22 USC 2778.htm

22 USC 2778.htm

Prior Approval for Brokering Activity

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[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-107 Section 1048(g)(8)]
[Document affected by Public Law 107-115 Section 548]
[CITE: 22USC2778]
 
 
TITLE 22--FOREIGN RELATIONS AND INTERCOURSE
 
CHAPTER 39--ARMS EXPORT CONTROL
 
SUBCHAPTER III--MILITARY EXPORT CONTROLS
 
Sec. 2778. Control of arms exports and imports
 
 
(a) Presidential control of exports and imports of defense articles and 
services, guidance of policy, etc.; designation of United States 
Munitions List; issuance of export licenses; negotiations 
information
 
 (1) In furtherance of world peace and the security and foreign 
policy of the United States, the President is authorized to control the 
import and the export of defense articles and defense services and to 
provide foreign policy guidance to persons of the United States involved 
in the export and import of such articles and services. The President is 
authorized to designate those items which shall be considered as defense 
articles and defense services for the purposes of this section and to 
promulgate regulations for the import and export of such articles and 
services. The items so designated shall constitute the United States 
Munitions List.
 (2) Decisions on issuing export licenses under this section shall 
take into account whether the export of an article would contribute to 
an arms race, aid in the development of weapons of mass destruction, 
support international terrorism, increase the possibility of outbreak or 
escalation of conflict, or prejudice the development of bilateral or 
multilateral arms control or nonproliferation agreements or other 
arrangements.
 (3) In exercising the authorities conferred by this section, the 
President may require that any defense article or defense service be 
sold under this chapter as a condition of its eligibility for export, 
and may require that persons engaged in the negotiation for the export 
of defense articles and services keep the President fully and currently 
informed of the progress and future prospects of such negotiations.
 
(b) Registration and licensing requirements for manufacturers, 
exporters, or importers of designated defense articles and 
defense services
 
 (1)(A)(i) As prescribed in regulations issued under this section, 
every person (other than an officer or employee of the United States 
Government acting in an official capacity) who engages in the business 
of manufacturing, exporting, or importing any defense articles or 
defense services designated by the President under subsection (a)(1) of 
this section shall register with the United States Government agency 
charged with the administration of this section, and shall pay a 
registration fee which shall be prescribed by such regulations. Such 
regulations shall prohibit the return to the United States for sale in 
the United States (other than for the Armed Forces of the United States 
and its allies or for any State or local law enforcement agency) of any 
military firearms or ammunition of United States manufacture furnished 
to foreign governments by the United States under this chapter or any 
other foreign assistance or sales program of the United States, whether 
or not enhanced in value or improved in condition in a foreign country. 
This prohibition shall not extend to similar firearms that have been so 
substantially transformed as to become, in effect, articles of foreign 
manufacture.
 (ii)(I) As prescribed in regulations issued under this section, 
every person (other than an officer or employee of the United States 
Government acting in official capacity) who engages in the business of 
brokering activities with respect to the manufacture, export, import, or 
transfer of any defense article or defense service designated by the 
President under subsection (a)(1) of this section, or in the business of 
brokering activities with respect to the manufacture, export, import, or 
transfer of any foreign defense article or defense service (as defined 
in subclause (IV)), shall register with the United States Government 
agency charged with the administration of this section, and shall pay a 
registration fee which shall be prescribed by such regulations.
 (II) Such brokering activities shall include 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.
 (III) No person may engage in the business of brokering activities 
described in subclause (I) without a license, issued in accordance with 
this chapter, except that no license shall be required for such 
activities undertaken by or for an agency of the United States 
Government--
 (aa) for use by an agency of the United States Government; or
 (bb) for carrying out any foreign assistance or sales program 
authorized by law and subject to the control of the President by 
other means.
 
