Why ITAR?

1. ITAR WhyITAR? Thomas A. Wheeler EFW Inc FSO / Empowered Official

2. Agenda • Why ITAR exists • Key Definitions • Authorizations • What is the Risk • Recommendations • Questions

3. Short Answer…It’s the Law • Section 38 of the Arms Export Control Act • Authorizes the President to control the export and import of defense articles and defense services.

4. Why do they want to control this stuff? • National security • Foreign policy • Human rights

5. What’s a Defense Article? • Any item or technical data (in any form) that the ITAR defines as a defense article. • For Example, category XV of section 121.1 which is: • Spacecraft, satellites, ground stations. • GPS used for military purpose. • And many other items.

6. What is Technical Data? • Information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles.

7. Do you mean ANY information? • No! This does not include Basic marketing information. • On function. • On purpose. • Or general descriptions.

8. Nor Does it include… • general scientific, mathematical, or engineering principles commonly taught in schools, colleges, universities, or information in the public domain.

9. What do you mean “Public Domain”? • Information which is published and is generally accessible or available to the public • Newsstands, bookstores, subscriptions, libraries open to the public, patents, etc…

10. What is an Export? • Sending or taking a defense article or export controlled Technical Data out of the United States in any manner. Excludes personal knowledge. • Transfer of ownership, registration or control of a defense article to a foreign person. • Oral or visual disclosure for technical data to a foreign person regardless of location.

11. U.S. Person Lawful permanent resident of the United States Green Card NOT Visa Companies incorporated to do business in the US. Foreign Person Not a lawful permanent resident of the United States Companies not incorporated to do business in the U.S. Embassy How do they define Persons?

12. Now I get it! • I know what a Defense Article is • I know what Technical data is • Public Domain Information is NOT controlled • So if it’s public data I can share it freely!

13. Now I get it! • Not So FAST! Careful Application of Public Domain Information is considered a Defense Service. ITAR124.1(a)

14. Furnishing assistance to a foreign person in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles. What is a Defense Service?

15. That Stinks! • How do I know I crossed the line? • You won’t. (Until it’s too late.) • How do I decide what to share? • Take time to think about it. • Talk to an empowered official. • Talk to your management. • Create and try to stick to an export strategy. • If you don’t feel comfortable - don’t share.

16. Form Licenses TAA/MLA Government to Government Exemptions Export Strategy Shopping List

17. Authorizations • DSP-5 • Permanent Export of Unclassified Defense Articles or Technical Data • DSP-73 • Temporary export of unclassified Defense Articles

18. Authorizations • DSP-61 • Temporary Import of Unclassified Defense Articles • DSP-85 • Temporary or Permanent Import or Export of Classified Defense Articles or Technical Data • Technical Assistance Agreements (TAA) • Authorization to perform Defense Services

19. A Word about Approvals What You Asked For What’sAuthorized All Information

20. Record Keeping • You are required to maintain a record of ALL exports • Articles • Data • Record Keeping means--- YOUR KEEPING RECORDS!

21. Authorizations • Exemptions • It IS the approval

22. Consider This • U.S. Foreign policy precludes doing business with certain countries. • Some companies and some people may be on the debarred persons list and thus not eligible.

23. Consider This • If you use contractors • In order to assist on Programs that have a TAA their company has to be a signatory to the agreement too. Book of Tech Data

24. Recommendations • Engage Program Management in the TAA draft cycle • Establish a review process • Get buy in

25. Recommendations • Understand Scope of the Approval • Know the Limitations and provisos… • Set up controls of your foreign persons • Physical • Procedural

26. Recommendations Train Train Train Useful Web Sites! • www.pmddtc.state.gov • www.siaed.org

27. Understanding the Risk • Companies are held responsible and expected to comply with ITAR. • Individuals are held responsible and expected to comply with ITAR.

28. Some recent examples… • ITT $100 Million! • Boeing • A single chip in an aircraft $15 Million • IBM East Europe • Exported 17 computers to a Russian nuclear weapons lab. $8.5 Million • BE Aerospace • Export of aircraft parts (mainly seats) for installation in Iran Aircraft. $2.5 Million + $500K Civil penalty

29. More Examples… • Dell Computer • Computers to Iran $50K • James L. Stephns/Weisser’s Sporting Goods • Exporting U.S. origin shotguns to Namibia and South Africa $60K & 15 years denial of export privileges. • Edward A. Johnson • Exporting zirconium an incendiary agent in cluster bombs to a Chilean arms maker who in turn sold it to Iraq. $25K and 41 months in Prison

30. Role of the Empowered Official • To help the Organization. • To help the employees understand the requirements. • Ensure compliance. • Sign all license or TAA requests. • Apply the brakes without retribution

31. Range of action (Internal) Verbal guidance Written Guidance Decision Leave Termination Range of action (external) Loss of export privileges Loss of business Loss of reputation Monetary Fines Prison Loss of Jobs Violations lead to corrective Action

32. More Recommendations • Get Top Management Support • Buy your Empowered Official a cup of coffee • Establish Foreign Person Controls • Train • Make Record Keeping Requirements Known • Centralization is best • Know your what your Marketing folks are up to

33. More Recommendations • Train • Build strong relationships with your Shipping and Receiving group • Train • Be available and encourage questions • Focus should be on fixing issues

34. In Conclusion • Why ITAR exists • Key Definitions • Authorizations • What is the Risk • Recommendations

35. ITAR Questions