ITAR/EAR The Short Overview

1. ITAR/EARThe Short Overview The Security Summit Bob Ketts 22 March 2011

2. Agenda • Disclaimer • ITAR overview • Basis in law • Registration with State Dept. • What is governed • Types of State Dept. authority to export • EAR overview • Licensing • ECCN – SNAP R • Compliance programs • Violations/Sanctions • Export reform • Sources of training and help • Summary • Q&A

3. ITAR - basics • International Traffic in Arms Regulation - The regulatory implementation of the Arms Export Control Act • Administered by U.S. Dept of State • Importance to US foreign policy • Defense Technology Security Administration (“DTSA”) • Registration with State Dept. - Any person who engages in the US in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with DDTC.

4. ITAR – basics (cont’d.) • What is covered • Defense articles – Hardware designed/developed for a defense purpose • US Munitions List (“USML”) in ITAR -21 categories of defense articles • Significant Military Equipment (“SME”) • Technical Data – Information used to describe defense articles • Defense Services – Usually training or maintenance performed for benefit of a non-US person • US Person • US citizen • Permanent resident of US • Granted special asylum by US

5. ITAR – basics (cont’d.) • Types of State Dept authority to export • License • Technical data license (DSP-5) • Permanent export license (DSP-5) • Temporary export license (DSP-73) • Temporary import license (DP-61) • Agreement • Technical Assistance Agreement (“TAA”) • Manufacturing License Agreement (“MLA”) • Warehouse Distribution Agreement (“WDA”) • Exemption to ITAR • Mock up • Repair of item of US origin

6. EAR • Export Administration Regulation administered by the Bureau of Industry and Security, U.S. Department of Commerce • Export Classification Control Number (“ECCN”) • Significantly different approach from State • Positive identification of item and assignment of ECCN • Basis for determining if license is required • Most articles do not require license • SNAP R – Means of getting USDOC to validate ECCN

7. Compliance Programs • Required for both ITAR and EAR • Culture of Export Compliance • Written organization • Training • Technology Control Plan • Subject to review by US Depts. of State and Commerce • State Dept. visit of Cubic

8. Violations/Sanctions • Suspected violations must be reported to either State or Commerce • Voluntary (self) disclosure • State and Commerce different approach • Sanctions • Civil/Criminal Fines • Imprisonment • Debarment • Consent agreements • BAES $400M • ITT $100M

9. Export Reform • Defense Trade Advisory Group • Administration seeking to establish five singles • Single list vice USML and CCL • Single agency vice State, Commerce and Justice • Single regulation vice ITAR and EAR • Single enforcement vice 22 agencies • Single IT system vice 1 paper system and 2 electronic that don’t talk to one another • Important features of new system • “Bright line” separating defense and commercial items • Tiered list of items • Positive identification • Align USML and CCL • “Higher fences around fewer things”

10. Sources of Training and Help • DDTC and BIS websites • BIS training classes • DDTC Response Team 202-663-1282 or ddtcresponseteam@state.gov • Society for International Affairs (“SIA”) • Spring conference various locations (May – Long Beach) • Fall (Nov.) conf in Washington, DC • San Diego Trade Compliance Group • ITAR boot camp • Strategic Shipping, UK

11. Summary • Ignorance is no excuse • USG expects culture of export compliance • Personal commitment of top company officers • Help is available but have to work for it

12. Questions • Any and all welcome