At the end of 2007, the Defense Export Control Law, 2007 (hereinafter: the "Law") entered into effect.
The Law, the regulations and the orders promulgated thereunder replace the secondary legislation that existed prior to the entry of said Law into force. The law regulates, by means of primary legislation, the supervision of the export of defense equipment from Israel, the transfer of defense know-how and the provision of defense services. The purpose of the Law is to regulate the supervision of defense export on grounds of national security, foreign policy, international obligations, and maintain other essential interests of the State of Israel.
As clarified in previous articles, it is extremely important and even crucial to examine whether the exporter's operations enters the category of "Defense Export"; such preliminary examination may save the exporter a great deal of time and money, because once the law does not apply to the exporter, there is no reason to spend time and money in vain. On the other hand, an exporter that fails to comply with the provisions of the Law applicable to it, risks committing a criminal offense.
Our previous article (The Fundamentals of Defense Export Supervision – The Registration and Licensing Phase) dealt with the registration of the exporter and the products; in this article we shall introduce the marketing license phase. It should be emphasized that obtaining a defense marketing license is a necessary stage required by law, regardless of the registration of the exporter and the product.
What is a Marketing License?
The Law requires a defense exporter to obtain a marketing license from the Defense Export Controls Agency (DECA) in order to engage in the export of defense equipment, know-how or services. The obligation to obtain a license applies to any individual or company engaged in defense export, as well as any broker or representative agent conducting negotiations for the sale of defense equipment, know-how or services in the course of their operations.
Notwithstanding the fact that the license is named a Marketing License, the license is also required for other activities other than marketing, such as conducting negotiations or preliminary proceedings to advance a transaction (even before executing a contract or drafting a memorandum of understanding) in connection with goods within the category of defense exports. In other words, the obligation to obtain a marketing license applies at very early stages, even before the transaction is concluded, and is required, inter alia, in order to offer a product, develop it, provide advice, training, conduct negotiations, etc.
How is a marketing license obtained?
In order to obtain a Defense Marketing License, the exporter shall file an application with the Defense Export Controls Agency (DECA) for a marketing license. Without going into too many details, it should be noted that there are sub-categories of defense exports requiring additional documents together with the marketing license application (as is the case, for example, in the sub-categories of the MTCR [Software and Missile Technology], the TSWG [a framework for US-Israel cooperation in the defense field], counterterrorism, security, guerrilla warfare, and more).
What is the term of validity of a marketing license?
Should the exporter's application be approved by the DECA, the head of DECA may grant a marketing license valid for three years at the most. Three months before the license expires, the exporter is required to apply to DECA for renewal of its marketing license. Since the process of inspection and issue of marketing licenses involves comprehensive and thorough examinations by DECA, it may take more than a while. Therefore, it is recommended that exporters plan their steps wisely and commence the process a sufficient amount of time before their licenses expire.
Are there differences between marketing licenses of different exporters?
Yes. Marketing licenses may vary from one exporter to another: DECA has the authority and discretion to grant a license while stipulating conditions as to the validity thereof, which may impose certain restrictions on the exporter in accordance with the Law and the Defense Export Control Regulations. Such conditions may include restrictions on the marketing of certain products or the marketing to certain countries, or determine a shorter than usual license validity period, etc.
What is the difference between Equipment Marketing License and Know How Marketing License?
It is important to distinguish between two types of marketing licenses: the first type is intended for the marketing of defense equipment, and the second type is intended for the marketing of defense know-how. Whereas the first is the 'classic' license required by an individual or entity seeking to market defense equipment, the latter refers to the transfer of defense know-how. For instance, the second type of marketing license is required for production training or if the exporting entity employs teams of instructors for the purpose of transferring defense know-how.
More often than not, an exporter needs two licenses - a license to market equipment and a license to transfer know-how, and neither one is sufficient in order to engage in the other type of activity. Many exporters may mistakenly believe that the fact they have obtained an equipment marketing license allows them also to engage in the transfer of know-how (e.g. training activities) related to the same equipment, but that is not so; in such a case, the exporter must obtain a separate license for each type of activity. This is also true in the opposite case - if the training involves the "sale" of know-how to the trainee, a license for the transfer of defense know-how would not suffice and the exporter would have to obtain a marketing license with respect to the know-how it intends to market.
What is the importance of the Marketing License?
It should be clarified that the marketing license is a necessary precondition imposed on the exporter of defense equipment due to the fact that without a valid marketing license such exporter would not be able to obtain an export license with respect to the goods and/or know how. In our next article, we shall address the issue of marketing licenses in the framework of defense export supervision.
Should you wish to read some of our previous articles on the topic of Defense Export Control, please click the following links:
- Supervision of the Export of Dual-Use Equipment
- The Fundamentals of Defense Export Supervision – First Part
- Important Things to Know About Encryption Items I
- The Fundamentals of Defense Export Supervision – The Registration and Licensing Phase
Source : articlesbase.com
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