ITAR Licensing and Consulting Services are our specialty!
You will find that FD Associates’ ITAR Consultants are professionals with decades of experience. FD Associates team is comprised of consultants and attorneys with backgrounds at major corporations, responsible for trade compliance oversight, to leading and supporting audits of a prime contractor with domestic and worldwide locations over a multi-year period. Through the auditing experience for clients, crafting 1000s of export licenses, conducting hundreds of training programs and voluntary disclosures to various agencies of the USG and the development and updates to trade compliance programs for clients, our ITAR consultants are experts in their field. Our team applies past experience to your transactional requirements. We support the small to medium size company with developing the tools to make exports not a word to be afraid of and we use these skills to help you meet your trade compliance objectives on time.
International Traffic In Arms Regulations
There are 2 key export regulations. The most stringent is the International Traffic in Arms Regulations (ITAR) which regulates the export of defense articles (hardware and technical data), the performance of defense services and brokering activities 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.
Under the ITAR, a company is required to be registered with the Department of State, DDTC, if it manufactures defense articles even if the product is never exported. A company is also required to be registered if it exports defense articles, provides defense services to foreign persons or brokers defense articles and items on the USMIL. See our article for more on the requirement to register. To Register Or Not, That Is The Question – FD Associates, Inc.
What are the requirements for ITAR Compliance?
- If required, the company must register with the DDTC
- The company must have a documented compliance policy with specific procedures for export activities and address the management of ITAR technical data at its facilities.
- The company must train its employees regularly on the specifics of the ITAR and its applicability to their job
- The company must obtain export licenses when required
- The company must conduct due diligence including denied party screenings on it supply chain providers, customers, end users and intermediaries for export transactions
- The company should audit its export compliance program annually to facilitate identification of any export violations and foster continuous improvement
- The company should engage third-party consultants (ITAR Consultants or attorneys) to conduct audits on a periodic basis
Read an article from our consulting corner that discusses key elements of export compliance Does Your Export Compliance Program Pass Muster? – FD Associates, Inc.
Read any of the consent agreement articles from our consulting corner to learn more about how the prime contractors got it wrong.
Go to the attached link for the Department of State guidelines for compliance programs Article - DDTC Public Portal (state.gov)
The underpinnings of the ITAR is the Arms Export Control Act of 1976. Section 38 of the Arms Export Control Act (AECA) (22 U.S.C. 2778) provides the authority to control the export of defense articles and services, and charges the President to exercise this authority. Executive Order 13637 delegates this statutory authority to the Secretary of State.
Export Administration Regulations
The other set of export regulations, with more flexibility for exporters, is The Export Administration Regulations (EAR) which regulates and controls exports of hardware, software, technology, raw materials, manufacturing equipment, dual-use items, and military equipment, parts, and components, that were formerly regulated for export as ITAR. It’s a good chance that if what you are trying to export is not described on the ITAR US Munitions List (USML) then it's controlled or regulated for export from the U.S. under the EAR. Controlled items are described on the Commerce Control List (CCL). The EAR is administered by the Department of Commerce, Bureau of Industry and Security (BIS).
The mission of the BIS is to protect U.S. national security, homeland security, foreign policy, and economic interests through a law enforcement program. This program focuses on sensitive exports to hostile entities or those that engage in arms proliferation. They also enforce prohibited foreign boycotts and related public safety laws. These regulations apply to the export of 99.5 percent of today’s exports from the U.S. Not all EAR transactions require licenses from the Department of Commerce, BIS, but all EAR transactions require satisfactory due diligence conducted by the exporter. Read our Consultants Corner article Export Compliance Red Flags – FD Associates, Inc.
Original authority was granted to the BIS under the Export Administration Act of 1979 (EAA). The International Emergency Economic Powers Act, as amended, with the additional authority granted from a series of Presidential Executive Orders added to the legislative support for the Export Administration Regulations. Today the EAA has been replaced with the Export Control Reform Act of 2018 (ECRA).
The EAR and Anti-Boycott Regulations
Under the EAR, Part 760, anti-boycott regulations affect U.S. companies business transactions with foreign businesses that seek to invoke restrictive trade practices or boycotts of Israeli products & businesses. The Arab League requires member countries to boycott trade with Israel and trade only with companies that do not trade with Israel or provide products with Israeli content. Under the Trump Administration, we saw a warming of relations between certain Arab League nations and Israel.
In response to the boycott imposed decades ago, the U.S implemented anti-boycott regulations in the mid-1970s to prevent U.S. companies from participating in boycotting activities in their sales activities internationally. The regulation does not name Israel specially but simply states that it is against the regulations to participate in a boycott of countries friendly to the U.S.
The purpose of the regulations is to prohibit U.S. companies from implementing other countries’ foreign policies when those policies disagree with U.S. policy. These requirements are defined by the Export Administration Act (EAA) with criminal and civil penalties (fines, imprisonment, and denial of export privileges) for companies and employees in non-compliance. Although the EAA is defunct, IEEPA keeps this provision alive.
Boycotting requests are typically found in Letters of Credit, Supplier Certifications, RFPs, RFQs, RFIs and purchase order and contract documents. However a boycott request can be as simple as a phone call requesting certain information pertaining to Israel in connection with your customer order. Companies that receive a boycott request are obligated to report it to the Department of Commerce in the fiscal quarter it is received.
What does all of this mean to your business?
If your company is involved with the manufacturing of defense articles, exports technical data, or performance defense services for foreign persons, the ITAR will require your company to register, seek licensing for exports, implement a compliance program, train your staff and identify where your risks are for export violations. Brokering of such defense articles and services is also regulated under the ITAR.
If your company deals the manufacturer or exports of parts, components, accessories, attachments for defense platforms, your company may not deal specifically with ITAR regulated equipment described on the USML but you will likely have highly controlled EAR items and services identified in the Commerce Control List (CCL) as 600 series ECCNs. Licenses are required in most circumstances unless a license exception is available.
If your company develops dual-use commodities, advanced technologies or is involved with commodities characterized as emerging or foundational technologies, these items have an ECCN and will be specified on the CCL. Export authorizations in the form of licenses or license exceptions may be applicable depending on who, what, where, and why. If your product or service has a classification of EAR99, no export authorization may be required after you have performed appropriate due diligence per EAR Part 736.
Companies that export in violation of the ITAR or EAR expose themselves to fines or penalties including the possibility of jail time.
FD Associates has been in the ITAR Consulting business since 1990. Our ITAR consultants have over 100 years of combined export experience. We regularly interface with the Department of State, Defense, and Commerce on our client's export license applications. We support our client base with technologies across the spectrum with understanding export jurisdiction and classification of their products and the requirements to make exports with either the Department of State or Commerce, development of company trade compliance programs, training and auditing services. Our commitment to our clients is they should always believe that they have an expert to guide them through the process. FD Associates is recognized around the world as a premier provider of ITAR and EAR consulting services.
Our ITAR consultants primarily work with small and medium-sized businesses. We have the tools to help your company get it right. We also offer onsite trade compliance services, when needed.