ECR means that the International Traffic in Arms Regulations (ITAR) will no longer regulate sporting firearm and ammunition exports. The new regulations will be the Export Administration Regulations (EAR) administered by the Commerce Department.
Sporting firearms, ammunition and components will no longer be treated as weapons of war for export purposes. Instead, American businesses that make or sell sporting firearms, ammunition and components will be permitted to export their products just like any other business that exports “dual use” commodities.
ECR is all about reducing the fees and red tape associated with manufacturing and selling firearms, ammunition and components outside the U.S. With a new administration in Washington, the industry can expect the reforms that have already reached every other category of the United States Munitions List to come to Categories I, II and III, the categories for firearms, ammunition, components and certain accessories, as well as related technical data and defense services.
It’s not too early to beginning considering how ECR can add dollars to your bottom line.
Fulfill orders the next day!
Today, most international sales of firearms, ammunition and components require an export license. That’s a lot of work for you and the customer, plus a $250 fee per license. Worst of all, order fulfillment must await issuance of the license, which can take 4-6 weeks.
If sporting handguns and rifles are regulated under the EAR the way sporting shotguns are today, no EAR license will be required to ship to certain countries for which an ITAR license is required today.
In addition, there are no license fees under the EAR. The $250 per-transaction fee for ITAR licenses will be totally gone.
No licenses for exports to certain countries and no fees for exports to any country mean that new market opportunities will open for some companies. Others will simply find it easier and less expensive to do what they are doing today.
This is a big deal. If you are not selling product outside the U.S. today because you think it’s too hard or too risky, now is the time to rethink.
Source parts outside the United States
Today, the barriers to sourcing firearms parts outside the United States are prohibitive most of the time.
Many of these barriers will fall under Export Control Reform.
Today you need a DSP-5 license to send prints out of the U.S. for a quote or for a foreign supplier to build firearm or ammunition components to print. Many times, a Technical Assistance Agreement is necessary.
Assuming that prints for handgun and rifle components are treated the way prints for sporting shotguns and their components are today, ECR will make it much easier to source parts and tools outside the U.S. No license will be required to send prints to many countries for quotes or production and in most others, license requirements will be more flexible and easier to satisfy.
What about China? China, a potentially significant low-cost source of components, tools and fixtures, is totally off limits under the ITAR. In the post-ITAR world, however, it can be expected that opportunities will exist to export drawings and prints for certain items to China so producers in that country can make parts, tools and fixtures for use in the United States.
Are you familiar with Technical Assistance Agreements and Manufacturing License Agreements? Well, you can forget about them once the new ECR reforms take effect. Collaborative projects with foreign partners for design and manufacturing will still be regulated in many instances, but they will be much easier and less expensive under the EAR. Instead of a TAA or MLA, a plain vanilla license under the EAR will suffice in those instances in which a license is required.
The global economy beckons.
Sell Firearms and Parts at Retail to International Customers
ECR will be a boon to online retailers that sell into the international market as export license requirements vanish for sales to certain countries. To achieve international sales volume online retailers will not only need a strategy and an understanding of the new rules. They will also need to incorporate the new rules into their ERP systems.
Where Can I Get Help with Export Control Reform?
Export Control Reform means new opportunity for the firearms and ammunition industry. To capitalize, industry needs to know the rules, develop strategies for taking advantage of them and implement international sales and manufacturing programs effectively. Orchid Advisors, The Firearm Industry’s Trusted Compliance and Operations Experts, is the only advisory firm that can help in all these areas and provide solutions precisely tailored to your company’s requirements.
Talk to us about our new Managed Export Services solution – Unlimited trade advisory, export licensing and export compliance services for one annual fee. Let Orchid Advisors become your export services department.