ITAR/EARThe Short Overview

The Security SummitBob Ketts

22 March 2011

Agenda• Disclaimer• ITAR overview

– Basis in law– Registration with State Dept.– What is governed– Types of State Dept. authority to export

• EAR overview– Licensing– ECCN – SNAP R

• Compliance programs• Violations/Sanctions• Export reform• Sources of training and help• Summary• Q&A

ITAR - basics

• International Traffic in Arms Regulation - The regulatory implementation of the Arms Export Control Act– Administered by U.S. Dept of State– Importance to US foreign policy– Defense Technology Security Administration (“DTSA”)

• Registration with State Dept. - Any person who engages in the US in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with DDTC.

ITAR – basics (cont’d.)

• What is covered– Defense articles – Hardware designed/developed for a defense

purpose• US Munitions List (“USML”) in ITAR -21 categories of defense articles• Significant Military Equipment (“SME”)

– Technical Data – Information used to describe defense articles– Defense Services – Usually training or maintenance performed for

benefit of a non-US person• US Person

– US citizen– Permanent resident of US– Granted special asylum by US

ITAR – basics (cont’d.)

• Types of State Dept authority to export– License

• Technical data license (DSP-5)• Permanent export license (DSP-5)• Temporary export license (DSP-73)• Temporary import license (DP-61)

– Agreement• Technical Assistance Agreement (“TAA”)• Manufacturing License Agreement (“MLA”)• Warehouse Distribution Agreement (“WDA”)

– Exemption to ITAR• Mock up• Repair of item of US origin

EAR

• Export Administration Regulation administered by the Bureau of Industry and Security, U.S. Department of Commerce

• Export Classification Control Number (“ECCN”)– Significantly different approach from State

• Positive identification of item and assignment of ECCN

– Basis for determining if license is required– Most articles do not require license– SNAP R – Means of getting USDOC to validate ECCN

Compliance Programs

• Required for both ITAR and EAR– Culture of Export Compliance– Written organization– Training– Technology Control Plan– Subject to review by US Depts. of State and

Commerce• State Dept. visit of Cubic

Violations/Sanctions

• Suspected violations must be reported to either State or Commerce– Voluntary (self) disclosure– State and Commerce different approach

• Sanctions– Civil/Criminal Fines– Imprisonment– Debarment

• Consent agreements– BAES $400M– ITT $100M

Export Reform• Defense Trade Advisory Group• Administration seeking to establish five singles

– Single list vice USML and CCL– Single agency vice State, Commerce and Justice– Single regulation vice ITAR and EAR– Single enforcement vice 22 agencies– Single IT system vice 1 paper system and 2 electronic that don’t talk to one

another• Important features of new system

– “Bright line” separating defense and commercial items– Tiered list of items– Positive identification– Align USML and CCL

• “Higher fences around fewer things”

Sources of Training and Help

• DDTC and BIS websites• BIS training classes• DDTC Response Team 202-663-1282 or

ddtcresponseteam@state.gov• Society for International Affairs (“SIA”)

– Spring conference various locations (May – Long Beach)– Fall (Nov.) conf in Washington, DC

• San Diego Trade Compliance Group• ITAR boot camp• Strategic Shipping, UK

Summary

• Ignorance is no excuse• USG expects culture of export compliance• Personal commitment of top company officers• Help is available but have to work for it

Questions

• Any and all welcome