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Fall Cleaning at DDTC: Six ITAR Rulemakings in Three Weeks Reshape Country Policies and Trim the USML

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In just a three-week period starting in September, the State Department’s Directorate of Defense Trade Controls (DDTC) published six rulemakings that make or propose notable changes to the International Traffic in Arms Regulations (ITAR). These include the following:

  • A broad omnibus proposed rule that would remove items from the U.S. Munitions List (USML), revise core definitions and add a new license exemption;
  • An interim final rule refining the USML to remove certain uncrewed underwater vehicles (UUVs);
  • Revisions to country policies, which, among other things: (1) remove Syria from the list of countries subject to a policy of denial; (2) clarify the policy-of-denial framework and update the major non-NATO ally list; and (3) continue the suspension of Cyprus’s status as a proscribed destination for another year;

Taken together, these actions show a consistent push to focus ITAR controls on the most sensitive and sophisticated technologies. They also aim to improve regulatory clarity and reduce burdens on industry. Below, we summarize the key takeaways from each rulemaking based on potential impact to defense trade.

Omnibus Proposed Rule: More USML Removals, Revised Definitions and a New Exemption
On October 1, DDTC published a proposed rule meant to keep the USML focused on the most sensitive technologies, improve regulatory clarity and reduce burdens. Comments are due by November 30.

Proposed USML Removals
DDTC proposes the following changes to the USML:

    • Category II(a)(4): narrowed to remove smooth-bore, fixed-barrel canister launchers. Grenade launchers with rifled or removable barrels would remain controlled.
    • Category VIII(h)(10): removed and reserved, which would take most radar altimeters off the USML.
    • Category X(a)(7): revised to remove certain goggles, spectacles, visors, vision blocks, canopies and optical filters that no longer provide a critical military or intelligence advantage. The revised paragraph would use new optical density thresholds.
    • Category XX(c): restructured and significantly narrowed. This paragraph is currently one of the broadest catch-all controls on the USML. Items specially designed for naval nuclear propulsion plants would be newly designated as Significant Military Equipment.

Revised “Specially Designed” Definition
The proposed rule would, in addition to other amendments, add two new carve-outs to ITAR § 120.41(b):

    • New paragraph (b)(7): This would prevent an item from being pulled onto the USML after the fact through a catch-all control. It would apply when the item was not described on the USML within its first year after leaving development and is later used, in the same or equivalent form, in a defense article that has a catch-all control.
    • New paragraph (b)(8): This would exclude a list of basic commodities from USML catch-all controls. The list includes knobs, tires, light fixtures, analog gauges, circuit breakers, latches, hinges, brackets and passenger seats.

Documents created at the time of an item’s development would be needed to support the (b)(7) carve-out. DDTC explained that the new paragraphs (b)(7) and (b)(8) are being proposed to reduce the scope of items designated on the USML and provided explanatory examples in the preamble text regarding how the new paragraphs would limit the scope.

In addition, the proposed rule included a request for public comment on removing references to “software” from parts of the “specially designed” definition. Under that change, an ITAR § 120.41(a)(1) analysis would remain applicable to software, but the ITAR § 120.41(a)(2) and (b) analyses would no longer apply to software. DDTC noted that this change would affect only USML entries where software is described as specially designed and not where software is described as technical data. DDTC explained that such a change is being considered to ensure that specially designed software controls are applied more consistently by practitioners. For example, DDTC noted that it is counterintuitive for software designed explicitly for intelligence purposes, which would be controlled by USML Category XI(b) via the ITAR § 120.41(a) hook, to be released from the specially designed controls merely because the software was developed to run on both defense articles and EAR items (ITAR § 120.41(b)(4) release). In addition, DDTC noted that even when portions of the code meet the requirements of a specially designed release in ITAR § 120.41(b), the see-through rule continues to control portions of the code that do not meet the specially designed release requirements. Based on this preamble text and request for public comment, DDTC appears to be seeing inconsistent applications of the specially designed controls as they relate to software and seemingly assesses that removing references to software from parts of the specially designed definition would reduce the inconsistency.

Other Definitional Changes
The proposed rule would also make these changes:

    • New ITAR § 120.35: This would list items excluded from the USML, including certain demilitarized end items and basic marketing information. DDTC notes that a Department of Defense “DEMIL” certification does not by itself mean an item is no longer described on the USML.
    • “Equivalent form” in ITAR § 120.42(e): The definition would be clarified.
    • “Development” and “production” in ITAR § 120.43: These definitions would be clarified to note that, among other clarifications, cosmetic changes and routine improvements would not restart the development cycle.

New § 123.26 Exemption
DDTC proposes a new license exemption for temporarily exporting unclassified foreign defense articles to their original equipment manufacturer or its authorized service provider. The exemption would cover servicing, inspection, testing, calibration, repair, overhaul, upgrade, reconditioning, or one-to-one replacement.

DDTC is also seeking comment on several other topics. These include:

  • ways to refine the Category X(a)(7) parameters;
  • antennas for civil airborne weather radar; and
  • the use of paragraph (x) (the paragraph in USML Categories that enables industry to list EAR-controlled items, used in or with defense articles, on license and agreement applications to DDTC).

USML Category XX(a): Certain UUVs Move to the EAR
On September 18, DDTC published an interim final rule removing certain UUVs from the USML and making changes to related controls. Before this rulemaking, USML Category XX(a)(10) covered uncrewed vessels heavier than 3,000 pounds and designed to operate without human interaction for more than 24 hours or more than 70 nautical miles.

