Categories of Export-Controlled Items & ITAR Compliance

The United States of America is the world's largest exporter of military arms, and it’s not really close.

Image courtesy of Statista https://www.statista.com/chart/18417/global-weapons-exports/

With nearly forty percent of global arms exports, the U.S. sends military wares to just about everyone. Of course, this is a highly delicate process. We do not want our best technology to get into the wrong hands. And it isn’t even about our latest innovations and hardware; think about what we still have in service. The F-15 Eagle is five decades old, yet it is still one of the best fighter jets in existence. The F-16 Viper has also been around for nearly as long, yet it remains a mainstay of air forces the world over. 

The process of exporting weapons of war is critically important, and ITAR export controls are the regulations in place to do just that. 

However, ITAR covers much more than just military arms. It also manages toxins, IT and technology, how data is transmitted, system access and management, and a lot more. It is a highly complex series of regulations.

Key Takeaways

  • ITAR controls the export of defense articles and extends to technical data exchange, requiring U.S. Department of State approval for exporting listed items on the United States Munitions List (USML).
  • ITAR compliance necessitates registration, obtaining export licenses, and adhering to restrictions regarding deemed exports to foreign nationals within the U.S. Non-compliance results in significant legal penalties.
  • Recent revisions to ITAR and the USML aim to ensure that only inherently military items are controlled, impacting U.S. industry and academia due to increased regulatory compliance requirements.

Greenwood Aerospace Is Your ITAR-Certified Partner

Embarking on the journey to becoming ITAR-certified can be a pivotal step for aerospace contractors and companies aiming to expand their horizons in the global aerospace market. While essential, this process can often seem daunting, filled with intricate compliance requirements and logistical challenges. 

However, understanding the path to ITAR certification is the first step toward unlocking new opportunities in international trade and collaborations.

Greenwood Aerospace stands ready to offer expert support for all your aerospace needs. With our comprehensive services in logistics and compliance, we are dedicated to simplifying this journey for you, ensuring that your focus remains on innovation and growth. Discover everything we have to offer your flight program, including: 

Embargo Countries Under DDTC Regulations

Before we dive into the good, we should cover the bad. 

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The table above is courtesy of the University of Pittsburg Office of Trade Compliance

 

There are nations in the world that we cannot do business with because of severe geopolitical problems. The table above is an up-to-date list of countries that cannot be sold to or have services and goods transferred to.

To understand exactly what that table is talking about in terms of export control laws, make sure to check out our article “ITAR-Controlled Facility: What It Means and How It Helps.” EAR and ITAR are similar, but they are not the same, so read it to understand the differences. 

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The reasons why countries would end up on the embargo list, and the countries on that list are ones that the U.S. has been embroiled in conflict with for years. These countries, identified as State Sponsors of Terrorism or listed as prohibited destinations, include:

  • Afghanistan
  • Belarus
  • Cuba
  • Iran
  • Iraq
  • Libya
  • North Korea
  • Syria
  • Vietnam
  • Myanmar
  • China
  • Haiti
  • Liberia
  • Rwanda

Also, it is important to understand that the United Nations has their own foreign policy interests and maintains a separate embargo list from the U.S. And finally, sanctions are not the same as an embargo; there are a number of countries that have sanctions levied on them but are not subject to an embargo. 

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The reasons are obvious enough: we don’t want known adversaries to have access to our defense services and technical data. Defense trade contracts must be highly regulated or completely blocked with arms regulations for bad actors. 

For example, North Korea has generally been very open about its intentions against the U.S. and other Western allies. To allow them access to any of our technical data, defense services, or related technical data would be a grievous error. 

But here’s the thing: while Iran and North Korea are obvious cases for the embargo, other nations are not so cut and dry. What do we, as a nation, do about Afghanistan, a nation that we directly supported for two decades? Or Iraq, where we spent many years both directly and indirectly interceding? Should we withhold defense services completely through defense trade controls from those nations?  

We’ll cover that a little later. 

ITAR Compliance Requirements

Complying with ITAR takes a lot more effort than just a cursory understanding of the regulatory framework. To become an ITAR-compliant facility, you will have to take a proactive stance because the regulations are strictly enforced.  

Registering With The Department of State

The U.S. Department of State is the agency tasked with ensuring that ITAR and EAR are adhered to. 

