Missile licenses and sanctions on American persons

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1. The missile list inside the Munitions List

Chapter 7 of the Arms Export Control Act sets out missile technology controls, codified at 22 U.S.C. 2797 to 2797c (22 U.S.C. 2797). Its starting point is a list. The Secretary of State, consulting the Secretary of Defense and other agencies, must keep a missile list as part of the Munitions List. It covers every item on the Missile Technology Control Regime (MTCR) Annex whose export the Commerce Department’s statutory controls do not cover (22 U.S.C. 2797(a)).

The statute defines the regime itself. The MTCR is the policy statement announced on 16 April 1987 among the United States and six other governments, to restrict sensitive missile-relevant transfers based on the MTCR Annex, with any amendments (22 U.S.C. 2797c(a)(2)). The MTCR Annex means the regime’s Guidelines and Equipment and Technology Annex, with any amendments (22 U.S.C. 2797c(a)(4)). Missile equipment or technology means the items in category I or category II of that Annex (22 U.S.C. 2797c(a)(5)). A missile means a category I system as the Annex defines it, any other unmanned delivery system of similar capability, and the specially designed production facilities for these systems (22 U.S.C. 2797c(a)(1)).

2. Defense sees every approval

The State Department may approve a license for an item on the missile list only after referring the application to the Secretary of Defense (22 U.S.C. 2797(b)(1)). Within 10 days of issuing such a license, the Secretary of State must give the application and its documents to the Secretaries of Defense and Commerce, as far as each asks for them (22 U.S.C. 2797(b)(2)).

The Secretary of State must also set up a procedure to share information with appropriate intelligence officials, as the Director of Central Intelligence determines, and with other agencies (22 U.S.C. 2797(c)). The purpose is effective monitoring of transfers of MTCR equipment or technology and other missile technology. Release screening for missile items on government sales is covered in screening missile technology and large drones.

3. Reports on space launch exports

Some licenses trigger a report to Congress (22 U.S.C. 2797(d)). The rule covers licenses, including brokering licenses, for exports valued at less than $50,000,000 of items controlled under the Act because of American obligations under the MTCR. The items must be goods or services meant to support the design, use, development or production of a space launch vehicle system listed in category I of the Annex. Within 15 days after the license is issued, the Secretary must report to Congress describing the export and the reasons for approving it. The report must address the export’s consistency with American missile nonproliferation policy. The rule does not apply to exports to countries that were MTCR members as of 17 April 1987.

4. When sanctions on American persons apply

Section 72 of the Act, codified at 22 U.S.C. 2797a, turns to American persons who break the rules (22 U.S.C. 2797a). Sanctions follow if the President determines that an American person knowingly did one of three things (22 U.S.C. 2797a(a)(1)). The first is exporting, transferring or otherwise engaging in the trade of any MTCR Annex item in violation of the arms export statute, the Commerce export control statute, or their regulations or orders. The second is conspiring or attempting to do so. The third is facilitating such an export, transfer or trade by someone else.

Engaging in the trade of an item has a specific meaning (22 U.S.C. 2797c(a)(9)). For a given export or transfer, it means being a freight forwarder or designated exporting agent, or a consignee or end user of the item. Non-market economies have a special rule. Elsewhere, a person means a natural person, a corporation, business association, partnership, society, trust or other nongovernmental entity or group, a governmental entity operating as a business enterprise, and any successor (22 U.S.C. 2797c(a)(8)(A)). The meaning of American person follows the definition in the Commerce export control statute (22 U.S.C. 2797c(a)(6)). A foreign person is any person other than an American person (22 U.S.C. 2797c(a)(7)).

5. Two tiers of sanction

The sanction depends on the category of the item (22 U.S.C. 2797a(a)(2)). For a category II item, the President must deny the person, for two years, government contracts relating to missile equipment or technology (22 U.S.C. 2797a(a)(2)(A)). The person is also denied licenses for transfers of missile equipment or technology controlled under the Act for the same two years.

For a category I item, the sanction is broader and longer (22 U.S.C. 2797a(a)(2)(B)). The President must deny the person, for at least two years, all government contracts. The person is also denied all export licenses and agreements for Munitions List items. In either case the President may also pursue any penalty provided in the criminal violations provision of the arms export statute, 22 U.S.C. 2778(c) (22 U.S.C. 2797a(b)). Those penalties are covered in penalties, debarment and the presumption of denial.

6. A presumption and a waiver

One presumption shapes the decision (22 U.S.C. 2797a(c)). If the final destination is a country whose government the Secretary of State has found to have repeatedly supported acts of international terrorism, it should be presumed that the item is designed for use in an Annex missile. The presumption applies where the President determines that the final destination is such a country. The presumption can be rebutted.

The President may waive the sanctions for a product or service by certifying two things to Congress (22 U.S.C. 2797a(d)). The product or service must be essential to American national security (22 U.S.C. 2797a(d)(1)). The person must also be a sole source supplier, with no alternative reliable supplier, and the need must not be one that improved manufacturing processes or technology can meet in time (22 U.S.C. 2797a(d)(2)). Sanctions on foreign persons are covered in missile sanctions on foreign persons.

Key terms

MTCR Annex	The regime’s guidelines and its list of controlled equipment and technology.
Category I item	The Annex class that includes the systems the statute defines as missiles.
Engaged in the trade of	Acting as forwarder, exporting agent, consignee or end user in a transfer.
Referral	The required review of missile list license applications by the Secretary of Defense.
Sole source waiver	A waiver for essential products that no alternative reliable supplier can provide.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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