USIS Washington File

26 May 2000

Text: State Department Release on Defense Trade Security Initiative

(Seventeen agreed proposals are part of initiative) (1240)

The following list of proposals agreed to under the new Defense Trade
Security Initiative (DTSI), which is designed to improve U.S.
cooperation with allies in the area of defense trade, was released by
the State Department's Bureau of Political Military Affairs on May 24:

(begin text)


1. Major Program License: A single, comprehensive license (including
hardware, technical data, defense services) issued at the beginning of
a project where the U.S. firm is the prime contractor. The license,
initially available via a pilot project, will permit a consistent line
of supply from one single end-user to another, or to identified
sub-contractors as well. A major program license can cover a wide
range of ventures, including projects for the commercial development
of defense articles. Licenses can be valid for up to 8 years (vice the
current maximum of 4 years). The U.S. firm will need additional
licenses only when activities or transactions extend beyond the
initially approved license parameters.

2. Major Project License: A single comprehensive license for a major
commercial sale of defense articles to NATO, Japan or Australia. This
license would permit the U.S. prime contractor to define the
parameters of an export license that would cover all or some of the
exports associated with the sale. Once these parameters were defined
with the USG (U.S. government), and contractor (either at the prime or
sub-tier) would have smooth and expedited processing of its export
license request for something within the project, as long as the
export is within the parameters of the Major Project License.

3. Global Project License: A single, comprehensive license to cover
all exports planned to occur under a government-to-government
international agreement for a cooperative project. DoD (Department of
Defense) will define a standard set of terms and conditions that will
apply to all phases and activities identified in the international
agreement. Once a firm receives an initial license permitting it to
participate in some aspect of the project covered by the international
agreement, it would need additional licenses only for activities that
exceed the standard terms and conditions and/or exceed congressional
notification thresholds, to add new end users or participants, and/or
to expand the participation of existing end-users or participants.
Exports and re-exports to and among the approved end-users would
require no additional licenses.

4. Technical Data Exports for Acquisitions, Teaming Arrangements,
Mergers, Joint Ventures, and Similar Arrangements: A single,
comprehensive export authorization to permit qualified U.S. defense
companies to exchange a broad set of technical data necessary for
teaming arrangements, joint ventures, mergers, acquisitions, or
similar arrangements with qualified foreign firms from NATO, Japan or
Australia. Unlike export authorizations for marketing, this
authorization would cover the much broader range of technical data
needed to assess with some degree of depth and transparency
opportunities for such undertakings.

5. Enhance the Use of Multiple Destination Licenses: Try to increase
use of multiple destination licenses, that permit U.S. firms to market
specific products to specified end-users for specified end-uses. Using
this license establishes a de facto sales territory, since there is a
presumption of approval for sales to those end users that were
approved for marketing.

6. Enhance the Use of Overseas Warehousing Agreements: Try to increase
the use of overseas warehousing agreements that permit U.S. firms to
export large numbers of items (like spare parts) to a foreign company
(including U.S. subsidiaries incorporated overseas). The warehousing
agreement authorizes the foreign company to re-export the parts to a
list of pre-approved end-users for specified end-uses.

7. Expedited License Review for NATO: Expedite USG review of export
licenses for Defense Capabilities Initiative (DCI) projects or

8. Special Embassy Licensing Program: Expedite USG review of licenses
submitted by the governments of NATO countries, Japan and Australia
via their embassies in Washington, D.C., for end use by the requesting

9. Interagency Export License Electronic Control Process: State and
DoD will enhance computer connectivity between DoD and DTC (Defense
Trade Controls, Department of State) to permit greater and more timely
exchange of data on license applications.

10. Extension of ITAR (International Traffic in Arms Regulations)
Exemption to Qualified Countries: An ITAR exemption would be extended
to countries that share with the United States congruent and
reciprocal policies in export controls, industrial security,
intelligence, law enforcement, and reciprocity in market access. This
exemption would be limited to unclassified exports to the foreign
government and to companies who are identified as reliable by the U.S.
government in consultation with the foreign government. This exemption
would be contingent upon establishment of appropriate international
agreements on end use and retransfer of defense items, services and
technical data and on close conformation of essential export control
principles. It is envisioned that the UK and Australia are the two
countries most ready to take advantage of this exemption.

11. Defense Services Exemptions for Maintenance and Maintenance
Training: Create a new ITAR exemption for increased levels of
maintenance services and maintenance training for NATO countries,
Japan and Australia, if such repairs provide no upgrade to the
equipment's original capability and do not include the transfer of
manufacturing designs, information or know-how.
12. Exemption for DoD Bid Proposals: This proposal will permit U.S.
firms to export certain technical data and services in support of DoD
bid proposals without a license.

13. More Effective Use of Existing ITAR Exemptions by DoD: DoD will
clarify how DoD Components should use existing ITAR exemptions that
are available to them.

14. Streamlined Licensing for COMSAT (commercial satellite)
Components/Technical Data: This proposal will streamline the licensing
process for parts and minor components and limited technical data
needed to bid on projects and respond to insurance requests on
COMSATS. This process will minimize the number of licenses needed to
support COMSAT programs where all the parties to the programs are NATO
countries. The proposal has been developed by State and DoD in
consultation with U.S. industry and is intended also to fulfill the
requirements of Section 1309(a) of the FY 2000-2001 Foreign Relations
Authorization Act.

15. ITAR Exemption for Foreign Military Sales Defense Services: This
proposal will permit the license-free export of technical data and
defense services if they are expressly authorized in a Letter of Offer
and Acceptance (LOA) and the underlying contract with a U.S. company.
License free exports will be permitted for the duration of the LOA and
the underlying contract.

16. Advance Re-transfer Consent for Items Sold or Granted by the USG:
This proposal will permit the re-transfer of defense articles
previously sold or granted by the USG if (1) the articles are to be
re-transferred only between the governments of NATO countries, Japan
or Australia which have already signed blanket end-use and re-transfer
assurances; (2) the re-transfer involved only unclassified items that
the recipient already possesses; and (3) the re-transfer involves
articles with acquisition values of no greater than $7 million.

17. Review/Revise the U.S. Munitions List: The process would involve a
four-year review cycle, where one-quarter of the USML (U.S. Munitions
List) would be reviewed each year. The objective would be to comport
what is controlled by the USML more directly with the Military
Critical Technologies List.

(end text)

More information about the Defense Trade Security Initiative can be
found at

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: