Export and Reexport
International Traffic in Arms
Regulations (ITAR) sales
Governed by the Arms Export
Control Act (22 U.S.C. 2778).
George Mason University
International Trade Relations
Prof. Stuart Malawer
November 28, 2011
Andrea L Moody
Nicolas David Pazmino
Ta r i q M a h m o o d M i a k h e l
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Overview of the Problem

Under the Arms Export control Act (22 U.S.C. 2778), the
process of sale to foreign nations and the technology export
controls are scattered across three major agencies.

This bureaucratic process hinders the competitiveness of
US firms in exporting their defense technology.
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The Arms Export Control Act (22 U.S.C. 2778)
a)
Presidential control of exports and imports of defense articles
and services, guidance of policy, etc.; designation of United
States Munitions List; issuance of export licenses;
negotiations information
b)
Registration and licensing requirements for manufacturers,
exporters, or importers of designated defense articles and
defense services
c)
Criminal violations; punishment
d)
Enforcement powers of President
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Problems
US firms not free to trade their
defense technologies in an efficient
manner
The process of approval to export
defense technology is an
impediment to “partnerships with
friends and allies”
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Leads to “Erosion of global Market
Share for American defense
products”
Issues
• More companies are getting into
the business
• Complexity of rules can cause
problems to all businesses
• Particularly to small and medium
sized businesses
• Obama administration's National
Export Initiatives, those
initiatives are designed to
increase U.S. export business by
simplifying export rules
• “Unnecessary controls a burden”
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ughton.com/439%3FPHPSESSID%3D8d03d39769418559d7e0047b90adeccf&docid=Y_WKjUWa9tBbMM&i
mgurl=http://www.alexmacnaughton.com/images/arms-fair-001.jpg&w=635&h=423&ei=En3KTsZE8Lq0gGrvO3uDw&zoom=1
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wY&zoom=1
• The export control reform initiative is highly technical
• Eased controls should allow more outbound trade and thereby
expand U.S. Employment
• U.S. Exporters have long complained of the overly complex and
poorly coordinated U.S. Export control system, which is overseen by
the departments of commerce, state, treasury, energy and defense
• Moving items off the restrictive state department-controlled
international traffic in arms regulations (itar) list and onto a more lax
commerce control list (ccl) controlled by the department of
commerce
• Collapsing the various export control agencies into a single agency
with a single list
Competing Interests
• Department of State versus industries and academia
• Department of State:
• Limited effect
• Security benefits
• Industries and academia:
•
•
•
•
Significant trade barrier
Encourages countries to obtain defense equipment elsewhere
Stifles trade
International students and science
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Harm to US Industries
•
•
•
•
•
April 2006 – Australian government helicopters
Joint Strike Fighter
Boeing engineers
Brazilian government
Restrictions on dual and third country nationals
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ITAR Exemptions
• US Government reluctant to
issue broad exemptions
• 1963 Defense Development
Sharing Agreement with Canada
• JSF program with Britain
• Defense Trade Cooperation
Agreements with Australia and
UK
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g
Policy Proposal
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• Create a single control list, single
licensing agency, unified information,
technology system, and enforcement
coordination center
• Focus ITAR controls on protecting those
items that will maintain a military
advantage for the United States
• Remove a large volume of low level
aircraft parts from ITAR control
• Licenses
• Simple, less bureaucratic and les “red
tape”
• High levels of security in exporting
• High investment in border security
• Increase diplomatic talks
Impact on U.S. foreign
and trade policies
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• Increase in trade, that could lead to
increase in the manufacturer sector
and return of offshoring companies to
the U.S.
• Could create diplomatic tensions
between the United States and other
countries and international and
regional organizations
• Some arguments against it say it could
have a negative effect on the country
security
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Impact on the private sector
• Increased opportunity for
exporting and re exporting items
that are no longer subject to ITAR
control
• More employment opportunities
• Easier exports
• Increased manufacturing and
export
• Encourage manufacturing of
some civilian products to move
back to the United States
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Stockholm International Peace Research Institute.
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