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Potomac Institute Report on the ITAR

Earlier this month, the Potomac Institute for Policy Studies, a nonprofit research organization focused on science, technology, and national security issues, released its report on the impacts of the International Traffic in Arms Regulations (ITAR) on U.S. national security and economic interests. [FN 1]

The board of directors, regents, and fellows of the Potomac Institute include former senior U.S. Department of Defense officials from the Joint Chiefs of Staff, Office of Naval Research, and NATO command, as well as highly experienced members of the defense industrial base who regularly provide advice to Congress on national security issues. [FN 2]

The Institute’s report is based on a yearlong effort that involved an extensive review of academic, industry, and government reports, and discussions with senior Department of Defense leadership, former State Department Directorate of Defense Trade Controls employees, CEOs of companies subject to the ITAR, and other stakeholders at workshops, seminars, and interviews.

Among other findings noted in the report, the Institute found the following:

“The ITAR is collapsing from excessive bureaucracy.”


“The ITAR no longer safeguards this country from our adversaries’ use of critical knowledge and technology.”


“The current export control regulatory process is inefficient and burdensome for large companies, and almost impossible for smaller companies to abide by.”


“The current Export Control Reform Initiative started in 2009 has been unsuccessful in mitigating and/or correcting the impacts and problems caused by the ITAR, as intended.”


“The well-meaning reform initiative, which has plodded along for six years at this point, has devolved into tweaking of vague descriptions of poorly understood technologies that support a grotesque framework of patched-together regulations and misguided directives.”

The Institute’s report further explains how the ITAR unnecessarily inhibits international collaborations with foreign partners necessary to scientific growth and weakens U.S. national security. Accordingly, the Institute properly concludes “that many of the same problems still exist that prompted the reform effort indicating that a new strategy needs to be considered.”

The new strategy, as proposed by the Potomac Institute in its letter to members of Congress [FN 3], is for Congress to replace the current system of controls administered under the ITAR. The Institute’s report explains that the next system should focus on appropriate classification of critical technologies warranting control, while clearly leaving other technologies open for international collaborations where it benefits the nation to stay current.

 

*   *   *

[1] “A Potomac institute for Policy Studies’ Report: An Analysis of the Impacts of the International Traffic in Arms Regulations (ITAR) on U.S. National Security and Economic Interests,” 2016, available at http://www.potomacinstitute.org/images/RSEC/ITAR.pdf

[2] See http://www.potomacinstitute.org

[3] See Potomac Institute Report at p. 4.

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*The above is not intended as an exhaustive list of restrictions that may apply to a particular transaction nor advice for a specific transaction because the specifics of an individual case may implicate application of other U.S. laws as well as foreign laws that carry added or different requirements.  In addition, U.S. export control and sanctions laws are frequently subject to change.  Such changes can affect the continued validity of the information above, which is based on U.S. law existing as of March 28, 2016. For these reasons, assistance from a qualified attorney competent to advise on such matters is highly recommended. Matthew A. Goldstein is an International Trade Attorney in Washington D.C. licensed to practice in the District of Columbia.  He can be reached at (202) 550-0040 and Matthew@GoldsteinPLLC.com

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