ITAR FAQs
Frequently Asked and Answered
General
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
Commodity Jurisdiction
A: If you are unable to determine the classification of an item after reviewing the USML and Commerce Control List per the Order of Review (see ITAR §120.11), you may submit a commodity jurisdiction determination to DDTC.
Manufacturing License Agreements
A: The continued use and exchange of the technical data previously authorized for export among the same foreign signatories, sub-licensees and end-users is generally permitted even after the agreement has terminated or expired. However, the foreign parties may not continue to use the technical data to manufacture absent separate authority. The foreign parties must seek approval from DDTC via a General Correspondence request to continue manufacturing using ITAR-controlled technical data after the expiration of an MLA. If the continued manufacturing activity requires the furnishing of a defense service by a U.S. person, then separate DDTC authorization would be required.
What is Not an Export
A: In the case of section 120.56(b) that would be where a regulated person provided access information to a foreign person, such that the foreign person could access, view, or possess encrypted technical data in an unencrypted form through the use of that access information and the foreign person is not authorized to have the technical data.
AUKUS Exemption
A: The foreign person, in their capacity as a natural person, must become an Authorized User to avail themselves of the exemption. A DDTC authorization (e.g., DSP-5 FPE license) would be required for the transfer of any technical data beyond the scope and limitations of the ITAR § 126.7 exemption. This would include, for example, transfers of defense articles described on the ETL.
A: Exporters of defense articles must electronically file Electronic Export Information (EEI) using the AES citing code “126.7” in the appropriate field in the EEI for each shipment. This new code appears in the existing AES drop-down menu.
A: The Authorized User list in DECCS is the official, up-to-date record of Australian and United Kingdom Authorized Users. DDTC will update the Authorized User list as needed.
A: No. Legal entities incorporated in Australia or the United Kingdom are foreign persons, considered to be entities of those countries, and must enroll as Authorized Users through their governments to participate in transfers or activities pursuant to the ITAR § 126.7 exemption.
A: The list of Authorized Users of Australia and the United Kingdom is available in the Defense Export Control and Compliance System (DECCS). To access the list, you must enroll in DECCS, log-in, and navigate to the Authorized User list.
A: DDTC does not develop or support such third-party screening software and cannot speak to its integration with the Authorized User list.
A: The ETL that is applicable to ITAR § 126.7 is codified in Supplement No. 2 to Part 126 of the International Traffic in Arms Regulations (ITAR).
A: The International Traffic in Arms Regulations (ITAR) § 126.7 exemption simplifies the transfer of ITAR-controlled defense articles, including technical data, the performance of defense services, and engaging in brokering activities between and among Australia, the United Kingdom, and the United States within an approved Authorized User group of government, private sector, and research and academic entities. When all requirements are met, parties may engage in such activities without the need for additional Directorate of Defense Trade Controls (DDTC) authorization. More information on who is an Authorized User is available in a corresponding FAQ.
A. No. If an item is described on the ETL, it is ineligible for transfer under the ITAR § 126.7 exemption.
Expedited License Processing for United Kingdom and Australia
A: No. The expedited procedures described in ITAR § 126.15 are available only when the export application would authorize the export of defense articles or defense services to only Australia, the United Kingdom, or Canada. Any application that would authorize exports to parties in any other country will be subject to routine DDTC adjudication processes.
A: DDTC will apply the expedited licensing procedures to export license applications that qualify for expedited treatment under ITAR § 126.15 automatically. There is no need to request expedited treatment specifically. However, applicants always are encouraged to submit any information that they believe would help facilitate an expeditious and streamlined review by the Department.
ITAR Registration
- 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.
A: Yes, but only if an applicant includes administrative, material, and Mergers, Acquisitions and Divestitures (MAD) changes within the annual renewal submission. However, if the amendment is executed more than 60 days prior to the registration expiration date, then an applicant must submit a standalone amendment via the ‘Amend’ option in DECCS Registration Dashboard.
A: The Directorate of Defense Trade Controls (DDTC) conducted a multi-year assessment to calculate the new registration fees. The new registration fees are based on several factors, including the last 15 years of inflation, technological advancements, and advancements in support services.
A: Registrants whose fees are greater than $4000 may appeal to the Department for consideration of an alternate payment schedule. To be considered, registrants must provide proof that the registration fee is greater than 1 percent of the total sales in the given year. "Total sales" includes domestic and international sales and is not limited to sales of items controlled on the USML. Applicants must submit a request for special consideration to DDTC not less than 30 days prior to registration expiration. Any request received within the 30-day window will be automatically disapproved.
A: A favorable determination is an approval, an approval with provisos (sometimes also referred to as an approval with conditions), or written authorization from the Directorate of Defense Trade Controls (DDTC) to conduct an activity regulated by the International Traffic in Arms Regulations (ITAR). An application that is returned without action or denied is not a type of favorable determination.
A: The fee for first time registrants is set at $3,000 (manufacturers/exporters and brokers). However, persons registering as a manufacturer/exporter may also simultaneously register as a broker with a consolidated DS-2032 Statement of Registration and not be charged a separate broker registration fee.
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