U.S. firearm export rules are set for a major overhaul this March. Will it actually happen? What does it mean for you?
Editor’s Note: this article was written by Borderview’s founder, Joel VanderHoek, and originally appeared in the March 2020 print edition of Canadian Access to Firearms, and is reproduced here for your convenience. Parts two and three of the series are forthcoming.
OVERVIEW: EVERYTHING IS CHANGING (OR MAYBE NOT!)
You may have heard the rumors over the past decade – that the U.S. government is reducing export controls on firearms and related items. Specifically, that the “ITAR” (International Traffic in Arms Regulations) is going away insofar as firearms are concerned. These rumors have swirled for years as the U.S. government has on-again and off-again discussed and made progress on such a proposal.
But, the rumors are more true now than ever before. In the ten years of efforts to transition U.S. export controls of most firearms away from the ITAR, this is by far the furthest it’s gotten, currently scheduled to take effect March 9th, 2020. Yet, the battle is not over. A pending lawsuit in the U.S. threatens to severely delay – or even completely derail – the transition efforts (more on this below).
If the changes do become effective, the U.S. export license application forms, licensing officers and enforcement jurisdiction will all change overnight. Yet, contrary to what some may want you to believe, this doesn’t mean you’ll be able to buy guns out of vending machines on a day trip to the USA and bring them home to Canada with a smile and a nod at the border.
….this doesn’t mean you’ll be able to buy guns out of vending machines on a day trip to the USA and bring them home to Canada with a smile and a nod at the border.
Yes, you’ll still be able to get firearms and related items from the USA through proper channels. Yes, the new system has plenty of advantages for lawful commerce. Yes, the new rules would save U.S. gunsmiths, manufacturers, and exporters from paying huge annual fees to register under ITAR. But, an export license will still be required for all firearms and ammunition leaving the USA – just from a different agency than today. And yet, this entire exercise could be all for nothing and go down in the history books as merely a footnote, if legal challenges succeed in stopping the reform.
By way of background, as the author of this article I own and operate BORDERVIEW International Firearm Logistics, a company specializing in the legal and efficient cross-border movement of firearms, especially between Canada and the United States. In this capacity, for many years we have served the needs of our community, shipping thousands of guns across the border in both directions each year. This experience, combined with our proactive engagement with the government authorities, has given us a front row seat to the inner workings of these proposed changes. The purpose of this article is simply to share all of this information with you. Knowledge is power, and when it comes to shipping guns across borders, misinformation is very dangerous.
BACKGROUND: WHAT IS THE “ITAR”, AND WHY DOES IT MATTER?
You may have heard of the fear-inducing “ITAR” rules in the United States. Simply put, the ITAR is a set of regulations, administered by the U.S. Department of State, designed to keep the most sensitive and military-critical technology and hardware out of the hands of foreign adversaries. The ITAR was originally enacted in 1976, and while it has certainly evolved since then, its basic structure of controls remains the same today.
An important part of the ITAR is the U.S. Munitions List – or “USML” – which defines which specific items are controlled as “Defense Articles” by the ITAR. For decades, most commercially available firearms, ammo and their parts have been right at the top of the list, as USML Categories I and III. This includes all rifles, all handguns, all their parts, their ammunition and ammunition components. (Most shotguns, shotgun ammo and optical scopes have already been separately controlled by the U.S. Department of Commerce’s control list – more on that later).
Further down the page on the USML, below your grandfather’s bolt action .22 caliber rifle, you’ll find the true Defense Articles that warrant the tight levels of control provided by the ITAR. For example: military tanks, aircraft, spacecraft and nuclear weapons are all among the many categories of the USML. So, the same process and application form to export a collector’s rifle out of the United States is used for an F-22 Raptor fighter jet being sold to the middle east. You read that right – hence, the need for a longoverdue reform of this Cold War era export control system.
….we’ll explain in detail how the new system could help lower costs and reduce wait times for firearm exports from the United States.
