ITAR was enacted in 1976 to control the export of defense-related articles and services. It stipulates that non-US persons are not allowed to have logical or physical access to articles modulated by International Traffic in Arms Regulations; which is administered by the Directorate of Defense Trade Controls – DDTC, a sub-division of the State Department. The articles covered by ITAR are listed on the United States Munitions List – USML, and generally, encompass any technology that is specifically designed or intended for military end-use. ITAR was also contrived to govern the import and export of any related technical data that consists of describes, supports, or accompanies the actual exported service or goods unless exemptions or special authorization is created.
The goal of ITAR is to prevent the transfer or disclosure of sensitive information, typically related to national security and defense, to a foreign national. In most cases, non-compliance usually translates to the loss of assets and professional reputation. However, with ITAR, lives may possibly be at stake. This is why the International Traffic in Arms Regulations is a strictly enforced United States government regulation and carries some of the most austere criminal and civil penalties that not business or individual would want to be on the receiving end of.
ITAR is not applicable to information that is already available in the public domain, or that is commonly taught in school under general scientific, engineering or mathematical principles.
Who is required to be ITAR compliant?
The law essentially applies to defense contractors who manufacture or export services, items or other information on the United States Munitions List. However, any company that is in the supply chain for such items must make ITAR compliance a priority. ITAR has a fairly complicated set of requirements, and since the repercussions of non-compliance are severe, companies should not hesitate to seek legal clarifications of their obligations if they even suspect the regulation applies to them – better safe than sorry. The vague categories of the USML make it difficult to intelligibly understand what exactly falls under the purview of military equipment.
The list is inclusive of most technology used for spaceflight, along with a vast range of technical data such as product blueprints, software and aircraft technology. Most of these items were initially developed for military purposes but were later on adapted for mainstream purposes – in aviation, maritime, computer security, navigation, electronics and other industries. It is crucial for firms that offer products and services to government consumers to fully grasp this distinction, to avoid expensive legal violations. ITAR may also likely impact large commercial enterprises, universities, research labs, and other institutions who are not directly involved in the defense industry.
The Repercussions of Non-compliance
Violating ITAR could lead to both criminal and civil penalties. The imposed fines are virtually unlimited – typically, organizations are prosecuted for hundreds of violations at once. The penalties for ITAR violations, both criminal and civil, are substantial. Criminal penalties may include fines of up to a million dollars per violation and 10 years’ imprisonment while civil fines can be as high as half a million dollars per violation. Failure to comply with ITAR may also damage an organizations reputation and ability to conduct business. The State Department maintains publicly available records of all penalties and violations dating back to 1978. Organizations and individuals run the risk of being completely debarred from exporting defense-related services and items.
Challenges in the Cloud
ITAR compliance and the adoption of cloud platforms presents unique challenges. Uploading technical data to the cloud carries with it a huge risk of penalties and violations. There are a lot of questions in regards to whether or not regulated technical data can be stored in a public cloud. The intrinsic quandary in that cloud vendors use distributed and shared resources that will likely cross national borders, and this dispensation of resources is not entirely transparent to the end-user. Data back-up and replication are common security measures when sharing files and collaborating via the cloud, but they can inadvertently lead to unlicensed exports in the event data is sent to servers located outside the United States. Once technical data goes beyond U.S borders, the risk of non-US persons having access to it increases exponentially.
In 2016 for example, Microwave Engineering Cooperation settled an ITAR violation with the State Department after technical data related to a defense article was exported to a foreign person without authorization. So if giving a foreign person access to technical data, or placing it on a server in a foreign nation is deemed and export. What guidance does ITAR give to ensure the entire process is done in a legal manner? Or is cloud storage simply off the table?
The State Department maintains that technical data can be stored on servers outside the U.S, provided that the of the ITAR license exemption conditions are met, and adequate measures are taken to obviate non-US individuals from accessing technical data. In most cases, the measure typically involves ensuring that any data sent to a server beyond U.S borders, or that is potentially accessible by a foreign person within or outside the U.S has to be properly encrypted. It is important to note that by law, cloud providers aren’t considered exporters of data, however, your organization might be. So the burden of ensuring ITAR compliance when handling technical data falls squarely on the people within the organization. Organizations dealing with defense-related articles in any capacity have to exercise extreme caution when using any commercial file sharing and sync service.
Author: Gabriel Lando