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1 February 1998

    Source: http://www.access.gpo.gov/nara/cfr/index.html

    ------------------------------------------------------------

    [Code of Federal Regulations]
    [Title 22, Volume 1, Parts 1 to 299]
    [Revised as of April 1, 1997]
    From the U.S. Government Printing Office via GPO Access
    [CITE: 22CFR123]

    [Page 353-365]

                           TITLE 22--FOREIGN RELATIONS

                         CHAPTER I--DEPARTMENT OF STATE

    PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

    Sec.
    123.1 Requirement for export or temporary import licenses.
    123.2 Import jurisdiction.
    123.3 Temporary import licenses.
    123.4 Temporary import license exemptions.
    123.5 Temporary export licenses.
    123.6 Foreign trade zones and U.S. Customs bonded warehouses.
    123.7 Exports to warehouses or distribution points outside the United
              States.
    123.8  Special controls on vessels, aircraft and satellites covered by
              the U.S. Munitions List.
    123.9  Country of ultimate destination and approval of reexports or
              retransfers.
    123.10  Non-transfer and use assurances.

    [[Page 354]]

    123.11  Movements of vessels and aircraft covered by the U.S. Munitions
              List outside the United States.
    123.12  Shipments between U.S. possessions.
    123.13  Domestic aircraft shipments via a foreign country.
    123.14  Import certificate/delivery verification procedure.
    123.15  Congressional notification for licenses.
    123.16  Exemptions of general applicability.
    123.17  Exports of firearms and ammunition.
    123.18  Firearms for personal use of members of the U.S. Armed Forces
              and civilian employees of the U.S. Government.
    123.19  Canadian and Mexican border shipments.
    123.20  Nuclear materials.
    123.21  Duration, renewal and disposition of licenses.
    123.22  Filing of export licenses and Shipper's Export Declarations with
              District Directors of Customs.
    123.23  Monetary value of shipments.
    123.24  Shipments by mail.
    123.25  Amendments to licenses.
    123.26  Recordkeeping requirement for exemptions.
    123.27  Temporary export for personal use of Category XIII(b)(1)
              cryptographic products.

        Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C.
    2752, 2778); E.O. 11958, 42 FR 4311, 3 CFR 1977 Comp. 79; 22 U.S.C.
    2658.

        Source: 58 FR 39299, July 22, 1993, unless otherwise noted.

    Sec. 123.1  Requirement for export or temporary import licenses.

        (a) Any person who intends to export or to import temporarily a
    defense article must obtain the approval of the Office of Defense Trade
    Controls prior to the export or temporary import, unless the export or
    temporary import qualifies for an exemption under the provisions of this
    subchapter. Applications for export or temporary import must be made as
    follows:
        (1) Applications for licenses for permanent export must be made on
    Form DSP-5 (unclassified);
        (2) Applications for licenses for temporary export must be made on
    Form DSP-73 (unclassified);
        (3) Applications for licenses for temporary import must be made on
    Form DSP-61 (unclassified); and
        (4) Applications for the export or temporary import of classified
    defense articles or classified technical data must be made on Form DSP-
    85.
        (b) Applications for Department of State export licenses must be
    confined to proposed exports of defense articles including technical
    data.
        (c) As a condition to the issuance of a license or other approval,
    the Office of Defense Trade Controls may require all pertinent
    documentary information regarding the proposed transaction and proper
    completion of the application form as follows:
        (1) Form DSP-5, DSP-61, DSP-73, and DSP-85 applications must have an
    entry in each block where space is provided for an entry. All requested
    information must be provided.
        (2) Attachments and supporting technical data or brochures should be
    submitted in seven collated copies. Two copies of any freight forwarder
    lists must be submitted. If the request is limited to renewal of a
    previous license or for the export of spare parts, only two sets of any
    attachment (including freight forwarder lists) and one copy of the
    previous license should be submitted.
        (3) A certification letter signed by an empowered official must
    accompany all application submissions (see Sec. 126.13 of this
    subchapter).
        (4) An application for a license under this part for the permanent
    export of defense articles sold commercially must be accompanied by a
    copy of a purchase order, letter of intent or other appropriate
    documentation. In cases involving the U.S. Foreign Military Sales
    program, three copies of the relevant Department of Defense Form 1513
    are required, unless the procedures of Sec. 126.4(c) or Sec. 126.6 of
    this subchapter are followed.
        (5) Form DSP-83, duly executed, must accompany all license
    applications for the permanent export of significant military equipment,
    including classified hardware or classified technical data (see
    Secs. 123.10 and 125.3 of this subchapter).
        (6) A statement concerning the payment of political contributions,
    fees and commissions must accompany a permanent export application if
    the export involves defense articles or defense services valued in an
    amount of $500,000 or more and is being sold commercially to or for the
    use of the armed

    [[Page 355]]

    forces of a foreign country or international organization (see part 130
    of this subchapter).
        (d) Provisions for furnishing the type of defense services described
    in Sec. 120.9(a) of this subchapter are contained in part 124 of this
    subchapter. Provisions for the export or temporary import of technical
    data and classified defense articles are contained in part 125 of this
    subchapter.
        (e) A request for a license for the export of unclassified technical
    data (DSP-5) related to a classified defense article should specify any
    classified technical data or material that subsequently will be required
    for export in the event of a sale.