The Export Administration Regulations (EAR) are another important set of regulations. EAR is a Department of Commerce's Bureau of Industry & Security project, unlike ITAR, which is a State Department program. 

EAR is a federal code found in Title 15 CFR. Here are a few of the key parts of EAR compliance:

  • EAR requires export information to be filed when U.S. Possessions are transferred to foreign nations or areas (see 15 CFR 758.1(b) and 772.1). 
  • There are requirements to impose certain export controls from the EEI in the EAR (See 15 CFR 758.1(g) and 15 CFR 758.2).
  • The export control information must be on export control documents on shipments that are exempt from AES filing (See 15 CFR 758.1(d).

All international traffic of U.S.-made war materials, defense articles, and related technical data are subject to ITAR or EAR arms regulations, depending on what the items are. Even though the technical data, defense services, chemical agents, and biological agents may be proprietary and owned by private companies, they still must abide by export licenses and are governed by traffic-in-arms regulations for export authorization. 

The registration process for ITAR is done by registering with the U.S. Department of State under ITAR, which is submitted through the Defense Export Control and Compliance System (DECCS) Portal. Once the initial registration process is complete, the next step for ITAR compliance is getting an export license. 

Supporting Information

According to the official DECCS page, the following documentation is required to get ITAR certified:

  • Documentation issued or endorsed by a state government authority enabling the registrant to engage in business in the U.S. (e.g., articles of incorporation, articles of organization, partnership agreement) or in a foreign country.
  • Annual brokering report (for broker registration renewals only).
  • Organizational chart, if applicable, showing the relationship among the company's parent, subsidiaries, affiliates, or multiple divisions or facilities.
  • An internal organizational chart (i.e., showing responsibilities or reporting relationships of individuals or offices within the company) may be helpful but is not required.
  • "Other Amplifying Data" you have that are not specifically prompted by EFS (e.g., a Federal Firearms License).

The Directorate of Defense Trade Controls

The Directorate of Defense Trade Controls (DETC) is the Department of State’s enforcing agency that is charged with controlling the export and temporary import of 

  • Defense articles
  • Defense services 

This is conducted by adhering to governing regulations by the AECA and ITAR. 

If you are getting a little confused by the hierarchy at this point, don’t worry; you are not alone. This is why we strongly suggest working with us on any project that requires ITAR certification. The certification process is rigorous, and the penalties and fines are severe if your organization runs astray from the regulations. And there are a lot of regulations. 

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Government Procurement through Greenwood Aerospace is registered through the State Department under the International Traffic in Arms Regulations (ITAR). This allows us to access supply chains to fulfill defense contract requirements for your mission. Because of our standing with the State Department, we only work with clients who are in good standing with the U.S. State Department. We do this to provide compliance security to all transactions.  

Items Controlled Under the ITAR

There are 21 categories of export-controlled items that fall under the umbrella of export control regulations. The Arms Export Control Act of 1976 is the governing regulation, and the POTUS is the final authority for approving any and all nations on the final commerce control list.

PART 121—THE UNITED STATES MUNITIONS LIST

Nested under the ITAR is the United States Munitions List (USML)

So, let’s talk specifically about the items covered under the ITAR umbrella. 

ITAR is totally comprehensive, made up of twenty-one distinct articles, which are groups of items commonly found together. These articles make up the USML, which is found at  22 CFR §121.1. Here are the categories:

  1. Firearms and related articles. This includes fully automatic up to .50 caliber, shotguns, suppressors, and all small arms systems AND parts. 
  2. Guns & armament. These guns are larger than .50 caliber and include howitzers, mortars, recoilless rifles, etc. 
  3. Ammunition & ordinance. This part is self-explanatory. 
  4. Launch vehicles, guided missiles, ballistic missiles, rockets, torpedoes, bombs, and mines. 
  5. Explosives and energetic materials, propellants, incendiary agents, and their constituents
  6. Surface vessels of war and special naval equipment. All naval warships and combatant vessels fall under this category. 
  7. Ground vehicle. This is ALL ground vehicles, from trucks to tanks and everything in between. 
  8. Aircraft and all related articles. This pertains to all aerial assets, from UAVs to fighters. 
  9. Military training equipment and training. 
  10. Personal protective equipment. 
  11. Military electronics.
  12. Fire control, laser, imaging, and guidance equipment. These would be fire control systems for all kinds and types of delivery devices. 
  13. Materials and miscellaneous articles. These could be cryptographic equipment, infosec, information awareness, etc. 
  14. Toxicological agents, including chemical agents, biological agents, and associated equipment.
  15. Spacecraft and associated equipment.
  16. Nuclear weapons-related articles. Anything that has to do with nuclear weapons but not the weapons themselves. 
  17. Classified articles, technical data, and defense services not otherwise enumerated.
  18. Directed energy weapons. 
  19. Gas turbine engines and associated equipment. 
  20. Submersible vessels, oceanographic and related articles
  21. Articles, technical data, and defense services not otherwise enumerated. Everything else goes here. 

