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A COMPARISON OF KEY TERMS
IN THE ITAR AND EAR
As we get closer to the final rules transitioning most commercially available firearms and ammunition away from the export controls of the U.S. Department of State over to the Department of Commerce, we continue our series reviewing the key differences between the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR).
For firearms and ammunition businesses who so far have structured their export operations mostly or entirely under ITAR controls, the impending change over to the EAR may be overwhelming because of the vast differences between the two sets of regulations. Therefore, even though the government has not yet published the final rules amending the U.S. Munitions List, it is important that exporters of firearms and ammunition start familiarizing themselves with the EAR so they are ready to hit the ground running once the final rules come out.
Learning a new set of regulations requires a base understanding of the defined terms. Last week we reviewed how the ITAR and EAR each treat publicly available information, especially information on the Internet. In this week's alert, we will examine the similarities and differences between key definitions in the ITAR and EAR.
For ease in review, we provide a table with side-by-side comparisons.
We note that the Departments of State and Commerce have made great strides in harmonizing the definitions in recent years, but some important distinctions remain. In the chart below, you will see instances where the ITAR and EAR use the same term but assign slightly different meanings. In other cases, there is no direct match. Take for example the ITAR term "retransfer." In the EAR, "retransfer" is not used because the term "transfer" encompasses the concept. Another difference is the absence of "defense service" from the EAR.
Practice Tip:
The EAR indicates a defined term by putting quotation marks around the specific word or phrase. Many EAR definitions contain defined terms within the definition itself, which will require the reader to refer to other sections of the EAR to arrive at the ultimate definition of a single term or phrase. When first acquainting yourself with the EAR this may seem confusing and cumbersome (and, candidly, sometimes frustrating), but once you become comfortable with the way the EAR is drafted, you will realize that the use of defined terms helps narrow the scope of controls and pinpoint exactly that which is intended to be subject to the EAR.
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ITAR
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EAR
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22 C.F.R. 120.6
Any item or technical data designated in the USML. This term includes technical data recorded or stored in any physical form, models, mockups or other items that reveal technical data directly relating to items designated in the USML. It also includes forgings, castings, and other unfinished products, such as extrusions and machined bodies, that have reached a stage in manufacturing where they are clearly identifiable by mechanical properties, material composition, geometry, or function as defense articles. It does not include basic marketing information on function or purpose or general system descriptions.
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"Commodities, software, and technology." When the EAR intends to refer specifically to commodities, software, or technology, the text will use the specific reference.
Commodity
15 C.F.R. Part 772
Any article, material, or supply except technology and software.
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Technical Data
22 C.F.R. 120.10
(1) Information (including software) which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation;
(2) Classified information relating to defense articles and defense services on the USML and 600-series items controlled by the CCL; or
(3) Information covered by an invention secrecy order.
The term does not include information concerning general scientific, mathematical, or engineering principles commonly taught in schools, colleges, and universities, or information in the public domain as defined in §120.11 of the ITAR or telemetry data as defined in note 3 to Category XV(f). It also does not include basic marketing information on function or purpose or general system descriptions of defense articles.
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Technology
15 C.F.R. Part 772
Information necessary for the "development," "production," "use," operation, installation, maintenance, repair, overhaul, or refurbishing (or other terms specified in ECCNs on the CCL that control "technology") of an item.
N.B.: Controlled "technology" is defined in the General Technology Note and in the Commerce Control List (Supplement No. 2 to part 774 of the EAR). [Technology is controlled according to the provisions in each CCL Category].
NOTE 1 to definition of Technology: "technology" may be in any tangible or intangible form, such as written or oral communications, blueprints, drawings, photographs, plans, diagrams, models, formulae, tables, engineering designs and specifications, computer-aided design files, manuals or documentation, electronic media or information revealed through visual inspection.
NOTE 2 to definition of Technology: The modification of the design of an existing item creates a new item and technology for the modified design is technology for the development or production of the new item.
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Software
22 C.F.R. 120.45(f)
Includes but is not limited to the system functional design, logic flow, algorithms, application programs, operating systems, and support software for design, implementation, test, operation, diagnosis and repair.
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Software
15 C.F.R. Part 772
A collection of one or more "programs" or "microprograms" fixed in any tangible medium of expression.
