Switzerland, as a neutral country is not part of the European Union. The Swiss “Feldschiessen,” or “Field Shoot,” is the world’s largest shooting competition, with as many as 128,000 people participating. According to some reports, an estimated 48% of households own a firearm, resulting in an estimated 2.3 million firearms owners in the country with a population of 8.5 million. Many of the owners are collectors, with multiple firearms. Swiss Army soldiers have historically been allowed to take their service rifles home, even if fully automatic. Fully automatic firearms were legal to own by civilians until the new laws were put into effect.

How did this happen? In 2008, Switzerland signed onto the Schengen Agreement, which was originally meant to increase trade and free movement of people throughout the EU. When passing from Germany into Switzerland, there are no border controls, and no passport examination is required. In terms of free trade, trucks laden with goods travel freely between the EU and Switzerland. Most European countries have signed onto the Schengen Agreement, with the exception of the United Kingdom and Ireland. Poland, Norway and Iceland have signed on to the agreement, even though they, like Switzerland, are not part of the EU.

In a move to force Switzerland to change its gun laws, the EU threatened to remove free passage between the EU and Switzerland, eliminate free trade, eliminate law enforcement cooperation and eliminate shared intelligence resources involving terror threats. In response, the Swiss parliament acquiesced and passed the new EU-based laws. Immediately after passing the laws, gun owners sought a referendum to take the issue directly to the voters. 50,000 verified signatures were needed within 100 days; more than 125,000 signatures were gathered. On May 19, the referendum passed with more than 60% in support of the new laws.

Now what? The basics do not change. Swiss citizens and permanent residents over the age of 18 can purchase a gun in Switzerland, but they must first apply for a permit and present a copy of their legal (Or criminal) record. These types of basic firearms possession licenses are “shall” issue—that is, there is no prohibition, as long as the applicant has no criminal record. After that, the situation gets complicated.

Most private sales between individuals were unreported and unregulated. The new laws seek to change that. If a pistol were possessed prior to August 15, 2019, no permit is needed to possess, and standard capacity magazines up to and exceeding 20 rounds may be purchased and used. Pistols purchased after August 15, 2019, require a “small exceptional” permit to possess and are neutered to a maximum of 20-round magazine capacity.

In terms of rifle possession, the August 15 possession date is again important. Recall that most private sales were not regulated or registered. Rifles possessed prior to August 15, 2019, may utilize a standard capacity magazine exceeding 10 rounds, but they must be registered. Rifles that accept a detachable magazine purchased after August 15, 2019, require an exceptional permit. In addition, all semiautomatic rifles and rifles with an overall length less than 60cm require an exception permit. Standard capacity magazines exceeding 10 rounds will still be allowed but must be locked and secured in a separate location. It is now illegal to insert a standard capacity magazine into an “unregistered” rifle. It is difficult to know exactly how many firearms are currently in circulation, since guns are registered regionally, and there is no national registry. The new laws will change that by making most firearms subject to registration and licensing.

Exceptional licenses are exactly that—exceptional. They are issued at the regional level and are “may” issue. Standards for issuance vary by locale. As one might imagine, rural Cantons are typically more lenient, while urban Cantons (like Zurich) have more stringent requirements. In general terms, an exceptional permit will be granted if the applicant is a good citizen, has no criminal record, has no known drug abuse, has no history of mental illness and is at least 18 years old. Some jurisdictions require an applicant to be a “collector,” but there are no statutory definitions of what constitutes a “collector.” In some regions, a licensing officer may require possession of five firearms, while other licensing officers may require 10 or more firearms to meet the local standard. Once an application is submitted for an exceptional permit, it may be denied for no reason—a denial could be as basic as the issuing officer having a bad day or not approving of the applicant’s personal appearance.

Possession of a service weapon has been a basic right of the Swiss military for hundreds of years. As a nod to Swiss custom and history, service members will continue to possess service weapons outside of training, as long as they are in national service. Once out of military service, the former soldier would need to apply for an exceptional permit to allow continued possession of the service weapon.

Shooting clubs are a popular pastime in Switzerland, with dozens located throughout the country. Under the new law, membership within a shooting club becomes required in 2024, as in most of Europe. At this time, there are no standards or requirements on what constitutes a “shooting club.” It is likely that shooting clubs will become more defined within the law over time, as the new law requires a re-evaluation of the applicable laws every five years, with the next evaluation occurring in 2024.