The above 21 categories are very broad, encompassing hundreds of thousands, or maybe even millions, of items, from ballistic missiles to small arms, technical data, and all related items. Any article, defense service, or related technical data is subject to these arms regulations and export control laws, and the vendor must have an export license to conduct the sales. 

The USML is codified, meaning it must be adhered to in its entirety without exception. To do so would or could put members of the United States in grave peril.

Export Licensing

Acquiring an export license under ITAR involves the following steps:

  1. Submitting an online application for commodity classification using SNAP-R at www.bis.doc.gov.
  2. The Directorate of Defense Trade Controls (DDTC) oversees the licensing process.
  3. The process ensures that commercial exports of defense articles and defense services contribute to advancing U.S. national security and foreign policy interests.

The typical timeframe for receiving an export license under ITAR is 30 to 60 days. However, exporting defense articles without a license under ITAR can lead to criminal penalties, including up to 20 years of imprisonment and fines of up to $1 million per violation. Defense articles, technical data, and defense services are among the categories that necessitate an export license under ITAR.

Here’s an example of violations and punishments levied due to a breach of the Arms Export Control Act (22 U.S.C. 2751, et seq.).

All violations and penalties to ITAR are laid out in 22 CFR Part 127, so please read through this and pay heed to the instructions if you plan to obtain ITAR certification. 

The Commerce Control List

While it may not seem related, the Department of Commerce also plays a role in arms regulation. 

The Department of Commerce is responsible for the Commerce Control List CCL, which maintains export control classification numbers (ECCN). The ECCN is an alpha-numeric code issued by the Department of Commerce on defense articles, defense services controlled by the CCL, etc. 

The CCL is one of the most significant components of the U.S. export control framework. It is responsible for the regulation of commercial and dual-use items that are exported in accordance with the Export Administration Regulations (EAR). The CCL applies to all export control items, defense articles, or other items that are commerce jurisdiction and not under the purview of ITAR.

The USML is responsible for the series of regulations controlling all military use or tactical items. The CCL oversees the export of items that are either commercial or dual-use items. These are items that have both civilian and military potential or intended applications.     

In instances where an item seems to fall under both the USML and the CCL, the USML holds greater authority, and the exporter should assume that the USML controls the item. This safeguards against potential regulatory violations and underscores the importance of a clear understanding of the regulatory landscape. Remember, the stakes are high in the export control and international traffic in arms business, and the fines and punishment for violations are severe. Federal regulations are unyielding regarding defense items and their regulatory requirements. 

Deemed Exports & Foreign Nationals

Under the broad context of ITAR, the term ‘deemed export’ assumes a broader meaning.  

Here’s what the Bureau of Industry and Security says about it (italics added):

“The obligation to obtain an export license from BIS before “releasing” controlled technology to a foreign person is informally referred to as a deemed export. Releases of controlled technology to foreign persons in the U.S. are "deemed" to be an export to the person’s country or countries of nationality. “Deemed” exports are described in 734.13(b) of the EAR. Typical organizations using “deemed” export licenses include universities, high technology research and development institutions, bio-chemical firms, as well as the medical and computer sectors. Note that those organizations having persons with permanent residence status, U.S. citizenship, and persons granted status as "protected individuals" are exempt from the “deemed” export rule.”

A deemed export is the release to a foreign national in the United States of ‘technology’ or ‘source code’ ‘required’ for the ‘development,’ ‘production,’ or ‘ …’, which contrasts with a physical export that refers to the actual shipment or transmission of items out of the United States. Unlike physical exports, deemed exports pertain to the release of controlled technology and information to a non-U.S. person, regardless of where the release takes place.

Deemed exports under ITAR encompass transfers of controlled technology or technical data to foreign individuals in the U.S., which are regarded as exports to the individual’s country or countries of nationality. These transfers commonly take place within universities, high-technology research and development institutions, and bio-chemical firms.