DDTC has now determined that vessels of up to 8,000 pounds only provide a critical military or intelligence advantage in two situations: when they are described elsewhere on the USML, or when they are specially designed to have certain navigation capabilities.

Accordingly, revised paragraph (a)(10) now covers vessels between 3,000 and 8,000 pounds only if they meet both of the following conditions:

  • they are specially designed to operate without human interaction beyond the 24-hour or 70-nautical-mile thresholds, and
  • they can deviate from, determine or plan a navigation route, other than following pre-planned fixed waypoints, station-keeping or performing collision avoidance maneuvers that follow see-and-avoid navigation rules.

A new paragraph (a)(11) covers vessels over 8,000 pounds that are specially designed to operate without human interaction beyond those thresholds. Vessels removed from Category XX(a)(10) that are not described elsewhere on the USML will become subject to the Export Administration Regulations (EAR). The license exemption at ITAR § 126.9(u) is unchanged and remains available for vessels described in Category XX(a)(10). DDTC also stated that it intends to review ITAR controls on autonomous capabilities, including the maritime navigation systems in USML Category VI.

The rule takes effect on October 19, and comments are due on the same day. DDTC specifically asks for comments on two topics:

  • other navigation capabilities it should consider, and
  • challenges operators have faced with the ITAR § 126.9(u) exemption, including additional authorized purposes it could add.

Syria: Removed from the § 126.1 Comprehensive Policy of Denial
On October 1, DDTC published a final rule that allows transfers of defense articles and defense services to Syria to be reviewed on a case-by-case basis. Specifically, the final rule removed Syria from ITAR § 126.1. The rule took effect on October 1, 2026, without a public comment period.

Clarifying Policies of Denial, Updating Country Policies and Adding Major Non-NATO Allies
On September 18, DDTC published a final rule that took effect immediately. The rule: (1) clarified the policy-of-denial provisions; (2) updated the country policies for Ethiopia and Somalia; (3) added Saudi Arabia and Peru to the list of major non-NATO allies; and (4) made miscellaneous corrections.

Clarified Scope of ITAR § 126.1 Prohibitions
The revised ITAR § 126.1(a) now states that its prohibitions apply to “exports, reexports, retransfers, and temporary imports of defense articles and defense services destined for, or originating in, certain countries.”

ITAR § 125.4(a) also now bars use of its exemptions for transfers “to or for” persons who are ineligible under ITAR § 120.16, rather than only transfers “for” them. DDTC explained that this change confirms that such persons may not take part in any ITAR-controlled activity under these exemptions.

Ethiopia, Somalia, Libya, South Sudan and the Democratic Republic of the Congo
The Ethiopia entry in ITAR § 126.1 has also been removed. This implements a February 5 Secretary of State determination ending the policy of denial for defense articles and defense services destined for Ethiopia’s armed forces, police, intelligence and internal security forces.

The Somalia entry was revised to confirm that weapons, ammunition or military equipment may be authorized on a case-by-case basis if intended solely for: (1) European Union training and support activities; (2) Turkey, the United Kingdom or the United States; or (3) other UN Member States that have concluded a Status of Forces Agreement with Somalia and pre-notify the relevant U.N. Security Council committee.

The Democratic Republic of the Congo, Libya and South Sudan entries also received clarifying and technical revisions.

Canadian Exemption Corrections
DDTC corrected ITAR § 126.5(b) to remove a requirement that conflicted with ITAR § 123.10. The correction confirms that a Nontransfer and Use Certificate (Form DSP-83) is not required for significant military equipment transferred under the Canadian exemption. A similar correction was made to ITAR § 126.5(d).

New Major Non-NATO Allies: Saudi Arabia and Peru
ITAR § 120.23 now lists Saudi Arabia and Peru as major non-NATO allies, reflecting their January 2026 designations. Designation as a major non-NATO ally results in the following direct commercial sale defense trade benefits:

    • DDTC is no longer required to apply the special export controls described in ITAR § 124.15 for exports of defense articles and defense services relating to space systems and space launches in or by nationals of Saudi Arabia and Peru—though DDTC retains the discretion to apply such special controls.
    • U.S. exporters of specifically designed or modified components, systems, parts, accessories, attachments, associated equipment, and certain associated technical data for commercial communications satellites can now use the ITAR § 123.27 expedited approval process to export such defense articles to Saudi Arabia and Peru.

Cyprus: Arms Embargo Suspension Extended Through FY 2027
On September 11, 2026, DDTC published a final rule, effective October 1, amending ITAR § 126.1 to specify that the Republic of Cyprus’s status as a proscribed destination is suspended from October 1, 2026, through September 30, 2027. This continues the policy that first lifted the arms embargo on Cyprus in 2022.

The suspension depends on an annual certification required by statute, under which Cyprus must keep cooperating with the United States on anti-money laundering reforms and keep denying Russian military vessels access to its ports for refueling and servicing. In July, the Secretary of State certified that Cyprus meets these requirements for FY 2027 and also suspended the policy of denial for retransfers, temporary imports and brokering activities involving Cyprus.

As a result, certain ITAR license exemptions remain available for transactions involving Cyprus, as long as their conditions are met. License applications involving Cyprus and Cypriot nationals will continue to be reviewed on a case-by-case basis.

Key Takeaways
These rulemakings show DDTC is continuing to make efforts to focus ITAR controls on the most sensitive and sophisticated technologies and improve regulatory clarity. Based on the Office of Management and Budget’s Unified Agenda of Federal Regulatory and Deregulatory Actions, more changes are to come.