 (IV) For purposes of this clause, the term ``foreign defense article 
or defense service'' includes any non-United States defense article or 
defense service of a nature described on the United States Munitions 
List regardless of whether such article or service is of United States 
origin or whether such article or service contains United States origin 
components.
 (B) \1\ The prohibition under such regulations required by the 
second sentence of subparagraph (A) shall not extend to any military 
firearms (or ammunition, components, parts, accessories, and attachments 
for such firearms) of United States manufacture furnished to any foreign 
government by the United States under this chapter or any other foreign 
assistance or sales program of the United States if--
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 \1\ So in original. There are two subpars. designated ``(B)''.
---------------------------------------------------------------------------
 (i) such firearms are among those firearms that the Secretary of 
the Treasury is, or was at any time, required to authorize the 
importation of by reason of the provisions of section 925(e) of 
title 18 (including the requirement for the listing of such firearms 
as curios or relics under section 921(a)(13) of that title); and
 (ii) such foreign government certifies to the United States 
Government that such firearms are owned by such foreign government.
 
 (B) \1\ A copy of each registration made under this paragraph shall 
be transmitted to the Secretary of the Treasury for review regarding law 
enforcement concerns. The Secretary shall report to the President 
regarding such concerns as necessary.
 (2) Except as otherwise specifically provided in regulations issued 
under subsection (a)(1) of this section, no defense articles or defense 
services designated by the President under subsection (a)(1) of this 
section may be exported or imported without a license for such export or 
import, issued in accordance with this chapter and regulations issued 
under this chapter, except that no license shall be required for exports 
or imports made by or for an agency of the United States Government (A) 
for official use by a department or agency of the United States 
Government, or (B) for carrying out any foreign assistance or sales 
program authorized by law and subject to the control of the President by 
other means.
 (3)(A) For each of the fiscal years 1988 and 1989, $250,000 of 
registration fees collected pursuant to paragraph (1) shall be credited 
to a Department of State account, to be available without fiscal year 
limitation. Fees credited to that account shall be available only for 
the payment of expenses incurred for--
 (i) contract personnel to assist in the evaluation of munitions 
control license applications, reduce processing time for license 
applications, and improve monitoring of compliance with the terms of 
licenses; and
 (ii) the automation of munitions control functions and the 
processing of munitions control license applications, including the 
development, procurement, and utilization of computer equipment and 
related software.
 
 (B) The authority of this paragraph may be exercised only to such 
extent or in such amounts as are provided in advance in appropriation 
Acts.
 
(c) Criminal violations; punishment
 
 Any person who willfully violates any provision of this section or 
section 2779 of this title, or any rule or regulation issued under 
either section, or who willfully, in a registration or license 
application or required report, makes any untrue statement of a material 
fact or omits to state a material fact required to be stated therein or 
necessary to make the statements therein not misleading, shall upon 
conviction be fined for each violation not more than $1,000,000 or 
imprisoned not more than ten years, or both.
 
(d) Repealed. Pub. L. 96-70, title III, Sec. 3303(a)(4), Sept. 27, 1979, 
93 Stat. 499
 
(e) Enforcement powers of President
 
 In carrying out functions under this section with respect to the 
export of defense articles and defense services, the President is 
authorized to exercise the same powers concerning violations and 
enforcement which are conferred upon departments, agencies and officials 
by subsections (c), (d), (e), and (g) of section 11 of the Export 
Administration Act of 1979 [50 App. U.S.C. 2410(c), (d), (e), and (g)], 
and by subsections (a) and (c) of section 12 of such Act [50 App. U.S.C. 
2411(a) and (c)], subject to the same terms and conditions as are 
applicable to such powers under such Act [50 App. U.S.C. 2401 et seq.], 
except that section 11(c)(2)(B) of such Act shall not apply, and 
instead, as prescribed in regulations issued under this section, the 
Secretary of State may assess civil penalties for violations of this 
chapter and regulations prescribed thereunder and further may commence a 
civil action to recover such civil penalties, and except further that 
the names of the countries and the types and quantities of defense 
articles for which licenses are issued under this section shall not be 
withheld from public disclosure unless the President determines that the 
release of such information would be contrary to the national interest. 
Nothing in this subsection shall be construed as authorizing the 
withholding of information from the Congress. Notwithstanding section 
11(c) of the Export Administration Act of 1979, the civil penalty for 
each violation involving controls imposed on the export of defense 
articles and defense services under this section may not exceed 
$500,000.
 
