David William

The International Chamber of Commerce (ICC) controls the rules which are defined under CFR Incoterm. The buyer and seller each have their own set of responsibilities under CFR which they can modify as per their convenience provided both of them agree to it.

Penalties for violating ITAR requirements include denying the ability to export items, seizure of goods, significant fines, and potentially even jail time in the most extreme cases.

Fines can be over $1 million per violation in some cases. Companies are expected to voluntarily disclose potential violations and the degree of their cooperation with an investigation can be a mitigating factor relating to the extent of the penalties.

Any company that manufactures defense articles or is involved in the export of these items (exporters, brokers, and freight forwarders) must ensure that they are registered with the DDTC and meet any other applicable requirements specified in the ITAR. A defense article is any item or technical data listed on the United States Munitions List (USML).

ITAR Compliance means that an exporter or manufacturer of specific hardware (defense articles) needs to meet certain requirements and operate in a certain manner consistent with those requirements to be allowed to participate in the supply chain involved with these items.

The basic elements of a compliance program include documentation in formal written procedures, awareness training for applicable personnel in the control processes, maintaining proper records, auditing the process to ensure that it is being implemented, and investigating and reporting suspected violations. The end result is to enable your company to:

• Determine the jurisdiction and classification of products
• Control access to ITAR items and related documentation
• Ensure that business transactions have proper legal authorization before exporting or importing
• Control products throughout the complete life cycle process.

Enforcement rests primarily with three different agencies of the U.S. government. They are:

• The U.S. Department of State: Directorate of Defense Trade Controls (DDTC). This agency is responsible for administration and enforcement of the International Traffic in Arms Regulations (ITAR).
• The U.S. Department of Commerce: Bureau of Industry and Security (BIS). This agency is responsible for administration and enforcement of the Export Administration Regulations (EAR).
• The U.S. Department of the Treasury: Office of Foreign Assets Control (OFAC). This agency is responsible for administering and enforcing a variety of economic and trade sanctions against certain countries and individuals.