2015 Annual Export Training

December 2015

The U.S. Department of State has classified certain ATC products and services as defense articles, services, or technical data. This means that some of ATC’s products and services have been specifically designed for, or inherently have, military applications. Additionally, the export of ATC products and services not under the jurisdiction of the Department of State (“dual use” items) are governed by the Department of Commerce. According to U.S. export control regulations, ATC must obtain permission from the U.S. Government to export these products, services or technologies to other countries. To prevent unauthorized export, it is crucial that all employees be aware of these regulations and that ATC maintains a program of strict compliance.

The following is a 10 question Quiz covering various export related topics with which you should become familiar. This Quiz is not graded, nor are you required to indicate on the Quiz your answers. Rather, it is intended to foster awareness of important export related information. If you do not know a particular answer, you may refer to the cited section of the ATC Export Compliance Manual which is provided with this Quiz for your convenience. Correct answers and explanatory comments follow each question.

1. The ____________, promulgated under the Arms Export Control Act, control the export of defense articles, technical data and services from the United States to foreign destinations or persons.

(a) the Uniform Commercial Code(b) the Commerce Control List(c) the International Traffic in Arms Regulations(d) the National Industrial Security Program Operating Manual

Reference: Export Compliance Manual Section 2.2-Definitions

Answer: (c) International Traffic in Arms Regulations (ITAR)

Administered by the Department of State Directorate of Defense Trade Controls (DDTC), the International Traffic in Arms Regulations (ITAR) implement the Arms Export Control Act (AECA), and are designed to regulate items designated in the United States Munitions List (USML) as defense articles, defense services and related technical data which are inherently military in character.

2. The _________________, promulgated under the authority of the Export Administration Act, control the export from the United States of certain commercial (“dual use”) commodities, software and technology.

(a) the Uniform Commercial Code(b) the Export Administration Regulations(c) the Code of Federal Licensing(d) the International Trade and Embargo Regulations

Reference: Export Compliance Manual Section 2.2-Definitions

Answer: (b) Export Administration Regulations (EAR)

Administered by the Department of Commerce Bureau of Industry and Security (BIS), the Export Administration Regulations (EAR) implement the Export Administration Act (EAA) and are designed to regulate items designated in the Commerce Control List (CCL) as “dual-use” commodities, technology and software.

3. Under the ITAR, A single willful violation of any of the terms and conditions of a Directorate of Defense Trade Controls (DDTC) license or approval may result in which of the following penalties:

(a) Personal fine up to $500,000(b) Company fine up to $1,000,000(c) Up to ten years imprisonment(d) Debarment from exporting(e) All of the above

Reference: Export Compliance Manual Section 2.1-Penalties

Answer: (e) All of the above.

Penalties are the major enforcement tool under the export laws. Penalties are violating any portion of the regulations governing controlled exports include:

• Company fines – up to $1,000,000.00 per violation• Personal fines – up to $500,000.00 per violation• Prosecution – up to ten years imprisonment per violation• Loss of export privileges – Debarment, extra compliance measures

Please note that most violations of export regulations involve unauthorized release of technical data (either classified or unclassified) to foreign persons in the United States or abroad. Also note that one mistake can comprise several violations.

4. You would like to ship overseas a particular item but you are unsure whether it is covered by the ITAR. The best source for finding the answer is:

(a) the Commerce Identification List(b) the Specially Designated Nationals List(c) the United States Munitions List(d) the Export Classification List

Reference: Export Compliance Manual Section 2.2-Definitions

Answer: (c) United States Munitions List (USML)

Found at Section 121.1 of the International Traffic in Arms Regulations (ITAR), the United States Munitions List (USML) constitutes those articles, services and related technical data designated as defense articles and defense services pursuant to the Arms Export Control Act (AECA). Such designations are made by the Department of State with the concurrence of the Department of Defense.

5. For ITAR purposes, the term “export” means:

(a) Sending or taking a defense article out of the United States in any manner; (b) Disclosing (orally or visually) or transferring in the United States any defense

article to a foreign person, foreign embassy, or any other part of a foreign government;

(c) Performing a defense service on behalf of a foreign person, whether in the United States or abroad.