    Sec. 123.2  Import jurisdiction.

        The Department of State regulates the temporary import of defense
    articles. Permanent imports of defense articles into the United States
    are regulated by the Department of the Treasury (see 27 CFR parts 47,
    178 and 179).

    Sec. 123.3  Temporary import licenses.

        (a) A license (DSP-61) issued by the Office of Defense Trade
    Controls is required for the temporary import and subsequent export of
    unclassified defense articles, unless exempted from this requirement
    pursuant to Sec. 123.4. This requirement applies to:
        (1) Temporary imports of unclassified defense articles that are to
    be returned directly to the country from which they were shipped to the
    United States;
        (2) Temporary imports of unclassified defense articles in transit to
    a third country;
        (b) A bond may be required as appropriate (see part 125 of this
    subchapter for license requirements for technical data and classified
    defense articles.)

    Sec. 123.4  Temporary import license exemptions.

        (a) District Directors of Customs shall permit the temporary import
    (and subsequent export) without a license, for a period of up to 4
    years, of unclassified U.S.-origin defense articles (including any
    article manufactured abroad pursuant to U.S. Government approval) if the
    article temporarily imported:
        (1) Is serviced (e.g., inspection, testing, calibration or repair,
    including overhaul, reconditioning and one-to-one replacement of any
    defective articles, parts or components, but excluding any modification,
    enhancement, upgrade or other form of alteration or improvement that
    changes the basic performance of the article), and is subsequently
    returned to the country from which it was imported. Shipment may be made
    by the U.S. importer or a foreign government representative of the
    country from which the goods were imported; or
        (2) Is to be enhanced, upgraded or incorporated into another article
    which has already been authorized by the Office of Defense Trade
    Controls for permanent export; or
        (3) Is imported for the purpose of exhibition, demonstration or
    marketing in the United States and is subsequently returned to the
    country from which it was imported; or
        (4) Has been rejected for permanent import by the Department of the
    Treasury and is being returned to the country from which it was shipped;
    or
        (5) Is approved for such import under the U.S. Foreign Military
    Sales (FMS) program pursuant to an executed U.S. Department of Defense
    Letter of Offer and Acceptance (DD Form 1513).

        Note: These Exceptions do not apply to shipments that transit the
    U.S. to or from Canada (see Sec. 123.19 and Sec. 126.5 of this
    subchapter for exceptions).

        (b) District Directors of Customs shall permit the temporary import
    (but not the subsequent export) without a license of unclassified
    defense articles that are to be incorporated into another article, or
    modified, enhanced, upgraded, altered, improved or serviced in any other
    manner that changes the basic performance or productivity of the article
    prior to being returned to the country from which they were shipped or
    prior to being shipped to a third country. A DSP-5 is required for the
    reexport of such unclassified defense articles after incorporation into
    another article, modification, enhancement, upgrading, alteration or
    improvement.
        (c) Requirements. To use an exemption under Sec. 123.4 (a) or (b),
    the following criteria must be met:

    [[Page 356]]

        (1) The importer must meet the eligibility requirements set forth in
    Sec. 120.1(b) of this subchapter;
        (2) At the time of export, the ultimate consignee named on the
    Shipper's Export Declaration (SED) must be the same as the foreign
    consignee or end-user of record named at the time of import; and
        (3) As stated in Sec. 126.1 of this subchapter, the temporary import
    must not be from or on behalf of a proscribed country listed in that
    section unless an exception has been granted in accordance with
    Sec. 126.3 of this subchapter.
        (d) Procedures. To the satisfaction of the District Director of
    Customs, the importer and exporter must comply with the following
    procedures:
        (1) At the time of temporary import--
        (i) File and annotate the applicable U.S. Customs document (e.g.,
    Form CF 3461, 7512, 7501, 7523 or 3311) to read: ``This shipment is
    being imported in accordance with and under the authority of 22 CFR
    123.4(a) (identify subsection),'' and
        (ii) Include, on the invoice or other appropriate documentation, a
    complete list and description of the defense article(s) being imported,
    including quantity and U.S. dollar value; and
        (2) At the time of export, file with the District Director of
    Customs at the port of exit a Shipper's Export Declaration (Department
    of Commerce Form 7525-V) and include on the SED or as an attachment the
    following information:
        (i) the U.S. Customs entry document number or a copy of the U.S.
    Customs documentation under which the article was imported;
        (ii) the following statement: ``22 CFR (identify section) and 22 CFR
    120.1(b) applicable.''

    Sec. 123.5  Temporary export licenses.

