I. Background

This rule streamlines the export control regulations between the United States and the United Kingdom under specified circumstances.

The U.S. Government controls exports of defense articles, technical data, and defense services. The governing law is the Arms Export Control Act (AECA) (22 U.S.C. 2778 et seq.) and implementing regulations in the International Traffic in Arms Regulations (ITAR) (22 CFR 120-130).

Under the ITAR, the Department of State manages an export licensing system in which numerous government approvals are often necessary for companies to hold discussions about potential projects, pursue joint activities, ship hardware, or transfer know-how to one another, and even sometimes to transfer engineers and other company employees from one country to another. This process can be challenging and time consuming for U.S. exporters and for foreign firms in their supply chains.

The U.S. concluded the Treaty with the United Kingdom to enable their militaries, security authorities, and their approved industries to exchange defense articles, technical information, and defense services more freely. The Treaty establishes exemptions for certain exports and transfers that meet the Treaty requirements. Other exports and transfers remain governed by AECA and the ITAR.

The Treaty and implementing arrangements with the United Kingdom may be accessed at http://www.state.gov/t/pm/rls/othr/misc/92770.htm.

The implementing legislation is in Title I of Pub. L. 111-266, the Security Cooperation Act of 2010.

The Senate conditions upon ratification are at http://www.govtrack.us/congress/billtext.xpd?bill=s111-3847.

The U.S. Department of State regulations implementing the Treaty with the United Kingdom are at 22 CFR part 120.

The Treaty establishes an Approved Community that includes members of the U.S. Government and the government of the United Kingdom, including various Ministries, Departments, and Agencies, as well as selected defense and security companies and facilities. Exports of most U.S. defense articles, including technical data and defense services, are generally permitted to enter and to move freely within this community, without the need for government approvals and licenses--provided that all persons comply with all other statutory and regulatory requirements concerning the import of defense articles and defense services or the possession or transfer of defense articles,--when in support of--Combined U.S.-U.K. military or counterterrorism operations;

U.S.-U.K. cooperative security and defense research, development, production, and support programs;

Mutually agreed to security and defense projects that are for U.K. Government use only; and U.S. Government end use.

Under the Treaty, instead of a U.S. exporter preparing and requesting U.S. Department of State approval of an export license or Technical Assistance Agreement for a project, which would normally take around 45-60 days, the exporter will verify information on the U.S. Department of State Web site that--

The U.K. industry member is a member of the Approved Community;

The project is on the list of approved projects and items are for U.S. Government end use; and

The defense article is not on the Exempted Technology List.

If the members of the United States Community and United Kingdom Community, the project, and the technology are verified, then the U.S. exporter and the U.K. member may proceed without export licenses.

In addition to checking the above three lists, an exporter using the Treaty also must comply with any applicable related ITAR requirements and 22 CFR 126.17(g) and other applicable U.S. laws and regulations. These requirements include marking and recordkeeping to ensure that export-controlled items are recognized as such and handled accordingly. Similarly, DFARS 225.7902 implements requirements that relate to exports that, for example, a prospective contractor may make under a DoD solicitation or that a contractor may make in performance of a DoD contract.