International Legal Affairs: V10N2
This column regularly discusses the workings and implications of the International Trade in Arms Regulations, or ITAR. News stories regarding the export of arms from the United States recently have attempted to highlight ITAR reform as a Trump initiative, but in reality the reform process has been ongoing since 2010 at the direction of then President Obama.
Export reform and an overhaul of the ITAR are nearly complete–with the exception of U.S. Munitions List (USML) Categories 1, 2 and 3. Not surprisingly, these are the categories that govern small arms (Category 1) crew served weapons 50 caliber and larger (Category 2), and ammunition for weapons governed by Categories 1 and 2. As discussion over Categories 1 through 3 continue, now may be a good time to examine other regulations that govern the export of small arms–specifically the contractual amounts that trigger Congressional Notification and review of export licenses.
Under Section 36(b) of the Arms Export Control Act, Congress must be formally notified 30-calendar days before the Administration can take final action on approving an export license. (As a reminder, the U.S. State Department is an executive branch agency, whose jurisdiction and authority come directly from the President.) The monetary values that trigger Congressional Notification depend upon the type of transaction. In the case of a sale of major defense equipment, the triggering amount is $14 million dollars. The performance of Defense Services triggers notification at $50 million or more. In the case of commercially licensed arms sales for Category 1 firearms, the triggering amount is a measly $1 million. As one might imagine, it is not difficult for a foreign government contract for small arms to exceed $1 million. Once the notification process is triggered, then what? The Congressional Notification process involves three steps–Internal Agency Action, Informal Notification and Formal Notification.
Internal Agency Action
When the U.S. State Department receives an export license application, it staffs the license to the applicable internal regional desks and the U.S. Department of Defense for review. All export licenses go through this process, regardless of dollar value. For those licenses that do not trigger Congressional Notification, export licenses are then processed as approved, denied or returned without action.
Assuming internal review at the State Department has been successfully completed, the next step involves informal notification to congress. An informal notification is provided to the Senate Foreign Relations Committee and the House Foreign Relations Committee–the two Congressional committees with primary jurisdiction over arms sales issues. As one might expect, the Chair of the Committee (usually a congressman of the majority party) and the Ranking Member of the Committee (usually the senior ranking minority congressman) take the lead on reviewing the license application. Due to the manner of review, and in an attempt to remain neutral, a minimum of four congressional offices–two in the Senate and two in the House–are tasked with reviewing the license application. Since both the Majority and Minority parties are represented, there is ample opportunity to ensure fair review of the proposed transaction.
During this period, clarifying questions regarding the transaction are often raised–questions regarding the proposed use by the end user or a justification on why the end user is requesting the particular weapon system. The questions are passed back to the U.S. State Department and ultimately back to the exporter that submitted the export license application. In most cases, the committees are notified 20-40 days prior to Formal Notification, but that time may extended until the Senator’s or Representative’s questions and concerns are resolved. Assuming that all of the questions are satisfactorily answered, the next stage of review is triggered.
Commercially licensed arms sales must be formally notified to Congress 30 calendar days before the export license is issued. In the case of sales to NATO member states, NATO, Japan, Australia, South Korea, Israel or New Zealand, the notification period is cut to 15 calendar days. Recall that the agency action is notification–not a request for approval. Congress has several legislative options it can take to block as proposed sale. Only one option is explicitly set out in law–a joint resolution of disapproval. Under this option, opponents of the proposed sale would introduce joint resolutions in the House and Senate to forbid the sale by law. After a joint resolution is passed by both the House and Senate, the measure would be sent to the President for signature. The President would likely reject and veto the joint resolution; Congress would need a 2/3 majority to overcome any potential Presidential veto. The joint resolution (and all subsequent actions to create a law blocking the proposed sale) need not occur within the 30-day statutory period. Instead, Congress need only act prior to delivery of the arms to the foreign end user.
The most recent joint resolution to block the sale of arms to a foreign government was in April 1986, when then-President Reagan proposed the same of Harpoon, Sidewinder and Stinger missiles to Saudi Arabia. A joint resolution was passed. President Reagan vetoed the bill, but sensing a potential override, agreed to remove the Stinger missiles from the arms package. The sale of Sidewinder and Harpoon missiles proceeded.
A Congressional recess or adjournment does not stop the 30-calendar day statutory review period. If, after 30 days, there has been no Congressional action, the U.S. State Department is free to approve the export license application.
On June 26, 2017, Senator Corker of Tennessee, the Chairman of the Senate Foreign Relations Committee, indicated that he would put a hold on any arms sales to Persian Gulf nations. In attempting to resolve a dispute with Qatar, its alleged support for terrorism and its relationship with Iran, many of the Gulf nations cut diplomatic ties with Qatar. In blocking all arms sales to the Persian Gulf region, Senator Corker expressed a desire for Gulf nations to assist in resolving the Qatar issue. Although many of the Gulf nations cut diplomatic ties with Qatar, the current hold remains in place. As a result of this hold, a number of small arms contracts, most notably to the United Arab Emirates, Saudi Arabia and Oman, have been delayed. While the submission of multiple export license applications for less than $1 million is not encouraged, such actions are not prohibited by law and may be an effective method to avoid the current Congressional block on arms sales to Gulf nations.
More importantly, as the ITAR is reviewed and amended, perhaps this is a good time to also look at the $1 million triggering amount for Congressional notification. Many small arms contracts to foreign governments regularly exceed $1 million. The Congressional Notification process adds additional time and expense to the proposed transaction and makes delivery schedules difficult to predict. As a result, U.S. companies are less competitive on the world market, despite having some of the most sought out small arms systems in the world. Now is the time to re-evaluate the Congressional Notification process and streamline it to make U.S. products and defense services more competitive on the world market.
Mr. Wong is a Washington licensed attorney and manages Hurricane Butterfly, a U.S.-based import/export company that assists foreign and domestic firearm manufacturers, resellers and collectors wade through the regulatory quagmire of U.S. import/export regulations.
The preceding article is not intended as legal advice and should not be taken as legal advice. If the reader has specific legal questions, seek competent legal counsel.