        (a) The Office of Defense Trade Controls may issue a license for the
    temporary export of unclassified defense articles (DSP-73). Such
    licenses are valid only if (1) the article will be exported for a period
    of less than 4 years and will be returned to the United States and (2)
    transfer of title will not occur during the period of temporary export.
    Accordingly, articles exported pursuant to a temporary export license
    may not be sold or otherwise permanently transferred to a foreign person
    while they are overseas under a temporary export license. A renewal of
    the license or other written approval must be obtained from the Office
    of Defense Trade Controls if the article is to remain outside the United
    States beyond the period for which the license is valid.
        (b) Requirements. Defense articles authorized for temporary export
    under this section may be shipped only from a port in the United States
    where a District Director of Customs is available, or from a U.S. Post
    Office (see 39 CFR part 20), as appropriate. The license for temporary
    export must be presented to the District Director of Customs who, upon
    verification, will endorse the exit column on the reverse side of the
    license. In some instances of the temporary export of technical data
    (e.g postal shipments), self-endorsement will be necessary (see
    Sec. 123.22(d)). The endorsed license for temporary export is to be
    retained by the licensee. In the case of a military aircraft or vessel
    exported under its own power, the endorsed license must be carried on
    board such vessel or aircraft as evidence that it has been duly
    authorized by the Department of State to leave the United States
    temporarily.
        (c) Upon the return to the United States of defense articles covered
    by a license for temporary export, the license will be endorsed in the
    entry column by the District Director of Customs. This procedure shall
    be followed for all exits and entries made during the period for which
    the license is valid. The licensee must send the license to the Office
    of Defense Trade Controls immediately upon expiration or after the final
    return of the defense articles approved for export, whichever occurs
    first.

    Sec. 123.6  Foreign trade zones and U.S. Customs bonded warehouses.

        Foreign trade zones and U.S. Customs bonded warehouses are
    considered integral parts of the United States for the purpose of this
    subchapter. An export license is therefore not required for shipment
    between the United States and a foreign trade zone or a Customs bonded
    warehouse. In the case

    [[Page 357]]

    of classified defense articles, the provisions of the Department of
    Defense Industrial Security Manual will apply. An export license is
    required for all shipments of articles on the U.S. Munitions List from
    foreign trade zones and U.S. Customs bonded warehouses to foreign
    countries, regardless of how the articles reached the zone or warehouse.

    Sec. 123.7  Exports to warehouses or distribution points outside the
              United States.

        Unless the exemption under Sec. 123.16(b)(1) is used, a license is
    required to export defense articles to a warehouse or distribution point
    outside the United States for subsequent resale and will normally be
    granted only if an agreement has been approved pursuant to Sec. 124.14
    of this subchapter.

    Sec. 123.8  Special controls on vessels, aircraft and satellites covered
              by the U.S. Munitions List.

        (a) Transferring registration or control to a foreign person of any
    aircraft, vessel, or satellite on the U.S. Munitions List is an export
    for purposes of this subchapter and requires a license or written
    approval from the Office of Defense Trade Controls. This requirement
    applies whether the aircraft, vessel, or satellite is physically located
    in the United States or abroad.
        (b) The registration in a foreign country of any aircraft, vessel or
    satellite covered by the U.S. Munitions List which is not registered in
    the United States but which is located in the United States constitutes
    an export. A license or written approval from the Office of Defense
    Trade Controls is therefore required. Such transactions may also require
    the prior approval of the Maritime Administration, the Federal Aviation
    Administration or other agencies of the U.S. Government.

    Sec. 123.9  Country of ultimate destination and approval of reexports or
              retransfers.

        (a) The country designated as the country of ultimate destination on
    an application for an export license, or on a Shipper's Export
    Declaration where an exemption is claimed under this subchapter, must be
    the country of ultimate end-use. The written approval of the Office of
    Defense Trade Controls must be obtained before reselling, transferring,
    transshipping, or disposing of a defense article to any end user, end
    use or destination other than as stated on the export license, or on the
    Shipper's Export Declaration in cases where an exemption is claimed
    under this subchapter. Exporters must ascertain the specific end-user
    and end-use prior to submitting an application to the Office of Defense
    Trade Controls or claiming an exemption under this subchapter.
        (b) The exporter shall incorporate the following statement as an
    integral part of the bill of lading, and the invoice whenever defense
    articles on the U.S. Munitions List are to be exported:

        These commodities are authorized by the U.S. Government for export
    only to [country of ultimate destination] for use by [end-user]. They
    may not be transferred, transshipped on a non-continuous voyage, or
    otherwise be disposed of in any other country, either in their original
    form or after being incorporated into other end-items, without the prior
    written approval of the U.S. Department of State.''

        (c) A U.S. person or a foreign person requesting approval for the
    reexport or retransfer, or change in end-use, of a defense article shall
    submit a written request which shall be subject to all the documentation
    required for a permanent export license (see Sec. 123.1) and shall
    contain the following:
        (1) The license number under which the defense article was
    previously authorized for export from the United States;
        (2) A precise description, quantity and value of the defense
    article;
        (3) A description of the new end-use; and
        (4) Identification of the new end-user.
        (d) The written approval of the Office of Defense Trade Controls
    must be obtained before reselling, transferring, transshipping on a non-
    continuous voyage, or disposing of a defense article in any country
    other than the country of ultimate destination, or anyone other than the
    authorized end-user, as stated on the Shipper's Export Declaration in
    cases where an exemption is claimed under this subchapter.

    [[Page 358]]

        (e) Reexports or retransfers of U.S.-origin components incorporated
    into a foreign defense article to a government of a NATO country, or the
    governments of Australia or Japan, are authorized without the prior
    written approval of the Office of Defense Trade Controls, provided:
        (1) The U.S.-origin components were previously authorized for export
    from the United States, either by a license or an exemption;
        (2) The U.S.-origin components are not significant military
    equipment, the items are not major defense equipment sold under a
    contract in the amount of $14,000,000 ($14 million) or more; the
    articles are not defense articles or defense services sold under a
    contract in the amount of $50,000,000 ($50 million) or more; and are not
    identified in part 121 of this subchapter as Missile Technology Control
    Regime (MTCR) items; and
        (3) The person reexporting the defense article must provide written
    notification to the Office of Defense Trade Controls of the retransfer
    not later than 30 days following the reexport. The notification must
    state the articles being reexported and the recipient government.
        (4) In certain cases, the Director, Office of Defense Trade
    Controls, may place retransfer restrictions on a license prohibiting use
    of this exemption.

