International Traffic in Arms Regulations - Restrictions On Retransfer To Dual Nationals and Third Country Nationals

Restrictions On Retransfer To Dual Nationals and Third Country Nationals

ITAR treats access to USML items by “Dual-National” and “Third Country National” employees of a foreign organization as a Retransfer to the employees’ other countries of nationality. As a result, access to USML items by such employees must be specifically authorized under the relevant export authorization. If access to USML items by Dual and Third Country National employees of a foreign organization is authorized, it only authorizes transfer to the employee. It does not authorize export to the employee’s country of Dual or Third Nationality.

If a U.S. export authorization is silent as to access by Dual and Third Country National employees of a foreign party, the authorization has the effect of limiting access to employees who are nationals only of the country of their employer. This means that, for example, a TAA that includes a UK company as the foreign person, but which does not include clauses authorizing access by Dual and Third Country Nationals will limit access to USML items supplied under the TAA to employees of the UK company who are UK citizens only.

This can cause significant problems for foreign governments and organizations from countries with large first generation immigrant populations (which is discussed in more detail under “Controversy”). As a result, the U.S. Government and the Australian Government have drawn attention to the importance for U.S. companies to consult closely with foreign persons who will be subject to a U.S. export authorization before it is submitted to the U.S. Department of State for approval.

Clauses approved by the U.S. Department of State must be included in TAAs and MLAs in order to authorize access to USML items by Dual and Third Country National employees of foreign parties to the export authorization. These clauses will generally permit access by Dual and Third Country Nationals from NATO, EU, Japan, Switzerland, New Zealand and Australia (subject to certain conditions). Employees of foreign persons holding Dual or Third Country Nationality from countries proscribed under ITAR 126.1, such as Vietnam, the Peoples Republic of China (“PRC”), North Korea, Syria and Iran, will, as a general rule, not be authorized to have access to USML items. It is less-clear how Dual and Third Country Nationals are addressed in FMS Cases and export licenses such as DSP-5s.