International Traffic in Arms Regulations, or ITAR, is a system regulating the manufacturing, selling, and distributing of defense and related articles listed on the United States Munitions List, also known as USML.
Many government agencies and defense contractors are affected by it because they deal with technical data used in defense.
ITAR prohibits exporting such sensitive information to any foreign person without permission from the Department of State.
Moreover, the Department of State amended the ITAR to revise these categories of the United States Munitions List:
- Category I covers firearms, combat shotguns, and close assault weapons
- Category II covers guns and armament,
- Category III covers ammunition
Who Needs ITAR?
Any American business, research facility, or university that produces defense goods for export or offers defense services must register with the Directorate of Defense Trade Controls, or DDTC, and abide by ITAR rules.
Many people are misguided in thinking that this set of rules only applies to tanks, missiles, and weapons.
However, it impacts a far more comprehensive range of technical information relevant to the defense sector.
Organizations and individuals concerned must take the time to identify which ITAR components need to be handled in their compliance activities to avoid the harsh fines and harmful effects of noncompliance with the State Department's directives.
The simplest way to check whether a company's product is on the Munitions List can allow them to determine if they are in charge of ITAR compliance.
Furthermore, companies in the defense industry, defense contractors, manufacturers, exporters, distributors, and software and hardware providers for defense need to meet USML (U.S. Munitions List) requirements to comply with ITAR regulations.
What is an ITAR Violation?
ITAR regulates defense-related products, technologies, and data, which are included in the USML. Manufacturers, distributors, and contractors must uphold compliance throughout the whole supply chain for these defense-related products.
ITAR compliance can be easy. Nonetheless, businesses must register with the DDTC and get particular licenses and documents not to enter any ITAR violation.
ITAR violation simply means breaking the rules and not complying with ITAR regulations.
Furthermore, the organization must adhere to all requirements in order to be legally compliant with ITAR, and it must also stay informed of any changes to the rules.
A majority of the time, when transporting USML commodities, physical goods come to mind, whereas compliance encompasses a wide variety of technical data and services too.
What are ITAR Penalties?
The US government is serious about ITAR compliance. Therefore, there are penalties to be faced for ITAR violations.
ITAR has severe penalties for every violation, and if the company doesn't follow any of these rules, it could face both criminal and civil penalties.
Although the degree, nature, and breadth of violations vary, the following general penalties apply to all
ITAR violations:
Each violation in business penalty carries a maximum fine of $1 million. This high fine can considerably impact the company's capacity to compete in the market.
Violators knowingly breaking ITAR regulations frequently face criminal penalties requiring years of imprisonment.
Receiving ITAR-related sanctions and fines is scary for company executives. Not only does breaking the ITAR expose businesses to harsh civil and criminal fines, but it can also harm the entire organization.
Furthermore, long-term effects can result from delayed shipments and reputational damage to the business.
In addition to financial loss from fines, companies can lose their export license, resulting in losing their capacity to conduct business.
A company’s ability to operate as a government contractor can be terminated if they break ITAR rules.
As an exporter of defense-related goods, one must have a robust organizational structure to uphold compliance and the financial means to guarantee that they commit not even one unintentional or willful violation.
How Much Does an ITAR Certification Cost?
The only legal requirements are for a corporation to be compliant and registered.
To comply with ITAR, businesses must register with the Office of DTCC or Defense Trade Controls Compliance.
For first-time applicants, there is a $2,250 application cost. Furthermore, the annual renewal prices range from $2,250 to $2,750 yearly.
What is Export Control ITAR?
A company may need a license to export from the US government if it plans to export goods with defense or national security-related usage.
Additionally, many American prime contractors request ITAR compliance from their suppliers to compete in a global market.
The ITAR covers all the laws governing the export and import of goods and services related to defense.
Furthermore, companies must register with the DDTC to comply with ITAR.
ITAR and EAR regulations govern specific exports of actual shipments of a product out of the country and the transfer, release, or disclosure to foreign individuals in the United States of technical data or technology about controlled commodities.
What Items Fall Under ITAR?