(f) Periodic review of items on Munitions List; exemptions
 
 (1) The President shall periodically review the items on the United 
States Munitions List to determine what items, if any, no longer warrant 
export controls under this section. The results of such reviews shall be 
reported to the Speaker of the House of Representatives and to the 
Committee on Foreign Relations and the Committee on Banking, Housing, 
and Urban Affairs of the Senate. Such a report shall be submitted at 
least 30 days before any item is removed from the Munitions List and 
shall describe the nature of any controls to be imposed on that item 
under the Export Administration Act of 1979 [50 App. U.S.C. 2401 et 
seq.].
 (2) The President may not authorize an exemption for a foreign 
country from the licensing requirements of this chapter for the export 
of defense items under subsection (j) of this section or any other 
provision of this chapter until 30 days after the date on which the 
President has transmitted to the Committee on International Relations of 
the House of Representatives and the Committee on Foreign Relations of 
the Senate a notification that includes--
 (A) a description of the scope of the exemption, including a 
detailed summary of the defense articles, defense services, and 
related technical data covered by the exemption; and
 (B) a determination by the Attorney General that the bilateral 
agreement concluded under subsection (j) of this section requires 
the compilation and maintenance of sufficient documentation relating 
to the export of United States defense articles, defense services, 
and related technical data to facilitate law enforcement efforts to 
detect, prevent, and prosecute criminal violations of any provision 
of this chapter, including the efforts on the part of countries and 
factions engaged in international terrorism to illicitly acquire 
sophisticated United States defense items.
 
 (3) Paragraph (2) shall not apply with respect to an exemption for 
Canada from the licensing requirements of this chapter for the export of 
defense items.
 
(g) Identification of persons convicted or subject to indictment for 
violations of certain provisions
 
 (1) The President shall develop appropriate mechanisms to identify, 
in connection with the export licensing process under this section--
 (A) persons who are the subject of an indictment for, or have 
been convicted of, a violation under--
 (i) this section,
 (ii) section 11 of the Export Administration Act of 1979 (50 
U.S.C. App. 2410),
 (iii) section 793, 794, or 798 of title 18 (relating to 
espionage involving defense or classified information) or 
section 2339A of such title (relating to providing material 
support to terrorists),
 (iv) section 16 of the Trading with the Enemy Act (50 U.S.C. 
App. 16),
 (v) section 206 of the International Emergency Economic 
Powers Act (relating to foreign assets controls; 50 U.S.C. App. 
1705) [50 U.S.C. 1705],
 (vi) section 30A of the Securities Exchange Act of 1934 (15 
U.S.C. 78dd-1) or section 104 of the Foreign Corrupt Practices 
Act (15 U.S.C. 78dd-2),
 (vii) chapter 105 of title 18 (relating to sabotage),
 (viii) section 4(b) of the Internal Security Act of 1950 
(relating to communication of classified information; 50 U.S.C. 
783(b)),
 (ix) section 57, 92, 101, 104, 222, 224, 225, or 226 of the 
Atomic Energy Act of 1954 (42 U.S.C. 2077, 2122, 2131, 2134, 
2272, 2274, 2275, and 2276),
 (x) section 601 of the National Security Act of 1947 
(relating to intelligence identities protection; 50 U.S.C. 421), 
or
 (xi) section 603(b) or (c) of the Comprehensive Anti-
 Apartheid Act of 1986 (22 U.S.C. 5113(b) and (c));
 
 (B) persons who are the subject of an indictment or have been 
convicted under section 371 of title 18 for conspiracy to violate 
any of the statutes cited in subparagraph (A); and
 (C) persons who are ineligible--
 (i) to contract with,
 (ii) to receive a license or other form of authorization to 
export from, or
 (iii) to receive a license or other form of authorization to 
import defense articles or defense services from,
 
 any agency of the United States Government.
 
