Chicago counsel Joan Koenig was quoted in a Law 360 article titled, “3 Key Changes in the New Export Control Brokering Rule.”
On August 26, the State Department’s Directorate of Defense Trade Controls published an interim final rule intended to clarify the definitions of a “broker” and “brokering activities” under the International Traffic in Arms Regulations. Companies and individuals that qualify as brokers under the ITAR must register and file reports with the government, and not doing so can carry serious consequences.
Joan explained one of the key revisions in the new brokering rule, which is expected to take effect in late October following a final public comment.
According to Joan, prior to the revisions in the new rule, the State Department took a broad view that individuals and companies in the United States and in foreign countries could be required to register as brokers. In practice, that meant U.S.-based companies that relied on foreign distributors often felt compelled to reach out to those distributors and urge them register as brokers.
Joan pointed to the changes in the broker definition and their impact on foreign companies as one of the “big important clarifications” incorporated into the State Department’s rule.
“Foreign companies have clear direction on when they, or when they do not need to register,” Joan said.
Joan concluded: “Although the list of exemptions and excluded activities is more well-defined under the new rule, companies still need to pay close attention to the registration requirements and not automatically assume that they’re in the clear.”