The United States Munitions List covers what the ITAR governs. The following list includes all 21 USML items and defense article categories:
- Category I - Firearms, Close Assault Weapons, and Combat Shotguns
- Category II - Guns and Armament
- Category III - Ammunition
- Category IV - Rockets, Bombs, and Mines
- Category V - Propellants and Explosive Materials
- Category VI - Special Naval Equipment and War Vessels
- Category VII - Military Vehicles and Tanks
- Category VIII - Aircraft and Associated Equipment
- Category IX - Military Training Equipment
- Category X - Protective Personnel Equipment
- Category XI - Military Electronics
- Category XII - Fire Control and Range Finder
- Category XIII - Auxiliary Military Equipment
- Category XIV - Toxicological Agents
- Category XV - Spacecraft Systems and Associated Equipment
- Category XVI - Nuclear Weapons
- Category XVII - Classified Articles, and Defense Services (not otherwise mentioned)
- Category XVIII - Directed Energy Weapons
- Category XIX - Gas Turbine Engines and Associated Equipment
- Category XX - Oceanographic and Associated Equipment
- Category XXI - Miscellaneous Articles
Does ITAR Require US Citizenship?
ITAR defines a US Person as a citizen, lawful permanent resident, or protected individual and typically permits the US Person to access ITAR-restricted data.
Non-US nationals who fall into the following categories, among others, generally are allowed access under the ITAR, which does not restrict access to exclusively US citizens:
- Citizens of the United States, defined as people born in one of its overseas territories who meet specific criteria or people born to parents who match certain criteria
- Limited refugees
- Green card holders
How Do You Qualify for ITAR?
Companies that deal with manufacturing, selling, or distributing defense or related articles in the US can qualify for ITAR.
Moreover, companies are expected to comprehend the rules; there is no official certification process to become ITAR-compliant or ITAR-certified.
However, there are three crucial actions that government suppliers and contractors can take to comply with the legislation and prove to their prime contractors that they are ITAR-ready:
Companies that fall under the defense supply chain need to register themselves.
Another crucial step is knowing about the ITAR general requirements.
The third essential step is to take a risk assessment to ensure the company fulfills ITAR requirements.
Who Enforces ITAR? Under the Arms Export Control Act or AECA, the Department of State exports and temporarily imports defense goods and services.
The AECA is put into practice through the International Traffic in Arms Regulations.
The ITAR, including USML, is enforced by the DDTC of the Bureau of Political-Military Affairs at the Department of State.
Do Companies Have to Be ITAR Registered?
A company cannot be fully ITAR compliant if they miss out or fail to register.
Simply adhering to ITAR regulations won't produce the same results as registration.
ITAR mandates that any military manufacturing company that provides defense services register with the Department of State and maintain a current registration to protect national security and advance foreign policy goals.
What’s the Difference Between ITAR and EAR?
The ITAR controls the export of defense goods and services in its most basic form.
However, a vast range of goods, services, and technical information is governed by this legislation.
This covers many items, such as body armor, electronics, satellites, imaging systems, etc.
It's also critical to understand that the ITAR regulates imports, exports, re-exports, and imports for temporary use.
Furthermore, even if the transfer of information occurs within the same American organization, an export can still happen by having a US Person give restricted information to a foreign person.
The United States Munitions List or USML, a list of things covered by the ITAR, now includes 21 separate broad categories of products, defense services, and technical data.
This can contain minor things like accessories, components, sub-assemblies, and spare parts.
However, various forms of support or instruction, including design, development, production, testing, operation, maintenance, and repair services, can be categorized as defense services too.
Moreover, finding out which federal agency is engaged in the jurisdiction, licensing review, and approval of the things will assist companies in differentiating between the ITAR and EAR.
Companies will communicate with the Department of Defense Trade Controls about the ITAR.
When it comes to Export Administration Regulations or EAR, commercial and dual-use objects, information, and technology will be under its supervision.
It is crucial to understand that the EAR does regulate specific categories of weapons and military gear, including particular kinds of firearms, aircraft, military vehicles, materials, chemicals, and more.
This applies to everything included under the Wassenaar Munitions List or WAML. Companies communicate with the US Department of Commerce, Bureau of Industry, and Security or BIS when working with the EAR.
The BIS is in charge of the EAR regulations' authority, licensing, policy, and enforcement, just like the DDTC is for the ITAR.
