It doesn't matter if you import or export, there are certain elements of the international trade process that you must understand if you are going to survive—and thrive—in the global economy.

That's why International Business Training is offering a series of lunch-time webinars in May that let you participate from your desktop computer in live, two-hour presentations on the fundamentals of international trade:

Each two-hour session is held twice a day so both east coast and west coast attendees can participate over their lunch hours. Of course, if you've already got lunch plans, we don't mind if you register for the other session that day.

Each two-hour webinar is only $150 per person, and you'll receive a copy of the instructor's PowerPoint presentation prior to the webinar so you can take notes, and we'll mail you a Certificate of Completion at the end of each webinar.

Seats for each webinar are definitely limited, so don't delay. You can register online or by calling IBT at 1-800-641-0920. You'll be glad you did!

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By Kathryn Toomey email | bio

In previous articles, we explored what the International Traffic In Arms Regulations (ITAR) are and the items controlled under the United States Munitions List (USML). To help you understand the registration requirements of ITAR, it’s worth stating again the reasons why the ITAR exists.

A myriad of U.S. laws and regulations exist regarding importing and exporting from the U.S. These laws and regulations are designed to comply with trade agreements, embargoes, sanctions and other political measures the U.S. has with other countries. Most importantly, these laws and regulations are designed to protect U.S. national security so the most sensitive information and technology do not get into the wrong hands. This includes laws and regulations prohibiting U.S. individuals and companies from engaging in business with prohibited/sanctioned countries and persons for various economic, financial, anti-terrorism and human rights issues.

Ok, so now we know why the government has the ITAR regulations, but what does this have to do with registration under the ITAR? What are we are we registering for?

In simple terms, the U.S. government wants to know every person or company that engages in either manufacturing or exporting defense articles or furnishes defense services; the way they obtain such information is to require you to register with the Department of State. This requirement also includes persons or companies who may never actually export their article or service but are the manufacturer of such. It also includes brokers, distribution outlets, parts companies and engineering and design firms who develop and/or supply ITAR controlled articles and services.

It might seem far reaching, but it is a necessary step in protecting our national security. Remember 9/11? How can we forget? Additional security measures put in place after 9/11 that trickled down into the ITAR were designed to further protect us and help ensure national security.

Registration requirements can be found under 22 CFR, Chapter I, Subchapter M, Part 122. There are only five subcategories in Part 122, and it’s really not that difficult to grasp. Part 122 of the ITAR is probably one of the easiest sections to understand and follow yet, ironically, so many companies fail to abide by this regulation.

Part 122 is as follows:

Section 122.1, Registration requirements, outlines exactly who must register and offers four very descriptive and focused exemptions. The exemptions are:

These are the only exemptions. In order to utilize them you should ensure accurate recordkeeping, documentation and perform reasonable due diligence and care when making this decision. For example, an error in interpreting your manufacturing fabrication for scientific research purposes can backfire on you if you are not careful or are trying to circumvent the law. Fines and penalties can be severe and far exceed the cost of registration. Remember, you are playing in the Directorate of Defense Trade Controls’ (DDTC) sandbox, and it’s best to err on the side of caution.

An example of using the exemption under 122.1(b)(4) would be if a university decided to manufacture enhanced body armor that exceeds the current specifications under 121.1 Category X. In the course of this research, the university develops body armor that is reminiscent of the metal suit that the cartoon character “Ironman” wore in the 2008 blockbuster movie of the same name. Once completed and fully tested, the university decides to use, share, distribute, post online or sell the technology, engineering and/or manufacturing rights or any part thereof. That would require the university to register with DDTC and obtain a license to do such.

Obviously in this fabricated example, it would also send a red flag to DDTC that if a university is working on something so extreme such as an ironman suit, simply procuring the necessary materials to make the suit would have been flagged by suppliers who should have notified DDTC of the university’s activities. Subsequently, it is highly likely that DDTC would have investigated and required the university to register or terminate the research. While this example is fiction, activities such as this do exist and, hence, the reason for registration.

When in doubt, consult with an ITAR expert and/or DDTC to help you make a sound decision before beginning the ITAR-related activity.

Registration is simple. Complete a form DS-2032, Statement of Registration, and follow all the requirements under 122.1–122.5. Registration will also require a fee that is based on a tiered scale. Fees are as follows:

Tier 1: $2,250 per year for new registrants or for those who have not had DDTC review, adjudicate or issue a license during a 12 month period 90 days prior to expiration of a current registration.

Tier 2: $2,750 per year for those whom DDTC has reviewed, adjudicated or issued between 1-10 license applications during a 12 month period 90 days prior to expiration of a current registration.

Tier 3: $2,750 per year for those whom DDTC has reviewed, adjudicated or issued more than 10 license applications during a 12 month period 90 days prior to expiration of a current registration. Additionally, registrants will pay $250 for each license application over the allotted 10 free per year.

For universities or those exempt from income tax pursuant to 26 U.S.C. 501(c)(3), their fee may be reduced. See 22 CFR 122.3(a)(4).

Registration typically takes an estimated four to eight weeks. Renewals must be made no later than 30 days prior to expiration date. Lapses in registration will cause the registrant to pay for the intervening period during the lapse and possibly incur violations for activities engaged in during such lapsed period.

Changes in registration information originally supplied to DDTC on the DS-2032 form must be made within five days of the event and sent via certified return receipt to DDTC. See 22 CFR 122.4 for details. Hefty fines and penalties can be incurred for non-compliance of change notifications to DDTC.

Record maintenance of all ITAR activities including, but not limited to, registration, manufacture, acquisition, disposition and minutes, notes, drawing, etc. must be maintained in an organized and easily accessible fashion and available at all times for inspection by DDTC. See 22 CFR 122.5 for details. Additionally, all registrants should go beyond these minimal requirements and follow the EAR recordkeeping requirements under 15 CFR Part 762 and industry best practices (such as the Nunn Wolfowitz Report) for recordkeeping.

Keeping minimal records could hurt you. Following industry best practices and performing adequate due diligence and reasonable care will help you. If it’s too hard for DDTC to follow or understand the paperwork, most likely you’ve just incurred an aggravating factor. If it’s easy to follow, clear and concise, you may have spared yourself from a penalty or have a mitigating factor should a penalty be incurred. Err on the side of caution. Make sure that if someone had to pick up where you left off, they could easily follow and understand things.

Earlier I mentioned that Part 122 is one of the easiest to follow under the ITAR yet many companies fail to comply. Can you guess why companies fail to comply? It’s very simple. They did not read or take the time to understand the regulations. Do yourself a favor and read 22 CFR Part 122. Then decide if you meet the criteria. Contact an expert for help if needed. The cost of registration will be a pittance compared to a fine or penalty. An ounce of prevention goes a long way to retaining your profits and keeping your bottom line healthy.

Stay tuned to our series of ITAR articles, and in the meantime, let me know if you have any questions.

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