 (2) The President shall require that each applicant for a license to 
export an item on the United States Munitions List identify in the 
application all consignees and freight forwarders involved in the 
proposed export.
 (3) If the President determines--
 (A) that an applicant for a license to export under this section 
is the subject of an indictment for a violation of any of the 
statutes cited in paragraph (1),
 (B) that there is reasonable cause to believe that an applicant 
for a license to export under this section has violated any of the 
statutes cited in paragraph (1), or
 (C) that an applicant for a license to export under this section 
is ineligible to contract with, or to receive a license or other 
form of authorization to import defense articles or defense services 
from, any agency of the United States Government,
 
the President may disapprove the application. The President shall 
consider requests by the Secretary of the Treasury to disapprove any 
export license application based on these criteria.
 (4) A license to export an item on the United States Munitions List 
may not be issued to a person--
 (A) if that person, or any party to the export, has been 
convicted of violating a statute cited in paragraph (1), or
 (B) if that person, or any party to the export, is at the time 
of the license review ineligible to receive export licenses (or 
other forms of authorization to export) from any agency of the 
United States Government,
 
except as may be determined on a case-by-case basis by the President, 
after consultation with the Secretary of the Treasury, after a thorough 
review of the circumstances surrounding the conviction or ineligibility 
to export and a finding by the President that appropriate steps have 
been taken to mitigate any law enforcement concerns.
 (5) A license to export an item on the United States Munitions List 
may not be issued to a foreign person (other than a foreign government).
 (6) The President may require a license (or other form of 
authorization) before any item on the United States Munitions List is 
sold or otherwise transferred to the control or possession of a foreign 
person or a person acting on behalf of a foreign person.
 (7) The President shall, in coordination with law enforcement and 
national security agencies, develop standards for identifying high-risk 
exports for regular end-use verification. These standards shall be 
published in the Federal Register and the initial standards shall be 
published not later than October 1, 1988.
 (8) Upon request of the Secretary of State, the Secretary of Defense 
and the Secretary of the Treasury shall detail to the office primarily 
responsible for export licensing functions under this section, on a 
nonreimbursable basis, personnel with appropriate expertise to assist in 
the initial screening of applications for export licenses under this 
section in order to determine the need for further review of those 
applications for foreign policy, national security, and law enforcement 
concerns.
 (9) For purposes of this subsection--
 (A) the term ``foreign corporation'' means a corporation that is 
not incorporated in the United States;
 (B) the term ``foreign government'' includes any agency or 
subdivision of a foreign government, including an official mission 
of a foreign government;
 (C) the term ``foreign person'' means any person who is not a 
citizen or national of the United States or lawfully admitted to the 
United States for permanent residence under the Immigration and 
Nationality Act [8 U.S.C. 1101 et seq.], and includes foreign 
corporations, international organizations, and foreign governments;
 (D) the term ``party to the export'' means--
 (i) the president, the chief executive officer, and other 
senior officers of the license applicant;
 (ii) the freight forwarders or designated exporting agent of 
the license application; and
 (iii) any consignee or end user of any item to be exported; 
and
 
 (E) the term ``person'' means a natural person as well as a 
corporation, business association, partnership, society, trust, or 
any other entity, organization, or group, including governmental 
entities.
 
(h) Judicial review of designation of items as defense articles or 
services
 
 The designation by the President (or by an official to whom the 
President's functions under subsection (a) of this section have been 
duly delegated), in regulations issued under this section, of items as 
defense articles or defense services for purposes of this section shall 
not be subject to judicial review.
 
(i) Report to Department of State
 
 As prescribed in regulations issued under this section, a United 
States person to whom a license has been granted to export an item on 
the United States Munitions List shall, not later than 15 days after the 
item is exported, submit to the Department of State a report containing 
all shipment information, including a description of the item and the 
quantity, value, port of exit, and end-user and country of destination 
of the item.
 