    Sec. 123.10  Non-transfer and use assurances.

        (a) A nontransfer and use certificate (Form DSP-83) is required for
    the export of significant military equipment and classified articles
    including classified technical data. A license will not be issued until
    a completed Form DSP-83 has been received by the Office of Defense Trade
    Controls. This form is to be executed by the foreign consignee, foreign
    end-user, and the applicant. The certificate stipulates that, except as
    specifically authorized by prior written approval of the Department of
    State, the foreign consignee and foreign end-user will not reexport,
    resell or otherwise dispose of the significant military equipment
    enumerated in the application outside the country named as the location
    of the foreign end-use or to any other person.
        (b) The Office of Defense Trade Controls may also require a DSP-83
    for the export of any other defense articles or defense services.
        (c) When a DSP-83 is required for an export of any defense article
    or defense service to a non-governmental foreign end-user, the Office of
    Defense Trade Controls may require as a condition of issuing the license
    that the appropriate authority of the government of the country of
    ultimate destination also execute the certificate.

    Sec. 123.11  Movements of vessels and aircraft covered by the U.S.
              Munitions List outside the United States.

        (a) A license issued by the Office of Defense Trade Controls is
    required whenever a privately-owned aircraft or vessel on the U.S.
    Munitions List makes a voyage outside the United States.
        (b) Exemption. An export license is not required when a vessel or
    aircraft referred to in paragraph (a) of this section departs from the
    United States and does not enter the territorial waters or airspace of a
    foreign country if no defense articles are carried as cargo. Such a
    vessel or aircraft may not enter the territorial waters or airspace of a
    foreign country before returning to the United States, or carry as cargo
    any defense article, without a temporary export license (Form DSP-73)
    from the Department of State. (See Sec. 123.5.)

    Sec. 123.12  Shipments between U.S. possessions.

        An export license is not required for the shipment of defense
    articles between the United States, the Commonwealth of Puerto Rico, and
    U.S. possessions. A license is required, however, for the export of
    defense articles from these areas to foreign countries.

    Sec. 123.13  Domestic aircraft shipments via a foreign country.

        A license is not required for the shipment by air of a defense
    article from one location in the United States to another location in
    the United States via a foreign country. The pilot of the aircraft must,
    however, file a written statement with the District Director of

    [[Page 359]]

    Customs at the port of exit in the United States. The original statement
    must be filed at the time of exit with the District Director of Customs.
    A duplicate must be filed at the port of reentry with the District
    Director of Customs, who will duly endorse it and transmit it to the
    District Director of Customs at the port of exit. The statement will be
    as follows:

        Domestic Shipment Via a Foreign Country of Articles on the U.S.
                                 Munitions List

        Under penalty according to Federal law, the undersigned certifies
    and warrants that all the information in this document is true and
    correct, and that the equipment listed below is being shipped from (U.S.
    port of exit) via (foreign country) to (U.S. port of entry), which is
    the final destination in the United States.

                            Description of Equipment

    Quantity:_______________________________________________________________
    Equipment:______________________________________________________________
    Value:__________________________________________________________________
    Signed:_________________________________________________________________

        Endorsement: Customs Inspector.

    Port of Exit____________________________________________________________
    Date:___________________________________________________________________
    Signed:_________________________________________________________________

        Endorsement: Customs Inspector.
    Port of Entry:__________________________________________________________
    Date:___________________________________________________________________

    Sec. 123.14  Import certificate/delivery verification procedure.

        (a) The Import Certificate/Delivery Verification Procedure is
    designed to assure that a commodity imported into the territory of those
    countries participating in IC/DV procedures will not be diverted,
    transshipped, or reexported to another destination except in accordance
    with export control regulations of the importing country.
        (b) Exports. The Office of Defense Trade Controls may require the
    IC/DV procedure on proposed exports of defense articles to non-
    government entities in those countries participating in IC/DV
    procedures. In such cases, U.S. exporters must submit both an export
    license application (the completed Form DSP-5) and the original Import
    Certificate, which must be provided and authenticated by the government
    of the importing country. This document verifies that the foreign
    importer complied with the import regulations of the government of the
    importing country and that the importer declared the intention not to
    divert, transship or reexport the material described therein without the
    prior approval of that government. After delivery of the commodities to
    the foreign consignee, the Department of State may also require U.S.
    exporters to furnish Delivery Verification documentation from the
    government of the importing country. This documentation verifies that
    the delivery was in accordance with the terms of the approved export
    license. Both the Import Certificate and the Delivery Verification must
    be furnished to the U.S. exporter by the foreign importer.
        (c) Triangular transactions. When a transaction involves three or
    more countries that have adopted the IC/DV procedure, the governments of
    these countries may stamp a triangular symbol on the Import Certificate.
    This symbol is usually placed on the Import Certificate when the
    applicant for the Import Certificate (the importer) states either (1)
    that there is uncertainty whether the items covered by the Import
    Certificate will be imported into the country issuing the Import
    Certificate; (2) that he or she knows that the items will not be
    imported into the country issuing the Import Certificate; or (3) that,
    if the items are to be imported into the country issuing the Import
    Certificate, they will subsequently be reexported to another
    destination. All parties, including the ultimate consignee in the
    country of ultimate destination, must be shown on the completed Import
    Certificate.

