Exporters of goods with potential military applications are governed by two sets of regulations: International Traffic in Arms (ITAR) and Export Administration Regulations (EAR). There is often confusion among exporters because the two sets of regulations do have some overlap. However, each one is designed to regulate goods based on their use.
A simple way of understanding ITAR is that its regulations pertain to a smaller, more specific set of goods where EAR-regulated goods are more numerous and less specific. Knowing which regulations apply to your goods is important if you export anything controlled by the two regulatory regimes.
Military Only vs. Dual Use
The dividing line between ITAR and EAR rules boils down to product use. Any goods made exclusively for military applications are covered under ITAR regulations. All these goods are found on the United States Munitions List (USML). The list is extensive, covering a variety of goods and technologies in more than twenty categories.
Goods regulated by EAR are considered dual use. This means that they have both commercial and military applications. In some cases, the distinction is as clear as knowing the differences between a hand grenade and a stick of dynamite. Hand grenades are made specifically for military use. Dynamite can be used commercially or militarily.
Understanding the USML
Companies whose goods are regulated by ITAR rules generally have little problem understanding that. Where they run into trouble is classifying goods based on USML categories. According to Vigilant Global Trade Services out of Shaker Heights, OH, product classification is one of the most confusing aspects of ITAR compliance.
As previously stated, the USML offers more than twenty categories under which restricted goods are classified. The further one goes down the list, the more convoluted product classification tends to be. Looking at categories I and XXI illustrate the point perfectly.
Category I Goods
Category I of the USML covers goods classified as firearms and related articles. For example, a fully automatic weapon with a caliber of up to .50 is considered a military weapon. Likewise for firearms that have integrated fire control, automated firing, or tracking built in.
As for the ‘related articles’ portion of this category, it covers specific parts and components necessary to build such weapons. These particular parts and components would not be used for weapons otherwise controlled under EAR regulations.
Category I is as simple as it gets from a classification standpoint. But jump down to category XXI and things get a bit more ambiguous. Here is where a manufacturer has to be at the top of its game.
Category XXI Goods
The actual title of this category is where the ambiguity begins: Articles, Technical Data, and Defense Services Not Otherwise Enumerated. As you can see from the title, you are not necessarily talking about goods anymore. Certain types of digital information are included in this category along with services and tangible goods.
The technical data aspect relates to any data required to purchase, utilize, maintain, or otherwise make use of any of the goods classified under the previous twenty categories. As for the other items not otherwise enumerated, that refers to any tangible products, data, or services produced for military applications that are not covered in any of the other categories.
A brief overview of just these two categories reveals just how complex the USML is. It is no wonder so many companies that export ITAR-regulated goods outsource their trade compliance to companies with expertise in this particular area. There is just too much to keep track of for companies whose industry is something other than trade compliance.