International Traffic in Arms Regulations (ITAR - US-Global

International Traffic in Arms
Regulations (ITAR) & US Trade
Brian Blasser
GMU ICP 701 Malawer
American Interests
Legal Authority
ITAR Process
Enforcement of exports control violations
Federal Policies
Controversy around ITAR
Issue: ITAR Reform
Policy Proposal
• Trading With The Enemy Act of 1917 (WWI)
• Neutrality Act of 1935 (WWII)
• Export Control Act of 1949 (Cold War) formalized
export controls outside wartime.
– Essentially embargo Eastern Bloc esp. in defense.
– Tool for American foreign relations/policy.
– Nuclear non-proliferation.
• Through North Atlantic Treaty Org (NATO) formed
the Coordinating Committee for Multilateral
Export Controls (Cocom) in 1949.
Background Continued
• New policy era of “détente” i.e. easing of tensions
between US & West with Cold War adversaries.
• Increasing political pressure to liberalize export
controls but to also refine US regime vice NATO’s.
• ITAR attempted to refine defense export controls
to accommodate these pressures.
• One half of the two major federal agencies
involved. Commerce Dept works non-defense
exports (Export Admin Regulations).
American Interests
• Safeguard American foreign policy (external)
and national security (internal) interests.
• Two drivers of this overarching goal:
– Refuse sales of defense items to adversaries
– Foster greater military ties with allies
• Economic goals: Increase US exports, help
build and sustain industrial base, and jobs.
• Security beats economy at the policy debate.
Legal Authority
• Statutory Foundation: Arms Export Control Act
of 1976, 22 USC Chapter 39.
• Authorizes POTUS to determine import and
export controls for defense items. POTUS
delegates to State Department.
• ITAR’s administration law: Code of Federal
Regulations under Title 22 (Foreign Relations),
Chapter I (State Dept), Subchapter M
Organization within State Department
• Bureau of Political Military Affairs' Directorate
of Defense Trade Controls (DDTC)
• Three offices:
– Policy (DTCP)
– Licensing (DTCL)
– Compliance (DTCC)
• Defense Trade Advisory Group (DTAG) formal
channel for consulting & coordinating w/ US
private sector on policy and regulatory issues.
ITAR Process
• Before exporting defense or defense-related info,
products, or services, a U.S. exporter must
register w/ State Dept if their product is on US
Munitions List (USML) which includes dual-use.
• Registration cost $2,250 per annum and takes 30
calendar days.
• Registration doesn’t give a company export
rights. Only a precondition to become considered
for State Dept review.
• Back fees assessed for those who didn’t register
Types of authorization
Foreign Military Sales (FMS)
Export License
Warehouse and Distribution Agreement
Technical Asst Agreement
Manufacturing License Agreement
Armaments Cooperative Projects e.g. F-35 Joint
Strike Fighter
• Re-exports: Third Party Transfer Approval
• Dual & Third Country Nationals roadblock
• State Dept imposes “positive obligation”, on US exporters,
including their subsidiaries, to disclose ITAR breaches. , i.e.
self-reported wrong doing as well as reverse onus: prove
you are innocent.
• If not reported, penalties involving fines and jail time
increase sharply.
• Since 1999 far higher enforcement actions.
• Notable enforcement: $100m fine on ITT Corp
• Highly recommends internal export compliance and
tracking programs.
• Portion of fines go back into internal compliance prgms.
• Public research and basic marketing material are safe from
USML but be careful about gray areas.
Controversy: Safety at what expense?
• Hurting U.S. companies by holding back
potential exports.
– Legal and Admin Expenses: Increasing red tape
– Schedule delays: Joint Strike Fighter
– Example: ITAR-Free Satellites.
• Restrictions on retransfers: affects allies’
commercial interests.
• Damages US exports in space industry.
Controversy Continued
• Roadblocks facing Dual and Third Party
Nationals hurting UK and Canadian interests
• Furthermore, complicates services like IT
support outsourcing and in-house services in
countries w/ high foreign populations. E.g.
Dubai, Singapore, etc.
• Academia fears best int’l students will be
prevented from helping US R&D
Encouraging Developments
• Since 2007, US has engaged in cooperative
Defense trade treaties with major Allies: UK and
Australia but only ratified by Senate in 2010 after
both countries updated their export control
regimes. Removes major ITAR hurdles between
respective countries.
• Obama seeks to standardize and streamline ITAR
and USML through revamping export controls
into one list. Held interagency discussions since
2010 and is currently in public comments period.
Policy Proposal
• Considerations to factor:
– Cumbersome two list process that is not user friendly
especially for small and medium size enterprises.
– US economy and political climate seeks to make
American exports more competitive.
– Looming domestic spending cuts esp. in the defense
– Allied Governments cutting defense budgets
– Hacking by PRC and others into US defense databases:
cat already out of the bag?
Policy: Verify and Liberalize
• Continue with Obama’s prudent regulatory
• Check to see if items on USML have similar
industrial substitutes.
• Allow companies to challenge State Dept’s
USML determinations in court.
• Broaden defense trade treaties with NATO
allies, Japan, ROK, and Singapore.
Works Cited
Official ITAR Regulations:
DOJ Release on Tennessee Professor:
Consent Agreements:
Federation of American Scientists’ ITAR Background:
CJ Requests:
UK J-35 ITAR Friction:
Satellite Issues:
Brazilian ITAR Frustration:
Obama’s Export Reform Initiative
Senate ratifies UK and Australia Defense Treaties:
Congressional Research Service on Export Controls:
MIT reviewing ITAR and effect on Space Industry:
Economist on ITAR’s effect on US Space Exports: