State Dept. Working on General License Concept for Exports

The State Department is considering an open general-license concept for certain defense exports, which would allow U.S. exporters to ship to certain U.S. trading partners without having to apply for a specific license, a senior agency official said. The concept would likely begin as a pilot program, said Mike Miller, deputy assistant secretary for defense trade in the Bureau of Political-Military Affairs, but it's still being discussed and there isn’t yet a timetable for release.

“I don’t have anything to announce in terms of when we might move forward on something, but we're rather excited about it,” Miller said during a Sept. 28 defense industry conference hosted by IDEEA. “I think it could be an innovative way forward to particularly support our closest partners and allies, but it's very much in the early stages.”

Open general licenses, which authorize a category of transactions by certain people or companies without requiring them to apply for a license, could reduce some of the red tape surrounding the agency’s licensing process. It could also lessen the workload for licensing officers, which could help reduce the turnaround time for pending licenses that require specific approval from the Directorate of Defense Trade Controls.

Although Miller said he’s “proud” of how DDTC licensing officials have managed during the pandemic, he said both agency and interagency operations could move faster. “There certainly have been instances during these months where getting things out of administrative review could be quicker,” he said.

Miller said the agency has been considering general licenses for “some time.” State Department officials have asked members of its Defense Trade Advisory Group, which is composed of defense industry representatives, to look at general-license models used by other U.S. agencies and foreign governments to determine if the concept could work at DDTC. “We're in a consultative phase with that right now and talking to various key stakeholders,” Miller said. “We’re making sure we're considering all aspects of the program,” which includes “some interagency review.”

The State Department is also still working on publishing a series of rules to reorganize the International Traffic in Arms Regulations. Miller said in October the agency was “very close” to releasing the first rule, which will reorganize and consolidate definitions in the ITAR (see 2010220049).

Miller said the agency is working with the Office of the Federal Register to “finalize” that rule. “We could see publication, and you’ve heard this before, really any week now,” he said. “Like many of those big projects, it often gets side-railed by some more pressing initiatives. But we are moving forward.” Miller said the first rule will have a six-month delayed implementation date and will be followed by a rule that will reorganize and consolidate exemptions in the ITAR. “It's been a long time coming,” he said, “but I think it's almost here.”

The agency is also continuing to review the U.S. Munitions List for potential updates under the government's Export Control Reform Initiative, but would like to move faster, Miller said. "I think the intent was always to turn over the various USML categories, no less frequently than every two years, and I think we've frankly had some issues making that schedule,” he said. “That's something we're mindful of, particularly in areas where technology changes over quickly.”

The agency is hoping to soon publish proposed changes to USML Categories IV (launch vehicles, missiles, rockets, torpedoes and bombs) and Category XV (spacecraft) (see 2105200061), Miller said. DDTC doesn’t yet have timetables for issuing those changes.

“There are multiple other categories under review,” he said. “So we’re pretty excited about that because, just looking at what's before us for the next nine months, it's a fairly aggressive schedule.”

That schedule includes reviewing several consent agreements stemming from ITAR violations, Miller said. The agency has six active agreements under review and has seen an “uptick” in issues related to recordkeeping and Part 130 violations, which covers payments and reporting of political contributions, fees and commissions related to certain export licenses.

Miller said the agency has “done quite a bit of engagement” with industry to understand whether its regulations are clear enough to help companies avoid these violations, particularly around Part 130. “In these consent agreements and the voluntary disclosures we get, we need to learn from those and see where industry is falling short, and then ask ourselves some hard questions as to whether what's in the regulations is sufficiently clear and followable,” he said. “I think that's something we're trying to learn from as we go through these processes.”