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Defense Service
22 C.F.R. 120.9
(1) The furnishing of assistance (including training) to foreign persons, whether in the United States or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles;
(2) The furnishing to foreign persons of any technical data controlled under the ITAR, whether in the United States or abroad; or
(3) Military training of foreign units and forces, regular and irregular, including formal or informal instruction of foreign persons in the United States or abroad or by correspondence courses, technical, educational, or information publications and media of all kinds, training aid, orientation, training exercise, and military advice.
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No similar concept in the EAR. BIS regulates the transfer of technology when providing assistance, not the act of providing assistance itself.
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Person
22 C.F.R. 120.14
A natural person as well as a corporation, business association, partnership, society, trust, or any other entity, organization or group, including governmental entities. If a provision in the ITAR does not refer exclusively to a foreign person (§120.16) or U.S. person (§120.15), then it refers to both.
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Person
15 C.F.R. Part 772
A natural person, including a citizen or national of the United States or of any foreign country; any firm; any government, government agency, government department, or government commission; any labor union; any fraternal or social organization; and any other association or organization whether or not organized for profit. This definition does not apply to part 760 of the EAR (Restrictive Trade Practices or Boycotts).
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U.S. Person
22 C.F.R. 120.15
A person (§120.14) who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, society, trust, or any other entity, organization or group that is incorporated to do business in the United States. It also includes any governmental (federal, state or local) entity. It does not include any foreign person (§120.16).
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U.S. Person
15 C.F.R. Part 772
(a) For purposes of §§740.21(e)(1), 744.6, 744.10, 744.11, 744.12, 744.13, and 744.14 of the EAR, the term U.S. person includes:
(1) Any individual who is a citizen of the United States, a permanent resident alien of the United States, or a protected individual as defined by 8 U.S.C. 1324b(a)(3);
(2) Any juridical person organized under the laws of the United States or any jurisdiction within the United States, including foreign branches; and
(3) Any person in the United States.
(b) See also §§ 740.9, 740.14, and 740.21(f)(2) and parts 746 and 760 of the EAR for definitions of "U.S. person" that are specific to those sections and parts.
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Foreign Person
22 C.F.R. 120.16
Any natural person who is not a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of foreign governments (e.g., diplomatic missions).
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Foreign Person
15 C.F.R. Part 772
Any natural person who is not a lawful permanent resident of the United States, citizen of the United States, or any other protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, trust, society or any other entity or group that is not incorporated in the United States or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of a foreign government (e.g., diplomatic mission). "Foreign person" is synonymous with "foreign national," as used in the EAR, and "foreign person" as used in the International Traffic in Arms Regulations (22 CFR 120.16). This definition does not apply to part 760 of the EAR (Restrictive Trade Practices or Boycotts).
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Export
22 C.F.R. 120.17
Except as set forth in §126.16 or §126.17 an export means:
(1) An actual shipment or transmission out of the United States, including the sending or taking of a defense article out of the United States in any manner;
(2) Releasing or otherwise transferring technical data to a foreign person in the United States (a "deemed export");
(3) Transferring registration, control, or ownership of any aircraft, vessel, or satellite subject to the ITAR by a U.S. person to a foreign person;
(4) Releasing or otherwise transferring a defense article to an embassy or to any of its agencies or subdivisions, such as a diplomatic mission or consulate, in the United States;
(5) Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad; or
(6) A launch vehicle or payload shall not, by reason of the launching of such vehicle, be considered an export for purposes of this subchapter. However, for certain limited purposes (see §126.1 of this subchapter), the controls of this subchapter may apply to any sale, transfer or proposal to sell or transfer defense articles or defense services.
(b) Any release in the United States of technical data to a foreign person is deemed to be an export to all countries in which the foreign person has held or holds citizenship or holds permanent residency.
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Export
15 C.F.R. 734.13
(a) Except as set forth in §§ 734.17 or 734.18, Export means:
(1) An actual shipment or transmission out of the United States, including the sending or taking of an item out of the United States, in any manner;
(2) Releasing or otherwise transferring "technology" or source code (but not object code) to a foreign person in the United States (a "deemed export");
(3) Transferring by a person in the United States of registration, control, or ownership of:
(i) A spacecraft subject to the EAR that is not eligible for export under License Exception STA (i.e., spacecraft that provide space-based logistics, assembly or servicing of any spacecraft) to a person in or a national of any other country; or
(ii) Any other spacecraft subject to the EAR to a person in or a national of a Country Group D:5 country.
(b) Any release in the United States of "technology" or source code to a foreign person is a deemed export to the foreign person's most recent country of citizenship or permanent residency.
