To Register or Not, That Is The Question…

By: Jenny Hahn, Vice President , FD Associates, Inc. 

Do I need to register or maintain registration with the Department of State (“DOS”)? Companies may find themselves asking this question, as a result of Export Control Reform. There are several factors to consider before deciding that your company should or should not register or maintain its registration with the Department of State.

  1. Are you a manufacturer of defense articles (items identified on the US Munitions List)? The USML can be found in the Part 121 of the International Traffic in Arms Regulations (“ITAR”).  If yes, you have a regulatory obligation under the ITAR, Part 122, to be registered and maintain registration with the Department of State, as long as you continue to manufacture defense articles.  Remember, a manufacturer of an article on the USML, needs to be registered whether it exports or not.   Under the ITAR, even the manufacture of one defense article, requires registration.
  2. Have all of the articles you manufacture transferred to a 600 or 515 series ECCN (Export, Control Classification Number) on the Commerce Control List? If yes, you will no longer need to be registered with DOS but you will want to document your review. (Remember: not all categories have been revised and some of the old “catch-all’ provisions remain). Additionally, you should ask yourself the question: do you provide defense services, e.g. assisting a foreign customer with integration of the non-ITAR hardware into an end item/platform, which is described on the USML and therefore your actions are subject to ITAR controls. If yes, you should consider maintaining your registration for the purposes of obtaining licenses/agreements to perform these defense services.
  3. Are you an exporter of defense articles? Today that question is a little easier to answer, as the USML in most instances, clearly defines the articles that are subject to the ITAR. If yes, you should obtain or maintain your registration with DOS as an exporter, so that you may apply for or continue to apply for export licenses.
  4. And then there is the broker registration with DOS: Changes October 25, 2013 to ITAR Part 129 made more clear who is required to register with DOS as a broker. All persons located in the US (US and foreign), who are not the OEM, may be deemed to be conducting brokering activities, if they assist US or foreign manufacturers with marketing and selling their products. These companies/persons should register as brokers as required by ITAR Part 129.3. Foreign persons not located in the US and not owned or controlled by US persons assisting in the marketing or selling of US origin products do not need to register with DOS as a broker unless they actually conduct brokering activities in the US.
  5. If your company provides processing, inspection or testing services or other engineering and technical services as a support function to a US manufacturer of defense articles, you will also need to register if you were are exporting.  How might you do that? Employ a foreign person and assign them to ITAR designated programs or send ITAR work offshore. These are just two examples of how an export may occur. Your company would need to be registered to be able to apply for an export license under these circumstances or any time it provides ITAR controlled technical data or defense services to a foreign person.

While Export Control Reform has made significant changes to the USML, these changes have not changed the requirements for US companies involved in defense work or persons engaged in brokering activities to obtain or maintain registration with DOS.  On a brighter note, the number of licenses companies are required to seek from the Department of State has been reduced and thus the annual registration fee for companies may be less than past years.

 

Do you have questions about your obligation to register with DOS or any other export compliance matter? Contact the export experts at FD Associates to navigate your regulatory obligations. www.fdassociates.net or This email address is being protected from spambots. You need JavaScript enabled to view it.

Joomla SEO by AceSEF