Registration and compliance under the International Traffic in Arms Regulations (ITAR) are a necessary but widely misunderstood aspect of international defense sales.  We previously covered the basics of ITAR.  Now let’s look at some myths around ITAR registration.

Myth:  Registering with ITAR is too complicated.

Reality:  It’s actually not as bad as you might think.  The process is mostly completed online and DDTC has lots of helpful info about how to register.  You need to register and then update your registration once a year; brokers have to file a compliance report each year at the end of January.  Manufacturers and exporters need to apply for a license for each new sale.

Myth:  I don’t need to register because I’m not selling weapons.

Reality: You must register if your product is listed on the U.S. Munitions List.  It is not up to your discretion as to whether your product qualifies as a defense article.  The Munitions List covers a wide range of products, so the only way to know whether your item is covered is to check the list.  If you check and are still unsure whether your product qualifies, you can submit a jurisdiction request to DDTC.

If it’s on the U.S. Munitions List and you’re planning to export it, you must register with ITAR.

Myth: I don’t need to register because I’m not selling to the military.

Reality:  Again, you must register with ITAR if your product is listed on the U.S. Munitions List and you’re planning to sell overseas.

Myth:  I don’t need to register because I haven’t made a sale yet. 

Reality:  You must register with ITAR before you enter into talks with foreign clients.

Some of the confusion here may arise from the ITAR registration vs. license requirements.  ITAR registration is for an entire company for the duration of one year; it’s a blanket registration to enter into negotiations for international sales.

After you register under ITAR, you’ll submit an export license request for every sale. For the license request, you’ll have to submit information about the particular purchaser and the details of the product being sold.  A new export license is required for each new sale.

While some companies try to put off registering under ITAR, I think they’re doing themselves a disservice.  It’s better for the company to be registered early, before they seek to enter the international market.  You never know when an opportunity may arise, and you don’t want to have to cut off talks because you haven’t yet filed your ITAR paperwork.  This recently happened with a client of mine – they were negotiating the sale of a non-USML product when the client asked to add a defense article to the package. The company hadn’t yet registered with ITAR, so they couldn’t pursue the deal.

Really, as with all legal matters, it’s better to be safe than sorry – get the ITAR registration done up-front, as soon as you have an inkling that you might like to enter the international market.

Myth:  I can get a consultant (or assistant, or part-time legal counsel) to do my ITAR compliance.

Fact:  You must assign a full-time employee as your ITAR compliance officer, and only certain levels of employees qualify.  For example, an assistant or part-time employee doesn’t qualify because they may not have the authority within the company to implement effective compliance policies.

DDTC also has helpful guidance on the elements of an effective compliance program (pdf file).

What other “myths” have you heard about ITAR registration?  What’s your experience with registration and compliance?

For more on ITAR:
See my previous post: What is ITAR regulation?
And DDTC has lots of information on ITAR here.

The International Traffic in Arms Regulations (ITAR) is a set of United States government regulations that controls the export and import of defense-related articles and services on the United States Munitions List (USML). According to the Department of State, the USG “strictly regulates exports and re-exports of defense items and technologies to protect its national interests and those interests in peace and security of the broader international community.”

Under ITAR, all companies that sell, manufacture, or export defense articles are required to register with the USG.  Registered companies may then apply for an export license, which grants formal permission to go ahead with a specific defense sale.

Who runs ITAR?

The Directorate of Defense Trade Controls (DDTC), part of the Bureau of Political-Military Affairs in the U.S. Department of State, is responsible for controlling the export of defense articles and services on the United States Munitions List (USML, pdf file).

What does ITAR cover?

ITAR covers all items on the U.S. Munitions List (USML).  You can find the full, up-to-date list here (pdf file).  Items on the list fall into numerous categories, covering everything from guns to ammunition, missiles and launchers, explosives, ships, aircraft, tanks and vehicles, protective gear, electronics, sights, chemical and biological agents, spacecraft, nuclear weapons, lasers, submarines, and miscellaneous.  Pretty all-inclusive.

If you review the list and aren’t sure if your product would qualify, you can file a Commodity Jurisdiction request.

Can you export things on the ITAR list?

YES.  Mostly.

… How? 

First, your company MUST register with DDTC if you sell, manufacture, or export defense articles.  This is an essential first step, even if you are just starting to think about exporting.  Registering does not grant permission to export, but rather it identifies you as someone eligible to apply for an export license.  You must be registered to enter into discussions with potential customers for the export of ITAR restricted items; when you register you also commit to completing annual compliance reports.

You will apply for an export license when you have a specific sale lined up.  You’ll need a new export license for every additional sale, since the permits are country-specific.  In adjudicating your license, State may ask other USG agencies (like the DOD) to review your request and make a recommendation.

The licensing process is now fully automated through the DTrade online system.  Learn more about DTrade here.

That sounds complicated.

A little.  Which is why FMS may be a good option for companies just starting out with defense exports.  Under FMS, the DOD will handle the process of obtaining an export license for ITAR restricted items.

How can I learn more?

The DDTC webpage is quite good and has a handy getting-started guide (pdf file).

What other questions do you have about ITAR restrictions and defense export licenses?