TRUMP PREPARING TO ROLL BACK ITAR ARMS EXPORT RESTRICTIONS

According to a report from Reuters, the Trump administration is preparing to roll back International Traffic in Arms Regulations (ITAR) and move up to 80% of American arms export out of the State Department's jurisdiction, and into to the Department of Commerce. The Reuter's report comments, "while the State Department is primarily concerned about international threats to stability and maintains tight restrictions on weapons deals, the Commerce Department typically focuses more on facilitating trade."

As it stands, many firearms, components, optics and ammunition falls under ITAR regulations that strictly control the export of these items to any country, including Canada, through the requirement of certificates and licenses. Obviously obtaining these export licenses is a time-consuming and expensive process, and has historically been one of the most significant factors preventing Canadians from obtaining US-made firearms and accessories, as the investment required by US exporters is oftentimes larger than the potential profits to be made.

Reuters reports the changes will not require congressional approval, and are all but finished, and "could be made public this fall, followed by a period of public comment, with implementation as early as the first half of next year, the officials said." However, officials also have stressed that the changes do not represent a blanket deregulation of firearms, but rather a shift in oversight. For Canadians, a glimpse into what these changes may look like comes from an an unlikely market segment: The hunting shotgun market.

Canadian Sneak Peek

Shotguns with barrels over 18", as well as all the associated parts and ammunition for hunting shotguns, have never been covered by ITAR. Rather, they've been the purview of the US Department of Commerce. Without going into too much depth, the behind-the-scenes machinations required to export these materials is substantially less than those required to export ITAR materials, as the Department of Commerce Export Administration Regulations operate on a Commerce Control List that uses a country-based chart to control exports. In the case of shotguns with 18" or longer barrels, US companies obtain Canadian import and US export licenses, and can then export shotguns to Canada under their company-held license. So, once Browning, for example, has the export permit, they can export any shotgun with a barrel over 18 inches, or parts thereof.

On the other hand, ITAR export licenses must be carried on each exported shipment of ITAR regulated firearms or parts, and apply to very specific items. Major components must be listed discretely even if they are assembled into a complete firearm. So, a single AR-15 being exported from the USA must have the barrel, bolt carrier, receivers, and numerous other parts listed on the license. Different calibres of barrel, or even different barrel materials can require additional items be placed on the license. So the work and costs involved in obtaining and maintaining these licenses is far greater. However, for the layman, the potential loss of the ITAR small-parts exemption that allows up to $500 worth of ITAR-regulated goods to be exported without a license may be felt, as no such exemption exists in the existing Department of Commerce regulations.

What Will it Mean...

Obviously some regulatory changes will occur as the regulation of arms export transfers from the State Department to the Department of Commerce, and it will be those smaller changes that will have the greatest impact to Canadians. Either of the US or Canadian governments are capable of structuring these changes to allow everything from "I placed an order with Brownells USA and it arrived at my door a week later," to maintaining the existing firearms importation regime as it stands. Furthermore, the impact of such changes as opening up the Canadian market to US exporters like Brownells could be so far-reaching that it's impossible to predict how such a scenario would play out. So we're as yet incapable of saying with any certainty what effect these changes will truly have on the Canadian marketplace, and industry. However, you best believe that with SHOT Show 2018 around the corner, we're pretty confident in saying that we know what everyone will be talking about in the run up to January...

What it Won't Mean...

Canadians will likely not be able to purchase firearms in the US. Acquisition of a firearm by non-resident aliens in the US is strictly controlled by various federal and state statutes. Likewise, if the regulatory changes do result in a dramatically streamlined import process for Canadians, such as easing the manner in which Canadians could import major components, ammunition, or firearms through things like online ordering, we would expect the Canadian government would consider restricting the import of firearms through the regulation of Canadian import licenses.