the Australian Community 
member must submit a written request to the Government of Australia. 
The Government of Australia will submit the request to DDTC for review 
and approval. The defense article or defense service shall remain 
subject to the conditions and limitations of the existing license or 
other approval until the Australian Community member has received via 
the Government of Australia the approval from DDTC.
    (4) Authorized exporters identified in paragraph (b)(2) of this 
section who have exported a defense article or defense service that has 
subsequently been placed on the list of exempted items in Supplement 
No. 1 to part 126 of this subchapter must review and adhere to the 
requirements in the relevant Federal Register notice announcing such 
removal. Once removed, the defense article or defense service will no 
longer be subject to this section, and such defense article or defense 
service previously exported shall remain on the U.S. Munitions List and 
be subject to the requirements of this subchapter unless the applicable 
Federal Register notice states otherwise. Subsequent reexport or 
retransfer must be made pursuant to Sec.  123.9 of this subchapter.
    (5) Any defense article or defense service transitioned from a 
license or other approval to treatment under this section must be 
marked in accordance with the requirements of paragraph (j) of this 
section.
    (j) Marking of exports. (1) All defense articles and defense 
services exported or transitioned pursuant to the Defense Trade 
Cooperation Treaty between the United States and Australia and this 
section shall be marked or identified prior to movement as follows:
    (i) For classified defense articles and defense services the 
standard marking or identification shall read ``//CLASSIFICATION LEVEL 
USML//REL AUS and USA Treaty Community//.'' For example, for defense 
articles classified SECRET, the marking or identification shall be ``//
SECRET USML//REL AUS and USA Treaty Community//.''
    (ii) Unclassified defense articles and defense services exported 
under or transitioned pursuant to this section shall be handled while 
in Australia as ``Restricted USML'' and the standard marking or 
identification shall read ``//RESTRICTED USML//REL AUS and USA Treaty 
Community//.''
    (2) Where U.S.-origin defense articles are returned to a member of 
the United States Community identified in paragraph (b) of this 
section, any defense articles marked or identified pursuant to 
paragraph (j)(1)(ii) of this section as ``//RESTRICTED USML//REL AUS 
and USA Treaty Community//'' will be considered unclassified and the 
marking or identification shall be removed; and
    (3) The standard marking and identification requirements are as 
follows:
    (i) Defense articles (other than technical data) shall be 
individually labeled with the appropriate identification detailed in 
paragraphs (j)(1) and (j)(2) of this section; or, where such labeling 
is impracticable (e.g., propellants, chemicals), shall be accompanied 
by documentation (such as contracts or invoices) clearly associating 
the defense articles with the appropriate markings as detailed in 
paragraphs (j)(1)(i) and (j)(1)(ii) of this section;
    (ii) Technical data (including data packages, technical papers, 
manuals, presentations, specifications, guides and reports), regardless 
of media or means of transmission (physical, oral, or electronic), 
shall be individually labeled with the appropriate identification

[[Page 21530]]

