Participation in Open General License Pilot Lacking, DDTC Official Says

LONDON -- The State Department hasn’t yet seen much participation in its open general license pilot program despite releasing the licenses more than a year ago, said Catherine Hamilton, the licensing director for the agency’s Directorate of Defense Trade Controls. Hamilton said the licenses specifically aren’t “really being used in the U.K. as we had envisioned.”

The pilot, released July 2022, authorizes reexports and retransfers of certain defense items and services to Australia, Canada and the U.K. without the companies involved having to apply for a specific license (see 2207190008). DDTC originally issued the program for only one year but in June renewed it for three years (see 2305310016).

Hamilton, speaking last week during a defense industry conference hosted by SAE Media, said the initial one-year program timeline was “necessary” to secure buy-in from Congress, which may have pushed back on DDTC creating a new reexport exemption without a short trial period. But she also said the short initial duration of the pilot may have dissuaded some companies from participating.

"If it's a pilot program that's only good for a year, why would I even start it if it was something that could potentially be pulled down?" Hamilton said. She hopes the three-year extension gives “companies some reasonable assurance” and leads to more participation.

Hamilton also said she doesn’t necessarily expect the licenses to lead to an increase in DDTC end-use checks, because the licenses are authorized only for reexports and retransfers involving the U.K., Canada and Australia -- three trusted U.S. allies. “We’re working within an approved community, so" DDTC has "confidence in the trade that they've done and their record keeping ability.”

But if there’s a “trendline” of companies abusing the licenses or if Congress asks DDTC to assess the impact of the program, “we always reserve that ability to look at the record-keeping ability of a particular company or a particular program,” Hamilton said. But, in general, she said she doesn’t envision “an uptick in end-use monitoring checks.”

In its annual Blue Lantern report released in April, the agency said it initiated more end-use checks in FY 2022 compared with the previous year and also saw increased in-person site visits due to loosened COVID-19 pandemic-related travel restrictions (see 2304260029). Hamilton said the agency is frequently scanning open-source information to drive its end-use checks.

“It's amazing how many times you find in a public release that a company is now acquired by the [People’s Republic of China], or that they're engaged in certain technologies and we've not seen a license for them,” she said. “So we are scouring a plethora of that information,” Hamilton said, adding the agency is “in lockstep with our intelligence community.”

Hamilton also noted the agency hasn’t yet found a permanent replacement to fill the spot vacated by Mike Miller, who left as head of DDTC in December (see 2212120004). The State Department appointed Timothy Betts to fill his place on an acting basis (see 2307200007).

The gap in a permanent leader may cause some slowdowns, Hamilton said. “When you bring in new people, you have to spend a lot of time training them up to the normal operations,” she said. “So if you've seen some things sort of stagnate within DDTC, it's because we don't have that continuity at the top."

But she also said DDTC has other experienced “office-level” officials who will help the agency keep up with licenses and other export control work. “We do have some continuity there with people that really understand the operations and why it matters,” Hamilton said.