New ITAR Rule on Transfer of Defense Articles to Dual and Third-Country Nationals Creates Substantial New Compliance Obligations

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On May 16, 2011, the Department of State (“Department”) published its final rule in the Federal Register amending provisions of the International Traffic in Arms Regulations (“ITAR”) regarding the transfer of ITAR controlled defense articles (including technical data) to dual and third-country nationals employed by approved foreign end-users. See 76 Fed. Reg. 28174-78 (amending 22 C.F.R. pts. 120, 124 and 126).

Provided that certain screening and record-keeping requirements are met, the new rule eliminates the need to secure prior approval from the Directorate of Defense Trade Controls (“DDTC”) before transferring unclassified defense articles (including technical data) to dual or third-country nationals who are employees of foreign end-users or consignees (including approved sub-licensees) approved for such defense articles. The new rule goes into effect August 15, 2011.

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