On August 26, 2013, the U.S. Department of State published a long awaited interim final rule amending the brokering provisions of the International Traffic in Arms Regulations (ITAR). The rule, which has been in process for a number of years and published in proposed format multiple times, will be effective October 25, 2013. Interested parties can submit comments through October 10, 2013.
The rule provides several important clarifications, including:
- Brokering does not extend to certain types of activities, including activities that do not exceed administrative services and support, activities performed by one company on behalf of an affiliate, or the provision of legal advice by an attorney to a client related to export compliance;
- The requirement for foreign persons to register as brokers is limited to foreign persons in the U.S. and those owned/controlled by a U.S. person; and,
- Persons solely in the business of financing, insuring or transporting goods are excluded from registration, prior approval requirements, reporting and recordkeeping requirements when providing these services in connection with trade in defense articles.
In addition to the new brokering regulations, the first revisions to the U.S. Munitions List under the Administration’s Export Control Reform Initiative will be effective on October 15, 2013. These changes include the transfer of certain items from USML Category VIII (concerning aircraft) and Category XVII (concerning classified articles, technical data and defense services) to the Commerce Control List, the creation of Category XIX (gas turbine engines and associated equipment) and the implementation of the new “specially designed rule.” For more information on how the amendments to the ITAR’s brokering regulations and the USML can affect your business, please contact Joan Koenig or any other member of Drinker Biddle’s Customs and International Trade Team.