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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On May 12, 2021, the Department of Commerce&rsquo;s Bureau of Industry and Security (BIS) issued a series of <a href="https://www.bis.doc.gov/index.php/documents/pdfs/2756-fms-faqs-dated-5-12-21/file">Frequently Asked Questions (FAQs)</a> in an effort to respond to numerous questions from industry regarding the export of items that have been moved from the U.S. Munitions List under the International Traffic in Arms Regulations (ITAR) to BIS&rsquo; Commodity Control List and authorized under the Foreign Military Sales (FMS) program.&nbsp; BIS notes that the movement of certain items which were previously classified as defense articles under the ITAR over to the Export Administration Regulations (EAR) as &ldquo;600 series&rdquo; items under the control of BIS &ldquo;did not change the FMS Program.&rdquo;
Under the EAR, certain items are not &ldquo;subject to the EAR&rdquo; (i.e., those regulations that govern U.S. export controls and license application procedures enforced by BIS).&nbsp; One such instance is the Department of Defense (DoD) and Department of State Foreign Military Sales (FMS) Program, as the EAR confirms that &ldquo;items that are subject to the EAR that are sold, leased or loaned by the Department of Defense to a foreign country or international organization under the FMS Program of the Arms Export Control Act pursuant to a Letter of Offer and Acceptance (LOA) authorizing such transfers are not &lsquo;subject to the EAR,&rsquo; but rather, are subject to the authority of the Arms Export Control Act.&rdquo;
The FAQs note, therefore, that &ldquo;BIS will not issue a license for the export of these items.&rdquo; &nbsp;Instead, when exported under FMS authority, these items are &ldquo;defense articles&rdquo; even if they are not listed or described on the US Munitions List (USML) under ITAR.&nbsp; According to the FAQs, the State Department has determined that it has the authority to authorize items normally &ldquo;subject to the EAR&rdquo; when such items will be exported under FMS authority if &ldquo;the item will be used in or with a USML defense article.&rdquo; &nbsp;Thus, an FMS applicant &ldquo;may include such items on a DDTC application as USML paragraph (x) items when for use in or with USML defense articles listed on the same DDTC application and will be included in the same shipment as those USML defense articles.&rdquo;&nbsp; The FAQs then clarify that the terms and conditions of any Letter of Offer and Acceptance (LOA) govern the export of items shipped under the FMS Program and whether any U.S. government authorization is required.
The FAQs, while helpful, are detailed and must be applied to a specific scenario involving FMS Program sales and export.&nbsp; Thus, interested parties are encouraged to review them carefully.&nbsp; They were developed by BIS, the U.S. Census Bureau, the Directorate of Defense Trade Controls (DDTC) and the Office of Regional Security and Arms Transfers (RSAT) at the Department of State, the Defense Security Cooperation Agency (DSCA) at the Department of Defense; and, U.S. Customs and Border Protection (CBP).&nbsp; The notice provides contact information for most of these agencies for any further specific questions.

BIS Issues FAQs on Foreign Military Sales

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