ITAR is a formidable guardian of national security interests in the complex world of international trade. The International Traffic in Arms Regulations (ITAR) govern this complex set of regulations, which carefully control the export and import of defense-related articles, services, and technologies.
Think of ITAR as a gatekeeper, ensuring that these sensitive items remain within authorized channels. But why is this so important?
Let’s find out, starting with the basics…
What Is ITAR
ITAR (The International Traffic in Arms Regulations) governs the import and export of defense-related goods and services listed on the United States Munitions List (USML). The U.S. Government states that all producers, exporters, and dealers of defense-related technical data, defense services, or items must comply with ITAR regulations. As a result, many businesses are demanding ITAR compliance from the people in their supply chains.
The requirement to be “ITAR certified (compliant)” for a business that manufactures, sells, distributes, or provides services related to goods covered by the United States Munitions List (USML) or supplies components for goods covered by the USML means that the business must register with the State Department’s Directorate of Defense Trade Controls (DDTC), if necessary, as stated on the DDTC website. Additionally, the business must comprehend and adhere to the ITAR related to its USML-linked goods or services. When a company agrees to supply the primary USML exporter, it attests to its compliance with the ITAR.
ITAR Compliance Requirement
EMS, defense services, and technical data that the USML defines are regulated by ITAR. Below is a summary of the topics covered in each category.
#1. Articles on Defense
Although many people may associate “defense articles” or goods with weaponry such as tanks, missiles, and handguns, the term actually refers to much more. The following 21 categories are included in the defense articles listed in the USML:
- Handguns, battle shotguns, and close-quarters weaponry
- Weapons and armaments
- Armaments and munitions
- Rockets, torpedoes, mines, launchers, guided missiles, ballistic missiles, and bombs
- Propellants, incendiary agents, explosives and energetic compounds, and their components
- Special naval equipment and surface warfare boats
- Automobiles on the ground
- aircraft and associated content
- Military instruction and equipment
- Individual safety gear
- Military technology
- Equipment for fire control, lasers, imaging, and guidance
- Materials as well as other items
- Chemical and biological agents, as well as related equipment, are examples of toxicological agents.
- Spacecraft and associated publications
- Articles about nuclear weapons
- Technical information, classified documents, and defense services not otherwise listed
- Weapons with directed energy
- Gas turbine engines and related machinery
- Submersible boats and associated items
- Technical information, articles, and defense services not otherwise listed
#2. Military Services
There are three primary categories for the defense services that ITAR covers:
- Assisting foreign nationals with all aspects of defense article creation, manufacturing, training, maintenance, etc.
- Granting access to restricted technical data to foreign nationals
- Supplying military training to foreign troops and units
#3. Technical Data
In addition, ITAR governs three categories of technical data:
- Information such as blueprints, drawings, documents, and other materials are needed for designing, developing, and producing military articles.
- Classified data regarding the abovementioned defense products and services
- Programs linked explicitly to stories on defense
The Main Challenges to ITAR Compliance
The complicated ITAR laws are subject to frequent revisions. An organization faces several obstacles in its efforts to comply with ITAR effectively.
#1. Discovering and Categorization
The USML list contains several goods with dual-use applications. Determining which ITAR or EAR regulation applies to an organization can be problematic for entities.
#2. Tracking the Movement of Technical Data Between Borders
A company may export large amounts of data or goods subject to ITAR to several destinations with different end uses. It can be challenging to map those objects or data to the appropriate end-user and end-use specifications.
#3. Limiting Access to Private Information
Several people can access defense-related data for different reasons. It can take a lot of time and effort to keep track of their rights, account activity, and necessary level of access.
Therefore, to properly manage, govern, and secure its ITAR-controlled data, an authorized ITAR-covered company must implement a robust data governance architecture.
Types of Data Elements that ITAR Cover
The USML’s Categories XVII and XXI list the categories of data element types that are subject to ITAR regulations and are, therefore, categorized as defense-related goods or services. For example:
#1. Technical Data
Technical data is any information required for the design, development, manufacturing, assembly, operation, repair, testing, maintenance, or modification of defense-related objects, according to Section § 120.33 of ITAR. Photographs, technical designs, documentation, and training manuals are a few instances of this data type.
