Connecticut Export Compliance Law
Subcontractors who never send their goods or provide their services outside the United States are often mystified to learn that they are nonetheless required to comply with United States export control laws. And they are astounded to learn that fines for violating those laws can run as high as $250,000 per violation.
The International Traffic in Arms Regulations
Mystification often commences when prime contractors demand that their subs certify that they are ITAR compliant and confusion is evident when companies issue press releases proclaiming that, by registering with the State Department under the ITAR, they are indeed ITAR compliant.
To Clarify: Under our government’s International Traffic in Arms Regulations, the so-called “ITAR”, manufacturers of items identified on the State Department’s Munitions List (and providers of related services) are required to register as such with the State Department, even if they never “export” any goods or services. But that registration, while necessary for ITAR compliance, says nothing about whether a company is “ITAR compliant”, if only because the registration process does NOT involve any State Department review of anything other than certain corporate information required by a registration application.
Compliance, on the other hand, is a matter of knowing what the ITAR require and putting practices in place, including training of employees, which ensure that a company will comply with the ITAR. Thus, when a subcontractor certifies that it is ITAR compliant, it is stating that the company has registered AND it has implemented a program of internal controls that will keep the company in compliance while it performs as a sub for the prime.
To summarize: If your company produces articles that are identified in the Munitions List, or provides related services, it probably has to register with the State Department. But registration is only one (and the simplest) of the ITAR’s requirements. Voluntary compliance with ALL of the ITAR is required, not merely as performance of an obligation to the prime, but as the only way to avoid exposure to steep fines… and possible jail terms.
PS: There’s another reason to have a compliance program in place: The authorities routinely reduce the possible fines by 50 percent if a violator has shown a good faith effort to comply.
PPS: Although companies have to REGISTER with the government only if their products/services appear on the Munitions List, companies may also have export control obligations with respect to so-called “dual-use” items that appear on the Commerce Control List under the Export Administration Regulations (the”EAR”); and they may not do business anywhere in the world with persons or entities that are identified on several government-contained lists, including the list of Specially Denied Nationals maintained by the Treasury Department’s Office of Foreign Assets Control (“OFAC”)
Export Compliance NE provides the expertise you need to guide your company through compliance with this complex area of the law, as well as the services of an experienced export control attorney to represent the company against the government in the unfortunate event that violations occur.