ITAR and Defense Exports

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By: Reid Whitten

The first major wave of the much-discussed U.S. Export Control Reform measures will break on October 15, 2013 as the first round of rule changes take effect.  While many in the affected industries expect that the October changes will be a welcome relief from certain burdensome regulations, many are concerned, confused, and overwhelmed by the complex regulatory shifts being announced by the U.S. State and Commerce departments.

This article is the first in a series addressing various aspects of the ECR changes.  We will do our best to offer a bit of fundamental clarity, provide lay-person explanation, and lend some guidance in parsing nuanced regulations.  We also hope to bring an entirely new concept to the ECR discussion: comprehensibility.  We welcome your feedback by email through our open discussion on Twitter at @ReidGlobalTrade.Continue Reading Export Control Reform Series Episode I: The Basics – Five Points to Remember about Export Control Reform

By: Reid Whitten

In Episode I: The Basics we noted that U.S. Export Control Reform may be causing confusion and consternation among those who will have to take the first theoretical rule changes and apply them in real and practical situations.  Among the first test subjects are those who oversee ITAR compliance for manufacturers and exporters of aircraft and aircraft parts.  While these brave souls will be the front line of the ECR implementers, those in the ranks behind (looking at you, Military Vehicles and Naval Vessels) will do well to learn from their experience.
Continue Reading Export Control Reform Series Episode II: The First Change – Reevaluating your ITAR Aircraft Parts

By: Thad McBride

On May 10, 2013, the U.S. State Department issued unusually practical guidance (the Guidance) on exporting to Libya.  The Guidance, which even has a practical name – “Direct Commercial Sales of Defense Articles and Services to Libya” – is available here.

For many years, the United States has imposed extensive restrictions on exports of defense articles to Libya.  Since February 2011, unilateral U.S. restrictions on such exports have been buttressed by an arms embargo imposed on the country by the United Nations.  Under part 126 of the U.S. International Traffic in Arms Regulations (ITAR), UN arms embargoes essentially have direct effect under U.S. law.  With respect to Libya, this means that section 126.1(k) of the ITAR tracks the restrictions that the United Nations has imposed on Libya.
Continue Reading State Department Issues Nuts and Bolts Guidance on Libya

By: Reid Whitten

On April, 30, 2013, Raytheon Company, a major military electronics and weapons manufacturer, agreed with the U.S. Department of State to pay $8 million in civil penalties and remedial expenditures to settle alleged violations of the International Traffic in Arms Regulations (ITAR).  The size of the penalty catches the eye, but beyond the whopping number is a sizeable lesson to be drawn from such enforcement actions: when a company forgoes the expense of maintaining its ITAR compliance system, it risks paying a much greater price if a breakdown occurs.
Continue Reading $8 Million Penalty for Weak ITAR Compliance: How the Price of Maintenance Beats the Cost of Repair

By: Scott Maberry, Curtis Dombek, and Cheryl Palmeri

On April 16, 2013, the U.S. Departments of State and Commerce published the first in a series of final rules, amending the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR) in accordance with President Obama’s 2009 Export Control Reform (ECR) initiative.[1] This is a significant milestone in export reform.  The ECR aims to focus U.S. government efforts on controlling the export of sensitive technologies while streamlining exports of defense-related items to U.S. allies and partners around the world.

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Continue Reading New “Beast” Rules Lessen the Export Control Burden

By: Scott Maberry and Reid Whitten

Since 2011, President Barack Obama’s administration has actively pursued export control reform designed to reduce the regulatory burdens on U.S. companies and enhance U.S. national security (as reported here).  On March 7, 2013, the Administration notified Congress of the first in a series of amendments to the U.S. Munitions List.  The next day, March 8, 2013, the White House released Executive Order 13637 to update delegations of presidential authority over the administration of export and import controls.  Also on March 8, the White House issued a fact sheet on the implementation of export control reform.  These steps, though small, mark clear progress in the President’s Export Reform Initiative.…
Continue Reading Streamlining the System: More Baby Steps Toward Reducing Export Compliance Burdens

By: Mark Jensen

For the last nine months, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) has been collaborating with NASA, the U.S. Air Force, and the National Reconnaissance Office on a “Deep Dive” survey and assessment of the U.S. space industrial base supply chain network.  The survey was originally distributed to 9,150 companies and other organizations.  Through January 2013, the government had received more than 2,000 responses, which yield a great deal of data about the space industry in the United States.
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Continue Reading A “Deep Dive” into Space and Export Controls

By: Mark Jensen

As many exporters know, the U.S. government conducts investigations under the so-called “Blue Lantern” program to monitor end-use compliance in defense trade exports. On October 23, 2012, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) updated its Fiscal Year 2009 Blue Lantern report (titled “End-Use Monitoring report for Defense Articles and Defense Services”), describing actions it took to implement the “Blue Lantern” end-use monitoring program in 2009.  While the data contained in the 2009 report are somewhat dated, the fiscal year 2010 and 2011 reports are also available. Together, the reports provide important reminders about monitoring compliance under the International Traffic in Arms Regulations (“ITAR”) for any company dealing with military related exports.…
Continue Reading ITAR End-Use Investigations Reveal Compliance Priorities

By: Curt Dombek and Mark Jensen

On June 19, The U.S. Department of State, Directorate of Defense Trade Controls (DDTC) and U.S. Department of Commerce, Bureau of Industry and Security (BIS) proposed a joint, largely standardized definition of “specially designed” that would apply to items on both the Commerce Control List (CCL) and U.S. Munitions List (USML).  The definition represents a major step in the functional merger of the two lists.  Once implemented, it should ease the administrative burden of U.S. export compliance on companies whose work touches both areas and clarify the status of a large number of items.  One thing it will not do (and which may never be done) is remove ambiguity from the lists altogether.…
Continue Reading All Together Now: A New Joint Definition of “Specially Designed”

By: Curt Dombek, Brian Weimer, Dan Brooks, and Reid Whitten

Since 1999, strict controls on the export of U.S. satellites and satellite components have drastically eroded U.S. manufacturers’ market share in the global satellite industry.  On April 18, 2012, the U.S. Departments of State and Defense released the “1248 Report” containing findings related to reducing some of those controls.  The 1248 Report assesses the national security risks of removing certain satellites and related components from the tightly controlled United States Munitions List (USML) and transferring them to the generally less restrictive Commerce Control List (CCL).  The report concludes that most communications satellites, lower-performing remote sensing satellites, and related components could be transferred from the USML to the CCL without harming U.S. national security.  The transfer of these items to the CCL could greatly benefit the U.S. satellite industry by significantly easing the export controls placed on its products.…
Continue Reading Proposed Easing of Satellite Export Controls Could Benefit U.S. Satellite Industry