The U.S. State Department has proposed amendments to the International Traffic in Arms Regulations (ITAR) to increase the fees required for Directorate of Defense Trade Controls (DDTC) registration. The ITAR requires persons engaging in manufacturing, exporting, temporarily importing, or brokering of any defense articles or services register with DDTC. This proposed rule marks the first adjustment to the registration fee structure in over fifteen years.
The revisions are intended to better align the fees with the current operational costs of the DDTC and to support enhancements of the services provided. The revisions to the Tier 1 and 2 fees are inflation-adjusted, but the revisions to Tier 3 fees include an increase beyond the adjusted amount of inflation. DDTC justifies that increase because Tier 3 registrants receive greater benefits, benefit most from recent DDTC improvements (including to Defense Export Control and Compliance System (DECCS)), and generate the significant export-derived revenue. For example, in fiscal year 2022, issued authorizations that were valued at just over $153.7 billion (from approximately 22,500 license applications).
Increased Fees and Revised Tier Criteria:
- Tier 1: The first tier applies to first-time registrants or those renewing their registration who have not received any favorable determinations from the DDTC during the twelve-month period ending 90 days prior to the expiration of their current registration. It also applies to brokers, regardless of the authorizations submitted or determinations received. The annual set fee for the first tier will increase from $2,250 to $3,000.
- Tier 2: The second tier applies to registrants renewing their registration who have submitted license applications or other requests for authorization and have received five or fewer favorable determinations in the twelve-month period ending 90 days before their current registration expires. The set fee will increase from $2,750 to $4,000.
- Tier 3: The third tier applies to registrants renewing their registration who have submitted license applications or other requests for authorization and have received more than five favorable determinations in the twelve-month period ending 90 days before their current registration expires. The base fee will increase from $2,750 to $4,000, with an additional charge of $1,110 for each favorable determination beyond the initial five.
Overall, the revised ITAR registration fees underscore the importance of the ITAR registration and licensing procedures for defense trade entities. We will continue to monitor new developments and provide our updates here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.