Law firm defends ability of forwarders to obtain ITAR licenses
A Washington law firm has asked the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) to restore the practice of allowing freight forwarders to obtain export licenses for shipments of American military technology.
Effective Sept. 16, the DDTC said it would no longer allow forwarders to obtain licenses for shipments regulated under the country’s International Traffic in Arms Regulations (ITAR). To obtain a license for ITAR shipments, DDTC said an applicant must be the “entity that is selling the defense article to the designated recipient foreign company.”
“This interpretation ostensibly would bar the forwarder from ever being a licensee,” said Carlos Rodriguez, a partner of Rodriguez O’Donnell Ross Fuerst Gonalez Williams & England, in an Aug. 29 letter to Susan M. Clark, DDTC deputy director. “These developments have modified the past practice that was previously acceptable to the DDTC with regard to forwarders as licensees.”
The law firm’s letter to the DDTC noted that it was representing four large and two niche transportation intermediaries who have traditionally acted as consolidators, warehousemen, and forwarders for defense cargoes.
“The current involvement of forwarders in obtaining licenses comes mainly from routed export transactions where the U.S. domiciled forwarder or its overseas agent(s) have been retained by foreign defense-related agencies or contractors to ‘collect, warehouse, and forward’ defense article shipments from various suppliers in the U.S. related to Department of Defense export programs,” Rodriguez said.
“These exports are now bundled into single recognizable transactions by qualified (registered) forwarders, which currently are registered and issued licenses by DDTC,” he said.
In some cases, these forwarders may bundle shipments for up to 50 Defense suppliers under a single license. “Under the new scenerio, DDTC could end up having to process that many licenses from the U.S. suppliers,” Rodriguez said.
The law firm pointed out that forwarders are recognized by the Commerce Department for licenses under the Export Administration Regulations. By allowing forwarders to obtain similar licenses under ITAR, the DDTC would enjoy the efficiency of a single interface for multiple Defense shippers and an extra layer of security oversight, the law firm said.
If the DDTC’s new policy toward forwarders is allowed to proceed, the law firm asked that the agency provide the industry with clear guidance on current and future licenses, especially for routed export transactions.