Who Must Register under the
Arms Export Control Act?
Recently we have received questions from companies in the firearms and ammunition industries on who must register with the U.S. Department of State as an exporter or manufacturer of defense articles under the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). As there appears to be some confusion on this compliance matter since the ITAR's U.S. Munitions List Categories I-III were revised back in March 2020, we thought it a good time to put out this refresher. We also go one step further and include a review of the registration requirement for importers of defense articles. While this alert provides some important notes regarding the firearms and ammunition industries, this refresher on the registration requirements is not just for them.
I. Why is there a Registration Requirement?
The ITAR registration requirement derives from the Arms Export Control Act (“AECA”), which Congress passed in 1976 to further world peace and protect the security and foreign policy of the United States. The statute requires every person who engages in the business of manufacturing, exporting, importing, or brokering any defense article or defense service to register with the U.S. government agency charged with administering the statute. 22 U.S.C. § 2778(b)(1).
The president delegated responsibility for implementing this part of the AECA to two different agencies: the U.S. Departments of State (“DOS”) and Justice (“DOJ”). DOS controls the manufacture, export, temporary import, and brokering of defense articles and defense services and has delegated responsibility for administering the ITAR, located in Title 22 of the Code of Federal Regulations (“C.F.R.”), Parts 120-130, to the Directorate of Defense Trade Controls (“DDTC”). DOJ controls the permanent import of defense articles and has delegated responsibility to the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”). ATF’s regulations governing the Importation of Arms, Ammunition, and Implements of War are located at 27 C.F.R. Part 447. ATF’s regulations don’t have a catchy recognized acronym, so we’ll refer to these simply as “ATF’s import regulations.”
Registration is an important way for the U.S. government to know who is involved in activities involving defense articles. The need for such information derives from national security interests and is why manufacturers of defense articles must register even if they do not engage in export activity. Registration is does not confer any export, broker, or import rights or privileges, but it is usually a precondition to obtaining a license or other approval.
We also note that the statute requires payment of registration fees, so whether you are registering with DDTC or with ATF, you will have to pay a specified fee. Details are below.
II. What Triggers the Registration Requirement?
Whether a person or entity must register with DDTC or ATF under the AECA depends on whether that person manufactures, exports, imports, or brokers “defense articles” or “defense services.” The statute specifies “engaging in the business,” but implementing regulations make clear that only one instance of engaging in the activity is sufficient to trigger the registration requirement. This is true for both the ITAR and ATF regulations.
To be clear, a “person” is not just a natural person. Both the ITAR and ATF regulations define “person” to include a corporation, business association, or partnership. The ITAR also includes society, trust, or any other entity, organization, or group, including government entities in its definition of “person.”
A. ITAR Registration
The ITAR requires “[a]ny person who engages in the United States in the business of manufacturing or exporting or temporarily importing defense articles or furnishing defense services” must register with DDTC…. 22 C.F.R. § 122.1(a). Persons who engage in brokering activities under 22 C.F.R. Part 129 must also register, and we will address brokering separately below.
The ITAR defines a “defense article” as “any item or technical data designated in [the U.S. Munitions List (“USML”)]. … The 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.”
A “defense service” is also defined in the ITAR (22 C.F.R. § 120.9) and can be in the form of assistance or furnishing technical data related to a defense article. Military training is also a controlled defense service.
So, if a person (yes, that includes business entities) engages in the business (one instance suffices) of manufacturing, exporting, or temporarily importing an item or technical data enumerated on the USML, that person must register with DDTC.
How do you know if your item or technical data is on the USML? The answer is not in the sky - where my children often look for answers to math problems – no, not there. You must review 22 C.F.R § 121.1 which houses the current USML. Be careful not to rely on an old version of the USML, as the list does change and went through considerable revisions between 2014 and 2020. We provide a link to the eCFR, which is the most up-to-date version of the federal regulations. We also recommend signing up for alerts from the Federal Register, the daily journal of the U.S. government and through which agencies publish regulatory changes. If you are a regular reader of our alerts, you will know that we always cite to the Federal Register publication for agency rulemaking. If DDTC makes any changes to the USML, it will publish the changes in the Federal Register. If you don’t get it, you don’t get it.
Manufacturers of Defense Articles
One rule of the ITAR that is often misunderstood is that manufacturers of defense articles must register with DDTC even if they never export a single thing. We repeat, MANUFACTURERS OF DEFENSE ARTICLES MUST REGISTER WITH DDTC EVEN IF THEY NEVER EXPORT A SINGLE THING. But you must be a manufacturer of a something that is listed on the USML, i.e., a defense article, so be sure to check 22 C.F.R. § 121.1.
Why this seemingly odd rule? It is because the U.S. government wants to know who is manufacturing defense articles, as such persons could be the source for new and emerging technology the U.S. government wants to safeguard because of potential implications to our national security.
