The U.S. government takes trade compliance very seriously. As a case in point, a U.S. manufacturer of electronic equipment and software was assessed a civil penalty of $6.6 million after exporting goods under EAR rather than ITAR. If you or your company exports products, software, and certain kinds of services, you need to know the difference between the two programs.

Both EAR (Export Administration Regulations) and ITAR (International Traffic in Arms Regulations) are regulatory regimes involving products, technologies, and services that could be potentially harmful to other people. In order to export anything regulated by either program, you need to have a special permit from Washington.

The company in question was ITAR registered. Even so, it ran afoul of the regulations by exporting goods and services under the wrong program. Thank goodness the mistake was made in ignorance. Had the government determined that there was a willful violation of the law, penalties could have been much more severe.

Different Administrative Jurisdictions

EAR deals with products, technologies, and services that could be considered dual use. For example, hand-held weapons can be used by military personnel, law enforcement, or even private owners. Such weapons are not designated as military-only products. Exporting them is normally governed by EAR. In terms of administrative jurisdiction, EAR is the domain of the Commerce Department’s Bureau of Industry and Security (BIS)

Products, technologies, and services covered by ITAR are designated exclusively for military use. A good example is a fighter jet. A fighter jet is not something that an overseas farmer would use for crop dusting. It is an aircraft wholly inappropriate for carrying air cargo. A fighter jet is a military vehicle only. For the record, the State Department’s Directorate of Defense Trade Controls (DDTC) has jurisdiction over ITAR.

Making Use of Control Lists

It is the exporter’s responsibility to understand the correct regime under which to export. But the exporters responsibilities do not end there. Each regime has its own control lists governing which products, technologies, and services have to be reported, and how they need to be reported.

Exporters may find the lists more complicated than they need to be. The biggest challenge is that the lists are not as easy and straightforward as a typical shopping list. Rather, they are extremely detailed. Just one or two little details in a given product or piece of technology could make an item previously eligible under EAR the jurisdiction of ITAR instead.

Data Covered Under Both

Vigilant Global Trade Services, an Ohio company that facilitates global trade management and compliance, says that the two regimes also apply to certain types of data. Interestingly enough, data that might otherwise be regulated by either program is often exempt if it is published publicly prior to export

As the thinking goes, publicly published data is no longer sensitive. Thus, it probably has very little value in terms of military use. Still, the two programs have different rules governing exemptions, publishing, and pre-approval before publishing.

Expert Assistance Is a Good Thing

The risk of running afoul of either EAR or ITAR is less when companies work with experts. In terms of the company mentioned at the start of this post, it is not clear whether they utilized expert assistance. But either way, reporting their exports under the wrong program resulted in a fairly significant fine. They could have saved millions by avoiding the mistake.

EAR and ITAR are complicated, there is no arguing that. The only question is whether or not your organization can handle things in-house without violating the law.