Restrictions on Access by Foreign Nationals

Regarding arms trades and ITAR controls, ITAR imposes very specific restrictions to access defense articles, data and defense services, and related technical data to foreign nationals. This includes dual and third-country nationals (TCNs). 

When dual and TCN employees of foreign organizations have access to USML items it is considered a re-transfer to their country of origin, and it is explicitly forbidden without approval from the Office of Export Compliance.  

If a U.S. export authorization doesn’t explicitly address access by dual and TCN employees of foreign parties, it effectively limits access to individuals who are exclusively nationals of an employer’s country. ITAR violations restrict foreign national access and can/will have significant repercussions. Fines of up to one million dollars per violation are possible, along with prison time. 

Tread this issue very lightly because the blowback is severe. 

Some Best Practices for ITAR Compliance

A strong comprehension of the myriad export administration regulations is critical for exporting arms, but the application of ITAR compliance practices is just as important. Here are a few of the most important ITAR compliance practices:

  • Developing a comprehensive internal compliance program
  • Regular, scheduled training on ITAR regulations
  • Ensuring that all parties in the organization have a clear understanding of their roles and responsibilities. 

Internal Compliance Program

Your Internal Compliance Program is the key to guaranteeing ITAR compliance in your organization. 

  • It promotes a proactive posture of compliance throughout the institution
  • An ICP ensures that management is committed to ITAR compliance. 
  • Establishes internal control measures to monitor adherence to export control laws and export administration regulations. 

An ITAR Internal Compliance is your internal SOP designed and implemented by the organization to uphold compliance. You can’t just copy and paste a generic boilerplate for this either; every organization is different. The internal compliance SOP has to be built to your organization's specifications and mission.

Now, this is not a mandatory function; the Office of Defense Trade Controls states that it is strongly advised to establish and maintain a compliance program, but that does not mean that you must do it. Of course, if you don’t, you are likely inviting more scrutiny into your organizational practices. 

The ODTC suggests these general rules for a good program:

  • Clearly documented in writing
  • Tailored to the business
  • Regularly reviewed/updated
  • Fully supported by management

Through our extensive experience as an ITAR-approved facility, we have found the essential elements of an effective ITAR ICP to be:

  1. Affirming the company’s commitment to export compliance
  2. Allocating appropriate resources to compliance
  3. Explaining the basic purpose of export controls
  4. Implementing the nine key elements identified by the Bureau of Industry 

Recommended best practices for upholding an effective ITAR Internal Compliance Program involve:

  • Conducting regular audits to assess effectiveness
  • Ensuring that the management team comprehends export laws and regulations
  • Adhering to best practices for trade compliance.

Training and Awareness For ITAR Compliance

Your ITAR compliance program relies heavily on training and awareness in general. The best way to deal with this is to incorporate it into a routine part of their job. Make the training efficient yet agile enough to encompass the entirety of the program, and allow it to be changed and updated to accommodate changes in policy and regulation. 

The governing export administration regulations are long and tedious and subject to change. Your program needs to be built to stay up to speed on this. 

 Efficient training methods to ensure ITAR compliance among employees include:

  • Developing a comprehensive compliance program
  • Conducting regular training on ITAR regulations and best practices
  • Utilizing resources like ITAR Training Basics from CVG Strategy to solidify their understanding of their duties. There is no reason to reinvent the wheel when excellent guides on this topic already exist. 

Your company enhances internal awareness of ITAR regulations by:

  • Identifying items and technologies controlled under ITAR
  • Conducting basic ITAR compliance training sessions for all relevant staff
  • Consistently highlighting the key requirements of ITAR to ensure understanding and adherence throughout the organization

The frequency of ITAR compliance is really at the discretion of the employer since they aren’t mandatory in the first place. 

Recordkeeping and Documentation

If an organization chooses to take part in an ITAR compliance program, maintaining accurate records is extremely important. Records should be kept for five years on all employees who are deemed necessary to be trained in ITAR compliance. The specific documents required to demonstrate compliance with ITAR include:

  • Documentation of legal authority over the product
  • Understanding of ITAR-related provisions
  • Registration with the Directorate of Defense Trade Control
  • Maintenance of records required by 22 CFR 122.5
  • Obtaining licenses or other approvals prior to making exports.

