Defense
As one of the largest and most advanced defense industries in the world, the U.S. defense sector consists of a wide range of industries, including aerospace, shipbuilding, cyber-defense, and advanced weaponry. U.S. defense exports include innovative equipment, from fighter jets and missiles to defense systems, radar, and cybersecurity solutions. Navigating the intricacies of international trade law is critical for ensuring compliance, protecting national interests, and maintaining competitive advantage in global markets.
To operate effectively, companies must understand and adhere to a complex framework of regulations, including the International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), and various sanctions administered by the Office of Foreign Assets Control (OFAC). These regulations are designed to safeguard against unauthorized access to sensitive technologies and prevent the export of controlled items to hostile states or entities. These regulations also include provisions that affect defense exports, including restrictions on dual-use items and requirements for government approval before exporting sensitive technologies. The Committee on Foreign Investment in the United States (CFIUS) reviews foreign acquisitions of U.S. defense companies to protect sensitive technologies and intellectual property from potential adversaries.
Cybersecurity is increasingly relevant in the defense industry, especially as many controlled technologies and information are stored or transferred digitally. Defense companies must secure their systems against unauthorized access and cyber threats, implementing controls to prevent sensitive data leaks that could jeopardize national security. Advanced encryption, regular security audits, and compliance with international cybersecurity standards are essential practices.
Representative Experience
Torres Trade Law has a very experienced defense trade practice, and Managing Member Olga Torres has been an active member of the Department of State’s Defense Trade Advisory Group (DTAG) since 2012. Torres Trade Law’s representative experience related to the defense industry includes:
- Advising a U.S.-based government contractor in connection with its acquisition by a Japanese company and related CFIUS issues, including CFIUS mitigation plan compliance and meetings with CFIUS Department of Defense monitors.
- Successfully obtaining export control licenses and ITAR license agreements for numerous defense industry clients.
- Advising defense industrial base clients regarding cybersecurity requirements, including Cybersecurity Maturity Model Certification.
- Preparing and implementing export control and sanctions compliance programs for multiple defense companies.
- Advising on the application of Foreign Ownership, Control, or Influence (FOCI) regulations administered by the Defense Counterintelligence and Security Agency.
- Operating as the outsourced export compliance department for manufacturers and exporters of defense articles.
- Conducting internal investigations of defense companies, leading to submissions of voluntary disclosures to the Department of State Directorate of Defense Trade Controls (DDTC) and the Department of Commerce Bureau of Industry and Security (BIS).
- Advising defense brokers on ITAR brokering registration and licensing requirements.
INSIGHTS
DOJ’s Increasing Role in the Enforcement of U.S. Trade Laws
A Primer on the Committee on Foreign Investment in the United States (CFIUS)
The Committee on Foreign Investment in the United States (“CFIUS” or “the Committee) is an interagency body of the U.S. government that plays a critical role in safeguarding national security by reviewing foreign investments in U.S. businesses and assets. Established in 1975 through an Executive Order issued by President Gerald Ford, CFIUS initially served as an advisory committee to monitor and evaluate the impact of foreign investments on the U.S. economy. Over time, its role has evolved significantly to focus on identifying and mitigating risks to national security posed by such investments.
DOJ Involvement in the Enforcement of Trade and National Security Laws
The U.S. agencies most well-known for their enforcement of U.S. trade and national security laws are the Bureau of Industry and Security (“BIS”), the Directorate of Defense Trade Controls (“DDTC”), the Office of Foreign Assets Control (“OFAC”), and U.S. Customs and Border Protection (“CBP” or “Customs”). However, the Department of Justice (“DOJ”) can often play a critical role in these types of matters.
Understanding ITAR Mandatory Disclosures and the “Duty to Inform” DDTC
The discovery of actual or potential International Traffic in Arms Regulations (“ITAR”) violations presents the question of whether to disclose the conduct to the Department of State Directorate of Defense Trade Controls (“DDTC”). For certain violations, the ITAR sets forth mandatory disclosure requirements, and specific circumstances may give rise to an affirmative duty to inform DDTC of certain activities and transactions.
ITAR Material Change Reference Guide
Any person or company in the United States that manufactures, exports, temporarily imports, or brokers items, including technical data and software (defense articles), or performs certain services (defense services) that are controlled under the International Traffic in Arms Regulations (ITAR) is required to register with the U.S. Department of State Directorate of Defense Trade Controls (DDTC) and keep that registration current. Current in the context of the ITAR means not only the information that is current at the time the registration is initially submitted, but the registration information must accurately reflect the registered entity’s current information at any point in its timeline.
VTA Telecom Corporation Enters into Consent Agreement with the U.S. Department of State
On April 20, 2023, VTA Telecom Corporation (“VTA”) entered into an administrative consent agreement with the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) to resolve six alleged violations of the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”) for unauthorized exports of defense articles and technical data to Vietnam.