(d) All of the above

Reference: Export Compliance Manual Section 2.2-Definitions

Answer: (d) All of the above

Export means, for purposes of the International Traffic in Arms Regulations (ITAR):

(a) Sending or taking a defense article out of the United States in any manner, except by mere travel outside of the United States by a person whose personal knowledge includes technical data; or(b) Transferring registration, control, or ownership to a foreign person of any aircraft, vessel, or satellite covered by the U.S. Munitions List, whether in the U.S. or abroad; or(c) Disclosing (including oral or visual disclosure) or transferring in the United States any defense article to an embassy, any agency or subdivision of a foreign government (e.g., diplomatic missions); or(d) Disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the U.S. or abroad; or(e) Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad.

6. Marvin is working on a project at his company where he has access to unclassified plans and drawings for an item developed for military use and would like to mail by U.S. postal service the plans and drawings to his overseas client. Marvin remembers from his annual ITAR training that he is not supposed to export “technical data” without first obtaining approval. He is certain that mailing the information would be an export, but he is not sure whether the information constitutes technical data. Are the plans and drawings considered technical data under the ITAR?

(a) Yes(b) No

Reference: Export Compliance Manual Section 2.2-Definitions

Answer. YesFor purposes of the International Traffic in Arms Regulations (ITAR), technical data means:(a) Classified information relating to defense articles and defense services;(b) Information covered by an invention secrecy order;(c) Information which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes, for example, information in the form of blueprints, drawings, plans, photographs, instructions, and documentation. (This definition does not include information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities; information in the public domain; or basic marketing information on function or purpose or general system descriptions of defense articles. Ordinarily, under the ITAR, unclassified information that provides only a description of the defense article and its general characteristics and expected performance does not constitute technical data. Further, information which does not exceed that normally included in sales brochures or marketing data sheets or similar products, readily available to the public (including competitors) at trade shows or other public events, normally does not constitute technical data within the spirit and intent of the ITAR.)

7. For ITAR purposes, a “defense service” means:

(a) Furnishing of assistance to foreign persons in the operation or use of defense articles, whether in the United States or abroad

(b) Furnishing to foreign persons of any technical data controlled by the ITAR (c) Furnishing spare parts for an item identified on the USML (d) Military training of foreign units and forces in the United States (e) All of the above (f) Answers (a) and (d)(g) Answers (a), (b) and (d)

Reference: Export Compliance Manual Section 2.2-Definitions

Answer: (a), (b) and (d)

For ITAR purposes, a “defense service” means:

(a) Furnishing of assistance to foreign persons in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles, whether in the United States or abroad; (b) Furnishing to foreign persons of any technical data controlled by the ITAR; (c) Military training of foreign units and forces, regular and irregular, whether in the United States or abroad, including by correspondence courses, and through media of all kinds, training aids, exercises and through the furnishing of military advice.

8. Margaret is a salesperson for Acme Helicopter Company. She is negotiating a sale of military helicopters and associated training to a NATO member country. Which of the following export authorizations under the ITAR might be applicable to the transaction:

(a) a License(b) a Harmonized Tariff Approval (c) a Technical Assistance Agreement(d) an Exemption (e) All of the above(f) Answers (a), (c) and (d)

Reference: Export Compliance Manual Section 2.6-Types of Authorization

Answer: (a), (c) and (d)

Exports by ATC of military hardware, technical data, and defense services can be authorized from the U.S. Department of State in one of three ways:

Licenses – License means a document bearing the word “license” issued by the Directorate of Defense Trade Controls (DDTC) which permits the export or temporary import of a specific defense article or defense service. Licenses are granted after an application is made and have gone through an approval process. Exports made against a license apply only to specific products, technical data and services, and only for specific dollar or quantity amounts. Licenses must be accounted for very carefully to prevent mistakes. Export values reported to the DoS must always reflect the value noted on the original license. In addition, licenses may include specific provisions that carefully spell out additional export rules by which ATC must abide.

Answer cont.

