International Trade Law News

Published by Jacobson Burton Kelley PLLC

The State Department's Directorate of Defense Trade Controls (DDTC) has issued its 2006 "Defense Trade Overview", which contains a summary of current defense trade control laws and regulations and a summary of the defense licensing activity in fiscal year 2006. Some of the more useful pieces of information contained in the Defense Trade Review include:

• More than 5,000 entities are registered with DDTC as manufacturers, exporters, or brokers of U.S. defense articles or services [with an annual registration fee of $1,750, this generates nearly $9 million in revenues for DDTC]. The report notes that less than half of currently registered entities are likely to apply for a license in any given year.
  

• In FY 2006, DDTC took final action on 66,000 cases (i.e., licenses and agreement), with case volume increasing at about 8% per year.

• Approximately 1/3 of license applications are referred to other State Department bureaus or the Department of Defense's Defense Technology Security Administration (DTSA) or other agencies for review.

• The median review time for cases handled internally at DDTC (2/3 of total cases) is 18 calendar days. Review time for the 1/3 third of cases that are staffed to DoD and other offices in the State Department is about 55 calendar days.
  

• About 15% of applications are returned without action to the applicant, usually because "required documentation is missing or because DTCL does not have confidence in some specific aspect of the transaction."
  

• In FY 2006, more than 7,000 agreement applications (e.g., TAAs and MLAs) were received and that almost all agreements are referred to DTSA for national security and technical review.

• In FY 2006, 78 DDTC speakers participated in 58 events around the U.S. and in foreign countries, including Australia and India.
  

• DDTC’s Response Team handled roughly 25,000 phone inquiries and 8,500 e-mails from the public.
  

• DDTC expect to make the use of D-Trade available for all unclassified authorizations, including agreements, during 2007.

• DTCC maintains a “Watchlist” of more than 130,000 foreign and domestic companies and individuals identified from various open and classified sources. All parties on license applications and agreement applications are checked against this Watchlist. If the name of a party is on the Watchlist, the licensing officer evaluates the information on the listed party, and the license may be denied.

• In FY 2006, there were 613 Blue Lantern [an end-user monitoring program] checks (surpassing the previous record number of 563 in FY 2005), and unfavorable information was identified in over 90 cases.

• DDTC provided support for law enforcement agencies that initiated criminal actions pursuant to the Arms Export Control Act and ITAR, resulting in 119 arrests, 92 indictments and 60 convictions.

• DDTC imposed $22 million in civil penalties in FY 2006.

• DTCC visited 23 companies in FY 2006, helping to identify compliance issues or specific problem areas.
  

• In FY 2006, 340 commodity jurisdiction cases were completed.

Labels: DDTC, Export Controls