US Export Controls: What do they mean for my Business?

The US has a number of different controls & regulations in place to safeguard national security, to support foreign policy and to control the import and export of specific products & services.

Whilst export controls remain very relevant today, they are to some extent a legacy of the cold war when controls were created to prevent the dissemination of military technologies to eastern bloc countries and to give the US and its allies the edge in terms of defence and military technology.

Two of the main export controls that aerospace & defence businesses in the US encounter when trying to sell internationally are ITAR and EAR regulations.

The International Traffic in Arms Regulations (ITAR) are a series of regulations laid down by the United States Government to control the import and export of defence related items & services. ITAR is administered and overseen by the US Department of State – Directorate of Defense Trade Controls. Items controlled by ITAR appear on a list called the ‘US Munitions List’ (USML).

Export Administration Regulations (EAR) run in parallel with ITAR, but are administered by the US Department of Commerce rather than the State Department. EAR’s purpose is to control items that are primarily designed for commercial purposes, but which may also have military applications. Examples of these include global positioning systems, cameras and optics. Items subject to Export Administration Regulations appear on a list called the Commerce Control List (CCL).

How do ITAR and EAR controls affect my business?

Any business selling products or services that appear on either the US Munitions List or the Commerce Controls List have a duty to ensure that they have the appropriate marketing/export licenses in place and that they are export compliant in order export & sell these products internationally.

Export Controls are not a barrier to international trade
Whilst export controls can seem initially daunting to businesses unfamiliar with international sales, export controls can be navigated relatively easily with appropriate assistance from an export compliance consultant – Who will help establish whether (1) your product / service is controlled by ITAR or EAR and (2) whether any export / marketing licences are required.

Commercial Products are controlled by EAR & ITAR

It is important to recognise that both the US Munitions List (USML) and the Commerce Controls List (CCL) contain both military and commercial products/services.

Whilst the US Munitions List (USML) is designed to control the export of articles and technology developed for the military, the gradual transfer and use of military technology in the commercial sector (e.g. satellites, lasers, space technology & components) means that many items used commercially appear (or have appeared) on the US Munitions List. This means that there is the potential for your business’ products or services to be controlled by ITAR. A product’s intended use is not relevant in determining whether or not it is controlled by export regulations.

The Commercial Controls List (CCL) contains many more ‘dual-use’ items (i.e. items that have military as well as commercial applications). Typically items that appear on the CCL are designed for commercial purposes, but they may also be seen to have military applications. Examples include navigation systems, flight control systems, radar systems and components. As part of recent export control reform, many items (including products related to the space sector) are being moved from the US Munitions List onto the Commerce Controls List. This will have a positive impact for many businesses.

If you are an aerospace or defence business, export controls can have significant implications for your international sales strategy. It is essential to ensure your business is compliant and that you have the appropriate marketing licenses/export licenses in place before marketing your products.

Information and Technical Data about Products is also Controlled

Another key point is that export controls apply to information, software and services that relate to items on the US Munitions List and Commerce Control List. For example; manuals & technical data related to your products may also be export controlled. Emailing technical data outside of the US or to a foreign national as part of the sales process [without the appropriate licenses & authorisation] can breech export controls.

How are Export Controls are being reformed?

Under pressure from US businesses, a plan has been developed by the US Government to dramatically reform export controls to make it easier for businesses to sell and export products internationally, whilst continuing to ensure that US National Security and US Interests remain protected. The reform process, known as the ‘Export Controls Reform’ (ECR), started in 2009 and is being implemented in three phases.

The long-term goal of ECR is to have a single government agency responsible for all export controls with a single export controls list. This will eventually replace the US Munitions List (part of ITAR) and the Commerce Control List (part of EAR). The reform process is planned to take many years and a deadline for the final phase has not yet been identified.

In the short / medium term, the goal of the reform process is to harmonise the classification criteria between the US Munitions List and the Commerce Control List, to ensure there are distinct boundaries between the two lists, and to reclassify items so that the US Munitions List ultimately only contains .. those items that provide at least a significant military or intelligence applicability that warrant the controls the AECA requires”. This means many of the items previously on the US Munitions List (USML) are being transferred to the less stringent Commerce Controls List (CCL) and this will provide many more opportunities for aerospace and defence businesses to win work and sell products internationally.

At this stage of the reform process both ITAR and EAR regulations are still very complicated and the onus is on businesses to ensure that they are compliant.

If you are exporting or attempting to sell products internationally and you are unsure whether your products appear on either the US Munitions List or the Commerce Control Classification List (CCL) always consult an export control specialist.

Export Compliance Help and Support

mk trade compliance group
For those companies requiring advice and support on export control matters, Westworld has a close working relationship with MK Trade Compliance Group, a leading practitioner in the field, with a range of expertise covering export control regulations in the U.S. and the European Union and a full range of webinars, courses and awareness videos.

MK Trade compliance are our preferred partner when clients require additional support with both ITAR & EAR export controls and compliance.

Additional ITAR / EAR Resources

Disclaimer:  Westworld Consulting strives to provide accurate informative information within this blog post. This post is for information purposes only and does not constitute legal advice. You should not rely or act upon any information within this post without seeking independent legal counsel. Westworld Consulting are not export compliance consultants or export lawyers. We cannot be held responsible for any inaccuracy, errors or omissions within the information contained above. If you require export advice or assistance you should seek professional legal counsel from an Export Controls Attorney or Export Compliance Consultant.