#2. Confidential Data
Any information that the US government classifies as confidential due to concerns about national security falls under this category. Examples include sensitive data, military secrets, and intelligence inputs.
#3. Software Data
Any algorithm, logical flow, operating system, or application utilized in designing, producing, manufacturing, repairing, or testing any defense-related item is considered software data under USML.
#4. Proprietary Data
Any knowledge covered by an invention secrecy order or used in developing military weaponry or defense-related products or services is considered proprietary data. Trade secrets, blueprints, and formulas are a few examples.
#5. Defense Services Data
Information sent to any foreign unit or individual for military training, correspondence, or training is defined as defense service data under ITAR Section § 120.32.
The Primary Responsibilities of Controllers Concerning ITAR Data
The first and most crucial step in meeting ITAR compliance requirements is determining whether your company is subject to the laws. The organization must abide by ITAR if it handles any defense-related goods or services specified in UMSL.
The next stage is for the organization to register with the Directorate of Defense Trade Controls (DDTS) after confirming that ITAR applies to its operations. Every year, registered organizations must renew their registration, and the registration payments are non-refundable.
Let’s briefly review the ITAR compliance criteria, beginning with the registration procedure:
#1. Registering with the Defense Trade Controls Directorate
The registrants must submit a certified Statement of Registration. The registrant must certify that it is permitted to produce, broker, export, or temporarily import defense-related goods, services, and technical data and that it is based in the United States. The information must include the registrant’s name, contact information, and a list of the defense-related things they handle.
A senior officer of the business must also attest that no employee has ever engaged in illegal activity, been found guilty of any offense, or been prohibited from obtaining a contract or license from any US government agency for importing or exporting any defense-related goods. However, the certification must contain information about the foreign person, such as their identity or ownership details, if the prospective registrant is owned or managed by an unfamiliar person, that is, by anyone who isn’t a well-protected individual as defined under 8 U.S.C. 1324(b)(a)(3).
In addition, the registrant needs to renew their registration every 12 months and pay an annual registration fee. No later than 60 days before the expiration date, the registrant must send a notice of expiration to the relevant authority. Additionally, the registrant must notify DDTC of any changes to the information supplied in the registration statement or the event of a combination with another entity.
#2. Keeping Extensive Records
One of the main requirements for ITAR compliance is maintaining records. According to the rule, permitted organizations must keep a comprehensive record of all the transactions about the import or export of any goods, services, or technical data relevant to defense. Businesses must maintain documentation of the controller’s registration and the license to export or import any defense-related goods approved by the DDTC.
Maintaining records is essential to proving ITAR compliance. These records also allow the DDTC to proceed with reporting, compliance inspections, and other pertinent activities. The minimum retention period for these documents is five years.
#3. Putting an Internal Compliance Program in Place
Every registered company must have a compliance program tailored to their industry. The requirements of the ITAR laws and the company’s plans to comply with them must be considered while creating the compliance program. For example, end-user and end-use provisions need to be included in the program.
Similarly, the business must ensure that the intended use aligns with the ultimate use specified in the export license by carrying out due diligence. The program must also comply with the export licensing and registration requirements for ITAR record-keeping.
Companies prove their commitment to ITAR compliance with the DDTC by creating a comprehensive compliance program and seeing that it is carried out.
#4. Notifying Violations
Authorized entities must report any infractions and instances of non-compliance under ITAR compliance. Companies must promptly report violations to DDTC, including the exact description and type of the infraction, the parties involved, any defense-related goods or technical data covered by USML, and the reporting person’s name and address.
#5. Getting Licenses for Export or Temporary Import
Parts 123 and 125 of the ITAR regulations from the DDTC offer comprehensive instructions on the export or temporary import of any goods or services linked to defense. For the registrant company to export any defense-related goods to any approved foreign person or country, a license from the DDTC is required before the company starts operations.
The license must contain all necessary information on the kind of defense-related item to be exported, the destination nation, and the item’s planned use. Furthermore, exporting any classified or unclassified technical data, patenting any technical data, or disclosing any technical data requires licenses. The duration of a license is four years.