detailed in paragraphs (j)(1) and (j)(2) of this section; or, where 
such labeling is impractical shall be accompanied by documentation 
(such as contracts or invoices) or verbal notification clearly 
associating the technical data with the appropriate markings as 
detailed in paragraphs (j)(1)(i) and (j)(1)(ii) of this section; and
    (4) Defense services shall be accompanied by documentation 
(contracts, invoices, shipping bills, or bills of lading) clearly 
labeled with the appropriate identification detailed in paragraphs 
(j)(1) and (j)(2) of this section.
    (5) The exporter shall incorporate the following statement as an 
integral part of the bill of lading and the invoice whenever defense 
articles are to be exported: ``These U.S. Munitions List commodities 
are authorized by the U.S. Government under the U.S.-Australia Defense 
Trade Cooperation Treaty for export only to Australia for use in 
approved projects, programs or operations by members of the Australian 
Community. They may not be retransferred or reexported or used outside 
of an approved project, program, or operation, either in their original 
form or after being incorporated into other end-items, without the 
prior written approval of the U.S. Department of State.''
    (k) Intermediate consignees. (1) Unclassified exports under this 
section may only be handled by:
    (i) U.S. intermediate consignees who are:
    (A) Exporters registered with DDTC and eligible;
    (B) Licensed customs brokers who are subject to background 
investigation and have passed a comprehensive examination administered 
by U.S. Customs and Border Protection; or
    (C) Commercial air freight and surface shipment carriers, freight 
forwarders, or other parties not exempt from registration under Sec.  
129.3(b)(3) of this subchapter, that are identified at the time of 
export as being on the U.S. Department of Defense Civil Reserve Air 
Fleet (CRAF) list of approved air carriers, a link to which is 
available on the DDTC Web site; or
    (ii) Australian intermediate consignees who are:
    (A) Members of the Australian Community; or
    (B) Freight forwarders, customs brokers, commercial air freight and 
surface shipment carriers, or other Australian parties that are 
identified at the time of export as being on the list of Authorized 
Australian Intermediate Consignees, which is available on the DDTC Web 
site.
    (2) Classified exports must comply with the security requirements 
of the National Industrial Security Program Operating Manual (DoD 
5220.22-M and supplements or successors).
    (l) Records. (1) All exporters authorized pursuant to paragraph 
(b)(2) of this section who export defense articles or defense services 
pursuant to the Defense Trade Cooperation Treaty between the United 
States and Australia and this section shall maintain detailed records 
of their exports, imports, and transfers. Exporters shall also maintain 
detailed records of any reexports and retransfers approved or otherwise 
authorized by DDTC of defense articles or defense services subject to 
the Defense Trade Cooperation Treaty between the United States and 
Australia and this section. These records shall be maintained for a 
minimum of five years from the date of export, import, transfer, 
reexport, or retransfer and shall be made available upon request to 
DDTC or a person designated by DDTC (e.g., the Diplomatic Security 
Service) or U.S. Immigration and Customs Enforcement, or U.S. Customs 
and Border Protection. Records in an electronic format must be 
maintained using a process or system capable of reproducing all records 
on paper. Such records when displayed on a viewer, monitor, or 
reproduced on paper, must exhibit a high degree of legibility and 
readability. (For the purpose of this section, ``legible'' and 
``legibility'' mean the quality of a letter or numeral that enables the 
observer to identify it positively and quickly to the exclusion of all 
other letters or numerals. ``Readable'' and ``readability'' means the 
quality of a group of letters or numerals being recognized as complete 
words or numbers.). These records shall consist of the following:
    (i) Port of entry/exit;
    (ii) Date of export/import;
    (iii) Method of export/import;
    (iv) Commodity code and description of the commodity, including 
technical data;
    (v) Value of export;
    (vi) Reference to this section and justification for export under 
the Treaty;
    (vii) End-user/end-use;
    (viii) Identification of all U.S. and foreign parties to the 
transaction;
    (ix) How the export was marked;
    (x) Security classification of the export;
    (xi) All written correspondence with the U.S. Government on the 
export;
    (xii) All information relating to political contributions, fees, or 
commissions furnished or obtained, offered, solicited, or agreed upon 
as outlined in paragraph (m) of this section;
    (xiii) Purchase order or contract;
    (xiv) Technical data actually exported;
    (xv) The Internal Transaction Number for the Electronic Export 
Information filing in the Automated Export System;
    (xvi) All shipping documentation (including, but not limited to the 
airway bill, bill of lading, packing list, delivery verification, and 
invoice); and
    (xvii) Statement of Registration (Form DS-2032).
    (2) Filing of export information. All exporters of defense articles 
under the Defense Trade Cooperation Treaty between the United States 
and Australia and this section must electronically file Electronic 
Export Information (EEI) using the Automated Export System citing one 
of the four below referenced codes in the appropriate field in the EEI 
for each shipment:
    (i) For exports in support of United States and Australian combined 
military or counter-terrorism operations identify Sec.  126.16(e)(1) 
(the name or an appropriate description of the operation shall be 
placed in the appropriate field in the EEI, as well);
    (ii) For exports in support of United States and Australian 
cooperative security and defense research, development, production, and 
support programs identify Sec.  126.16(e)(2) (the name or an 
appropriate description of the program shall be placed in the 
appropriate field in the EEI, as well);
    (iii) For exports in support of mutually determined specific 
security and defense projects where the Government of Australia is the 
end-user identify Sec.  126.16(e)(3) (the name or an appropriate 
description of the project shall be placed in the appropriate field in 
the EEI, as well); or
    (iv) For exports that will have a U.S. Government end-use identify 
Sec.  126.16(e)(4) (the U.S. Government contract number or solicitation 
number (e.g., ``U.S. Government contract number XXXXX'') shall be 
placed in the appropriate field in the EEI, as well). Such exports must 
meet the required export documentation and filing guidelines, including 
for defense services, of Sec.  123.22(a), (b)(1), and (b)(2) of this 
subchapter.
    (m) Fees and commissions. All exporters authorized pursuant to 
paragraph (b)(2) of this section shall, with respect to each export, 
transfer, reexport, or retransfer, pursuant to the Defense Trade 
Cooperation Treaty between the United States and Australia and this 
section, submit a statement to DDTC containing the information 
identified in Sec.  130.10 of this subchapter relating to fees, 
commissions, and political contributions on contracts or

[[Page 21531]]

other instruments valued in an amount of $500,000 or more.
    (n) Violations and enforcement. (1) Exports, transfers, reexports, 
and retransfers that do not comply with the conditions prescribed in 
this section will constitute violations of the Arms Export Control Act 
and this subchapter, and are subject to all relevant criminal, civil, 
and administrative penalties (see Sec.  127.1 of this subchapter), and 
may also be subject to penalty under other statutes or regulations.
    (2) U.S. Immigration and Customs Enforcement and U.S. Customs and 
Border Protection officers may take appropriate action to ensure 
compliance with this section as to the export or the attempted export 
of any defense article or technical data, including the inspection of 
loading or unloading of any vessel, vehicle, or aircraft.
    (3) U.S. Immigration and Customs Enforcement and U.S. Customs and 
Border Protection officers have the authority to investigate, detain, 
or seize any export or attempted export of defense articles or 
technical data that does not comply with this section or that is 
otherwise unlawful.
    (4) DDTC or a person designated by DDTC (e.g., the Diplomatic 
Security Service), U.S. Immigration and Customs Enforcement, or U.S. 
Customs and Border Protection may require the production of documents 
and information relating to any actual or attempted export, transfer, 
reexport, or retransfer pursuant to this section. Any foreign person 
refusing to provide such records within a reasonable period of time 
shall be suspended from the Australian Community and ineligible to 
receive defense articles or defense services pursuant to the exemption 
under this section or otherwise.
    (o) Procedures for legislative notification. (1) Exports pursuant 
to the Defense Trade Cooperation Treaty between the United States and 
Australia and this section by any person identified in paragraph (b)(2) 
of this section shall not take place until 30 days after DDTC has 
acknowledged receipt of a written notification from the exporter 
notifying the Department of State if the export involves one or more of 
the following:
    (i) A contract or other instrument for the export of major defense 
equipment in the amount of $25,000,000 or more, or for defense articles 
and defense services in the amount of $100,000,000 or more;
    (ii) A contract for the export of firearms controlled under 
Category I of the U.S. Munitions List of the International Traffic in 
Arms Regulations in an amount of $1,000,000 or more;
    (iii) A contract, regardless of value, for the manufacturing abroad 
of any item of significant military equipment (see Sec.  120.7 of this 
subchapter); or
    (iv) An amended contract that meets the requirements of paragraphs 
(o)(1)(i) through (o)(1)(iii) of this section.
    (2) The written notification required in paragraph (o)(1) of this 
section shall indicate the item/model number, general item description, 
U.S. Munitions List category, value, and quantity of items to be 
exported pursuant to the Defense Trade Cooperation Treaty between the 
United States and Australia and this section, and shall be accompanied 
by the following additional information:
    (i) The information identified in Sec.  130.10 and Sec.  130.11 of 
this subchapter;
    (ii) A statement regarding whether any offset agreement is final to 
be entered into in connection with the export and a description of any 
such offset agreement;
    (iii) A copy of the signed contract; and
    (iv) If the notification is for paragraph (o)(1)(ii) of this 
section, a statement of what will happen to the weapons in their 
inventory (for example, whether the current inventory will be sold, 
reassigned to another service branch, destroyed, etc.).
    (3) The Department of State will notify the Congress of exports 
that meet the requirements of paragraph (o)(1) of this section.

