This is good news for gunsmiths and small manufacturers who have been threatened by onerous regulations (and huge fees), under ITAR. With a Republican President in the White House, it looks like the Departments of Commerce and State are moving towards removing common gunsmithing activities (such as threading barrels or fitting brakes) that were potentially under the purview of ITAR. In addition, possible Federal rule changes would broadly move firearms and ammunition out from ITAR regulation. Generally speaking, it appears that the proposed rule changes will make Federal law more tolerant, so that producers of small firearms accessory parts would no longer have to register as ITAR manufacturers (with hefty annual fees).
As part of the Export Control Reform (ECR) initiative and ahead of expected publication in the Federal Register this week, the Departments of Commerce and State have posted the new proposed rules transitioning export licensing of sporting and commercial firearms and ammunition from the ITAR-controlled U.S. Munitions List (USML) to the EAR-controlled Commerce Control List. Thus, items removed from the USML would become subject to the Export Administration Regulations (EAR).
The NSSF states: “The new proposed rules represent significant change in the regulations controlling exports of our products, and all exporters need to review these important proposed rules.
NSSF is preparing comments on the rules for formal submission. We will be sending out a recap of the changes in the next few days. Please make sure all your export specialists have a chance to review and provide comments. NSSF will be drafting a comments letter for both rules based on this review.”
SUMMARY: This proposed rule describes how articles the President determines no longer warrant control under United States Munitions List (USML) Category I – Firearms, Close Assault Weapons and Combat Shotguns; Category II – Guns and Armament; and Category III – Ammunition/Ordnance would be controlled under the Commerce Control List (CCL). This proposed rule is being published simultaneously with a proposed rule by the Department of State that would revise Categories I, II, and III of the USML to describe more precisely the articles warranting continued control on that list.
SUMMARY: The Department of State (the Department) proposes to amend the International Traffic in Arms Regulations (ITAR) to revise Categories I (firearms, close assault weapons and combat shotguns), II (guns and armament) and III (ammunition and ordnance) of the U.S. Munitions List (USML) to describe more precisely the articles warranting export and temporary import control on the USML. Items removed from the USML would become subject to the Export Administration Regulations (EAR).
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If you are a gunsmith, or do any machine works on firearms, you need to know about ITAR, the International Traffic in Arms Regulations which are enforced through the U.S. Department of State (DOS). ITAR applies to companies that create sophisticated weapons systems. However, under DOS interpretations in recent years, ITAR may also apply to persons and businesses that do simple, basic gunsmithing tasks. That could require filling out lots of paperwork, and paying the Fed’s hefty fees, starting at $2250 per year. A Guidance Statement issued by the DOS Directorate of Defense Trade Counsels (DDTC) in July, 2016 (under the Obama Administration) gave rise to serious concerns that DOS was going to require every gunsmith to register under ITAR, under threat of massive fines and penalties. READ About DDTC ITAR Guidance.
Thankfully, it appears that the Trump Administration is working to narrow the scope of ITAR so that it would NOT apply to basic gunsmithing activities, and not apply to common gun accessories that are not exported. IMPORTANT: Changes have NOT been made yet, but it appears the Feds are heading in the right direction, with the DOS willing to modify its definition of “manufacturing” so ITAR would not embrace basic gunsmithing tasks such as threading a muzzle.
The Gun Collective reports that: “The Directorate of Defense Trade Counsels (DDTC) is working on revising the ITAR regulations which will help the gun industry[.] Gunsmiths having to pay hefty fees, register and comply with ITAR may no longer be a problem if this goes through as planned. Fortunately, we don’t have to wait for Congress to take action, but rather an agency, which appears to be taking initiative to get it done. As always, time will tell, so be sure to keep your eye on the Federal Register….”
While nothing has happened yet, it appears that this administration is working to revise ITAR. For members of the firearms industry, this is a big deal and will be beneficial to all. There is no reason that a gunsmith should be required to register and comply with ITAR to simply thread a muzzle. It will also allow companies to more easily export their products around the world. (Source: The Gun Collective)
The Gun Collective further noted that: “The topic that will be of the most interest to us would be the definition of manufacturing[.] You may remember DDTC’s July 2016 letter, which issued “Guidance” as to who would have to register under ITAR [and suggested] that now gunsmiths would have to register as well. The definition of manufacturing is an important one to define and one that had broad ranging implications as the industries covered under ITAR are wide ranging, everything from the firearms industry to airplanes and missiles. The Guidance stated that ITAR registration was required for gunsmiths who machined or cut firearms, such as the threading of muzzles or muzzle brake installation which required machining. At a hefty $2,250 a year to register, ignoring all of the other things that go along with ITAR, it is easy to see why this would be problematic for most small businesses.”
