How The International Traffic And Arms Regulations Affect Exporters

The International Traffic in Arms Regulations (ITAR) is overseen by the U.S

. Department of State Directorate of Defense Trade Controls (DDTC) and is designed to protect U.S. interests in defense and homeland security by limiting the import and export of defense and military technology and information. These regulations help implement the Arms Export Control Act, which gives the President the authority to control export of U.S. defense technology. For exporters, however, understanding ITAR applications to U.S. business and how it is enforced is crucial to keeping in compliance.

The DDTC, along with the U.S. Department of Defense, determines the commodities that are categorized and contained in the U.S. Munitions List (USML); a list of all articles, materials, technology, and information that are designated as defense products, and are therefore subject to export licensing.

ITAR regulates any information and materials pertaining to the items listed on the USML to be shared with U.S. persons only, essentially a U.S. citizen or permanent resident, unless authorized by the DDTC. Export licensing is required for transactions with foreign governments, companies, and individuals, as well as Non-government organizations (NGO). Export permission that is granted is not transferable to third parties or to other foreign nations seeking to obtain defense technologies by going around U.S. law.

The DDTC requires that all manufacturers, brokers, and exporters of defense and military information and technology as defined by the USML must be registered in the DDTC database and act in compliance with ITAR. Registration fees are approximately $2500; however, registration does not guarantee any export privileges. Exporters and firms that attempt to export goods without permission or to foreign nationals not permitted by the department to receive goods can face heavy fines.

The DDTC, along with other federal agencies, also enforces the ITAR regulations. U.S. persons, including corporate and business entities, engaged in exporting defense technology or information can face charging heavy fines to violators, with possible imprisonment for some violations. Along with fines, the DDTC also charges back fees for periods when the exporter was not registered in compliance with ITAR.

U.S. companies engaged in defense export are obliged by ITAR to inform the DDTC of any breaches of compliance. Corporate violators of ITAR may be required to implement internal policies that specifically enforce ITAR standards; an external audit of compliance operations, as well as fines levied against the entity, and in some cases, privileges to export goods may be revoked.

Exporters consider supply chain and logistics to be key components for success. However, for those involved in defense trade, ITAR compliance alone is an issue that can cripple business operations if it is not followed precisely. One solution that offers both logistical services and help with defense trade compliance is to outsource export operations to an experienced and knowledgeable service provider. These providers can help prevent compliance issues by educating the exporter about regulations, ensuring safe and secure transport, and acting as a third party intermediary between exporter and the DDTC.

by: Matt Gardner

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