Agreements – Agreements are similar to licenses except that they are more flexible in the amount of products or information that may be exchanged with a foreign entity. Agreements come in the form of a Manufacturer’s License Agreement (MLA) or a Technical Assistance Agreement (TAA). Agreements are drafted when a large amount of data or hardware must be exchanged with a foreign entity for a specific product or program. As the names imply, agreements can be used to allow manufacturing of U.S. designed products overseas, or to provide general technical assistance to a foreign party working with a specific product or program.

Answer cont.

Exemptions – Exemptions from the licensing requirements of the U.S. State Department apply to specific circumstances outlined in the International Traffic in Arms Regulations (ITAR). Exemptions have their own record-keeping requirements and only apply to specific circumstances. They do, however, preclude the use of a License or Agreement. Exemptions help to simplify routine exports in certain cases and can be very convenient, but their use is closely monitored by the State Department. Use of an exemption to export an otherwise licensable article is a violation of the law.

9. Ted works for a company that manufactures electronic components utilized in military applications which are covered by the United States Munitions List (USML). A potential client in Australia is interested in possibly purchasing a certain component, and asks Ted if he would ship to Australia a single sample of the desired item for inspection. Ted has been told by his boss that their company is registered with the Department of State as a manufacturer of defense articles as required by the ITAR. Based on this information, Ted decides to ship the item to his potential client in Australia. Which statement below is correct:

a) Because Ted is only shipping a single component as a sample, the shipment does not constitute an export of a defense article.

b) Although the products manufactured by Ted’s company are covered on the United States Munitions List (USML), they are not considered defense articles and may be exported without any Department of State authorization.

(c) Because Ted’s company is registered with the Department of State as a manufacturer of defense articles as required by the ITAR, he is therefore authorized to ship the component to Australia.

(d) Although Ted’s company is registered with the Department of State as a manufacturer of defense articles as required by the ITAR, he still must determine whether a license, agreement or exemption is applicable to the export transaction.

Reference: Export Compliance Manual Sections 2.2-Definitions; 2.6-Types of Authorization

Answer: (d) Although Ted’s company is registered with the Department of State as a manufacturer of defense articles as required by the ITAR, he still must determine whether a license, agreement or exemption is applicable to the export transaction. While manufacturers of defense articles/services are required to register with the Department of State, registration alone does not authorize the export of defense articles or defense services. A determination must be made in each case as to whether a license or agreement is required, or if an exemption is applicable.

If the subject item is on the United States Munitions List (USML) it is considered a defense article.

It does not matter the number of items shipped or that the item is only intended as a sample in determining whether an export occurs.

10. Louise has been hired by ATC to provide Subject Matter Expertise on a military aircraft platform. In connection with her work, Louise has been provided various documents related to the operation and repair of the aircraft and has stored these documents on her company-issued laptop computer. It has been determined by ATC that these documents constitute technical data related to a military aircraft and are subject to the ITAR. Louise is going on summer vacation with her family to Jamaica, but decides to take her laptop computer in case “something comes up at work”. She remembers that the subject technical data is stored on her computer.

Which statement is correct?

(a) Louise can take her computer storing the technical data because her intended purpose for going to Jamaica is primarily for vacation and not for business.

(b) Louise should transfer the technical data from her computer to a portable flash drive and transport the flash drive in her laptop carrying case.

(c) Louise can take her computer with the technical data because she will not be showing the technical data to any Jamaican citizens.

(d) Louise must inform the ATC IT Department of her intended overseas travel and what electronic storage devices she intends to take so that the devices may be inspected for controlled data and the data purged from the device where necessary.

Reference: Export Compliance Manual Section 3.7 – Travel with Laptop and Electronic Data Storage Devices

Answer: (d) Louise must inform the ATC IT Department of her intended overseas travel and what electronic storage devices she intends to take so that the devices may be inspected for controlled data and the data purged from the device where necessary.

It is illegal to transport sensitive technical data across international borders without the authorization of the U.S. Government. Failure to properly license hand-carried technical data (in hardcopy or in electronic format) can result in criminal and civil charges.

(All too often in our technology-driven lives, we fail to question our day-to-day routine, especially when it comes to business travel. Please consider the above statement any time you are leaving the country, especially if you are carrying an electronic device.)