0
7. Supplement No. 1 to part 126 is revised to read as follows:

                                          Supplement No. 1 to Part 126*
----------------------------------------------------------------------------------------------------------------
                                                                          (CA) Sec.     (AS) Sec.     (UK) Sec.
           USML Category                         Exclusion                  126.5        126.16        126.17
----------------------------------------------------------------------------------------------------------------
I-XXI.............................  Classified defense articles and               X             X             X
                                     services. See Note 1.
I-XXI.............................  Defense articles listed in the                X             X             X
                                     Missile Technology Control Regime
                                     (MTCR) Annex.
I-XXI.............................  U.S. origin defense articles and    ............            X             X
                                     services used for marketing
                                     purposes and not previously
                                     licensed for export in accordance
                                     with this subchapter.
I-XXI.............................  Defense services for or technical             X
                                     data related to defense articles
                                     identified in this supplement as
                                     excluded from the Canadian
                                     exemption.
I-XXI.............................  Any transaction involving the                 X
                                     export of defense articles and
                                     services for which congressional
                                     notification is required in
                                     accordance with Sec.   123.15 and
                                     Sec.   124.11 of this subchapter.
I-XXI.............................  U.S. origin defense articles and    ............            X             X
                                     services specific to
                                     developmental systems that have
                                     not obtained written Milestone B
                                     approval from the U.S. Department
                                     of Defense milestone approval
                                     authority, unless such export is
                                     pursuant to a written
                                     solicitation or contract issued
                                     or awarded by the U.S. Department
                                     of Defense for an end-use
                                     identified in paragraph (e)(1),
                                     (e)(2), or (e)(4) of Sec.
                                     126.16 or Sec.   126.17 of this
                                     subchapter and is consistent with
                                     other exclusions of this
                                     supplement.
I-XXI.............................  Nuclear weapons strategic delivery            X
                                     systems and all components,
                                     parts, accessories, and
                                     attachments specifically designed
                                     for such systems and associated
                                     equipment.
I-XXI.............................  Defense articles and services       ............            X             X
                                     specific to the existence or
                                     method of compliance with anti-
                                     tamper measures, where such
                                     measures are readily
                                     identifiable, made at originating
                                     Government direction.
I-XXI.............................  Defense articles and services       ............            X             X
                                     specific to reduced observables
                                     or counter low observables in any
                                     part of the spectrum. See Note 2.
I-XXI.............................  Defense articles and services       ............            X             X
                                     specific to sensor fusion beyond
                                     that required for display or
                                     identification correlation. See
                                     Note 3.
I-XXI.............................  Defense articles and services       ............            X             X
                                     specific to the automatic target
                                     acquisition or recognition and
                                     cueing of multiple autonomous
                                     unmanned systems.

[[Page 21532]]

