Licensing of Foreign Persons Employed by a U.S. Person

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The Directorate of Defense Trade Controls (DDTC) has a long-standing policy to authorize the employment of a foreign person by a U.S. person on a DSP-5 through an exception to the requirement for a technical assistance agreement (TAA) in accordance with 22 CFR 124.1(a).  In certain instances, DDTC required a TAA in addition to the DSP-5 to authorize the U.S. person to transfer certain levels of technical data and defense services.  After close review, DDTC has determined this “double” licensing to be redundant.  Therefore, all requests for the licensing of a foreign person employed by a U.S. person must be made through the use of a DSP-5 to cover all levels of requested technical data and defense services.  

The DSP-5 authorizes the U.S. person to transfer technical data and perform limited defense services to the employee(s) on their products.  The DSP-5 authorizes the foreign person to perform defense services on behalf of the employing U.S. person.  The foreign person employed by a U.S. person does not have to reside in the U.S. to be considered an employee but may reside and perform the job duties outside the U.S.  If the foreign person is a full time regular employee, directly paid, insured, hired/fired and/or promoted exclusively by the U.S. person the foreign person is “employed” by the U.S. person.  The employing U.S. person is liable to ensure the employee’s compliance with U.S. export laws regardless of where the employee currently resides

Use of the DSP-5 permits DDTC to identify all requests for employment, determine technical areas in which the individual is employed, standardize application documentation, and, to the extent possible, standardize conditions of approval. In addition, standardization should assist industry in monitoring its foreign person employees. 

For situations involving the transfer of classified technical data, a DSP-85 must be obtained in lieu of the DSP-5.  The DSP-85 application package will require all the same information as the DSP-5 plus an executed DSP-83 required for the transmission of classified information.

Requests for a foreign person employee involving the transfer of manufacturing know-how related to a Significant Military Equipment (SME) defense article will require the execution of a DSP-83 by the foreign person and the U.S. person.

For export control purposes, the foreign person, once authorized by a DSP-5, is considered and treated as an employee of the U.S. person who obtained the authorization.  As such, the foreign person employee may have contact with other entities, U.S. or foreign, so long as the presence of the foreign person employee is identified to the other party:

           (1) If the foreign person employee will have direct interaction with another U.S. person, it is the employing party’s responsibility to notify the other U.S. person of the foreign person’s participation.  The other U.S. person will be responsible for obtaining all required authorizations (e.g., tech data DSP-5) in order to transfer their technical data to the foreign person prior to interaction.

           (2) If the foreign person employee will have direct interaction with another foreign person, the foreign person employee’s country/countries of nationality must be identified in the TAA or MLA the employing U.S. person has with the foreign party but they do not have to be a signatory to the agreement.

A DSP-5 approved for foreign person employment will be valid only for a period of four years or until expiration of their authorized stay from Department of Homeland Security, U.S. Citizenship and Immigration Services, whichever is shorter.  If the foreign person employee resides outside the U.S., the license will be valid for the standard validity of a license.  In instances when the authorized stay is longer than four years, or the employee’s employment continues beyond the approved validity, the applicant must apply for a renewal of the license.

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