In 2020, DDTC and the Commerce Department’s Bureau of Industry and Security ("BIS") published companion rules transferring most commercially available firearms and ammunition from the USML to the Commerce Control List (“CCL”). The firearms and ammunition no longer enumerated on the USML (refer to USML Cats. I, II and III) are no longer “defense articles” subject to the ITAR. Consequently, if a person (including business entities) is engaged in the business of manufacturing, exporting, or temporarily importing firearms or ammunition not listed on the USML, then that person does not have to register with DDTC. But, before you gleefully make plans for the registration fees you expect to save, review the USML and confirm that you are not engaged in manufacturing, exporting, or temporarily importing an item or technical data listed on the USML. DO NOT START WITH THE CCL. Classification is a process of elimination, so always check the USML first to confirm your item or data is not listed on the USML. If your item or data is enumerated on the USML, your review stops and that item or data is a defense article.
As an example, if a company manufactures semiautomatic pistols, revolvers, and semi- or non-automatic rifles only, that company does not have to register with DDTC because that company is not engaged in the manufacture of defense articles. If, however, a company also manufactures fully automatic firearms, including firearms that have a two- or three-round burst function, that company must register as a manufacture of defense articles because fully automatic firearms are listed on the USML (Cat. I for full auto firearms up to and including .50 cal.; Cat. II if larger than .50 cal.). Similarly, if a company only exports pistols, revolvers, and semi- or non-automatic rifles, that company does not have to register with DDTC because that company is not engaged in exporting defense articles. And, as you’ve probably figured out already, if you include a fully automatic firearm in that export, you’re back to having to be registered with DDTC.
- U.S. Persons Operating in a Foreign Country
If a U.S. person is providing defense services outside the United States (see 22 C.F.R. § 120.9 for what activities are “defense services”), they do not need to register with DDTC. According to DDTC Guidance, “registration is not required if you are physically located outside the United States. Under ITAR § 122.1(a), registration is required only for persons who engage in the United States in the business of furnishing defense services or manufacturing, exporting, or temporarily importing defense articles. If at any point you engage in the United States in the business of furnishing defense services, you would be required to register with the Department unless otherwise exempted.” See DDTC FAQs for Defense Services and U.S. Persons Abroad (Jan. 6, 2020) (emphasis added).
B. ATF Importer Registration
We often get panicked phone calls from parties who have had their Form 6 import permit application returned without action by ATF because they are not registered as an importer under the AECA. “I don’t understand. We are already registered with DDTC, why is ATF rejecting my Form 6 to import [defense article widget]?”
The short answer to this question is that registration with DDTC pursuant to the ITAR does not satisfy the requirement to register as a permanent importer of defense articles under the ATF regulations. Recall that the statute requires registration of all persons who engage in the business of manufacturing, exporting, importing, and brokering defense articles and defense services. ATF has jurisdiction over permanent imports of defense articles, and their implementing regulations are distinct and separate from the ITAR. The two sets of regulations share the same governing statute, but otherwise are different. Do not confuse the two.
The ATF regulations define “import or importation” as “[b]ringing into the United States from a foreign country any of the articles on the Import List, but shall not include intransit, temporary import or temporary export transactions subject to Department of State controls under [the ITAR].” 27 C.F.R. § 447.11. The “Import List” is the list of articles contained in 27 C.F.R. § 447.21, also known as the U.S. Munitions Import List (“USMIL”). The USMIL is distinct and separate from the ITAR USML, and it is very important to not confuse or conflate the two lists. In fact, in a 2013 Final Rule, ATF removed the cross references to the USML in its import regulations in Part 447, explaining that the Attorney General exercises delegated authority to designate certain items as defense articles for permanent import regardless of whether such items are controlled by the Secretary of State for export or temporary import. See 78 Fed. Reg. 23675 (AG Order No. 3383-2013).
Although the ITAR USML has changed drastically for firearms and ammunition because of the 2020 rule changes (most commercially available firearms and ammunition moving off the USML and over to the CCL), no similar reforms have changed the USMIL. Consequently, Categories I, II, and III look very different on ATF’s USMIL compared to the same categories on the USML. For example, nonautomatic and semiautomatic firearms, to caliber .50 inclusive, combat shotguns, and shotguns with barrels less than 18 inches in length, and all components and parts for such firearms are defense articles for permanent import purposes (USMIL Cat. I(a)), but not for manufacturing, export, or temporary import. And it’s not just Categories I, II, and III on the USMIL that are different – all USMIL categories are different from their corresponding USML entries; some are even reserved (do not appear) on the USMIL, as you can see from the list below.
So, if you are intending to permanently import an item into the United States, make sure you review ATF’s USMIL to determine whether your activity involves a defense article for import. If it does, you must first register with ATF as an importer of defense articles before you apply for an import permit. If you engage in manufacturing, exporting, temporarily importing USML defense articles and in permanently importing USMIL defense articles, you must register with both DDTC and ATF. There is no two-for-one special here.