    Sec. 123.15  Congressional notification for licenses.

        All exports of major defense equipment, as defined in Sec. 120.8 of
    this subchapter, sold under a contract in the amount of $14,000,000 or
    more, or exports of defense articles and defense services sold under a
    contract in the amount of $50,000,000 or more, may take place only after
    the Office of Defense Trade Controls notifies the exporter through
    issuance of a license or other approval that 30 calendar days have
    elapsed since receipt by the Congress of the certification required by
    22 U.S.C. 2776(c)(1) and that Congress has

    [[Page 360]]

    not enacted a joint resolution prohibiting the export. Persons who
    intend to export defense articles and defense services pursuant to any
    exemption in this subchapter (e.g., Sec. 126.5 of this subchapter) under
    the circumstances described in the first sentence of this subsection
    must notify the Office of Defense Trade Controls by letter of the
    intended export and, prior to transmittal to Congress, provide a signed
    contract and a DSP-83 signed by the applicant, the foreign consignee and
    end-user.

    Sec. 123.16  Exemptions of general applicability.

        (a) The following exemptions apply to exports of unclassified
    defense articles for which no approval is needed from the Office of
    Defense Trade Controls. These exemptions do not apply to: Proscribed
    destinations under Sec. 126.1 of this subchapter; exports for which
    Congressional notification is required (see Sec. 123.15 of this
    subchapter); MTCR articles; Significant Military Equipment (SME); and
    may not be used by persons who are generally ineligible as described in
    Sec. 120.1(c) of this subchapter. All shipments of defense articles,
    including those to and from Canada, require a Shipper's Export
    Declaration (SED) or notification letter. If the export of a defense
    article is exempt from licensing, the SED must cite the exemption. Refer
    to Sec. 123.22 for Shipper's Export Declaration and letter notification
    requirements.
        (b) The following exports are exempt from the licensing requirements
    of this subchapter.
        (1) District Directors of Customs shall permit the export without a
    license of defense hardware being exported in furtherance of a
    manufacturing license agreement, technical assistance agreement,
    distribution agreement or an arrangement for distribution of items
    identified in Category XIII(b)(1), approved in accordance with Part 124,
    provided that:
        (i) The defense hardware to be exported supports the activity and is
    identified by item, quantity and value in the agreement or arrangement;
    and
        (ii) Any provisos or limitations placed on the authorized agreement
    or arrangement are adhered to; and
        (iii) The exporter certifies on the Shipper's Export Declaration
    that the export is exempt from the licensing requirements of this
    subchapter. This is done by writing, ``22 CFR 123.16(b)(1) and the
    agreement or arrangement (identify/state number) applicable''; and
        (iv) The total value of all shipments does not exceed the value
    authorized in the agreement or arrangement.
        (v) In the case of a distribution agreement, export must be made
    directly to the approved foreign distributor.
        (2) District Directors of Customs shall permit the export of
    components or spare parts (for exemptions for firearms and ammunition
    see Sec. 123.17) without a license when the total value does not exceed
    $500 in a single transaction and:
        (i) The components or spare parts are being exported to support a
    defense article previously authorized for export; and
        (ii) The spare parts or components are not going to a distributor,
    but to a previously approved end-user of the defense articles; and
        (iii) The spare parts or components are not to be used to enhance
    the capability of the defense article;
        (iv) exporters shall not split orders so as not to exceed the dollar
    value of this exemption;
        (v) the exporter may not make more than 24 shipments per calender
    year to the previously authorized end user;
        (vi) The exporter must certify on the Shipper's Export Declaration
    that the export is exempt from the licensing requirements of this
    subchapter. This is done by writing 22 CFR 123.16(b)(2) applicable.
        (3) District Directors of Customs shall permit the export without a
    license, of packing cases specially designed to carry defense articles.
        (4) District Directors of Customs shall permit the export without a
    license, of unclassified models or mock-ups of defense articles,
    provided that such models or mock-ups are nonoperable and do not reveal
    any technical data in excess of that which is exempted from the
    licensing requirements of Sec. 125.4(b) of this subchapter and do not
    contain components covered by the

    [[Page 361]]

