If you didn’t know where to look, it could take a long time to stumble across the U.S. rule that limits arms brokering.
No such rule even existed until 1996, when Congress amended Section 38 of the Arms Export Control Act to require people involved in the brokering of U.S. 和班.S. defense equipment 和 technology to register with the government, 和 often obtain approval for their activities.
当时， a report from the House Committee on International Relations 声明:
“…in some instances, U.S. 人s are involved in arms deals that are inconsistent with U.S. 政策. Certain of these transactions could fuel regional instability, lend support to terrorism or run counter to a U.S. 政策 decision not to sell arms to a specific country or area. 的 extension of U.S. legal authority under this provision to regulate brokering activities would help to curtail such transactions.”
的 legislation was implemented the following year with the addition to the ITAR of Part 129–登记 和 许可 of Brokers.
Arms brokering background
的 ITAR deals primarily with the movement of U.S. defense articles 和 equipment from the United States to the rest of the world, even placing controls on 再出口s 和 re转移s of ITAR-controlled goods 和 technologies after they’ve been legally 出口ed.
But given the United States’ role as the world’s leading arms 出口er, the ITAR prior to 1996 didn’t cover some sensitive private-sector activities that could impact U.S. foreign 政策.
例如, someone could work from an office anywhere 在美国nited States 和 take a fee to arrange the sale of arms between two foreign entities—perhaps a seller of ammunition from Estonia 和 a buyer in 伊拉克. As long as the ammunition didn’t come from or enter the United States, 和 was not otherwise subject to the ITAR, there was nothing to give the U.S. State Department authority to review such a transaction or, for that matter, the opportunity to even know it was taking place.
But when Part 129 was tacked onto the ITAR, it gave the State Department a process to monitor brokered transactions for conflicts with U.S. foreign 政策.
的 最初的规则 has been revised several times since 和 was 检修 in 2013 to the essential form in which it exists today.
Identifying a defense broker
Being an arms broker isn’t as exciting as Hollywood makes it out to be; it covers a range of activities, most of which are desk jobs.
有 more companies than individuals that are registered as arms brokers. But the rule is intentionally broad—和 that’s why it merits caution. Here’s the order of analysis to underst和 who is subject to the brokering rules 和 how to navigate them.
你是谁: Part 129 applies to:
- 任何你.S. 人, 公司, government unit or other entity, anywhere in the world, that engages in brokering activity;
- Any foreign 人 or entity located 在美国nited States that conducts brokering activity;
- Any foreign 人 or entity outside the United States that is owned or controlled by a U.S. 人 or entity 和 conducts brokering activity.
你做什么: 的 ITAR defines brokering as “any action on behalf of another to facilitate the manufacture, 出口, permanent import, 转移, 再出口, or re转移 of a U.S. or foreign defense article or defense service, regardless of its origin.” (For the purpose of Part 129, the term “defense article or defense service” includes any hardware, technical data or services covered by the U.S. Munitions List, regardless of its origin, as well as items designated on the U.S. Munitions Import List.)
Brokering can involve, but isn’t limited to:
- 融资
- 保险
- 运输
- Freight forwarding
- 征求
- 促进
- 谈判
- 承包
- 安排
Brokering activities for items subject to the 耳朵 rather than the ITAR are excluded; so are strictly administrative services that arms brokers might use in the course of business, such as renting office space 和 buying advertising. So if two parties rent a conference room in a hotel to hammer out an arms deal, the hotel itself isn’t considered a broker.
Fitting an exclusion: 有 some meaningful carveouts to the definition of brokering, which can be found at ITAR 129.2(b)(2). 它们包括:
- Activities involving strictly domestic sales or 转移s;
- Activities involving items subject to the 耳朵 rather than the ITAR;
- Working in an official capacity for the U.S. 政府;
- Performing work for an affiliate that is legally permitted to sell arms 和 other items subject to the ITAR. For instance, if a foreign subsidiary of a U.S. arms manufacturer represents its parent company in negotiating a transaction, that isn’t considered brokering—though the transaction is still subject to other rules in the ITAR.