So, why should you care? For starters, you certainly don’t want to get stuck with legal trouble for being misinformed. Perhaps more enticingly, there are important benefits to the new rules that will directly (and indirectly) help the Canadian firearm owner. Below we’ll explain in detail how the new system could help lower costs and reduce wait times for firearm exports from the United States.
U.S. EXPORT CONTROL REFORM EFFORTS IN RECENT YEARS
Ten years ago, starting in 2010, the Obama administration initiated a comprehensive review of the ITAR as part of their “Export Control Reform Initiative” to determine which items no longer warrant control by the ITAR. Firearms were among the first of the Proposed Rules drafted to transition such items away from ITAR control to the Commerce Control List – the CCL.
However, not surprisingly, due to political reasons and what one senior Obama administration official described as “bad optics”, the transition of firearms away from the ITAR was never completed during that administration, even though they viewed it as an appropriate right-sizing of export controls. For this reason, through recent years there have been off-and-on rumors about the impending transition of firearms away from the ITAR.
In May of 2018, under the Trump Administration, the State and Commerce Departments finally published the “Proposed Rules” for public review and comment. This initiated a period for public comment, after which the agencies would normally process these comments then issue the “Final Rule” in a matter of months. However, because of complex and politically sensitive issues around the issue of 3D gun printing technology, the rules were yet again delayed, until January 23rd 2020 when the Final Rules were published in the U.S. Federal Register, with a stated effective date of 45 days later – March 9th, 2020.
THE LEGAL CHALLENGE THAT COULD DERAIL IT ALL
The same day that the Final Rules were (finally) published, perhaps predictably, a coalition of twentyone U.S. state attorneys general filed a lawsuit against the administration asking a judge to halt the transition. This coalition, led by Washington State Attorney General Bob Ferguson, once again based their lawsuit on issues surrounding 3D printing technology, as well as accusations of procedural missteps.
While in theory it is possible that other lawsuits or complications could pose a threat to implementation of the Final Rules, this lawsuit is the most visible and substantial threat at this time. Its impact, if any, is very much yet to be seen. This lawsuit could severely delay – or at worst, even completely derail – implementation of the Final Rules. On the other hand, it could be altogether dismissed in court.
On February 6th, 2020, the Plaintiffs in this lawsuit (the twenty-one states) filed a Motion for Preliminary Injunction, specifically asking the Western District of Washington Judge to pause the Final Rules going into effect, pending the outcome of the trial. At the time of publishing, the court is set to rule on this motion on or before February 28th.
Truly, only time will tell. And meanwhile, those who have long been anticipating this change will keep their fingers crossed and stand ready for action when any opportunity arises to assist. At the end of this article you’ll find a way to get current, up-to-date information as the situation develops.
WHAT WOULD CHANGE?
As emphasized above, it’s critical to understand that none of these changes are official until they’re official. That is to say, all of the changes discussed below are not yet in effect as of the time this article was published. While they are currently scheduled to take effect on March 9th, 2020, one must first verify they have actually become effective prior to acting on any of these changes.
That being said, if or when they do become effective, these are some of the changes you can expect:
No more ITAR fees:
under the ITAR, U.S. firearm-related manufacturers, exporters and gunsmiths are forced to pay an annual fee of $2,250 USD to Register under the ITAR, whether they export or not. Furthermore, exporters must additionally pay $250 USD per license. With the transition to Commerce Department, this all goes away. Commerce has no equivalent annual registration fee, and no per-license fees. (It should be noted that even though there is no fee, only a qualified U.S. exporter can submit the application, and the steps to properly ship against an approved license are numerous.)
Skeptics may predict that the elimination of ITAR fees will result in no actual benefit for the Canadian importer – that exporters will keep all of this newfound money for themselves. In reality, these fees were often passed on directly to the Canadian importer, which will no longer be the case. And for ‘consolidated’ imports, wherein many items were on a single license (i.e. 25 guns on a single $250 license, costing only $10 per gun), while the financial impact will be less direct, in time it should create downward pressure on import costs, even if only a bit. Plus, any time governments reduce burden on our industry (a rare occurrence nowadays!), we should all be able to celebrate, regardless of the direct impact on our own day-to-day lives.