    U.S. Munitions List (see Sec. 120.6(b) of this subchapter). Some models
    or mockups built to scale or constructed of original materials can
    reveal technical data. U.S. persons who avail themselves of this
    exemption must provide a written certification to the District Director
    of Customs that these conditions are met. This exemption does not imply
    that the Office of Defense Trade Controls will approve the export of any
    defense articles for which models or mocks-ups have been exported
    pursuant to this exemption.
        (5) District Directors of Customs shall permit the temporary export
    without a license of unclassified defense articles to any public
    exhibition, trade show, air show or related event if that article has
    previously been licensed for a public exhibition, trade show, air show
    or related event and the license is still valid. U.S. persons who avail
    themselves of this exemption must provide a written certification to the
    District Director of Customs that these conditions are met.
        (6) For exemptions for firearms and ammunition for personal use
    refer to Sec. 123.17.
        (7) For exemptions for firearms for personal use of members of the
    U.S. Armed Forces and civilian employees see Sec. 123.18.
        (8) For exports to Canada refer to Sec. 126.5 of this subchapter.
        (9) District Directors of Customs shall permit the temporary export
    without a license by a U.S. person of any unclassified component, part,
    tool or test equipment to a subsidiary, affiliate or facility owned or
    controlled by the U.S. person (see Sec. 122.2(c) of this subchapter) if
    the component, part, tool or test equipment is to be used for
    manufacture, assembly, testing, production, or modification provided:
        (i) The U.S. person is registered with the Office of Defense Trade
    Controls and complies with all requirements set forth in part 122 of
    this subchapter;
        (ii) No defense article exported under this exemption may be sold or
    transferred without the appropriate license or other approval from the
    Office of Defense Trade Controls.

    [58 FR 39299, July 22, 1993, as amended at 59 FR 29951, June 10, 1994;
    59 FR 45622, Sept. 2, 1994]

    Sec. 123.17  Exports of firearms and ammunition.

        (a) Except as provided in Sec. 126.1 of this subchapter, District
    Directors of Customs shall permit the export without a license of
    components and parts for Category I(a) firearms, except barrels,
    cylinders, receivers (frames) or complete breach mechanisms when the
    total value does not exceed $500 wholesale in any transaction.
        (b) District Directors of Customs shall permit the export without a
    license of nonautomatic firearms covered by Category I(a) of Sec. 121.1
    of this subchapter if they were manufactured in or before 1898, or are
    replicas of such firearms.
        (c) District Directors of Customs shall permit U.S. persons to
    export temporarily from the United States without a license not more
    than three nonautomatic firearms in Category I(a) of Sec. 121.1 of this
    subchapter and not more than 1,000 cartridges therefor, provided that:
        (1) A declaration by the U.S. person and an inspection by a customs
    officer is made;
        (2) The firearms and accompanying ammunition must be with the U.S.
    person's baggage or effects, whether accompanied or unaccompanied (but
    not mailed); and
        (3) They must be for that person's exclusive use and not for
    reexport or other transfer of ownership. The foregoing exemption is not
    applicable to a crew-member of a vessel or aircraft unless the crew-
    member declares the firearms to a Customs officer upon each departure
    from the United States, and declares that it is his or her intention to
    return the article(s) on each return to the United States. It is also
    not applicable to the personnel referred to in Sec. 123.18.
        (d) District Directors of Customs shall permit a foreign person to
    export without a license such firearms in Category I(a) of Sec. 121.1 of
    this subchapter and ammunition therefor as the foreign person brought
    into the United States under the provisions of 27 CFR 178.115(d). (The
    latter provision specifically excludes from the definition of
    importation the bringing into the United States of firearms and
    ammunition

    [[Page 362]]

    by certain foreign persons for specified purposes).
        (e) District Directors of Customs shall permit U.S. persons to
    export without a license ammunition for nonautomatic firearms referred
    to in paragraph (a) of this section if the quantity does not exceed
    1,000 cartridges (or rounds) in any shipment. The ammunition must also
    be for personal use and not for resale or other transfer of ownership.
    The foregoing exemption is also not applicable to the personnel referred
    to in Sec. 123.18.

    Sec. 123.18  Firearms for personal use of members of the U.S. Armed
              Forces and civilian employees of the U.S. Government.

        The following exemptions apply to members of the U.S. Armed Forces
    and civilian employees of the U.S. Government who are U.S. persons (both
    referred to herein as personnel). The exemptions apply only to such
    personnel if they are assigned abroad for extended duty. These
    exemptions do not apply to dependents.
        (a) Firearms. District Directors of Customs shall permit
    nonautomatic firearms in Category I(a) of Sec. 121.1 of this subchapter
    and parts therefor to be exported, except by mail, from the United
    States without a license if:
        (1) They are consigned to servicemen's clubs abroad for uniformed
    members of the U.S. Armed Forces; or,
        (2) In the case of a uniformed member of the U.S. Armed Forces or a
    civilian employee of the Department of Defense, they are for personal
    use and not for resale or other transfer of ownership, and if the
    firearms are accompanied by a written authorization from the commanding
    officer concerned; or
        (3) In the case of other U.S. Government employees, they are for
    personal use and not for resale or other transfer of ownership, and the
    Chief of the U.S. Diplomatic Mission or his designee in the country of
    destination has approved in writing to Department of State the import of
    the specific types and quantities of firearms into that country. The
    exporter shall provide a copy of this written statement to the District
    Director of Customs.
        (b) Ammunition. District Directors of Customs shall permit not more
    than 1,000 cartridges (or rounds) of ammunition for the firearms
    referred to in paragraph (a) of this section to be exported (but not
    mailed) from the United States without a license when the firearms are
    on the person of the owner or with his baggage or effects, whether
    accompanied or unaccompanied (but not mailed).

    Sec. 123.19  Canadian and Mexican border shipments.

        A shipment originating in Canada or Mexico which incidentally
    transits the United States en route to a delivery point in the same
    country that originated the shipment is exempt from the requirement for
    an in transit license.

    Sec. 123.20  Nuclear materials.

        (a) The provisions of this subchapter do not apply to equipment in
    Category VI(e) and Category XVI of Sec. 121.1 of this subchapter to the
    extent such equipment is under the export control of the Department of
    Energy or the Nuclear Regulatory Commission pursuant to the Atomic
    Energy Act of 1954, as amended, and the Nuclear Non-Proliferation Act of
    1978.
        (b) A license for the export of any machinery, device, component,
    equipment, or technical data relating to equipment referred to in
    Category VI(e) will not be granted unless the proposed export comes
    within the scope of an existing Agreement for Cooperation for Mutual
    Defense Purposes concluded pursuant to the Atomic Energy Act of 1954, as
    amended, with the government of the country to which the article is to
    be exported. Licenses may be granted in the absence of such an agreement
    only (1) if the proposed export involves an article which is identical
    to that in use in an unclassified civilian nuclear power plant, (2) if
    the proposed export has no relationship to naval nuclear propulsion, and
    (3) if it is not for use in a naval propulsion plant.

    Sec. 123.21  Duration, renewal and disposition of licenses.

        (a) A license is valid for four years. The license expires when the
    total value or quantity authorized has been shipped or when the date of
    expiration has been reached, whichever occurs first. Defense articles to
    be shipped

    [[Page 363]]

    thereafter require a new application and license. The new application
    should refer to the expired license. It should not include references to
    any defense articles other than those of the unshipped balance of the
    expired license.
        (b) Unused, expired, expended, suspended, or revoked licenses must
    be returned immediately to the Department of State.

    Sec. 123.22  Filing of export licenses and Shipper's Export Declarations
              with District Directors of Customs.

        (a) The exporter must deposit the license with the District Director
    of Customs at the port of exit before shipment, unless paragraph (d) of
    this section or Sec. 125.9 applies (for exports by mail, see
    Sec. 123.24). Licenses for temporary export or temporary import are to
    be retained by the exporter and presented to the District Director of
    Customs at the time of import or export for endorsement. If necessary,
    the export may be made through a port other than the one designated on
    the license if the exporter complies with the procedures established by
    the U.S. Customs Service. Every license will be returned to the Office
    of Defense Trade Controls by the District Director of Customs when the
    total value or quantity authorized has been shipped or when the date of
    expiration is reached, whichever occurs first.
        (b) Before shipping any defense article, the exporter must also file
    a Shipper's Export Declaration with the District Director of Customs at
    the port of exit (unless otherwise exempt from filing a Shipper's Export
    Declaration). The District Director of Customs at the port of exit must
    authenticate the Shipper's Export Declaration, and endorse the license
    to show the shipments actually made. The District Director of Customs
    will return a copy of each authenticated Shipper's Export Declaration to
    the Office of Defense Trade Controls.
        (c) Except for the export of unclassified technical data, an
    exporter must file a Shipper's Export Declaration with District
    Directors of Customs or Postmasters in those cases in which no export
    license is required because of an exemption under this subchapter. The
    exporter must certify that the export is exempt from the licensing
    requirements of this subchapter by writing 22 CFR (identify section) and
    22 CFR 120.1(b) applicable on the Shipper's Export Declaration, and by
    identifying the section under which an exemption is claimed. A copy of
    each such declaration must be mailed immediately by the exporter to the
    Office of Defense Trade Controls.
        (d) A Shipper's Export Declaration is not required for exports of
    unclassified technical data. Exporters shall notify the Office of
    Defense Trade Controls of the initial export of the data by either
    returning the license after self endorsement or by sending a letter to
    the Office of Defense Trade Controls. The letter shall provide the
    method, date, license number and airway bill number (if applicable) of
    the shipment. The letter must be signed by an empowered official of the
    company and provided to the Office of Defense Trade Controls within
    thirty days of the initial export.
        (e) If a license for the export of unclassified defense articles,
    including technical data, is used but not endorsed by U.S. Customs or a
    Postmaster for whatever reason (e.g., electronic transmission,
    unavailability of Customs officer or Postmaster, etc.), the person
    exporting the article must self-endorse the license, showing when and
    how the export took place. Every license shall also be returned by the
    exporter to the Office of Defense Trade Controls when the total value or
    quantity authorized has been shipped or when the date of expiration is
    reached, whichever occurs first.

    [58 FR 39299, July 22, 1993, as amended at 61 FR 48831, Sept. 17, 1996]

    Sec. 123.23  Monetary value of shipments.

        District Directors of Customs shall permit the shipment of defense
    articles identified on any license when the total value of the export
    does not exceed the aggregate monetary value (not quantity) stated on
    the license by more than ten percent, provided that the additional
    monetary value does not make the total value of the license or other
    approval for the export of any major defense equipment sold under a
    contract reach $14,000,000 or more, and provided that the additional
    monetary

    [[Page 364]]

    value does not make defense articles or defense services sold under a
    contract reach the amount of $50,000,000 or more.

    Sec. 123.24  Shipments by mail.

        A Shipper's Export Declaration must be authenticated before an
    article is actually sent abroad by mail (see Sec. 123.22(d)). The
    postmaster or exporter will endorse each license to show the shipments
    made. Every license must be returned by the exporter to the Office of
    Defense Trade Controls upon completion of the mailings.

