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ITAR Part 129 Brokering by ube19723


									ITAR Part 129 Brokering
Complying with the International Traffic in Arms Regulations
Seattle U.S. Export Assistance Center
October 10, 2007

Dave DeCaro
Manager, Contracts and Export Compliance
Avionics & Optics Group
Esterline Corporation
901 Dexter Ave North
Seattle WA 98109

 1. Definitions

 2. Requirement to Register

 3. Recent Developments

 4. Implementation Plan

                              Page 2
  Broker - 129.2(a)
  – Any person (U.S. or Non-U.S.) who acts as an agent
    for others in negotiating or arranging contracts,
    purchases, sales or transfers of defense articles or
    defense services in return for a fee, commissions, or
    other consideration.
  – A sales representative located in Europe promoting the
    sale of U.S. company’s military aircraft parts of U.S.
    origin to a European company or government.

                                                            Page 3

   Brokering Activities - ITAR 129.2(b)
  – The financing, transportation, freight-forwarding, or
    taking of any other action that facilitates the
    manufacture, export, or import of a defense article or
    defense service, irrespective of its origin.

                                                         Page 4
Requirement to Register

  ITAR 129.3(a)
  – Any U.S. person, wherever located, and any foreign
    person located in the United States or otherwise
    subject to the jurisdiction of the United States
    engaging in the business of brokering activities must
    register with the U.S. Department of State.

                                                            Page 5
Recent Developments
 DDTC has been rewriting Part 129 for 2-½ years but no
 drafts have been made public.

 It is apparent that DDTC has not accepted DTAG’s
 recommendation to narrow the “broker/brokering activities”
 definition to exclude the traditional sales rep who has no
 authority to negotiate on behalf of nor obligate a U.S.
 company, nor takes possession of goods or services.

 DDTC comments on 9/20/07:
 – DDTC questions the effectiveness of industry “vetting” of potential sales reps. There
   is a wide variance in the degree of “vetting” between large primes and smaller
   companies, plus DDTC has more means to “vett” potential brokers.
 – DDTC has completed the draft rewrite of Part 129 and is in discussions with DOD.
 – There will be no public registry of registered brokers.

                                                                                      Page 6
Implementation Plan

 Step 1: Identify Brokers

 Step 2: Communicate Requirements

 Step 3: Complete Registration Documents

 Step 4: Submit Registration Package & Manage Status

 Step 5: Obtain Licenses (if applicable)

 Step 6: Submit Annual Reports

                                                       Page 7
Step 1
 Identify Brokers
 1. International Sales Rep/Consultant/Service Provider
 2. Country
 3. Total Annual Commissions Paid (as applicable)
 4. Principle and Business Unit (as applicable)

 – Name Corporate Project Manager & Admin Assistant to Facilitate
 – Each Business Unit to Provide Items 1 – 3 to Project Manager
 – Admin Assistant Populates & Maintains Tracking Spreadsheet
   Throughout Implementation Plan

                                                                  Page 8
Step 2
 Communicate Requirements
 1. Notification Letter & Registration Package (see next slide)
 2. Incorporate contract provision (if applicable)

 – Project Manager Sends Letter & Registration Documents to
        Request and Track Acknowledgment of Receipt, Receipt
        Date, & Confirmation Broker Will Register
 – Amend Rep Agreement
 – Admin Assistant follows-up with each broker (as needed)

                                                                  Page 9
Step 3
 Complete Registration Documents
 1. Complete Form DS-2032 (Statement of Registration)
 2. Transmittal letter signed by an empowered official (from the
    Broker’s Firm)
 3. Supporting documentation demonstrating the applicant is
    incorporated or otherwise authorized to conduct business in the
    U.S. (Foreign Brokers need only provide a business license or
    similar documentation).
 4. Payment by check or money order (drawn on a U.S. Bank) payable
    to the Department of State ($1,750 for one year, $3,500 for two

 – Broker forwards Items 1 – 4 to Project Manager

                                                                      Page 10
Step 4
 Submit Registration Package & Manage Status
 – File Package with DDTC

 – Broker Forwards Registration Package to Project Manager
 – Project Manager Reviews Registration Documents Prior to
   Submittal To DDTC – Correct With Broker as Necessary
 – Admin Assistant Sends Package to DDTC Via Fedex & Records
   Tracking #
 – Record Registrant Code & Expiration

                                                               Page 11
Step 5
  Obtain licenses (if applicable)
  –   Brokers must obtain prior written approval of U.S. Department of State
      for “brokering activities” involving defense articles and services listed in
      ITAR 129.7(a)
          Fully automatic firearms
          Nuclear weapons strategic deliver systems, nuclear weapons design and
          test equipment, and naval nuclear propulsion equipment
          Missile Technology Control Regime Category I items
          Classified defense articles, services, and technical data
          Foreign defense articles and services (other than those that are arranged
          wholly within and destined exclusively for NATO, Japan, Australia, or New

  –   Project Manager to Determine if this Applies to any Sales
      Representatives & Ensure Compliance

                                                                                      Page 12
Step 6
  Submit annual reports to DDTC ‘enumerating’
  and describing brokering activities by
  –   Quantity
  –   Type
  –   Purchasers and Recipients
  –   License Numbers (If Applicable)
  –   Any Exemptions Utilized For Other Covered Activities
  –   U.S. Dollar Value Of Commission or Consideration “Paid, Agreed,
      Offered to be Paid”

  –   Send Annual Reminder to Brokers
  –   Brokers Responsible for Compliance

                                                                        Page 13

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