Certain types of tangible goods, technical data, and services are produced exclusively for military purposes. When these things are exported from the U.S., they are governed by International Traffic in Arms (ITAR) regulations. This forces exporters to maintain ITAR compliance. But what does that mean?
In a general sense, Ohio-based Vigilant Global Trade Services says that ITAR compliance is simply the state of being in compliance with all ITAR rules and regulations. But in reality, it is not as simple as that. The long list of ITAR rules is numerous and confusing. Violate just one and a company could find itself in hot water.
With that in mind, here is a better description of what ITAR compliance means:
An Exporter Is Licensed
Companies are not allowed to export ITAR-regulated goods and services without government approval. The necessary approval is gained by obtaining an ITAR license from the appropriate regulating authority. Licensure requires an exporter to follow a strict set of rules governing everything from how goods and services are classified to the destinations to which they will be exported to.
Exporting ITAR-controlled goods and services without a license is a serious crime. The U.S. government deals with it quite seriously, making use of punitive fines, administrative penalties, and even prosecution and incarceration.
Goods Are Properly Classified
ITAR compliance also stipulates that an exporter’s goods and services are properly classified prior to shipment. All restricted goods and services controlled by ITAR are found listed on the United States Munitions List (USML). It is up to exporters to understand all twenty-one categories on the USML and classify their goods and services accordingly.
In addition, paperwork has to be filed with governing authorities prior to shipment. Included in that paperwork is the classification of the goods or services in question. Not only does classification have to be correct, but so does the rest of the information on the paperwork.
Export Restrictions Are Followed
In order to be ITAR compliant, a licensed exporter must adhere to all export restrictions. A case in point are the different lists of restricted persons and entities exporters must consult prior to shipping goods and services. An exporter may not ship to any person, entity, or destination included on any of the restricted lists.
The purpose for this is simple: our government does not want military goods and services to fall into the wrong hands. They do not want U.S. producers shipping to enemies of this country. Nor do they want goods and services shipped to countries or organizations that pose a significant threat anywhere in the world.
Proper Offshore Procurement
Finally, ITAR compliance stipulates that a producer has followed all the rules relating to offshore procurement. This usually plays out in terms of obtaining parts and supplies for the manufacture or assembly of finished goods. International trade laws prevent U.S. producers from importing parts and supplies from certain countries, entities, and persons.
It is important to point out that ITAR regulations do not apply only to tangible goods. They also apply to defense-related services and technical data. The addition of such non-tangible items can make ITAR compliance a bit more challenging. However, compliance is a must. The government does not allow exceptions.
Maintaining ITAR compliance is no easy task. Companies either have to maintain their own highly specialized compliance teams or outsource compliance to an organization that offers global trade services. It would seem that the easiest and most cost-effective option would be outsourcing. Leaving compliance to a specialized global trade services provider frees up a company to concentrate its resources on core products and services.