 
I-XXI.............................  Nuclear power generating equipment  ............  ............            X
                                     or propulsion equipment (e.g.,
                                     nuclear reactors), specifically
                                     designed for military use and
                                     components therefore,
                                     specifically designed for
                                     military use. See also Sec.
                                     123.20 of this subchapter.
I-XXI.............................  Libraries (parametric technical     ............  ............            X
                                     databases) specially designed for
                                     military use with equipment
                                     controlled on the USML. See Note
                                     13.
I-XXI.............................  Defense services or technical data            X
                                     specific to applied research as
                                     defined in Sec.   125.4(c)(3) of
                                     this subchapter, design
                                     methodology as defined in Sec.
                                     125.4(c)(4) of this subchapter,
                                     engineering analysis as defined
                                     in Sec.   125.4(c)(5) of this
                                     subchapter, or manufacturing know-
                                     how as defined in Sec.
                                     125.4(c)(6) of this subchapter.
                                     See Note 12.
I-XXI.............................  Defense services other than those             X
                                     required to prepare a quote or
                                     bid proposal in response to a
                                     written request from a department
                                     or agency of the United States
                                     Federal Government or from a
                                     Canadian Federal, Provincial, or
                                     Territorial Government; or
                                     defense services other than those
                                     required to produce, design,
                                     assemble, maintain or service a
                                     defense article for use by a
                                     registered U.S. company, or a
                                     U.S. Federal Government Program,
                                     or for end-use in a Canadian
                                     Federal, Provincial, or
                                     Territorial Government Program.
                                     See Note 14.
I.................................  Firearms, close assault weapons,              X
                                     and combat shotguns.
II(k).............................  Software source code related to     ............            X             X
                                     USML Categories II(c), II(d), or
                                     II(i). See Note 4.
II(k).............................  Manufacturing know-how related to             X             X             X
                                     USML Category II(d). See Note 5.
III...............................  Ammunition for firearms, close                X
                                     assault weapons, and combat
                                     shotguns listed in USML Category
                                     I.
III...............................  Defense articles and services       ............  ............            X
                                     specific to ammunition and fuse
                                     setting devices for guns and
                                     armament controlled in USML
                                     Category II.
III(e)............................  Manufacturing know-how related to             X             X             X
                                     USML Categories III(d)(1) or
                                     III(d)(2) and their specially
                                     designed components. See Note 5.
III(e)............................  Software source code related to     ............            X             X
                                     USML Categories III(d)(1) or
                                     III(d)(2). See Note 4.
IV................................  Defense articles and services                 X             X             X
                                     specific to man-portable air
                                     defense systems (MANPADS). See
                                     Note 6.
IV................................  Defense articles and services       ............  ............            X
                                     specific to rockets, designed or
                                     modified for non-military
                                     applications that do not have a
                                     range of 300 km (i.e., not
                                     controlled on the MTCR Annex).
IV................................  Defense articles and services       ............            X             X
                                     specific to torpedoes.
IV................................  Defense articles and services                 X             X             X
                                     specific to anti-personnel
                                     landmines. See Note 15.
IV................................  Defense articles and services                 X             X             X
                                     specific to cluster munitions.
                                     See Note 16.
IV(i).............................  Software source code related to     ............            X             X
                                     USML Categories IV(a), IV(b),
                                     IV(c), or IV(g). See Note 4.
IV(i).............................  Manufacturing know-how related to             X             X             X
                                     USML Categories IV(a), IV(b),
                                     IV(d), or IV(g) and their
                                     specially designed components.
                                     See Note 5.
V.................................  The following energetic materials   ............  ............            X
                                     and related substances:
                                    a. TATB (triaminotrinitrobenzene)
                                     (CAS 3058-38-6);
                                    b. Explosives controlled in USML
                                     Category V(a)(32) or V(a)(33);
                                    c. Iron powder (CAS 7439-89-6)
                                     with particle size of 3
                                     micrometers or less produced by
                                     reduction of iron oxide with
                                     hydrogen;
                                    d. BOBBA-8 (bis(2-
                                     methylaziridinyl)2-(2-
                                     hydroxypropanoxy) propylamino
                                     phosphine oxide), and other MAPO
                                     derivatives;
                                    e. N-methyl-p-nitroaniline (CAS
                                     100-15-2); or
                                       Trinitrophenylmethylnitramine
                                        (tetryl) (CAS 479-45-8).
V(c)(7)...........................  Pyrotechnics and pyrophorics        ............  ............            X
                                     specifically formulated for
                                     military purposes to enhance or
                                     control radiated energy in any
                                     part of the IR spectrum.
V(d)(3)...........................  Bis-2, 2-dinitropropylnitrate       ............  ............            X
                                     (BDNPN).
VI................................  Defense articles specific to        ............  ............            X
                                     cryogenic equipment, and
                                     specially designed components or
                                     accessories therefor, specially
                                     designed or configured to be
                                     installed in a vehicle for
                                     military ground, marine, airborne
                                     or space applications, capable of
                                     operating while in motion and of
                                     producing or maintaining
                                     temperatures below 103 K (-
                                     170[deg]C).
VI................................  Defense Articles specific to        ............  ............            X
                                     superconductive electrical
                                     equipment (rotating machinery and
                                     transformers) specially designed
                                     or configured to be installed in
                                     a vehicle for military ground,
                                     marine, airborne, or space
                                     applications and capable of
                                     operating while in motion. This,
                                     however, does not include direct
                                     current hybrid homopolar
                                     generators that have single-pole
                                     normal metal armatures which
                                     rotate in a magnetic field
                                     produced by superconducting
                                     windings, provided those windings
                                     are the only superconducting
                                     component in the generator.
VI................................  Defense articles and services       ............            X             X
                                     specific to naval technology and
                                     systems relating to acoustic
                                     spectrum control and awareness.
                                     See Note 10.
VI(a).............................  Nuclear powered vessels...........            X             X             X
VI(c).............................  Defense articles and services       ............            X             X
                                     specific to submarine combat
                                     control systems.
VI(d).............................  Harbor entrance detection devices.  ............  ............            X
VI(e).............................  Defense articles and services                 X             X             X
                                     specific to naval nuclear
                                     propulsion equipment. See Note 7.

[[Page 21533]]