Common ITAR Violations to Avoid
ITAR (International Traffic in Arms) infractions are costly and legally significant. They are frequently the result of a failure to comprehend or follow these intricate requirements. The following are some of the most typical ITAR infractions:
#1. Unlicensed Export or Transfer
Exporting or transferring technology, goods, or services subject to ITAR regulations to a foreign national or organization without securing the necessary export license is one of the most common ITAR infractions. This infraction is frequently the result of poor paperwork, ignorance of the requirements, or the failure to realize that certain commodities are subject to ITAR controls.
#2. Not Getting the Correct Licensing
A common infraction occurs when an entity proceeds with a transaction without obtaining the necessary export or transfer license, even if it is aware of the ITAR rules. A special license is often needed for each export or transfer of ITAR-controlled goods; failing to get one is a significant violation.
#3. Poor Recordkeeping
Organizations that comply with ITAR regulations must keep thorough records of all their ITAR-related transactions, including import, export, and transfer transactions, permits, and agreements. Organizations commit violations when they fail to maintain comprehensive and accurate records, which makes it challenging to prove compliance in the event of an audit.
#4. Inadequate Security Measures
Technology, information, and goods subject to ITAR regulations must be protected from unwanted access. If organizations do not have sufficient digital and physical security measures to prevent sensitive data from being revealed to unauthorized persons, there may be violations.
#5. Failure to Screen Employees
Employers must verify that workers and anyone with access to ITAR-controlled materials are citizens of the United States or have been granted permission to do so. When someone accesses these materials without the required authorization, violations take place.
Inaccurate or partial documentation ITAR violations may result from insufficient or erroneous documentation about the export or transfer status and the classification of goods, services, or technology. Non-compliance can be caused by misclassifying or wrongly tagging objects.
Failure to Report Violations: Organizations that comply with ITAR must promptly notify the relevant authorities of any actual or suspected violations. Intentional or unintentional, failing to report breaches may result in harsher penalties if caught.
#6. Foreign National Participation
Violations may result from involving foreign nationals in projects or transactions involving ITAR-controlled goods, even indirectly. Specific protocols must be observed when dealing with foreign nationals in ITAR-related activities.
Traveling Abroad with ITAR Props: Violating the law might result in taking ITAR-controlled goods, including computers or technical data, abroad without the required permits.
What makes an item subject to the ITAR?
These laws also apply to non-military products and chemical precursors, like poisons and biological agents. When there is an “ITAR-controlled activity” and a “defense article” (i.e., defense article, defense services, or associated technical data), the ITAR is activated.
How do I comply with ITAR?
Organizations must evaluate their operations, classify regulated commodities, apply for permits as needed, put security measures in place, and train employees appropriately, among other things, to comply with ITAR.
Who needs to be ITAR certified?
Anyone operating a firm in the US that produces, exports, imports defense items temporarily, or provides defense services is subject to ITAR. Businesses can check the USML to see if they require an ITAR registration.
Can a non U.S. citizen work on ITAR?
The simplest solution for non-citizens handling ITAR materials without breaking compliance rules is for them to become citizens or permanent residents of the United States. Nonetheless, you might take steps to acquire non-citizens of the United States authorized to handle ITAR-covered goods if you choose to or have already recruited them.
Are green card holders ITAR compliant?
Information and materials linked to defense and military technologies must only be shared with U.S. persons who are defined as U.S. citizens, lawful permanent residents (holders of green cards), or other protected individuals, according to ITAR laws.
Why do I need an ITAR registration?
The U.S. Government tracks the shipments and operations of businesses that deal with defense-related goods, services, and data through ITAR registration. Since ITAR registration can be challenging, an ITAR expert can guide you through every stage.
Conclusion
Businesses or organizations that export military products, services, or data, whether directly or indirectly, must comply with ITAR regulations. Examples of these companies are consultants, manufacturers, suppliers of hardware or software, wholesalers, distributors, contractors, and third-party suppliers.
All supply chain participants must adhere to ITAR regulations. For instance, the ITAR-covered entity and the authorized entity will be liable for non-compliance and related penalties if the ITAR-covered entity sells a defense article to the authorized entity, subsequently selling it to a non-authorized organization.
References