This due diligence is not restricted to importers of firearms and ammunition. The USMIL’s coverage extends to several types of items that are controlled for import in the interests of U.S. foreign policy and national security interests, for example if an item presents a significant concern for trafficking or diversion into illicit channels. The following are the USMIL categories with their corresponding headers:
Cat. I - Firearms
Cat. II - Artillery Projectors
Cat. III - Ammunition
Cat. IV - Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs & Mines
Cat. V [Reserved]
Cat. VI - Vessels Of War & Special Naval Equipment
Cat. VII - Tanks & Military Vehicles
Cat. VIII - Aircraft & Associated Equipment
Cats. IX-XIII [Reserved]
Cat. XIV - Toxicological Agents & Equipment & Radiological Equipment
Cat. XV - [Reserved]
Cat. XVI - Nuclear Weapons Design & Test Equipment
Cat. XVII - XIX [Reserved]
Cat. XX - Submersible Vessels, Oceanographic & Associated Equipment
Cat. XXI - Miscellaneous Articles
We separate brokering into its own section because it is a bit nuanced. The first step is to determine if the person and the activities are captured under the brokering regulations. See 22 C.F.R. § 129.2 for the ITAR definitions of “broker” and “brokering activities.” If the person (including a business entity) is a “broker,” then that person must register with DDTC. One of the tricky aspects to the brokering regulations is that the registration requirement is not limited to those persons whose brokering activities involve USML items. Rather, if the brokering activity involves any item on the USML or the USMIL (ATF’s control list for permanent imports), registration is required. There are few exemptions to the registration requirement, and these are listed in 22 C.F.R. § 129.3(b).
If you are interested in learning more about the ITAR brokering regulations, we direct your attention to our alert dated 3-30-22
. In that article we do a deep dive into brokering in the context of Ukraine.
IV. How to Register
The good news is that registration can be accomplished relatively easily (we emphasize relatively) thanks to the marvels of software development and the internet. However, the DDTC and ATF processes are slightly different, so we outline both below.
A. ITAR Registration Process - Manufacturers, Exporters, Temp. Importers & Brokers
Registration with DDTC requires enrolling in the online portal DECCS (Defense Export Control and Compliance System). Once enrolled, you can access the electronic Form DS-2032 Statement of Registration to fill out. You must include on the registration statement the USML categories you wish covered, so be sure to review the USML carefully. The form must be signed by a senior officer and submitted (also through DECCS) along with support documentation, such as corporate authorization documents or organizational charts (if registering affiliates or subsidiaries). Once DDTC reviews the application, the applicant is notified to make the registration payment.
All first-time registrants must pay $2,250.00 regardless of the type of registration. The fees for renewing registration are as follows: (i) for manufacturers and brokers who do not export, the annual fee is $2,250.00; (ii) for exporters and temporary importers, the annual fee is calculated based on the number of licenses or other authorizations issued during the preceding year. Persons who engage in manufacturing or exporting and brokering can accomplish both registrations on one form at the same time.
Once DDTC approves a registration, it issues a unique registration code consisting of a letter prefix, M (assigned to a manufacturer and/or exporter) or K (assigned to a broker), followed by four or five digits (e.g., K-1234 or M 12345). The code is proprietary to the registrant and should be handled as such. Do not post your registration code online or give out freely to the public. The M- and K- registration numbers are applicable only to ITAR registrations. ATF uses a different numbering scheme for importer registrations. ITAR registrations are valid for one year and renewals should be submitted no less than 45 days in advance of expiration. Be sure to allow plenty of time for the review process. If a registration goes into lapse, all open export authorizations lapse as well.
Once you are properly registered you can apply for licenses or other authorizations, also through DECCS. Remember, an approved registration does not confer any export, temporary import or brokering rights or privileges, but it is a precondition to applying for any license or other authorization or using certain exemptions under the ITAR.
For more information on the ITAR registration process, visit the DDTC website.
B. ATF Registration Process - Permanent Imports of Defense Articles
ATF also allows for online registration and payment, but the registration form must be accessed through pay.gov. Submitting online is much easier and faster than the old-fashioned paper submission, so we highly recommend it. To access the Form 4587 (ATF Form 5330.4) online, go to pay.gov and select Justice (DOJ): Bureau of Alcohol Tobacco Firearms and Explosives (ATF) from the “Find an Agency” link at the top of the page. The ATF application to Register as an Importer of US Munitions Import List Articles should be the first form listed. You must include the USMIL categories of articles to be usually imported, so be sure to review the USMIL (NOT THE USML!!!!!).
ATF requires a registration fee, due to statutory requirements, but they are different than the ITAR registration fees. Also note that importers may register for more than one year at a time, up to five years, and you get a slight discount the more years you register. The fees are: one year $250.00; two years $500.00; 3 years $700.00; 4 years $850.00; and 5 years $1,000.00.
Once ATF approves the registration application it assigns a 9-digit number preceded by an A (A-xx-xxx-xxxx). Once you receive the AECA importer registration number, you can apply for import permits from ATF. We recommend using the ATF eForms system for the Form 6 import permit application. The importer registration application is not available through eForms. You must use pay.gov for registration.
There you have it – everything you wanted to know about AECA registration but were afraid to ask!