Congressional certification and general exemptions

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1. The commercial counterpart to sale notifications

Government-to-government sales above certain values are notified to Congress before an offer is made, as described in congressional notification of arms sales. Direct commercial exports have a parallel requirement, set in section 36(c) of the Arms Export Control Act and implemented in the regulations. The Act requires a certification to Congress before a license or other approval is granted for exports above set amounts (22 CFR 123.15(a)).

Congress can stop the export outright. "Approvals may not be granted when the Congress has enacted a joint resolution prohibiting the export" (22 CFR 123.15(a)).

2. The thresholds

The dollar figures depend on the destination and on what is being sold (22 CFR 123.15(a)).

• For most countries: major defense equipment sold under a contract of $14 million or more, or defense articles and services sold under a contract of $50 million or more.
• For NATO members and five other named allies: major defense equipment under a contract of $25 million or more, or defense articles and services under a contract of $100 million or more, provided the transfer includes no other countries.
• For firearms controlled in Category I, paragraphs (a) through (g): any license of $1 million or more.

The figures are contract values, so the relevant number is the value of the contract under which the goods are sold (22 CFR 123.15(a)(1)).

3. The waiting period

Certification starts a clock. Unless an emergency requires the export in the national security interests of the United States, approval may not be granted until at least 15 calendar days after Congress receives the certification for NATO members and the five named allies. For any other country the wait is at least 30 calendar days (22 CFR 123.15(b)).

Because the review runs before the license issues, a contract signed with a foreign buyer does not by itself allow delivery. Delivery schedules that assume a license date need to allow for the certification period.

4. Exemptions do not avoid the certification

A company intending to use an exemption for a transaction that meets these thresholds must still come to the Directorate of Defense Trade Controls. It must give written notification, with a signed contract and a nontransfer and use certificate, Form DSP-83, signed by the applicant, the foreign consignee and the end-user (22 CFR 123.15(c)).

The general exemptions in the next section also exclude exports that need congressional notification, as described below.

5. Exemptions of general applicability

Part 123 contains a short list of exemptions that allow certain unclassified exports without an approval from the Directorate. They come with fixed exclusions. They do not apply to proscribed destinations or to exports requiring congressional notification. Nor do they cover items designated as significant military equipment or on the missile technology annex, and persons who are generally ineligible may not use them (22 CFR 123.16(a)).

An exemption removes the license, not the filing. "All shipments of defense articles, including but not limited to those to Australia, Canada, and the United Kingdom, require an Electronic Export Information (EEI) filing or notification letter" (22 CFR 123.16(a)). Where the export is exempt, the filing must cite the exemption.

6. The exemptions most used by industry

The first allows hardware to be exported without a license in furtherance of an approved manufacturing license, technical assistance or distribution agreement. It must be identified by item, quantity and value in the agreement, provisos must be followed, the filing must show the exemption, and total shipments must stay within the value authorized. Under a distribution agreement, the export goes directly to the approved distributor (22 CFR 123.16(b)(1)).

The second covers low value spares. Parts or components worth no more than $500 in a single transaction may go without a license to support an article already authorized for export. They must go to a previously approved end-user, not a distributor, and must not enhance capability. Orders may not be split to stay under the limit, and "The exporter may not make more than 24 shipments per calendar year to the previously authorized end user" (22 CFR 123.16(b)(2)).

Two more cover packaging and display items. Packing cases specially designed to carry defense articles may be exported without a license. So may unclassified models or mock-ups that are inoperable, reveal no controlled technical data and contain no listed components, subject to a certification filed with Customs and Border Protection (22 CFR 123.16(b)(3) and 22 CFR 123.16(b)(4)). The regulation warns that some models built to scale or made of original materials can reveal technical data. Exporting a model also implies nothing about whether the real article will later be approved.

A further exemption covers repeat trips to shows. An article previously licensed for a public exhibition, trade show or air show may be temporarily exported to another such event without a new license while the earlier license remains valid, again with a certification (22 CFR 123.16(b)(5)).

The last covers a company’s own sites abroad. A registered American company may temporarily export unclassified components, parts, tools or test equipment to a subsidiary, affiliate or facility it owns or controls, for manufacture, assembly, testing, production or modification. Nothing exported this way may be sold or transferred without a license or other approval (22 CFR 123.16(b)(9)).

The list also points elsewhere for two cases. Personal protective gear has its own section, and exports to Canada are covered by the Canadian exemptions in part 126 (22 CFR 123.16(b)(6) and 22 CFR 123.16(b)(8)).

7. What this means for an exporter

The value of the contract, not the shipment, sets the congressional review, and that review runs before the license. The general exemptions are narrow and conditional, and each still needs an export filing that cites it. Other exemptions, including those for government transfers and for Canada, are covered in the government and official use exemption.

Key terms

Section 36(c) certification	The notice to Congress required before a commercial license above the set contract values is granted.
Major defense equipment	A defined class of significant military equipment used to set the lower certification thresholds.
Electronic Export Information	The export filing required for every shipment of defense articles, licensed or exempt.
Exemption of general applicability	A part 123 exemption allowing certain unclassified exports without an approval, subject to conditions.

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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