Missile sanctions on foreign persons

← All Insights

1. Who the foreign person rule reaches

Section 73 of the Arms Export Control Act, codified at 22 U.S.C. 2797b, extends missile technology sanctions to foreign persons (22 U.S.C. 2797b). A foreign person is any person other than an American person (22 U.S.C. 2797c(a)(7)). Sanctions follow if the President determines that a foreign person, after 5 November 1990, knowingly did one of three things (22 U.S.C. 2797b(a)(1)). Sanctions also follow a determination about the person under a cited provision of the Commerce export control statute.

The first act is exporting, transferring or otherwise engaging in the trade of MTCR equipment or technology that contributes to missile acquisition, design, development or production in a country that is not an MTCR adherent (22 U.S.C. 2797b(a)(1)(A)). The item must be one that would be subject to American jurisdiction under the Act if it were of American origin. Conspiring or attempting to do so is the second act (22 U.S.C. 2797b(a)(1)(B)). Helping another person carry out such a transaction is the third (22 U.S.C. 2797b(a)(1)(C)).

An MTCR adherent is a country that takes part in the Missile Technology Control Regime, or that controls MTCR equipment or technology under the regime’s criteria through an international understanding with the United States (22 U.S.C. 2797c(a)(3)). For understandings concluded after 1 January 2000, the statute defines what counts as an international understanding (22 U.S.C. 2797c(b)). It covers a specific agreement not to trade in such items for missile programs in non-adherent countries. It also covers a specific understanding that the United States keeps the right to impose these sanctions despite the adherent carve-outs. The rules for American persons are covered in missile licenses and sanctions on American persons.

2. Three tiers of sanction

For a category II item, the President must deny, for two years, government contracts relating to missile equipment or technology (22 U.S.C. 2797b(a)(2)(A)). Licenses to transfer controlled missile equipment or technology to the person are also denied for two years. For a category I item, the President must deny, for at least two years, all government contracts with the person (22 U.S.C. 2797b(a)(2)(B)). Licenses to transfer any Munitions List item to the person are also denied for that period.

A third tier adds an import ban (22 U.S.C. 2797b(a)(2)(C)). If the President also determines that the transaction substantially contributed to missile design, development or production in a non-adherent country, products made by that foreign person may not be imported into the United States. That ban lasts at least two years.

3. When adherents are carved out

The sanctions generally do not apply to activity authorized by the laws of an MTCR adherent, unless the authorization was obtained by misrepresentation or fraud (22 U.S.C. 2797b(b)(1)(A)). Nor do they apply to a transfer to an end user in an adherent country (22 U.S.C. 2797b(b)(1)(B)). The carve-outs do not protect an entity subordinate to a government that makes certain exports or transfers described in a separate nonproliferation statute (22 U.S.C. 2797b(b)(2)). The President may also act despite the carve-outs where an adherent has accepted the American right to do so under a understanding concluded after 1 January 2000 (22 U.S.C. 2797b-2).

Enforcement by an adherent can displace American sanctions (22 U.S.C. 2797b(c)). If the President makes the required certification, sanctions may not be imposed, and must be ended if in effect, where an adherent is taking judicial or other enforcement action, or has found the person innocent of wrongdoing. The President must certify to the congressional foreign affairs committees that any enforcement action was comprehensive and satisfactory to the United States. For a finding of innocence, the certification must state that the United States is satisfied with its basis.

4. Advisory opinions

Any person may ask for an advisory opinion on whether a proposed activity would bring sanctions (22 U.S.C. 2797b(d)). The Secretary of State may issue it, consulting the Secretaries of Defense and Commerce. Anyone who relies in good faith on an opinion that an activity would not bring sanctions may not be sanctioned for that activity. The same protection extends to anyone who later engages in the activity.

5. Waivers and the presumption

The President may waive the sanctions for a foreign person on finding the waiver essential to national security (22 U.S.C. 2797b(e)(1)). That waiver is not available where an advisory opinion has already said the activity would not bring sanctions. The President must notify the armed services and foreign affairs committees of both houses at least 45 working days before issuing it, with a report fully setting out its rationale and circumstances (22 U.S.C. 2797b(e)(2)).

A second waiver mirrors the one for American persons (22 U.S.C. 2797b(g)). The President must certify to Congress that a product or service is essential to national security, and that the person is a sole source supplier with no alternative reliable supplier. The need must also be one that improved manufacturing processes or technology cannot meet in time. The same rebuttable presumption applies as for American persons. An item bound for a country whose government has repeatedly supported acts of international terrorism is presumed designed for an Annex missile (22 U.S.C. 2797b(f)).

6. Exceptions to the import ban

The import ban does not apply to certain defense procurement (22 U.S.C. 2797b(h)(1)). It does not reach existing contracts or subcontracts, including options for production quantities essential to national security. It also does not reach defense articles and services where the President determines the person is a sole source supplier, the items are essential to national security and alternatives are not readily or reasonably available. Nor does it reach items the President determines are essential to national security under defense coproduction agreements or NATO Programs of Cooperation.

The ban also spares products or services under contracts made before the President publishes the intention to impose sanctions (22 U.S.C. 2797b(h)(2)). It spares spare parts, component parts essential to American products or production but not finished products, and routine services and maintenance where alternatives are not readily available (22 U.S.C. 2797b(h)(3)). Information and technology essential to American products or production are spared as well.

7. New adherents

When American action results in a country becoming an MTCR adherent, the President must promptly send Congress a report on the rationale and an assessment of that country’s nonproliferation policies, practices and commitments (22 U.S.C. 2797b-1(a)). The report includes the text of any agreements or understandings on the terms of adherence. The Director of Central Intelligence must separately report any credible information that the country engaged in sanctionable conduct in the previous two years (22 U.S.C. 2797b-1(b)).

Key terms

MTCR adherent	A regime participant, or a country controlling items under an understanding with the United States.
Import ban	The third-tier sanction barring imports of a foreign person’s products for at least two years.
Advisory opinion	A State Department view on whether a proposed activity would bring sanctions.
Working days notice	The 45 working days of notice Congress gets before a national security waiver.
Adherent enforcement	Action by an adherent that can displace American sanctions once certified.

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.

How Sentfore supports this

Partners and suppliers abroad shape the risk profile of every program. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.