(j) Requirements relating to country exemptions for licensing of defense 
items for export to foreign countries
 
 (1) Requirement for bilateral agreement
 
 (A) In general
 
 The President may utilize the regulatory or other authority 
pursuant to this chapter to exempt a foreign country from the 
licensing requirements of this chapter with respect to exports 
of defense items only if the United States Government has 
concluded a binding bilateral agreement with the foreign 
country. Such agreement shall--
 (i) meet the requirements set forth in paragraph (2); 
and
 (ii) be implemented by the United States and the foreign 
country in a manner that is legally-binding under their 
domestic laws.
 
 (B) Exception
 
 The requirement to conclude a bilateral agreement in 
accordance with subparagraph (A) shall not apply with respect to 
an exemption for Canada from the licensing requirements of this 
chapter for the export of defense items.
 
 (2) Requirements of bilateral agreement
 
 A bilateral agreement referred to \2\ paragraph (1)--
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 \2\ So in original. Probably should be followed by ``in''.
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 (A) shall, at a minimum, require the foreign country, as 
necessary, to revise its policies and practices, and promulgate 
or enact necessary modifications to its laws and regulations to 
establish an export control regime that is at least comparable 
to United States law, regulation, and policy requiring--
 (i) conditions on the handling of all United States-
 origin defense items exported to the foreign country, 
including prior written United States Government approval 
for any reexports to third countries;
 (ii) end-use and retransfer control commitments, 
including securing binding end-use and retransfer control 
commitments from all end-users, including such documentation 
as is needed in order to ensure compliance and enforcement, 
with respect to such United States-origin defense items;
 (iii) establishment of a procedure comparable to a 
``watchlist'' (if such a watchlist does not exist) and full 
cooperation with United States Government law enforcement 
agencies to allow for sharing of export and import 
documentation and background information on foreign 
businesses and individuals employed by or otherwise 
connected to those businesses; and
 (iv) establishment of a list of controlled defense items 
to ensure coverage of those items to be exported under the 
exemption; and
 
 (B) should, at a minimum, require the foreign country, as 
necessary, to revise its policies and practices, and promulgate 
or enact necessary modifications to its laws and regulations to 
establish an export control regime that is at least comparable 
to United States law, regulation, and policy regarding--
 (i) controls on the export of tangible or intangible 
technology, including via fax, phone, and electronic media;
 (ii) appropriate controls on unclassified information 
relating to defense items exported to foreign nationals;
 (iii) controls on international arms trafficking and 
brokering;
 (iv) cooperation with United States Government agencies, 
including intelligence agencies, to combat efforts by third 
countries to acquire defense items, the export of which to 
such countries would not be authorized pursuant to the 
export control regimes of the foreign country and the United 
States; and
 (v) violations of export control laws, and penalties for 
such violations.
 
 (3) Advance certification
 
 Not less than 30 days before authorizing an exemption for a 
foreign country from the licensing requirements of this chapter for 
the export of defense items, the President shall transmit to the 
Committee on International Relations of the House of Representatives 
and the Committee on Foreign Relations of the Senate a certification 
that--
 (A) the United States has entered into a bilateral agreement 
with that foreign country satisfying all requirements set forth 
in paragraph (2);
 (B) the foreign country has promulgated or enacted all 
necessary modifications to its laws and regulations to comply 
with its obligations under the bilateral agreement with the 
United States; and
 (C) the appropriate congressional committees will continue 
to receive notifications pursuant to the authorities, 
procedures, and practices of section 2776 of this title for 
defense exports to a foreign country to which that section would 
apply and without regard to any form of defense export licensing 
exemption otherwise available for that country.
 
 (4) Definitions
 
 In this section:
 
 (A) Defense items
 
 The term ``defense items'' means defense articles, defense 
services, and related technical data.
 
 (B) Appropriate congressional committees
 
 The term ``appropriate congressional committees'' means--
 (i) the Committee on International Relations and the 
Committee on Appropriations of the House of Representatives; 
and
 (ii) the Committee on Foreign Relations and the 
Committee on Appropriations of the Senate.
 
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