(c) The export of an item that will transit through a country or countries to a destination identified in the EAR is deemed to be an export to that destination.
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Release
22 C.F.R. 120.50
Technical data is released through:
(1) Visual or other inspection by foreign persons of a defense article that reveals technical data to a foreign person; or
(2) Oral or written exchanges with foreign persons of technical data in the United States or abroad.
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Release
15 C.F.R. 734.15
(a) Except as set forth in § 734.18, "technology" and "software" are "released" through:
(1) Visual or other inspection by a foreign person of items that reveals "technology" or source code subject to the EAR to a foreign person; or
(2) Oral or written exchanges with a foreign person of "technology" or source code in the United States or abroad.
(b) Any act causing the "release" of "technology" or "software," through use of "access information" or otherwise, to yourself or another person requires an authorization to the same extent an authorization would be required to export or reexport such "technology" or "software" to that person.
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Retransfer
22 C.F.R. 120.51
Except as set forth in § 126.16 or §126.17, Retransfer means:
(1) A change in end use or end user, or a temporary transfer to a third party, of a defense article within the same foreign country; or
(2) A release of technical data to a foreign person who is a citizen or permanent resident of the country where the release or transfer takes place.
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Transfer
15 C.F.R. 734.16
Except as set forth in §734.18(a)(3), a Transfer (in-country) is a change in end use or end user of an item within the same foreign country. Transfer (in-country) is synonymous with In-country transfer.
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Reexport
22 C.F.R. 120.19
Except as set forth in §126.16 or §126.17, Reexport means:
(1) An actual shipment or transmission of a defense article from one foreign country to another foreign country, including the sending or taking of a defense article to or from such countries in any manner;
(2) Releasing or otherwise transferring technical data to a foreign person who is a citizen or permanent resident of a country other than the foreign country where the release or transfer takes place (a "deemed reexport"); or
(3) Transferring registration, control, or ownership of any aircraft, vessel, or satellite subject to the ITAR between foreign persons.
(b) Any release outside the United States of technical data to a foreign person is deemed to be a reexport to all countries in which the foreign person has held or holds citizenship or holds permanent residency.
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Reexport
15 C.F.R. 734.14
(a) Except as set forth in §734.18 and 734.20, Reexport means:
(1) An actual shipment or transmission of an item subject to the EAR from one foreign country to another foreign country, including the sending or taking of an item to or from such countries in any manner;
(2) Releasing or otherwise transferring "technology" or source code subject to the EAR to a foreign person of a country other than the foreign country where the release or transfer takes place (a deemed reexport);
(3) Transferring by a person outside the United States of registration, control, or ownership of:
(i) A spacecraft subject to the EAR that is not eligible for reexport under License Exception STA (i.e., spacecraft that provide space-based logistics, assembly or servicing of any spacecraft) to a person in or a national of any other country; or
(ii) Any other spacecraft subject to the EAR to a person in or a national of a Country Group D:5 country.
(b) Any release outside of the United States of "technology" or source code subject to the EAR to a foreign person of another country is a deemed reexport to the foreign person's most recent country of citizenship or permanent residency, except as described in § 734.20.
(c) The reexport of an item subject to the EAR that will transit through a country or countries to a destination identified in the EAR is deemed to be a reexport to that destination. |
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See Through
An unwritten concept in the ITAR. When a non-ITAR item (U.S.-origin or foreign) incorporates an ITAR-controlled item, then that item becomes ITAR-controlled itself. In other words, the ITAR always "sees through" to the ITAR-controlled component, no matter how small the component may be.
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De Minimis U.S. Content
15 C.F.R. 734.4
The de minimis rules in the EAR are used to establish the point at which a foreign-made item that incorporates U.S.-origin EAR-controlled content is no longer subject to the EAR. The de minimis calculation is made based on the percentage of the dollar value of the U.S. content compared to the total dollar value of the non-U.S.-made item. If the U.S.-origin content falls below a set percentage (found in § 734.4), the foreign-made item will not be subject to EAR controls.
NOTE: Certain Items, as outlined in § 734.4 have a zero de minimis level, so be sure to check this section before performing the de minimis calculation.
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Never fear! There's always more to learn. Stay tuned for an upcoming alert where we will delve into the differences between export authorizations under the ITAR and EAR.
The above alert is for informational purposes only and is not intended to be construed or used as legal advice. Receipt of this alert does not establish an attorney-client relationship.
Questions about this alert may be directed to:
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