SUMMARY OF ISRAELI MINISTRY OF DEFENSE SEMINAR ON

UNCLAS SECTION 01 OF 03 TEL AVIV 006970

SIPDIS

USDOC FOR 532/OEA/SWADDY/DJOHNSON
USDOC FOR 3131 CS/OIO/ANESA/GLITMAN
USDOC FOR 520/ITA/ANESA/CLOUSTAUNAU/NWIEGLER
ROME FOR CUSTOMS ATTACHE
STATE FOR EB/ESP
US CUSTOMS HQ FOR STRATEGIC INVESTIGATIONS
STATE FOR NEA/IPA (MAHER),PM (RUGGERIO),NP/RA, PM/DTCC
PENTAGON FOR OSD (JAMES ANDERSON)

E.O. 12958: N/A
TAGS: BEXP ETTC ETRD IS MILITARY RELATIONS GOI EXTERNAL
SUBJECT: SUMMARY OF ISRAELI MINISTRY OF DEFENSE SEMINAR ON
UPCOMING EXPORT CONTROL REGIME.


1. On December 1, 2005, the Ministry of Defense (MOD) held
an export control seminar for the local high-tech and
defense industries. The seminar, "Export Controls for
Category 6 Technologies of the Wassenaar Arrangement,"
attracted over 200 participants, among them many Israeli hi-
tech exporters (defense and civilian). It was the second in
a series of outreach events on export controls organized and
held by the Israeli Ministry of Defense and the first one on
Israel's new dual use export control regulations. The
speakers included MOD and Ministry of Industry & Trade
(MOIT) officials and Bernie Kritzer, Director of the Office
of Strategic Trade and Policy Controls, U.S. Bureau of
Industry and Security.


2. After an initial two-year period, the licensing
responsibility for dual-use items will be shared between the
MOD and MOIT. In the interim, MOD will administer export
controls for dual use items through a new division that will
be dedicated to this program. MOD stated that it expects
the GOI to adopt the entire Wassenaar Arrangement list by
the end of 2007. The MOD and the MOIT plan to submit a
joint proposal for the required legal amendment to the GOI
at the beginning of March 2006.


3. Seminar Speakers and Topics:
Meir Shalit, Sr. Deputy Head, SIBAT, MOD - Introduction
Ram Raviv, Legal Dept., MOD - Legal Framework for New Export
Control Regulations
Dr. Shlomo Levine, TAU, former MOD - Background and
Technological Explanations
Ohad Orenstein, MOIT - MOIT Role in Export Licensing
Yoram Ziflinger, MOD Head of Licensing Division - Licensing
Procedures
Bernie Kritzer, Director, U.S. Bureau of Industry &
Security, Office of National Security & Technology Transfer
Controls

a. Meir Shalit gave a short introduction in which he stated
that Israel's new dual use export control regulations came
into effect on October 18, 2005 and that the MOD has
responsibility for the licensing and control functions to
ensure implementation and compliance. According to Shalit,
the Ministry of Industry and Trade will take over the
administration of export controls for dual use technologies
for the civilian market at the end of 2007. Shalit
explained that Israel is not a signatory to the Wassenaar
Arrangement, but has voluntarily agreed to adopt the export
restrictions that are part of the Arrangement. This is
similar to the arrangement Israel has with the Australia
Group (AG),the Nuclear Suppliers Group (NSG) and the
Missile Technology Control Regime (MTCR). Shalit stated
that in the beginning of March 2006, the MOD and the MOIT
plan to submit a proposal for a broadening of the dual-use
export control law to include the remaining categories of
the Wassenaar Arrangement. He expects implementation of
the law by the end of 2007. Mr. Shalit emphasized the need
for training within industry, in order to ensure compliance
with the new regulations.

b. Ram Raviv explained the legal framework for the dual-use
export controls. The new dual use regulations came into
effect on October 19, 2005 after the Knesset adopted the
amendment to the 1986 Control Act of Items and Services
(munitions equipment and defense know-how). He indicated
that the reasons for the GOI's adoption of a dual use export
control regime were national security and foreign affairs
interests, the desire to prevent the proliferation of
sensitive technologies and the need for Israel to adopt
universally accepted standards. According to Raviv, the
Israeli list of dual-use items is similar, but not identical
to, the Wassenaar Arrangement Category 6 list.

