State Department Issues Two Open General Licenses Authorizing Reexports and Retransfers of Certain Defense Articles for Australia, Canada and the UK

On July 13, 2022, as part of a new pilot program, the Department of State’s Directorate of Defense Trade Controls (DDTC) issued two open general licenses (OGLs) permitting certain reexports and retransfers of unclassified defense articles subject to the International Traffic in Arms Regulations (ITAR) within or between Australia, Canada, and the United Kingdom. The OGLs were published in the Federal Register on July 20, 2022, and will be effective August 1, 2022. The OGLs could significantly reduce licensing burdens for many entities in these close ally countries of the United States.

The OGLs authorize the following:

• OGL No. 1, “Qualifying Retransfers within Australia, Canada, and the United Kingdom,” permits the retransfer of unclassified defense articles to the Governments of Australia, Canada, or the United Kingdom, and to members of the Australian and United Kingdom communities and “Canadian-registered persons;” and
• OGL No. 2, “Qualifying Reexports Between or Among Australia, Canada, and the United Kingdom,” permits the reexport of unclassified defense articles between or among the Governments of Australia, Canada or the United Kingdom, and to members of the Australian and UK communities and “Canadian-registered persons.”

The Australian and UK communities are defined in ITAR §§ 126.16(d) and 126.17(d) and refer to the governments of those countries and non-governmental entities and facilities identified as members of the Approved Community on the DDTC web site. A “Canadian-registered person” is any Canadian national (including Canadian business entities organized under the laws of Canada), dual citizen of Canada and a third country other than a § 126.1 arms embargo country, permanent residents registered in Canada, and Canadian Crown Corporations identified by the Department of State. This effectively means Canadian government entities or Canadian individuals or entities registered with the Canadian Controlled Goods Program (CGP).

The OGLs do not authorize exports of defense articles, just reexports and retransfers. Both licenses are subject to additional requirements, limitations, and provisos as described in each OGL, including:

• Retransfers and reexports must take place wholly within or between the physical territory of Australia, Canada or the United Kingdom.
• Retransferred or reexported defense articles, other than technical data, must be for end use by, or operation on behalf of, the governments of Australia, Canada, the United Kingdom or the United States.
• The defense articles must have been originally exported pursuant to a license or other approval issued by DDTC, and defense articles originally exported under Foreign Military Sales programs may not be retransferred or reexported under these OGLs.
• Defense articles listed on the Missile Technology Control Regime (MTCR) Annex or identified as Missile Technology (MT) may not be retransferred or reexported under these OGLs.
• Defense articles used to support the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, or processing of—among other things—a missile, unmanned aerial vehicle (UAV), or space-launch vehicle may not be retransferred or reexported under these OGLs.
• Technical data may only be retransferred or reexported under these OGLs for the purpose of organizational-level, intermediate-level, or depot-level maintenance, repair, or storage of a defense article.
• Certain limitations apply for the retransfer or reexport under these OGLs of major defense equipment valued at $25 million or more and any defense article or related training or other defense service valued at $100 million or more.

DDTC guidance indicates that the reason for the OGL pilot program is, in part, to facilitate “legitimate defense trade with partners and allies while denying adversaries access to sensitive U.S. technology.” The guidance further notes that the OGLs are “designed to support the mission readiness of [U.S.] allies by facilitating defense trade activity related to the maintenance, repair, and storage of unclassified defense articles deployed or in-inventory rather than supporting new acquisitions or capabilities.”

One question companies may have is the relationship between the OGLs and the existing exemptions for the United Kingdom, Australia, and Canada in ITAR Part 126—especially where the OGLs cross-reference these exemptions directly in defining Australian and United Kingdom communities and “Canadian-registered persons.” Since the OGLs apply to defense articles originally exported pursuant to a DDTC license or approval, the OGLs can authorize reexports or retransfers of items previously exported under these exemptions so long as all the conditions provided in the OGLs are met; however, the OGLs are not limited to items subject to these exemptions.

These OGLs are valid for one year, effective August 1, 2022, through July 31, 2023; DDTC may later consider reissuing them or extending their period of validity. DDTC has not signaled whether this pilot program may be expanded to cover other close ally countries of the United States.