ITAR FAQs

Answer:

The International Traffic in Arms Regulations (ITAR), established in 1976, controls the export of the most sensitive equipment used by the U.S. military or intelligence community, its technical data and the services provided by U.S. persons related to the products and software enumerated on the ITAR U.S. Munitions List (USML). The services can relate to the equipment described on the USML whether U.S. Origin or Foreign Origin and the scope of services extend from the initial design all the way to the  destruction of such equipment or activities such as military planning, training and strategizing.

The ITAR also regulates brokering activities by U.S. persons related to defense articles and items on the U.S. Munitions Import List (USMIL) regulated by the Bureau of Alcohol, Tobacco & Firearms. The goal of ITAR, which is administered by the Department of State, Directorate of Defense Trade Controls (DDTC) is to safeguard U.S. national security and further U.S. foreign policy objectives. Licenses are required in most circumstances.

Answer:

ITAR Compliance is the implementation of a written trade compliance program that addresses key elements of export compliance. The Department of State, Directorate of Defense Trade Controls has a published guideline of what elements should be included in a company written compliance program. The written program will address the following: establishment of a trade compliance group in the organization, senior leadership support, export jurisdiction and classification analysis, registration with the Department of State, notifications of changes to information in registration statements including Merger and Acquisition activities, export licensing, foreign person visits, foreign person employment, foreign travel, tagging of export controlled information, shipping, recordkeeping, IT infrastructure/storage of technical data and protection, training of company personnel, auditing of company export processes and voluntary disclosures of violations of the ITAR.

Answer:

Actually No. The ITAR sets the threshold for who may receive ITAR  controlled technical information or defense articles to a lower threshold. The ITAR allows U.S. persons, which includes U.S. Citizens and persons granted permanent resident status or refugee/asylum status. All of these categories of persons may receive export controlled ITAR technical data[1] without an export license.

U.S. Person status is required when a company decides to engages in ITAR regulated activities, which trigger a requirement to register with the Department of State, i.e. manufacturing defense articles in the U.S. or exporting ITAR technical data, defense articles or performing defense services. The ITAR only permits U.S. persons, individuals or entities, to become registered with the Department of State as a manufacturer or exporter. U.S. Companies with foreign ownership may register with the Department of State provided a U.S. person in management/leadership is responsible for the day to day operations and export control processes. Foreign persons including companies and governments may receive ITAR controlled equipment or technical information pursuant to an ITAR license.

[1] Other USG regulations may impose different requirements

• DDTC views joint ventures as separate legal entities, rather than as a subsidiary or affiliate of the parties to the joint venture agreement. If the entity formed from a joint venture will be engaging in military or defense related activities that are subject to the ITAR, the joint venture entity must separately incorporate and register with DDTC.
• If a DDTC registered entity enters into a joint venture that results in 50% or more ownership of the new entity, the joint venture must be added to the registrant’s existing DDTC registration as a subsidiary. The same rule applies even if it is a foreign incorporated joint venture. Alternatively, if the DDTC registered entity owns less than 50% of the joint venture but is responsible for managing the day-to-day operations of the joint venture, then the joint venture entity would still be added to the existing DDTC registration and listed as a controlled affiliate.
• If a joint venture entity is equally owned (50/50) by two DDTC registered companies and control of business operations is also equally shared, then DDTC will consider other factors in deciding under which entity the joint venture will be registered, such as which of the registered entities is engaging in more ITAR specific activities or projects. If the joint venture is independently managed, then the joint venture entity must register with DDTC independently.
• If a U.S. incorporated joint venture is managed by foreign persons but will be engaging in ITAR-controlled activities, a U.S. person must be appointed as a senior officer for the U.S. joint venture and the joint venture can then apply for independent DDTC registration. If no U.S. person is acting as a senior officer of the joint venture, then it cannot register with DDTC and cannot conduct ITAR-controlled activities.

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