On May 23, 2016, from Hanoi, President Obama announced the end of the U.S. arms embargo against Vietnam. On the same day, the U.S. Department of State's Directorate of Defense Trade Controls (DDTC) posted an Industry Notice regarding the change and stated that it "will soon publish a rule in the Federal Register to implement a conforming change to ITAR § 126.1." The countries listed as subject to U.S. arms embargoes in Country Group D:5 of the Export Administration Regulations (EAR) are drawn from Section 126.1 of the International Traffic in Arms Regulations (ITAR). We have been informed that the Department of Commerce's Bureau of Industry and Security (BIS) will also soon issue a rule related to the President's announcement. We believe this future BIS rule may address other EAR matters relevant to Vietnam.
In announcing the termination of the embargo, President Obama stated "The decision to lift the ban was not based on China or any other considerations. It was based on our desire to complete what has been a lengthy process of moving towards normalization with Vietnam." Security analysts and regional military attachés expect Vietnam's initial wish list of equipment to cover the latest in surveillance radar, intelligence and communications technology, allowing them better coverage of the South China Sea as well as improved integration of its growing forces.
President Obama identified the change as related to deepening ties and cooperation with Vietnam. He also said the lifting of the embargo will allow Vietnam to arm itself to protect itself and enhance maritime security and stability in the region.
Lifting of the embargo follows previous relaxation measures. Since 2014, DDTC has applied a limited license review policy for approval on a case-by-case basis for the following categories of arms exports to Vietnam: (1) lethal defense articles and defense services to enhance maritime security capabilities and domain awareness; (2) non-lethal defense articles and defense services; and (3) non-lethal, safety-of-use defense articles (e.g., cartridge actuated devices, propellant actuated devices and technical manuals for military aircraft for purposes of enhancing the safety of the aircraft crew) for lethal end-items. Prior to the 2014 policy changes, the arms embargo was a blanket prohibition of exports or imports of defense articles and defense services destined for or originating in Vietnam. Going forward, as is the case with all arms sales, government review of proposed exports by DDTC will be required.
Publication of the DDTC Federal Register notice will have the effect of removing Vietnam from the list of U.S. arms embargoed countries contained in the EAR, which are administered by BIS. See the Note to Country Group D:5 in Supplement No. 1 to Part 740 of the EAR. Removal from Country Group D:5 will eliminate the “see through rule” for most defense articles listed on the CCL (see Section 734.4(a)(6)(i) of the EAR) and we have been informed that BIS will implement additional policy and regulatory changes.
Further information can be obtained from The Joint Statement issued by the United States and Vietnam and the Fact Sheet on U.S.-Vietnam relations issued by the White House.
For more information, please contact one of the following authors:
Larry E. Christensen, email@example.com, 202-626-1469
Barbara D. Linney, firstname.lastname@example.org, 202-626-5806
Kevin J. Miller, email@example.com, 202-661-6425
Also published as a Trade Compliance Flash on May 24, 2016