 
VI(g).............................  Technical data and defense                    X             X             X
                                     services for gas turbine engine
                                     hot sections related to USML
                                     Category VI(f). See Note 8.
VI(g).............................  Software source code related to     ............            X             X
                                     USML Categories VI(a) or VI(c).
                                     See Note 4.
VII...............................  Defense articles specific to        ............  ............            X
                                     cryogenic equipment, and
                                     specially designed components or
                                     accessories therefor, specially
                                     designed or configured to be
                                     installed in a vehicle for
                                     military ground, marine, airborne
                                     or space applications, capable of
                                     operating while in motion and of
                                     producing or maintaining
                                     temperatures below 103 K (-
                                     170[deg]C).
VII...............................  Defense articles specific to        ............  ............            X
                                     superconductive electrical
                                     equipment (rotating machinery and
                                     transformers) specially designed
                                     or configured to be installed in
                                     a vehicle for military ground,
                                     marine, airborne, or space
                                     applications and capable of
                                     operating while in motion. This,
                                     however, does not include direct
                                     current hybrid homopolar
                                     generators that have single-pole
                                     normal metal armatures which
                                     rotate in a magnetic field
                                     produced by superconducting
                                     windings, provided those windings
                                     are the only superconducting
                                     component in the generator.
VII...............................  Armored all wheel drive vehicles    ............  ............            X
                                     fitted with, or designed or
                                     modified to be fitted with, a
                                     plough or flail for the purpose
                                     of land mine clearance, other
                                     than vehicles specifically
                                     designed or modified for military
                                     use.
VII(e)............................  Amphibious vehicles...............  ............  ............            X
VII(f)............................  Technical data and defense                    X             X             X
                                     services for gas turbine engine
                                     hot sections. See Note 8.
VIII..............................  Defense articles specific to        ............  ............            X
                                     cryogenic equipment, and
                                     specially designed components and
                                     accessories therefor, specially
                                     designed or configured to be
                                     installed in a vehicle for
                                     military ground, marine, airborne
                                     or space applications, capable of
                                     operating while in motion and of
                                     producing or maintaining
                                     temperatures below 103 K (-
                                     170[deg]C).
VIII..............................  Defense articles specific to        ............  ............            X
                                     superconductive electrical
                                     equipment (rotating machinery and
                                     transformers) specially designed
                                     or configured to be installed in
                                     a vehicle for military ground,
                                     marine, airborne, or space
                                     applications and capable of
                                     operating while in motion. This,
                                     however, does not include direct
                                     current hybrid homopolar
                                     generators that have single-pole
                                     normal metal armatures which
                                     rotate in a magnetic field
                                     produced by superconducting
                                     windings, provided those windings
                                     are the only superconducting
                                     component in the generator.
VIII(a)...........................  All USML Category VIII(a) items.              X
VIII(b)...........................  Defense articles and services       ............            X             X
                                     specific to gas turbine engine
                                     hot section components and
                                     digital engine controls. See Note
                                     8.
VIII(f)...........................  Developmental aircraft, engines               X
                                     and components identified in USML
                                     Category VIII(f).
VIII(g)...........................  Ground Effect Machines (GEMS).      ............  ............            X
VIII(i)...........................  Technical data and defense                    X             X             X
                                     services for gas turbine engine
                                     hot sections and digital engine
                                     controls related to USML Category
                                     VIII(b). See Note 8.
VIII(i)...........................  Manufacturing know-how related to             X             X             X
                                     USML Categories VIII(a), VIII(b),
                                     or VIII(e) and their specially
                                     designed components. See Note 5.
VIII(i)...........................  Software source code related to     ............            X             X
                                     USML Categories VIII(a) or
                                     VIII(e). See Note 4.
IX................................  Training or simulation equipment    ............            X             X
                                     for Man Portable Air Defense
                                     Systems (MANPADS). See Note 6.
IX(e).............................  Software source code related to     ............            X             X
                                     USML Categories IX(a) or IX(b).
                                     See Note 4.
IX(e).............................  Software that is both specifically  ............  ............            X
                                     designed or modified for military
                                     use and specifically designed or
                                     modified for modeling or
                                     simulating military operational
                                     scenarios.
X(e)..............................  Manufacturing know-how related to             X             X             X
                                     USML Categories X(a)(1) or
                                     X(a)(2) and their specially
                                     designed components. See Note 5.
XI(a).............................  Defense articles and services       ............            X             X
                                     specific to countermeasures and
                                     counter- countermeasures See Note
                                     9.
XI(a).............................  High Frequency and Phased Array     ............            X
                                     Microwave Radar systems, with
                                     capabilities such as search,
                                     acquisition, tracking, moving
                                     target indication, and imaging
                                     radar systems. See Note 17.
XI................................  Defense articles and services       ............            X             X
                                     specific to naval technology and
                                     systems relating to acoustic
                                     spectrum control and awareness.
                                     See Note 10.
XI(b), XI(c), XI(d)...............  Defense articles and services       ............            X             X
                                     specific to USML Category XI (b)
                                     (e.g., communications security
                                     (COMSEC) and TEMPEST).
XI(d).............................  Software source code related to     ............            X             X
                                     USML Category XI(a). See Note 4.
XI(d).............................  Manufacturing know-how related to             X             X             X
                                     USML Categories XI(a)(3) or
                                     XI(a)(4) and their specially
                                     designed components. See Note 5.
XII...............................  Defense articles and services       ............            X             X
                                     specific to countermeasures and
                                     counter- countermeasures. See
                                     Note 9.

[[Page 21534]]

