DDTC Preparing New Compliance Guidance, Open General License Concept

The State Department's Directorate of Defense Trade Controls is preparing to publish new compliance program guidelines to help industry better meet agency compliance expectations, an official said. DDTC is also “close” to rolling out its new open general license concept, another official said, which would allow blanket approvals for certain shipments to close U.S. allies, potentially including Five Eyes alliance members.

DDTC recently began working on new compliance guidelines at the request of the Defense Trade Advisory Group, Jae Shin, a senior DDTC compliance official, said during a Nov. 4 DTAG meeting. After receiving the DTAG request, the agency formed a “special project team” to update the guidance and has been making “steady progress," Shin said. DDTC is planning to publish its new compliance guidance “early next year, hopefully January,” Shin said, and is also developing a “compliance risk matrix” to help companies “better identify and address compliance risk areas.” The agency will work on the risk matrix after it finishes updating the guidance.

Shin also said DDTC has worked to increase the consistency and clarity of its consent agreements. The agency recently updated language in its agreements to better clarify the "selection process" for external compliance monitors and auditors, Shin said, adding that the language is now “more clear and transparent." The new language "helps companies to sufficiently assess potential special compliance officers and auditors,” he said. Shin also said DDTC is constantly “holistically assessing whether the consent agreement requirements are effective in helping to improve a company's overall compliance program.”

DDTC is also preparing to present to the DTAG its open general license concept and is “getting close to rolling something out,” said Rob Hart, a senior official in the agency’s regulatory and multilateral affairs division. The concept, similar to Treasury Department open licenses, would allow U.S. exporters to ship to certain U.S. trading partners without having to apply for a specific license, and would likely begin as a pilot program (see 2109290056).

Hart said the concept is “very on target” with DTAG's recommendations that DDTC do more to ease export restrictions and hurdles for shipping to other Five Eyes countries: Australia, Canada, New Zealand and the United Kingdom. He said the agency has been studying whether it can change the way it licenses exports to those countries. “What are we not thinking enough about in terms of the way we license things to these countries, in terms of ways to avoid having to get a license for these countries?” Hart said. “How can we be more thoughtful about our closest allies out there?”

Hart said the agency has a “little more work” before its “next step,” which is to officially share the concept with the DTAG. “We're trying to create flexibilities for reexports and retransfers among these countries,” Hart said. "You're going to hear more from us about that soon.”

Hart also said the agency is using DTAG feedback to inform its effort to reorganize the International Traffic in Arms Regulations, including its upcoming rule to consolidate definitions in the ITAR (see 2010220049, 2109290056 and 2111040056). The agency’s goal is to “make this as readable and as intuitive as possible,” particularly for companies and exporters “who don't have years of experience with this.”

“We want to make sure it's approachable for someone who's just trying to figure out if they need a license or not,” Hart said. “We're not upending things in structure … we’re just trying to get things in one place.”