c. The MOD has not yet decided whether licensing of dual-use
technologies will be subject to the double license process
(separate license for negotiations and sales),currently in
use by MOD, or whether it will adopt a single license
approach. According to Raviv, it is essential to ensure
that the export control system cause the least possible
damage to Israel's exports. Fines and incarceration may
result from violations of the export control regulations, in
addition to the cancellation of licenses. With regard to
the division of responsibilities for licensing controlled
technologies, the MOD is responsible for the control of
defense equipment and know-how. Control of satellite
technologies and equipment is shared by the MOD and the
MOIT. Chemical, biological and nuclear items are controlled
by the MOIT. The licensing process includes consultations
between the MOD, the MOIT and the Ministry of Foreign
Affairs.

d. Shlomo Levine of Tel Aviv University (a former MOD
official) gave a presentation explaining the implications of
the new regulations on local industry. He presented
examples of items that would be controlled, and explained
the reasons behind these controls.

e. Ohad Orenstein's presentation dealt with the MOIT history
of export licensing. He explained that the only export
restrictions that remain in Israel are the ones the GOI is
committed to in the framework of the Basel and Vienna
conventions on trade in drugs, export of chemical,
biological and nuclear items, and now category 6 items of
the Wassenaar Arrangement. He pointed out that the
licensing authority is with MOIT's Environment and Chemical
Directorate.

f. Yoram Ziflinger's lecture was a hands-on presentation of
the proposed MOD licensing process. He ensured the audience
that the licensing process would be short (approximately
three weeks). The request for a license must be submitted
prior to negotiations with the potential buyer. Export of
sensors and lasers for defense end-users or for defense-
related end-use will be granted under two licenses; one
prior to negotiations and another prior to the sale. The
exporter must attach a detailed letter to the license
application, explaining the nature of the item to be
exported, details about the consignee, the end-user and the
end-use, and a purchase order/contract. In the event that
the item is shipped via an agent, an ultimate end user
statement is required. This is also required for all
exports to China. Upon granting the export license, MOD
will notify the Customs authorities accordingly.


4. In subsequent conversations with MOD, MFA and MOIT
officials, CS Tel Aviv learned the following:

a. MOD and MOIT: GOI has decided that MOD and MOIT will
share the responsibility for dual use export licensing and
control. Since MOD currently has an export control
administration in place, it will administer, on an ad
interim basis, the export licensing and control system for
dual use technologies in both the civilian and military
markets. MOIT has two years to assume responsibility for
the dual use controls licensing procedures for civilian
applications. Based on the MOIT presentation and on
conversations with MOD and Orenstein, the MOIT appears both
unprepared and uneager to take upon itself the role of
export licensing authority. Orenstein emphasized the
importance that his Ministry gives to the free-flow of
trade. He indicated that two years is a long time to
prepare a licensing system. He also mentioned that MOIT had
been unable to identify more than two-dozen companies that
may require export licenses.

b. Additional MOD-Sponsored Outreach Events: Two additional
seminars will be held in January 2006. The first will deal
with Missile Technology Control Regime-related issues, and
will include detailed licensing instructions. The second
event will be held for senior GOI officials and will focus
on the implications of the Wassenaar Cat. 6 for MOD, MOIT,
MFA, MOF, Customs and MOJ. It will include presentations
dealing with the current status of the regulations and their
implementation, the GOI's commitment to the USG, a legal
presentation, the division of responsibilities and an action
plan.

c. MOD Licensing Division: MOD will set up a new division
outside of its export branch, SIBAT, to deal with export
control licensing of dual use technologies. Currently,
SIBAT deals with licensing and the Security Directorate
(MALMAB-DSDE) with controls. As far as CS Tel Aviv can
ascertain, the export controls will remain in MALMAB-DSDE.
However, there was mention about merging the two functions
into the new division. MOD is considering the introduction
of a one-phase application process, in which the exporter
applies for a license prior to the sale of a product. This
differs from the regulations in place for defense exports,
which require the exporter to obtain two licenses -- one to
conduct negotiations, and a second to sell the technology.
According to MOD, the license processing time will average
three weeks.

d. Re-Export: During the presentations and the subsequent
Q&A session, all parties, including the BIS representative,
avoided referring to the issue of re-exports of U.S.
controlled technologies integrated into Israeli systems.

e. The MOD has established a new website dealing with export
controls: http://www.exportctrl.mod.gov.il. The website
requires significant updating to incorporate the new
regulations.

Cretz