 
XII...............................  Defense articles and services                 X
                                     specific to USML Category XII(c)
                                     articles, except any 1st- and 2nd-
                                     generation image intensification
                                     tubes and 1st- and 2nd-generation
                                     image intensification night
                                     sighting equipment. End items in
                                     XII(c) and related technical data
                                     limited to basic operations,
                                     maintenance, and training
                                     information as authorized under
                                     the exemption in Sec.
                                     125.4(b)(5) of this subchapter
                                     may be exported directly to a
                                     Canadian Government entity (i.e.,
                                     federal, provincial, territorial,
                                     or municipal) consistent with
                                     Sec.   126.5, other exclusions,
                                     and the provisions of this
                                     subchapter.
XII...............................  Technical data or defense services            X             X             X
                                     for night vision equipment beyond
                                     basic operations, maintenance,
                                     and training data. However, the
                                     AS and UK Treaty exemptions apply
                                     when such export is pursuant to a
                                     written solicitation or contract
                                     issued or awarded by the U.S.
                                     Department of Defense for an end-
                                     use identified in paragraph
                                     (e)(1), (e)(2), or (e)(4) of Sec.
                                       126.16 or Sec.   126.17 of this
                                     subchapter and is consistent with
                                     other exclusions of this
                                     supplement.
XII(f)............................  Manufacturing know-how related to             X             X             X
                                     USML Category XII(d) and their
                                     specially designed components.
                                     See Note 5.
XII(f)............................  Software source code related to     ............            X             X
                                     USML Categories XII(a), XII(b),
                                     XII(c), or XII(d). See Note 4.
XIII(b)...........................  Defense articles and services       ............            X             X
                                     specific to USML Category XIII(b)
                                     (Military Information Security
                                     Assurance Systems).
XIII(d)...........................  Carbon/carbon billets and preforms  ............  ............            X
                                     which are reinforced in three or
                                     more dimensional planes,
                                     specifically designed, developed,
                                     modified, configured or adapted
                                     for defense articles.
XIII(e)...........................  Defense articles and services       ............  ............            X
                                     specific to armored plate
                                     manufactured to comply with a
                                     military standard or
                                     specification or suitable for
                                     military use. See Note 11.
XIII(f)...........................  Structural materials specifically   ............  ............            X
                                     designed, developed, modified,
                                     configured or adapted for defense
                                     articles.
XIII(g)...........................  Defense articles and services       ............  ............            X
                                     related to concealment and
                                     deception equipment and materials.
XIII(h)...........................  Energy conversion devices other     ............  ............            X
                                     than fuel cells.
XIII(i)                             Metal embrittling agents..........  ............  ............            X
XIII(j)...........................  Defense articles and services       ............            X             X
                                     related to hardware associated
                                     with the measurement or
                                     modification of system signatures
                                     for detection of defense articles
                                     as described in Note 2.
XIII(k)...........................  Defense articles and services       ............            X             X
                                     related to tooling and equipment
                                     specifically designed or modified
                                     for the production of defense
                                     articles identified in USML
                                     Category XIII(b).
XIII(l)...........................  Software source code related to     ............            X             X
                                     USML Category XIII(a). See Note 4.
XIV...............................  Defense articles and services       ............            X             X
                                     related to toxicological agents,
                                     including chemical agents,
                                     biological agents, and associated
                                     equipment.
XIV(a), XIV(b), XIV(d)............  Chemical agents listed in USML                X
XIV(e)............................   Category XIV(a), (d) and (e),
XIV(f)............................   biological agents and
                                     biologically derived substances
                                     in USML Category XIV(b), and
                                     equipment listed in USML Category
                                     XIV(f) for dissemination of the
                                     chemical agents and biological
                                     agents listed in USML Category
                                     XIV(a), (b), (d), and (e).
XV(a).............................  Defense articles and services                 X             X             X
                                     specific to spacecraft/
                                     satellites. However, the Canadian
                                     exemption may be used for
                                     commercial communications
                                     satellites that have no other
                                     type of payload.
XV(b).............................  Defense articles and services       ............            X             X
                                     specific to ground control
                                     stations for spacecraft
                                     telemetry, tracking, and control.
                                     Defense articles and services are
                                     not excluded under this entry if
                                     they do not control the
                                     spacecraft. Receivers for
                                     receiving satellite transmissions
                                     are also not excluded under this
                                     entry.
XV(c).............................  Defense articles and services       ............            X             X
                                     specific to GPS/PPS security
                                     modules.
XV(c).............................  Defense articles controlled in                X
                                     USML Category XV(c) except end
                                     items for end-use by the Federal
                                     Government of Canada exported
                                     directly or indirectly through a
                                     Canadian-registered person.
XV(d).............................  Defense articles and services                 X             X             X
                                     specific to radiation-hardened
                                     microelectronic circuits.
XV(e).............................  Anti-jam systems with the ability             X
                                     to respond to incoming
                                     interference by adaptively
                                     reducing antenna gain (nulling)
                                     in the direction of the
                                     interference.
XV(e).............................  Antennas having any of the                    X
                                     following:.
                                    a. Aperture (overall dimension of
                                     the radiating portions of the
                                     antenna) greater than 30 feet;
                                    b. All sidelobes less than or
                                     equal to -35 dB relative to the
                                     peak of the main beam; or
                                       c. Designed, modified, or
                                        configured to provide coverage
                                        area on the surface of the
                                        earth less than 200 nautical
                                        miles in diameter, where
                                        ``coverage area'' is defined
                                        as that area on the surface of
                                        the earth that is illuminated
                                        by the main beam width of the
                                        antenna (which is the angular
                                        distance between half power
                                        points of the beam).
XV(e).............................  Optical intersatellite data links             X
                                     (cross links) and optical ground
                                     satellite terminals..

[[Page 21535]]

 
XV(e).............................  Spaceborne regenerative baseband              X
                                     processing (direct up and down
                                     conversion to and from baseband)
                                     equipment.
XV(e).............................  Propulsion systems which permit               X
                                     acceleration of the satellite on-
                                     orbit (i.e., after mission orbit
                                     injection) at rates greater than
                                     0.1 g.
XV(e).............................  Attitude control and determination            X
                                     systems designed to provide
                                     spacecraft pointing determination
                                     and control or payload pointing
                                     system control better than 0.02
                                     degrees per axis.
XV(e).............................  All specifically designed or                  X
                                     modified systems, components,
                                     parts, accessories, attachments,
                                     and associated equipment for all
                                     USML Category XV(a) items, except
                                     when specifically designed or
                                     modified for use in commercial
                                     communications satellites.
XV(e).............................  Defense articles and services       ............            X             X
                                     specific to spacecraft and ground
                                     control station systems (only for
                                     telemetry, tracking and control
                                     as controlled in USML Category
                                     XV(b)), subsystems, components,
                                     parts, accessories, attachments,
                                     and associated equipment.
XV(f).............................  Technical data and defense                    X             X             X
                                     services directly related to the
                                     other defense articles excluded
                                     from the exemptions for USML
                                     Category XV.
XVI...............................  Defense articles and services                 X             X             X
                                     specific to design and testing of
                                     nuclear weapons..
XVI(c)............................  Nuclear radiation measuring                   X
                                     devices manufactured to military
                                     specifications.
XVI(e)............................  Software source code related to     ............            X             X
                                     USML Category XVI(c). See Note 4.
XVII..............................  Classified articles and defense               X             X             X
                                     services not elsewhere
                                     enumerated. See Note 1..
XVIII.............................  Defense articles and services       ............            X             X
                                     specific to directed energy
                                     weapon systems.
XX................................  Defense articles and services                 X             X             X
                                     related to submersible vessels,
                                     oceanographic, and associated
                                     equipment.
 