A more flexible licensing structure:
The ITAR requires that U.S. exporters can only apply for a license after they have a firm, signed Purchase Order (P.O.) in hand from the foreign customer. Even then, they can only apply for the exact quantities and commodities on that P.O. – nothing more. Conversely, the Commerce Department does not require a P.O., and goes so far as to encourage exporters to forecast future orders to get an approved license that can be used for several years.
While this change may not sound like a big deal to some, it has the potential to virtually eliminate the lengthy wait times associated with ITAR export licensing. For example, if a Canadian retailer regularly orders certain firearms from the U.S., previously each order required a separate export license (with associated costs and wait times). Under Commerce Department, a single export license can cover up to four years’ worth of forecasted shipments for those firearms, meaning with a pre-approved license inhand, the U.S. supplier can ship immediately without waiting for a new license to be approved.
Improved license Exception for Low Value Shipments:
The ITAR gives exporters the option of using “Exemptions” for certain qualifying shipments of small parts, antique firearms, and more. The new rules improve these even further with several “Exceptions” (as they are called by Commerce Department) that expand the availability of qualifying shipments. As written, the new Low Value Shipment Exception would allow up to $500 worth of firearm barrels and complete bolts to qualify (they don’t under ITAR), as well as receivers if the ultimate destination is Canada. Ammunition components such as brass casings and projectiles up to $500 in value would also qualify, which like many other positive changes, was a result of BORDERVIEW’s comment request letter to the government.
Keep in mind that an “Exception” doesn’t mean that no export filings are required whatsoever. Rather, an exporter has the option of shipping qualified items without first obtaining an export license, but must carefully confirm they qualify with the many requirements in the rules, then file Electronic Export Information in the U.S. Government’s Automated Export System (AES) to properly declare use of the Exception.
More clear controls on fewer items:
The ITAR controls virtually every gun part, down to every last screw and pin. The new rules rightly continue to control major parts, but completely de-control the most minor parts (such as screws). Certain other parts (such as stocks, grips and iron sights) only require an export license if going to China.
Again, just because a certain firearm part (such as a rifle stock) does not require a full export license under the new rules, do not presume that means no export filing is required at all. While it is indeed easier to export stocks than under ITAR, a proper AES exporter filing is still required.
A new regulatory agency and enforcement:
The ITAR is administered by the State Department, while the Commerce Department’s Bureau of Industry and Security (BIS) administers the Export Administration Regulations (EAR). Overnight, the jurisdiction would shift, and with this would come the new oversight of Commerce Department’s robust and dedicated law enforcement agency: the Office of Export Enforcement.
WHAT IS STAYING THE SAME?
While much would be changing, much will stay the same. At it’s core, this change is not a de-control, but rather a change of controls. Behind the scenes, the same U.S. Government agencies (State, Commerce, Defense Departments and more) are reviewing each application. And although the application forms are different, all guns and ammo still require an approved U.S. export license for permanent export (a license exception does exist for certain temporary exports, such as U.S. hunters going abroad, who must follow a set procedure in lieu of getting an export license).
Enforcement efforts will remain equal if not greater. Commerce Department’s Office of Export Enforcement is a robust and experienced agency with field offices around the country, whereas State Department does not have it’s own enforcement agency, but relies on Homeland Security and other agencies to enforce their regulations.
Also important to remember is that this would only change the U.S. export controls – not Canadian import regulations, nor U.S. import regulations. This means that the same licensing, permit and transport requirements apply for import to Canada as they did before. Likewise, none of this changes the permanent import of firearms into the United States, which remains controlled by the Bureau of Alcohol, Tobacco and Firearms (ATF).
CONCLUSION
Very soon, the long-rumored change to U.S. export controls may be reality. If so, the changes will be substantial and impactful. Although they would become legally effective overnight, it may take some time for their impact to flow through the industry. As always, the right U.S. export agent will remain a valuable source of information and assistance in navigating the new rules, and if they become effective, to take advantage of the many benefits the new rules offer to reduce wait times and keep costs in line.
