F.A.I.R. Trade Group Requests Clarification from State on $1 Million Threshold

F.A.I.R. Trade Group
F.A.I.R. Trade Group Requests Clarification from State Department on $1 Million Threshold Amount for Congressional Notifications
FireArms Import/Export Roundtable Trade Group
FireArms Import/Export Roundtable Trade Group

Washington, DC -(AmmoLand.com)- As most of you are aware, the Arms Export Control Act requires the State Department to certify to Congress proposed exports of ITAR-controlled defense articles when an export license transaction hits certain value thresholds.

The ITAR implements this requirement in Section 22 C.F.R. Sec. 123.15.

The State Department must provide the certification prior to granting the export license or approval. Because the certification process involves several layers of inter-agency and congressional review, the approval time frame for so-called “Congressional Notification” or “CN” license cases are significantly longer than non-CN cases, usually by several months.

The statutory value thresholds that trigger the CN process are as follows: (a) $100,000,000 for a license to export defense articles to NATO + 5 countries, (b) $50,000,000 for non-NATO +5 countries; (c) $25,000,000 or $14,000,000 for a license to export Major Defense Equipment (defined by statute as Significant Military Equipment having a nonrecurring R&D cost of more than $50,000,000 or a total production cost of more than $200,000,000) to NATO +5 and non-NATO +5, respectively.

Since 2005, firearms have been singled out from other defense articles and assigned a significantly lower value threshold. Pursuant to a 2002 appropriations bill, P.L. 107-228, Congress added a new section to the Arms Export Control Act requiring certification for export licenses of a “defense article that is a firearm controlled under category I of the United States Munitions List” when the value is $1 million or more.

It has recently come to our attention that DDTC Licensing has been extending the $1 million CN threshold to apply not just to firearms controlled in USML Category I(a)-(d), but to defense articles controlled in USML Category I(e)-(g) as well. F.A.I.R. believes this policy is inconsistent with the plain language of the statute and regulations, does not promote the national security interests of the United States, and is counter to the Firearms Guidance that DDTC has published on its website.

As many industry members know all too well, the longer processing times for CN license cases can be extremely burdensome. The firearms industry already faces this trade impediment more often than any other industry segment because of the extremely low threshold of $1 million. Extending the low threshold to components, parts and accessories, an action we believe is outside the statutory authority granted to State, will magnify the burden, not just to industry members but to our foreign ally customers. We have therefore requested DDTC publish industry guidance clarifying that the $1 million threshold for Congressional Notifications (ITAR Section 123.15(a)(3)) apply only to firearms controlled in USML Category I(a)-(d) and not to any other USML Category I control paragraphs.

The full request is posted at https://www.fairtradegroup.org.

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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