On July 19, 2022, the State Department’s Directorate of Defense Trade Controls (DDTC) published Open General License (OGL) No. 1 and OGL No. 2, which authorize reexports to or retransfers within the U.K., Canada, and Australia of certain types of defense articles, services and technical data controlled under the International Traffic in Arms Regulations (ITAR). In good news for industry, these groundbreaking ITAR provisions are relatively simple and easy to use. Both OGLs are valid for one year, effective August 1, 2022, through July 31, 2023.
Some of the key limitations in these OGLs are as follows:
- They only apply to unclassified, not classified, defense articles.
- Use of the OGLs for technical data transfers is limited to the purpose of maintenance, repair, or storage of a defense article.
- The defense articles to be retransferred or reexported must have originally been authorized by DDTC for export from the United States. Those exported under Foreign Military Sales (FMS) authorities are excluded.
- Authorized parties are limited to the Governments of Australia, Canada, or the U.K., and members of the Australian and U.K. communities (identified as such on the DDTC website at the time of the transaction) and Canadian-registered persons (as defined in ITAR § 126.5(b)).
- Authorized end-users for hardware are limited to the Australian, Canadian, or U.K. governments (including operation by authorized parties on behalf of those governments).
- The reexport/retransfer activity must take place wholly within the physical territories of Australia, Canada or the U.K.
- Certain types of unclassified defense articles are excluded, including those listed on the Missile Technology Control Regime (MTCR) Annex or otherwise identified as subject to ITAR Missile Technology (MT) controls, and those used to support the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, or processing of a missile, UAV, space-launch vehicle, item listed on the MTCR Annex, or other MT-controlled ITAR defense article.
- There are also limitations on major defense equipment valued at $25,000,000 or more and any defense article or related training or other defense service valued at $100,000,000 or more.
- Detailed records of the transactions authorized under the OGL must be kept for five years from the expiration of the license by the reexporter/retransferor and made available to DDTC upon request.
- Destination control statements and other normal ITAR compliance requirements still apply.
These OGLs represent a major step forward in facilitating defense trade with these three key U.S. allies, and are indicative of a trend both within DDTC and the U.S. government more broadly of looking for ways to facilitate defense trade and investment with allies and partners, while carefully controlling ITAR-controlled defense articles involving foreign persons.