XXI...............................  Miscellaneous defense articles and            X             X             X
                                     services.
----------------------------------------------------------------------------------------------------------------
Note 1: Classified defense articles and services are not eligible for export under the Canadian exemptions. U.S.
 origin defense articles and services controlled in USML Category XVII are not eligible for export under the UK
 Treaty exemption. U.S. origin classified defense articles and services are not eligible for export under either
 the UK or AS Treaty exemptions except when being released pursuant to a U.S. Department of Defense written
 request, directive, or contract that provides for the export of the defense article or service.
Note 2: The phrase ``any part of the spectrum'' includes radio frequency (RF), infrared (IR), electro-optical,
 visual, ultraviolet (UV), acoustic, and magnetic. Defense articles related to reduced observables or counter
 reduced observables are defined as:
    a. Signature reduction (radio frequency (RF), infrared (IR), Electro-Optical, visual, ultraviolet (UV),
     acoustic, magnetic, RF emissions) of defense platforms, including systems, subsystems, components,
     materials (including dual-purpose materials used for Electromagnetic Interference (EM) reduction),
     technologies, and signature prediction, test and measurement equipment and software and material
     transmissivity/reflectivity prediction codes and optimization software..
    b. Electronically scanned array radar, high power radars, radar processing algorithms, periscope-mounted
     radar systems (PATRIOT), LADAR, multistatic and IR focal plane array-based sensors, to include systems,
     subsystems, components, materials, and technologies..
Note 3: Defense Articles related to sensor fusion beyond that required for display or identification correlation
 is defined as techniques designed to automatically combine information from two or more sensors/sources for the
 purpose of target identification, tracking, designation, or passing of data in support of surveillance or
 weapons engagement. Sensor fusion involves sensors such as acoustic, infrared, electro optical, frequency, etc.
 Display or identification correlation refers to the combination of target detections from multiple sources for
 assignment of common target track designation.
Note 4: Software source code beyond that source code required for basic operation, maintenance, and training for
 programs, systems, and/or subsystems is not eligible for use of the UK or AS Treaty exemptions, unless such
 export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense
 for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of Sec.   126.16 or Sec.   126.17 of this
 subchapter and is consistent with other exclusions of this supplement.
Note 5: Manufacturing know-how, as defined in Sec.   125.4(c)(6) of this subchapter, is not eligible for use of
 the UK or AS Treaty exemptions, unless such export is pursuant to a written solicitation or contract issued or
 awarded by the U.S. Department of Defense for an end-use identified in paragraph (e)(1), (e)(2), or (e)(4) of
 Sec.   126.16 or Sec.   126.17 of this subchapter and is consistent with other exclusions of this supplement.
Note 6: Defense Articles specific to Man Portable Air Defense Systems (MANPADS) includes missiles which can be
 used without modification in other applications. It also includes production and test equipment and components
 specifically designed or modified for MANPAD systems, as well as training equipment specifically designed or
 modified for MANPAD systems.
Note 7: Naval nuclear propulsion plants includes all of USML Category VI(e). Naval nuclear propulsion
 information is technical data that concerns the design, arrangement, development, manufacture, testing,
 operation, administration, training, maintenance, and repair of the propulsion plants of naval nuclear-powered
 ships and prototypes, including the associated shipboard and shore-based nuclear support facilities. Examples
 of defense articles covered by this exclusion include nuclear propulsion plants and nuclear submarine
 technologies or systems; nuclear powered vessels (see USML Categories VI and XX).
Note 8: A complete gas turbine engine with embedded hot section components or digital engine controls is
 eligible for export or transfer under the Treaties. Technical data, other than required for routine external
 maintenance and operation, related to the hot section or digital engine controls, as well as individual hot
 section components are not eligible for the Treaty exemption whether shipped separately or accompanying a
 complete engine. Examples of gas turbine engine hot section exempted defense article components and technology
 are combustion chambers/liners; high pressure turbine blades, vanes, disks and related cooled structure; cooled
 low pressure turbine blades, vanes, disks and related cooled structure; advanced cooled augmenters; and
 advanced cooled nozzles. Examples of gas turbine engine hot section developmental technologies are Integrated
 High Performance Turbine Engine Technology (IHPTET), Versatile, Affordable Advanced Turbine Engine (VAATE),
 Ultra-Efficient Engine Technology (UEET).
Note 9: Examples of countermeasures and counter-countermeasures related to defense articles not exportable under
 the AS or UK Treaty exemptions are:
    a. IR countermeasures;......................................................................................
    b. Classified techniques and capabilities;..................................................................

[[Page 21536]]