Here is the key language in the DDTC’s “ITAR Registration Requirements – Consolidated Guidance” Ruling of 7/22/2016:
2. Registration Required – Manufacturing: In response to questions from persons engaged in the business of gunsmithing, DDTC has found in specific cases that ITAR registration is required because the following activities meet the ordinary, contemporary, common meaning of “manufacturing” and, therefore, constitute “manufacturing” for ITAR purposes:
a) Use of any special tooling or equipment upgrading in order to improve the capability of assembled or repaired firearms;
b) Modifications to a firearm that change round capacity;
c) The production of firearm parts (including, but not limited to, barrels, stocks, cylinders, breech mechanisms, triggers, silencers, or suppressors);
d) The systemized production of ammunition, including the automated loading or reloading of ammunition;
e) The machining or cutting of firearms, e.g., threading of muzzles or muzzle brake installation requiring machining, that results in an enhanced capability;
f) Rechambering firearms through machining, cutting, or drilling;
g) Chambering, cutting, or threading barrel blanks; and
The National Shooting Sports Foundation (NSSF) hailed the recent bipartisan introduction of the Export Control Reform Act of 2016 in the U.S. House of Representatives, H.R. 6176, as well as the companion Senate bill, S. 3405, and called on Congress to pass this important legislation.
“The Export Control Reform Act of 2016 seeks to complete what the Obama administration itself began by transferring the export licensing and enforcement oversight of sporting and commercial firearms to the Commerce Department from the State Department,” said Lawrence G. Keane, NSSF senior vice president and general counsel. “We would especially like to thank the sponsors: House Majority Whip Steve Scalise (R-La.); Congressmen Henry Cuellar (D-Texas); Tom Marino (R-Penn.); Gene Green (D-Texas); and Steve Stivers (R-Ohio) for their timely bipartisan leadership as well as Senator Steve Daines (R-Mont.) for sponsoring a companion bill in the Senate.”
In August 2009, with the support of the business community including NSS, the Obama administration launched the Export Control Reform (ECR) Initiative. The Initiative’s purpose is to both improve America’s global competitiveness by reducing unnecessary restrictions on exports of commercial items and enhance national security by focusing the State Department’s attention and resources on guarding truly sensitive defense items and technologies. As former Defense Secretary Robert Gates once said, the ECR Initiative’s purpose is “to build a higher fence around a smaller yard.”
The administration has transferred, or is in the process of transferring, to Commerce from State, export licensing responsibility for virtually all commercial, non-military items. The only remaining items yet to be transferred are sporting and commercial firearms and related products. While we have patiently waited for the administration to make ECR progress on our products, small manufacturers, component parts suppliers, distributors, and exporters in our industry, and even gunsmiths and individuals, have to continue to comply with unnecessary regulations and to pay an annual minimum registration fee of $2,250, regardless of whether they actually export. Under the State Department’s Cold-war era export licensing regime, American companies are unable to compete globally on a level playing field.
“Because the administration has not moved forward in a timely manner to complete its own ECR Initiative, it is now time for Congress to move forward with legislation complete the ECR and reduce unneeded and burdensome regulations while improving our global competitiveness, create American jobs and enhance national security,” Keane said. [Editor’s Note: One goal of the ECR initiative is to reduce the burden of ITAR compliance for gunsmiths who do not export any products. SEE ITAR Registration Requirements Report.]
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If you are a gunsmith or work on firearms, you need to read this carefully. The Federal Government, acting through the Department of State Directorate of Defense Trade Controls (DDTC), has imposed significant new burdens on gunsmiths by expanding the definition of “manufacturing”. This is a big deal, as the Arms Export Control Act (AECA) and its implementing rules, the International Traffic in Arms Regulations (ITAR), require firearms “manufacturers” to register with DDTC and to pay a registration fee that (for new applicants) is currently $2,250 per year.
Previously, most small gunsmithing operations that did not export firearms were NOT subject to AECA/ITAR registration requirements. Now, by virtue of a DDTC “Guidance” ruling issued 7/22/2016, ordinary gunsmiths might be required to register as a manufacturer simply because they thread a muzzle or cut a chamber.
The NRA-ILA states: “DDTC is labeling commercial gunsmiths as ‘manufacturers’ for performing relatively simple work such as threading a barrel or fabricating a small custom part for an older firearm. Under the AECA, ‘manufacturers’ are required to register with DDTC at significant expense or risk onerous criminal penalties.” Read NRA-ILA Full Report.
Here is the key language in the DDTC’s “ITAR Registration Requirements – Consolidated Guidance” Ruling of 7/22/2016:
2. Registration Required – Manufacturing: In response to questions from persons engaged in the business of gunsmithing, DDTC has found in specific cases that ITAR registration is required because the following activities meet the ordinary, contemporary, common meaning of “manufacturing” and, therefore, constitute “manufacturing” for ITAR purposes:
a) Use of any special tooling or equipment upgrading in order to improve the capability of assembled or repaired firearms;
b) Modifications to a firearm that change round capacity;
c) The production of firearm parts (including, but not limited to, barrels, stocks, cylinders, breech mechanisms, triggers, silencers, or suppressors);
d) The systemized production of ammunition, including the automated loading or reloading of ammunition;
e) The machining or cutting of firearms, e.g., threading of muzzles or muzzle brake installation requiring machining, that results in an enhanced capability;
f) Rechambering firearms through machining, cutting, or drilling;
g) Chambering, cutting, or threading barrel blanks; and
h) Blueprinting firearms by machining the barrel.
