International Trade Law News

Published by Jacobson Burton Kelley PLLC

The State Department's Directorate of Defense Controls published in the Federal Register last week a final rule amending the ITAR to increase registration fees and change the registration renewal period for manufacturers and exporters of defense articles and services. This new fee structure will significantly increase the annual registration fee for all manufacturers and exporters of defense articles and services.

The new 3-tier fee structure is as follows:

• Tier 1: A set fee $2,250 per year is required for new registrants or registrants who have not submitted any applications during a 12-month period ending 90 days prior to expiration of the current registration.

• Tier 2: A set fee of $2,750 per year is required for registrants who have submitted ten or fewer applications during a 12-month period ending 90 days prior to expiration of the current registration.

• Tier 3: The third tier is for registrants who have submitted more than ten applications during a 12-month period ending 90 days prior to expiration of the current registration. For this tier, registrants will pay a fee of $2,750 plus an additional fee based on the number of applications submitted. The additional fee will be determined by multiplying $250 times the number of applications over ten submitted during a 12-month period ending 90 days prior to expiration of the current registration.

Fees for registrants whose total registration fee is greater than 3% of the total value of applications for which DDTC has reviewed, adjudicated or issued a response during the 12-month period ending 90 days prior to expiration of the current registration will be reduced to 3% of such total application value or $2,750, whichever is greater.

DDTC clarified that license applications that are returned without action or denied' will not be counted as "applications" for determining the number of applications submitted per year.

The fee for universities and other tax exempt organizations will be $2,250 per year.

The previous DDTC registration fee was $1750 per year for all registrants, regardless of the number of licenses submitted.

The final rule published by DDTC contains responses to the 27 comments that were submitted by individuals and companies on the change in fee structure. Most of the comments objected to the increased fees. While most of the comments were rejected, DDTC stated that as it "continues to reform the export control process, the budgetary requirements will be reviewed on a regular basis, which may result in a revision to the registration fee schedule." DDTC also indicated that it "will contemplate reconsidering multi-year registrations after the Department has experience with a single-year fee structure."

Labels: FAST, ITAR