On July 25, 2024, the U.S. Departments of State and Commerce issued new proposed rules that, if implemented, would (1) increase the restrictions associated with U.S. persons providing services in support of non-U.S. military-related end users / uses; and (2) implement new controls associated with exports, reexports, and transfers of items subject to the EAR if they involve a broader swath of non-U.S. military-related parties.
Both departments are accepting comments until September 27, 2024. Quick summaries of the rules, and key points follow.
Proposed Revisions to the ITAR's Definition and Controls Related to Defense Services
The ITAR proposed amendments:
- Create new U.S. Munitions List entries to broadly control U.S. person's creating, supporting, or improving (i) foreign government "intelligence activities", or (ii) a foreign government's organization, formation, or operation of military paramilitary operations or capabilities; irrespective of whether a defense article is involved. Both include a "catch" and "release" approach, to release certain categories of activities from control.
- Clarify that consulting services provided by a U.S. person can also be a defense service, to correct a misconception that DDTC interprets "training" to mean only direct instructional activity.
- Add new controls for U.S. persons providing services that result in the disabling or degradation of a defense article.
Proposed Revisions to the EAR's Military-Related and Foreign Security End User Controls
The EAR proposed amendments:
- Expand the Military End Use/User rule to extend to the transfer of all items on the CCL (and reorganizes the definitions Military End Uses/Users and Military Support End Users).
- Add a control on transfers of all items subject to the EAR to "Intelligence End Users" in specified countries.
- Add new prohibitions on U.S. persons "supporting" (a broadly defined term) activities associated with these end uses/users, even where no item subject to the EAR is involved.
- Expand ECCNs in Category 3 to control facial recognition software for Crime Control reasons, meaning a license would be required to export to China, among other countries.
The following brief table helps to summarize the numerous EAR proposed changes:
| Military End Users | Military Support End Users | Military Production Activities | Intelligence End Users | Foreign Security End User | |
| Definition | The national armed services (army, navy, marine, air force, or coast guard), the national guard, or any person or entity performing the functions of a 'military end user,' including mercenaries, paramilitary, or irregular forces | Any person or entity whose actions or functions support "military end uses" | Incorporation into the following types of items or any other activity that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, "development," or "production" of (i) 600 series items; or (ii) any other item subject to the EAR that you know is ultimately destined to or for use by a MEU | Any foreign government intelligence, surveillance, or reconnaissance organizations or other entities performing functions on behalf of such organizations | Governmental and other entities with the authority to arrest, detain, monitor, search, or use force in the furtherance of their official duties |
| Export Destination Country Groups in Scope | D:5 + Macau | D:5 + Macau | D:5 + Macau | D and E (other than Israel and Taiwan) | D:5 and E |
| Is this a Non-Exhaustive List of Prohibited End Users | Yes | Yes | N/A – Control applies to the activity if occurring within the countries in scope, regardless of the parties. | Yes | Yes |
| Items within Scope | All Items Subject to EAR | All Items on the CCL | N/A – only a prohibition on "supporting" | All Items Subject to EAR | All items on the CCL |
| Prohibition on U.S. Persons Providing Support | Yes | Yes, only to parties designated with Entity List footnote 6 | Yes | Yes | Yes, only to parties designated with Entity List footnote 8 |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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