My initial reaction to the International Trade in Arms Regulations (ITAR) several years ago was, “What a nightmare. I don’t want anything to do with it.” I quickly learned that there is no choice—the law is clear. Within those regulations resides the United States Munitions List (USML) beginning on page 473, which provides all of the definitions of what constitutes a defense article.
Coming to terms with the reality of complying with ITAR for many can mirror the often quoted five stages of grief. First is denial (“This can’t apply to me/my company!”). Second is anger (“This is ridiculous! Don’t they realize how this will kill us? We’re not doing it!”). Third is rationalizing or bargaining (“Maybe I don’t have to deal with it or it’s no big deal because it only really means this or that.”). Fourth is depression (“We’re doomed.”). And, finally, acceptance, even if reluctantly, when you get educated and implement proper policy. If your approach is to relegate/delegate all responsibility to only a few, it is probably a big mistake. The more widely understood ITAR is within your organization the better off you will be.
As stated, the law and what it means is quite clear. The part that isn’t always clear is what makes a particular item subject to ITAR. In the microwave industry, you probably do not typically provide actual weapons or military equipment per se. However, according to the USML, within nearly every major category there is a sub-category described as follows: “Components, parts, accessories, attachments and associated equipment specifically designed or modified for use…” This definition means that a commercial off the shelf (COTS) item that you modify in the slightest way so it can be used for a military application becomes a defense item. Another subcategory is for technical data, which includes documentation of design and development activity.
What about non-military satellites? A product designed or modified for use on a research satellite including those for NASA, JPL, ESA or JAXA missions is subject to ITAR control. These are included on page 485 in Category XV of the USML.
The good news is that a product designed for commercial use that has foundation in a defense item may no longer be subject to ITAR, but it must be reasonably different. There are of course situations that may still restrict your item. Upon review of this brief overview it is pretty clear that if you are exporting a defense item then you must obtain a license from the United States Department of State (US DoS). But your responsibility for compliance with ITAR is much more involved because you are required to identify defense items that you supply to US customers as well. This is known as a destination control statement.
However, there is one more way that a seemingly commercial item may actually be subject to ITAR. A product you design for commercial use that contains even a single ITAR part is also subject to ITAR control; it is in effect “tainted” for lack of a better term. Therefore, if your supplier fails to inform you that this part is a defense item, then you or your customer run the risk of illegally exporting a defense item, albeit inadvertently. Unfortunately, many suppliers are utilizing a simply bogus destination control statement in an attempt to cover themselves, which in effect says that it “might be ITAR” by stating that either EAR or ITAR applies. This, of course, is useless to us. If a part is ITAR then say so and if it’s not, please don’t say that it might be. If you do not know, then you should stop shipping the part and confirm its status. You absolutely need to put the correct destination control statement on all of your shipping documentation.
If your organization is not registered with the US DoS then you need to determine if you should be. I recommend that you open it up for discussion among your colleagues and carefully read the USML to be sure. It may be a good idea to get expert legal counsel that specializes in international trade compliance issues to assist you. However, if you are reading Microwave Journal, you are probably not in the food service, garment, agriculture or consumer electronics industry.
Your company or university probably has received development funds that somehow originated from the government, which means that it is very probable that you, on occasion, provide defense articles. Answer this question: Is there anything that you make or sell that constitutes a defense article, data or service? The pivotal question is, what was the original platform or design purpose? Phrased differently, why does this particular item exist or what was the motivation for creating it? Remember that it does not matter if you do not export.
If you find that you need to be registered then you should do it immediately. It is required by law. Start at www.pmddtc.state.gov/registration.
Remember, you cannot apply for an export license without first being registered. In my experience, some of the particular challenges of ITAR are listed as follows:
1. You must have the order BEFORE you can apply for a license. This presents risk in the event that a license is denied. Even if approved, it can also affect your ability to deliver to a firm schedule.
2. Approval or denial depends a lot on policy that may not be obvious or make sense to you.
a. Policy can change abruptly. An identical license granted six months ago could be denied today.
b. Conversely, a license previously denied could be approved today.
3. The license processing time can be quite long. Preparing the license can take just as long, especially if it is new and unique.
a. Plan for three months. If it is taking longer, that’s not a good sign.
4. Business opportunities can be lost and foreign competitors can gain competitive experience, which may not otherwise have happened.
5. A single ITAR part within an otherwise commercial item makes that item a defense article and is forever subject to ITAR restrictions.
a. You can petition the DoS for a change of jurisdiction, but that is a lengthy and often costly endeavor and the outcome is difficult to predict.
6. The DoS reserves the right to categorize an item as subject to ITAR controls if it poses significant strategic importance EVEN if it doesn’t meet ANY criteria of the USML. While this doesn’t occur often, it could happen.
My experience also shows that once you have it fairly well figured out, it’s not so bad.
1. It’s about National Security and protecting and controlling Strategic Technology.
2. There is not much gray area so with proper research you can quickly establish confidence of approval and save the frustration of getting denied after expending lots of effort.
3. Experience counts. An accurate and well-written license application can get approved more quickly, particularly if you can reference precedent license approvals. Two weeks is possible for a repeat application.
There are many ITAR related resources available and they often emphasize the liability for penalties, which can be very severe and is very much a reality. I hope you find this discussion constructive and useful in understanding your obligations with respect to ITAR.
This editorial content does not constitute official advice or training. It is strictly the opinion of the author and does not represent any official opinion or policy of Smiths Group or any of its businesses. Obtain your own training and legal advice for your ITAR related matters from an expert in the international trade compliance field.
Joe Chandler is currently vice president and MMW Products Division manager of Millitech Inc., a Smiths Interconnect business.