    Sec. 123.25  Amendments to licenses.

        (a) The Office of Defense Trade Controls may approve an amendment to
    a license for permanent export, temporary export and temporary import of
    unclassified defense articles. A suggested format is available from the
    Office of Defense Trade Controls.
        (b) The following types of amendments to a license that will be
    considered: Addition of U.S. freight forwarder or U.S. consignor; change
    due to an obvious typographical error; change in source of commodity;
    and change of foreign intermediate consignee if that party is only
    transporting the equipment and will not process (e.g., integrate,
    modify) the equipment. For changes in U.S. dollar value see Sec. 123.23.
        (c) The following types of amendments to a license will not be
    approved: Additional quantity, changes in commodity, country of ultimate
    destination, end-use or end-user, foreign consignee and/or extension of
    duration. The foreign intermediate consignee may only be amended if that
    party is acting as freight forwarder and the export does not involve
    technical data. A new license is required for these changes. Any new
    license submission must reflect only the unshipped balance of quantity
    and dollar value.

    Sec. 123.26  Recordkeeping requirement for exemptions.

        When an exemption is claimed for the export of unclassified
    technical data, the exporter must maintain a record of each such export.
    The business record should include the following information: A
    description of the unclassified technical data, the name of the
    recipient end-user, the date and time of the export, and the method of
    transmission.

    Sec. 123.27  Temporary export for personal use of Category XIII(b)(1)
              cryptographic products.

        (a) District Directors of Customs may permit a U.S. citizen or a
    U.S. person who is a lawful permanent resident as defined by 8 U.S.C.
    1101(a)(20) to temporarily export from the United States without a
    license not more than one each of any unclassified Category XIII(b)(1)
    cryptographic hardware product and not more than a single copy of each
    type of unclassified Category XIII(b)(1) cryptographic software product
    provided that:
        (1) The software product(s) are to be used only on a simultaneously
    temporarily exported Category XIII(b)(1) hardware product or a
    simultaneously exported item on the Commerce Control List (CCL); and
        (2) The cryptographic products covered by Category XIII(b)(1) are
    not destined for export to a destination listed in Sec. 126.1 of the
    ITAR (22 CFR 126.1) which is prohibited by a United Nations Security
    Council Resolution or to which the export (or for which the issuance of
    a license for the export) would be prohibited by a U.S. statute (e.g.,
    by Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to
    countries that have been determined to have repeatedly provided support
    for acts of international terrorism--currently Cuba, Iran, Iraq, Libya,
    North Korea, Sudan and Syria); and
        (3)(i) The encryption products remain in the possession of the
    exporting person or the possession of another U.S. citizen or lawful
    permanent resident traveling with him/her, are for their exclusive use
    and not for copying, demonstration, marketing, sale, re-export or
    transfer of ownership or control. The export of cryptographic products
    identified in Category XIII(b)(1) in any other circumstances, for
    example, those in which a person contemplates sales, marketing, or
    demonstration must be licensed in accordance with policies and
    procedures established in this subchapter.
        (ii) Special definition. For purposes of paragraph (a)(3)(i) of this
    section, a

    [[Page 365]]

    product is considered to be in the possession of the exporter if:
        (A) The exporter takes normal precautions to ensure the security of
    the product by locking the product in a hotel room, safe, or other
    comparably secure location; and
        (B) While in transit, the exporter keeps the product in his/her
    carry-on luggage or locked in baggage accompanying the exporter which
    has been checked with the carrier; and
        (4) At the time of export from the U.S. and import into the U.S.,
    the cryptographic products are with the individual's accompanying
    baggage or effects. They may not be exported or imported in
    unaccompanied baggage, mailed or transmitted by any other means (e.g.,
    electronically); and, the cryptographic products must be returned to the
    U.S. at the completion of the stay abroad; and
        (5) The exporter, upon request of a U.S. Customs officer, will
    submit the products to inspection at the time of export and/or import.
        (b) Use of this exemption requires the exporter, in lieu of filing a
    Shippers' Export Declaration, to maintain, for a period of 5 years from
    the date of each temporary export, a record of that temporary export and
    the subsequent import. Included in this record must be a self
    certification that the individual complied with the conditions of
    paragraph (a) of this section and a self certification that he/she has
    no reason to believe that any of the temporarily exported cryptographic
    products were stolen, lost, copied, sold or otherwise compromised or
    transferred while abroad. The record should include the following
    information: A description of the unclassified cryptographic products;
    the countries entered, including the dates of entry and exit for each
    foreign country; and, the dates of temporary export from and subsequent
    import into the United States.
        (c) In any instance where a product exported under this exemption is
    stolen, lost, copied, sold or otherwise compromised or transferred while
    abroad, the exporting person must, within 10 days of his/her return to
    the United States, report the incident to the Department of State,
    Office of Defense Trade Controls, Washington, DC 20520-0602. Also, any
    person who knows or has reason to know that cryptographic products
    exported under this exemption are being transferred, exported, or used
    for any other activity which must be licensed or otherwise authorized in
    writing by the Department of State, should immediately inform the
    Department of State, Office of Defense Trade Controls, Washington DC
    20520-0602.

    [61FR 6112, Feb. 16, 1996]