Editor’s Comment: Does this mean that any stock-maker or stock supplier is an ITAR “manufacturer” under part 2(c)? Would installing a scope or accessory rail fall under part 2(a) as “equipment upgrading”? Would fluting a barrel be considered “manufacturing” under part 2(h)?
Impact of New Registration Requirements
As the NRA-ILA (Institute for Legislative Action) reads this, gunsmithing shops (even one-man operations) will now be subject to ITAR regulation though they export nothing: “These requirements apply, even if the business does not, and does not intend to, export any defense article. Moreover, under ITAR, ‘only one occasion of manufacturing … a defense article’ is necessary for a commercial entity to be considered ‘engaged in the business’ and therefore subject to the regime’s requirements.”
As a consequence, these new regulations may drive smaller gunsmithing services out of business: “DDTC’s move appears aimed at expanding the regulatory sweep of the AECA/ITAR and culling many smaller commercial gunsmithing operations that do not have the means to pay the annual registration fee or the sophistication to negotiate DDTC’s confusing maze of bureaucracy. [This is] likely to have a significant chilling effect on activity that would not even be considered regulated.”
Statutory Authority for Registration
The AECA’s statutory requirement for firearms manufacturers to register with DDTC is implemented in Part 122 of the ITAR:
§122.1 Registration requirements.
(a) Any person who engages in the United States in the business of manufacturing or exporting or temporarily importing defense articles, or furnishing defense services, is required to register with the Directorate of Defense Trade Controls under §122.2. For the purpose of this subchapter, engaging in such a business requires only one occasion of manufacturing or exporting or temporarily importing a defense article or furnishing a defense service. A manufacturer who does not engage in exporting must nevertheless register.
Barrel chambering image from Primal Rights, dealer for Desert Tactical Arms.
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In 2009, to raise money for its defense budget, the Korean Defense Ministry announced plans to sell 87,000 M1 Garands to American collectors. Initially, it looked like there was a “green light” for the return of these historic arms, which were originally provided to South Korea by the American government. The rifles’ return was widely anticipated by American military rifle match shooters and gun collectors.
However, in March of 2010, the State Department blocked importation of the South Korean M1 Garands based on the expressed fear that the rifles would fall into the wrong hands. According to FoxNews.com, a State Department spokesman said that: “The transfer of such a large number of weapons … could potentially be exploited by individuals seeking firearms for illicit purposes.”
State Department Apparently Will No Longer Block Return of South Korean Garands
It looks like the State Department may have reversed itself. In response to pressure from Senator Jon Tester of Montana, the State Department now says that it will allow South Korea to return the rifles, once a qualified importer is selected. Sen. Tester’s office asserts that “the rifles will be sold in the U.S. through the Civilian Marksmanship Program” (CMP), which has sold many thousands of other surplus M1 Garands.
Sen. Tester declared: “From World War II to Korea and Vietnam, M1 Garand rifles played a crucial role in history. These American-made firearms will always be valued as collector’s items, and law-abiding Americans have the right to keep them under our Constitution’s Second Amendment. I’m glad the State Department listened to my concerns and those of America’s gun collectors.”
CMP States It Will NOT Sell Commercially Imported Garands
Senator Tester’s office has said the CMP will sell the Korean Garands. However, if the South Korean Garands are imported commercially, and NOT simply returned to the U.S. Army, it appears that these rifles would not be able to be sold or distributed by the CMP. Orest Michaels, CMP Chief Operating Officer, explained that the CMP would not re-sell commercially imported rifles:
“The CMP is not a firearms importer and we would not have any involvement of any kind in anything that may happen with these Korean rifles and carbines if they were ‘sold’ to an importer. The only way any rifle or carbine from any country can find its way to the CMP is if the country returns ‘loaned’ rifles back to the U.S. Army — at no cost to the U.S.[.] When that happens, the CMP ‘may’ possibly receive some of those rifles. Korea does not plan on returning (repatriating) any rifles to the U.S. Army, but plans to ‘sell’ these rifles to an importer. According to the recent news and rumors, the U.S. State Dept. has agreed to allow Korea to sell the rifles, even though the U.S. Army claimed the rifles and carbines should be returned to the U.S. Army at no cost. CMP will not have any involvement in this.” Michaels added: “There is no need to wait for the Korean Garands to make a purchase. CMP has plenty of M1 Garands for sale now.”
We commend the State Department for reversing its misguided policy blocking return of these historic arms. We wonder if this reversal can be attributed in large part to Tester’s efforts in Washington. After the State Department blocked the rifle’s sale in 2010, Tester drafted legislation blocking Executive-branch interference with importation of American-made guns that were originally provided to a foreign government. Tester, Chairman of the Congressional Sportsmen’s Caucus, also led efforts in the U.S. Senate to block U.S. funding to promote the United Nations Arms Trade Treaty.
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