Regulatory intelligence for US exporters

DDTC Seeing 'More Complex' License Applications, Official Says

Although the State Department is working to better streamline its export licensing process, the agency is facing increasingly complicated licensing decisions and a large volume of applications, said Sarah Heidema, policy director for the Directorate of Defense Trade Controls. She said DDTC has “thousands of licenses pending adjudication” at “any given time,” and some require extensive analysis.

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“The licenses we now see within DDTC are more complex and require significant analysis to ensure that they support U.S. foreign policy and national security objectives,” Heidema said during a Jan. 23 virtual export control seminar for Canada and the U.K. hosted by the departments of State, Commerce and Defense (see 2301110022). For each application, the DDTC analyst must become “familiar with the transaction, the technology and the ongoing interagency assessment.”

Heidema’s comments came several months after the agency said it was seeing a rise in more complex Ukraine-related export licenses. The agency had completed some of the more straightforward applications earlier in 2022 and was just starting to address applications wherein brokers were potentially looking to take advantage of the agency’s expedited review process for exports to Ukraine (see 2206300029).

DDTC is hoping it can continue to expedite certain applications, including to Canada and the U.K., Heidema said. She mentioned the agency’s open general license pilot program, which was introduced last year to more efficiently authorize reexports and retransfers of certain defense items and services to Australia, Canada and the U.K. (see 2207190008, 2207200005 and 2208020030). Heidema said the pilot program “has streamlined certain authorizations and made the overall export control system better suited to today's commercial environment.”

But even though Canada and the U.K. “enjoy unique efficiencies under U.S. export controls” and DDTC continues to “update our regulatory framework for arms sales,” she said the agency is still scrutinizing exports. “We remain committed to protecting our most sensitive information, which enables our countries to keep our competitive edge,” Heidema said, adding that it’s "crucial to ensure our state-of-the-art military technology is not susceptible to exploitation by actors who would seek to damage or threaten Canadian, U.K. or U.S. shared interests.”