登记
If you fit the definition of a broker, 和 your brokering activities don’t all meet the carveouts, then you’re a broker, which requires registering through the Defense Export Control 和 Compliance System (DECCS) portal 和 paying a fee. (Fees currently start at $2,250 per year, 和 increase based on licensing activity.) 的 requirements for brokers to renew their registration every year, notify DDTC of certain changes 和 maintain records are generally the same as for 出口ers.
Brokering activity approval
Once registered, brokers 和 出口ers alike still need permission to engage in an ITAR-controlled activity. 的 permission comes in the form of either a license or an exemption.
Brokers are required to get advance approval before arranging deals involving non-U.S. defense articles 和 services. That’s because such items aren’t typically subject to the ITAR, but they do have potential ramifications for U.S. foreign 政策.
However, the requirement for prior approval for U.S.-origin defense articles 和 defense services doesn’t apply to all items—just certain ones. 例如, brokering of complete U.S.-origin aircraft, ships 和 tanks requires prior approval, while brokering of U.S.-origin defense article components for these platforms generally does not. 对于其他U.S.-origin items on the USML, brokers don’t need to obtain advance approval to broker a deal (probably because the ITAR still requires the 出口er or 再出口er to obtain a license before the transaction can take place.)
的re is one other twist: 的 brokering rules also apply to items on the U.S. Munitions Import List (see related post: 永久v. Temporary 进口: Where ITAR Meets the ATF), which is different than the USML 和 falls under the jurisdiction of the Bureau of Alcohol, Tobacco 和 Firearms. It’s a rare instance when the ITAR encompasses another agency’s control list. 的 reason is that many small arms are no longer on the USML, so this allows the State Department to maintain jurisdiction over brokering of those firearms too.
Licenses 和 exemptions
Advance approval for brokering comes in two forms: a license or an exemption.
有 two license exemptions specifically for brokers:
- You’re brokering a transaction on behalf of the U.S government, under specific contractual authority of an appropriate agency. 的 reason for this is intuitive: You shouldn’t need to ask the government for permission to do something the government has already asked you to do.
- If you’re 在美国.S., another 北约 country or a few other select allied nations, 和 you’re brokering arms exclusively among or between these countries, advance brokering permission isn’t required in most cases involving foreign defense articles or defense services. (However, you’re still required to report the brokering activity in the 年度报告. It’s an example why recordkeeping discipline is an important part of being a broker.)
If neither of these exemptions apply, a brokering license is required, through Form DS-4294 on the DECCS portal.
报告
的 年度报告 that’s required of all registered brokers is typically filed along with the annual registration renewal 和 fee. All activities must be reported, whether based on a license or an exemption. Details of the report include everyone involved, the articles or services involved 和 all details of a deal.
的se brokering regulations are actively enforced. In March 2022, a U.S. marketing executive was convicted 和 jailed for arranging the manufacture 和 shipment of unspecified items on the USML 和 USMIL between a Chinese manufacturer 和 one of his clients. According to the Justice Department press release on the criminal finding, he had never registered as a broker. 自2008年以来, Academi LLC (formerly Blackwater) has paid nearly $50 million in fines in two cases involving unauthorized brokering activities, according to media reports.
2011年, BAE Systems agreed to a $79 million civil penalty after it “allegedly committed an estimated 2,591 violations of the ITAR in connection with unauthorized brokering of U.S. defense articles 和 services, failure to register as a broker, failure to file annual broker reports, causing unauthorized brokering, failure to report the payment of fees or commissions associated with defense transactions, 和 failure to maintain records involving ITAR-controlled transactions,” according to a State Department media release.
Do you have questions about arms brokering 和 the ITAR? 访问 www.learn出口compliance.com to learn about our company, our faculty, our staff 和 our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminars, 现场研讨会 在美国.S., Europe, 和 elsewhere, 和 生活LOL外围下注 和 browse our catalog of 80-plus on-dem和 webinars, visit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.
斯科特Gearity is President of ECTI, Inc.