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]