DDTC issued a final rule amending ITAR related to transfers by foreign parties of ITAR-controlled items to dual national and third-country national employees. Prior to the issuance of the rule, if a U.S. party exported an ITAR-controlled item to a foreign end-user, significant restrictions applied if the end-user sought to transfer the ITAR item to its dual national and third-country national employees. Under the current amendment, DDTC sought to address this issue. The amendment provides a new ITAR §126.18 which provides that, subject to certain conditions, the transfer of unclassified defense articles, including technical data, will be permitted to or within a foreign business entity, foreign governmental entity, or international organization that is an authorized end-user or consignee for defense articles, including the transfer to dual nationals or third-country nationals who are bona fide regular employees directly employed by the foreign consignee or end-user. The transfer of defense articles pursuant to this provision must take place completely within the physical territory of the country where the end-user is located, where the governmental entity or international organization conducts official business, or where the consignee operates, and be within the scope of an approved export license, other export authorization, or license exemption.

As a condition of transferring a defense article to foreign employees as described above, any foreign organization that receives a defense article must have effective compliance procedures in place to prevent diversion to destinations or entities, or for purposes, other than those authorized by the applicable export license or other authorization. The elements of such compliance procedures are set forth in the amendment.

The amendment also adds §124.16 to ITAR, which provides, subject to certain conditions set forth in the amendment, special retransfer authorizations for unclassified technical data and defense services to member states of NATO and the European Union, Australia, Japan, New Zealand and Switzerland. A copy of the final amendment is available at: http://www.pmddtc.state.gov/FR/2011/76FR28174.pdf.