 
    c. Exports for precision radio frequency location that directly or indirectly supports fire control and is
     used for situation awareness, target identification, target acquisition, and weapons targeting and Radio
     Direction Finding (RDF) capabilities. Precision RF location is defined as angle of arrival accuracy of less
     than five degrees (RMS) and RF emitter location of less than ten percent range error;.
    d. Providing the capability to reprogram; and...............................................................
    e. Acoustics (including underwater), active and passive countermeasures, and counter-countermeasures........
Note 10: Examples of defense articles covered by this exclusion include underwater acoustic vector sensors;
 acoustic reduction; off-board, underwater, active and passive sensing, propeller/propulsor technologies; fixed
 mobile/floating/powered detection systems which include in-buoy signal processing for target detection and
 classification; autonomous underwater vehicles capable of long endurance in ocean environments (manned
 submarines excluded); automated control algorithms embedded in on-board autonomous platforms which enable (a)
 group behaviors for target detection and classification, (b) adaptation to the environment or tactical
 situation for enhancing target detection and classification; ``intelligent autonomy'' algorithms which define
 the status, group (greater than 2) behaviors, and responses to detection stimuli by autonomous, underwater
 vehicles; and low frequency, broad-band ``acoustic color,'' active acoustic ``fingerprint'' sensing for the
 purpose of long range, single pass identification of ocean bottom objects, buried or otherwise (controlled
 under Category USML XI(a)(1), (a)(2), (b), (c), and (d)).
Note 11: This exclusion does not apply to the platforms (e.g., vehicles) for which the armored plates are
 applied. For exclusions related to the platforms, reference should be made to the other exclusions in this
 list, particularly for the category in which the platform is controlled.
The excluded defense articles include constructions of metallic or non-metallic materials or combinations
 thereof specially designed to provide protection for military systems. The phrase ``suitable for military use''
 applies to any articles or materials which have been tested to level IIIA or above IAW NIJ standard 0108.01 or
 comparable national standard. This exclusion does not include military helmets, body armor, or other protective
 garments which may be exported IAW the terms of the AS or UK Treaty.
Note 12: Defense services or technical data specific to applied research (Sec.   125.4(c)(3) of this
 subchapter), design methodology (Sec.   125.4(c)(4) of this subchapter), engineering analysis (Sec.
 125.4(c)(5) of this subchapter), or manufacturing know-how (Sec.   125.4(c)(6) of this subchapter) are not
 eligible for export under the Canadian exemptions. However, this exclusion does not include defense services or
 technical data specific to build-to-print as defined in Sec.   125.4(c)(1) of this subchapter, build/design-to-
 specification as defined in Sec.   125.4(c)(2) of this subchapter, or basic research as defined in Sec.
 125.4(c)(3) of this subchapter, or maintenance (i.e., inspection, testing, calibration or repair, including
 overhaul, reconditioning and one-to-one replacement of any defective items parts or components, but excluding
 any modification, enhancement, upgrade or other form of alteration or improvement that changes the basic
 performance of the item) of non-excluded defense articles which may be exported subject to other exclusions or
 terms of the Canadian exemptions.
Note 13: The term ``libraries'' (parametric technical databases) means a collection of technical information of
 a military nature, reference to which may enhance the performance of military equipment or systems.
Note 14: In order to utilize the authorized defense services under the Canadian exemption, the following must be
 complied with:
    (a) The Canadian contractor and subcontractor must certify, in writing, to the U.S. exporter that the
     technical data and defense services being exported will be used only for an activity identified in
     Supplement No. 1 to part 126 of this subchapter and in accordance with Sec.   126.5 of this subchapter; and.
    (b) A written arrangement between the U.S. exporter and the Canadian recipient must:........................
        1. Limit delivery of the defense articles being produced directly to an identified manufacturer in the
         United States registered in accordance with part 122 of this subchapter; a department or agency of the
         United States Federal Government; a Canadian-registered person authorized in writing to manufacture
         defense articles by and for the Government of Canada; a Canadian Federal, Provincial, or Territorial
         Government;.
        2. Prohibit the disclosure of the technical data to any other contractor or subcontractor who is not a
         Canadian-registered person;.
        3. Provide that any subcontract contain all the limitations of Sec.   126.5 of this subchapter;.........
        4. Require that the Canadian contractor, including subcontractors, destroy or return to the U.S.
         exporter in the United States all of the technical data exported pursuant to the contract or purchase
         order upon fulfillment of the contract, unless for use by a Canadian or United States Government entity
         that requires in writing the technical data be maintained. The U.S. exporter must be provided written
         certification that the technical data is being retained or destroyed; and.
        5. Include a clause requiring that all documentation created from U.S. origin technical data contain the
         statement that, ``This document contains technical data, the use of which is restricted by the U.S.
         Arms Export Control Act. This data has been provided in accordance with, and is subject to, the
         limitations specified in Sec.   126.5 of the International Traffic in Arms Regulations (ITAR). By
         accepting this data, the consignee agrees to honor the requirements of the ITAR.''.
    (c) The U.S. exporter must provide the Directorate of Defense Trade Controls a semi-annual report of all
     their on-going activities authorized under Sec.   126.5 of this subchapter. The report shall include the
     article(s) being produced; the end-user(s); the end item into which the product is to be incorporated; the
     intended end-use of the product; the name and address of all the Canadian contractors and subcontractors..
Note 15: This exclusion does not apply to demining equipment in support of the clearance of landmines and
 unexploded ordnance for humanitarian purposes. As used in this exclusion, ``anti-personnel landmine'' means any
 mine placed under, on, or near the ground or other surface area, or delivered by artillery, rocket, mortar, or
 similar means or dropped from an aircraft and which is designed to be detonated or exploded by the presence,
 proximity, or contact of a person; any device or material which is designed, constructed, or adapted to kill or
 injure and which functions unexpectedly when a person disturbs or approaches an apparently harmless object or
 performs an apparently safe act; any manually-emplaced munition or device designed to kill, injure, or damage
 and which is actuated by remote control or automatically after a lapse of time.
Note 16: The cluster munitions that are subject to this exclusion are set forth below:
The Convention on Cluster Munitions, signed December 3, 2008, and entered into force on August 1, 2010, defines
 a ``cluster munition'' as:
A conventional munition that is designed to disperse or release explosive submunitions each weighing less than
 20 kilograms, and includes those explosive submunitions. Under the Convention, a ``cluster munition'' does not
 include the following munitions:
    (a) A munition or submunition designed to dispense flares, smoke, pyrotechnics or chaff; or a munition
     designed exclusively for an air defense role;.
    (b) A munition or submunition designed to produce electrical or electronic effects;.........................
    (c) A munition that, in order to avoid indiscriminate area effects and the risks posed by unexploded
     submunitions, has all of the following characteristics:.
        1. Each munition contains fewer than ten explosive submunitions;........................................
        2. Each explosive submunition weighs more than four kilograms;..........................................
        3. Each explosive submunition is designed to detect and engage a single target object;..................

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        4. Each explosive submunition is equipped with an electronic self-destruction mechanism; and............
        5. Each explosive submunition is equipped with an electronic self-deactivating feature..................
Pursuant to U.S. law (Pub. L. 111-117, section 7055(b)), no military assistance shall be furnished for cluster
 munitions, no defense export license for cluster munitions may be issued, and no cluster munitions or cluster
 munitions technology shall be sold or transferred, unless:
    (a) The submunitions of the cluster munitions, after arming, do not result in more than 1 percent unexploded
     ordnance across the range of intended operational environments; and.
    (b) The agreement applicable to the assistance, transfer or sale of such cluster munitions or cluster
     munitions technology specifies that the cluster munitions will only be used against clearly defined
     military targets and will not be used where civilians are known to be present or in areas normally
     inhabited by civilians..
Note 17: The radar systems described are controlled in USML Category XI(a)(3)(i) through (v). As used in this
 entry, the term ``systems'' includes equipment, devices, software, assemblies, modules, components, practices,
 processes, methods, approaches, schema, frameworks, and models.
----------------------------------------------------------------------------------------------------------------
* An ``X'' in the chart indicates that the item is excluded from use under the exemption referenced in the top
  of the column. An item excluded in any one row is excluded regardless of whether other rows may contain a
  description that would include the item.


    Dated: April 5, 2013.
Rose E. Gottemoeller,
Acting Under Secretary, Arms Control and International Security, 
Department of State.
[FR Doc. 2013-08506 Filed 4-10-13; 8:45 am]
BILLING CODE 4710-25-P