Recall that failing to comply with ITAR regulations can (and probably will) lead to substantial fines, debarment, and even prison time. Non-compliance fines range from hundreds of thousands to millions per violation, so keep this in mind. 

Recent Changes and Updates to ITAR Export Controls

Since the geopolitical landscape is always shifting and changing, and with new congresses in place every couple of years, ITAR export controls change with the party's ideology in power. These revisions stem from the statutory requirement detailed in section 38(f) of the AECA, which is proposed to refine and confine the USML’s scope strictly to items that afford the United States a considerable military or intelligence advantage or that execute an inherently military function.

Generally speaking, for all items that are codified in the CFR, the best place to find updates is in the Federal Register. 

If you go to https://www.federalregister.gov/, you can check out the search bar and put a phrase in. In this case, we have the latest activity, which happened to be a rule effective October 1st, 2023.

Now, if we go back to the original search, you can see that there are over 1,300 entries. You can choose by publication date or type of update. The updates are about all kinds of different things that are too numerous to mention here, so the best course of action, if there is anything specific that you need to know, is to check the website regularly and download every new action. They are all available as a .pdf, and 2023 saw 47 updates, averaging just a little less than one per week. 

The application for this knowledge is your ITAR compliance education plan and internal compliance plan. You need to know exactly what is in ITAR, and the only way to keep up with that is through manual investigation and documentation. 

US Munitions List (USML) Revisions

Updates and revisions to the USML are handled in the same way and posted in the same place as other revisions: the Federal Register. If you plug USML into the search bar, it will bring up hundreds of different rulings, notices, and proposed rulings. The most recent ruling is from December 4th, 2023, and there have been 21 publications since last January.

If you work in this space, you need to bookmark the Federal Register and check it often.   

The recent revisions made to the US Munitions List (USML) are aimed at controlling only defense articles that are inherently military or that are not otherwise widely available for commercial sale. In response to these updates, specific ITAR sections have been amended. The revisions aim to control only defense articles that are inherently military or not otherwise widely available for commercial sale.

Impact on Industry and Academia

ITAR regulations have significant implications for U.S. industry and academia. These regulations have the potential to impose significant restrictions on the development and export of technologies with potential military applications, resulting in substantial economic consequences such as substantial fines and loss of export privileges for non-compliant U.S. companies. 

See, much of the R&D for military exports originates in public education and universities, not military labs (although there are plenty of those, too). 

Moreover, ITAR regulations have presented significant compliance obstacles for academic institutions and restricted the flow of technical knowledge between industry and academia. As a result, innovation has been detrimental, especially within the space industry, and institutions have had to implement rigorous supervision to ensure adherence to U.S. sanctions and export control regulations during research endeavors.

Frequently Asked Questions

Here are a few of the most common questions asked about ITAR compliance issues. 

What is the difference between ITAR and export control?

The main difference between ITAR and export control is that ITAR governs the export and temporary import of military-grade items, while export control, governed by EAR, regulates commercially used and military-grade technologies and data.

What Is the ITAR Export Restriction?

The ITAR export restriction establishes controls on the export and import of defense-related items and services listed on the US Munitions List, limiting access to specific technologies.

What is the difference between ITAR and OFAC?

The main difference between ITAR and OFAC is that ITAR focuses on national security, while OFAC focuses on advancing US foreign policies. Keep this in mind when dealing with technological transfers or foreign transactions.

What is the definition of 'export' according to ITAR?

The term 'export,' according to ITAR, is defined broadly and includes the transfer of intangible items, like technology or information, defense services, and technical data, to foreign nationals, even if it happens within the United States.

Who Is Obligated To Complete Registration With the U.S. Department of State According to ITAR?

All manufacturers, exporters, and brokers of defense articles, defense services, or related technical data as defined on the USML are obligated to complete registration with the U.S. Department of State, according to ITAR.

Parting Thoughts

Greenwood Aerospace has been an ITAR-compliant facility for many years since it is essential to our business. 

GovernmentProcurement.com, operated by Greenwood Aerospace, proudly serves the U.S. military community. We are ITAR-registered by the U.S. Department of State, allowing us to access defense supply chains to fulfill contracts.  

If you are ready to work with an ITAR-registered agency that will supply the parts you need for your missions, give us a call or start an online quote today! We’d love to hear from you, and one of our experienced representatives will walk you through the process and our services.

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