F.A.I.R. Trade Group Petitions DDTC for Reduction in ITAR Registration Fees

F.A.I.R. Trade Group
F.A.I.R. Trade Group
FireArms Import/Export Roundtable Trade Group
FireArms Import/Export Roundtable Trade Group

Washington, DC -(AmmoLand.com)- The F.A.I.R. Trade Group has petitioned the State Department, Directorate of Defense Trade Controls (DDTC), to reduce the registration fees required under the International Traffic in Arms Regulations (ITAR).

Under the Arms Export Control Act, all persons who engage in the business of manufacturing, exporting, temporarily importing, or brokering defense articles or defense services must register with the State Department. In accordance with this statute, DDTC has collected and utilized registration fees, but in 2008, the fees were dramatically increased.

According to DDTC, the fee increase was necessary to keep up with the cost of licensing, compliance, and other related activities, and to comply with the 2008 National Security Presidential Directive/NSPD-56, required the State Department to initiate a mechanism that would allow up to 75% of DDTC’s operations to be ultimately self-financed.

Under this three-tiered structure, all manufacturers, exporters and brokers of defense articles must pay an ITAR registration fee of $2,250.00 to DDTC annually (Tier One). Manufacturers of defense articles (including firearm and ammunition parts and components) must pay the annual $2,250 fee, even if the manufacturer does not engage in exporting defense articles.

Once a registrant submits an application to export or temporarily import defense articles, the annual registration fee increases. The amount of the increase depends on the number of licenses or other approvals the registrant obtains from DDTC during the previous year. Ten or fewer approvals results in a registration renewal fee of $2,750.00, so that a registrant who obtains only one or two approvals will pay the same registration renewal fee as a registrant who obtains ten approvals (Tier Two). A registrant who obtains more than ten approvals faces a registration renewal fee of $2,750 plus $250 times the total number of applications over ten (Tier Three). DDTC offers a discount “to insure fairness to those registrants…who may have [more than ten] applications but all of a low value.”

In such cases, if the fee calculated for the approvals is greater than 3 percent of the total value of all of their applications, then the fee will be 3 percent of the total value of all applications or $2,750, whichever is greater. DDTC’s explanation of the three tiers and other frequently asked questions about ITAR registration is on DDTC’s website at http://www.pmddtc.state.gov/registration/faqs_reg.html.

F.A.I.R. believes the current three-tiered registration structure creates a substantial financial burden to small businesses. We have therefore submitted a petition to DDTC to amend the registration fee structure to create a flat, per-license application fee that applies equally to all sectors of the industry.

Our proposal, if accepted, would result in a base registration fee of $250.00 (a reduction of $2,000) per year for all companies engaged in the manufacture, export, temporary import, or brokering of defense articles or defense services. An additional fee of $250 would be assessed on each authorization for which DDTC has taken final action. This would include DSP-5, -6, -73, -74, -61, -62, -85s, -53s, -119s, and agreements and their amendments. Cases returned without action and denied cases are not included in the fee calculation.

Submissions required under 22 C.F.R. 123 through 126 which do not require a response from DDTC (e.g., sales reports) would not be counted when determining the registration fee, nor would disclosures or requests for a commodity jurisdiction determination. For registrants who have many applications of a low value, there would be a provision for a reduced fee if the fee calculation above is greater than 3 percent of the total value of all of their applications. In such cases, the fee would be 3 percent of the total value of all applications or $3,000, whichever is greater.

We believe this proposed structure would create a more transparent and level playing field and result in a more equitable distribution of DDTC’s costs associated with licensing, compliance and other related activities.

The full Petition is available at http://www.fairtradegroup.org.

Thank you for your continued support!

About the F.A.I.R. Trade Group:

The F.A.I.R. Trade Group is a 501(c) (6) organization dedicated since 1994 to protecting the interests of the firearms and ammunition import and export community. F.A.I.R. operates entirely on the funds derived from our dues-paying membership. If you are interested in becoming a member or contributing to the organization, please visit our website at: www.fairtradegroup.org.

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