Finally, the new EU-based laws require extensive marking requirements. Under the old law, the receiver, barrel and bolt needed to be engraved with a serial number. Under the new law, AR-15 lower receivers become regulated parts, and all “relevant parts” must be marked with a serial number, name of the manufacturer and country of origin. Unfortunately, what constitutes a “relevant part” has not been defined. Under the new law, it is possible that an upper receiver, lower receiver, trigger housing, barrel, bolt, bolt carrier, trigger and trigger assembly could require serialization and marking.

There is currently a global fight against the right of self-defense and firearm possession. Switzerland, long a stalwart of firearm rights, has been neutered, with the prospect of unlimited restrictions being implemented every 5 years at the whim of the European Union. Domestic U.S.-based readers may wonder why Swiss gun laws matter, or why one should care about the laws of a foreign country. The answer is simple: if it can happen in Switzerland—a country with massive firearms ownership and pro-gun culture—it can happen anywhere including the United States. Individual U.S. states are taking positive actions against domestic possession of firearms. One need only look to the new laws passed in Washington State, the increased gun-grabbing frenzy in California and the continued rhetoric of the 2020 Democratic Presidential candidates to see the looming domestic threat.

Foreign-based readers (particularly those in New Zealand or the United Kingdom) may already recognize the path that Switzerland has undertaken. The global fight against the right of self-defense and firearm possession continues unabated. All readers, regardless of citizenship or nationality, must be vigilant and take action now, before all is lost.

Gun control pundits have long extolled the virtues of an Australian or European gun control scheme, pointing to the low incidences of gun violence in Australia and Europe. Listening to politicians and media worldwide, the high rates of firearm ownership were apparently the root cause of mass shootings throughout the United States, to include recent events in Aurora, Colorado and San Bernardino, Colorado. With recent mass shootings in Paris and Brussels, a series of high profile attacks against women, Europeans are re-evaluating their positions on gun control. As usual, the politicians seem disconnected from reality and the will of the populace.

Market Forces

Austria, one of the most heavily armed countries within the European Union, reports an estimated 900,000 firearms held by a population of 8.5 million. Despite already being one of the most heavily armed countries within Europe, sales of firearms in Austria have exceeded prior year to date sales. “Nearly all shotguns are sold out because you don’t need to have a firearms permit to buy them,” Thomas Ortner, spokesman for gun retailers in the state of Upper Austria. “Registration courses for pistols are usually held only every five weeks but are now held weekly.” According to Austrian law, anyone 18 and over can buy and own a shotgun or certain types of rifles, but they must be registered at a licensed dealer on gunsmith within six weeks of purchase. The report also noted that many of the new gun buyers are women. The report stated that the most common reasons given for buying a gun were fear of refugees and fear of burglars.

A January 2016 article from Reuters pointed out that the best-selling products on the “Sport & Leisure” section of Amazon.de (the German Amazon.com) revealed brisk sales of defensive sprays. The Reuters article also noted that the president of German defensive spray manufacturer DEF-TEC indicated that sales of the products “rose seven-fold in the final three months of [2015].”

Following a well-publicized scene of violence in Cologne on December 31, 2015, reportedly more than 300 people have applied to Cologne police for licenses to carry gas pistols and imitation firearms; only 408 such licenses were granted in all of 2015. Actual firearms are also in great demand – German state news agency Deutsche Welle noted a similar trend. According to Deutsche Welle, “most customers want a pistol that can fit easily into a handbag or a small drawer in the night table.” Moreover, the news outlet reported that “there has been an increase of at least 1,000 percent or more in Google search queries for gun permits since January.”

Faced with increased threats of random violence, European citizens are seeking to arm and protect themselves by whatever means necessary. As Europeans are learning, a gas pistol may not be ideal when confronted by an unruly mob or an armed gunman, but it’s better than nothing. Sadly, Europe’s politicians are seeking to disarm the continent’s citizens, rather than allow for increased self-reliance and personal protection.

Political Forces

As gun sales increase throughout Europe, the European Union Parliament is seeking to impose additional restrictions on the purchase and possession of firearms. A proposed directive jointly issued in December 2015 by Internal Market and Industry Commissioner Elzbieta Bienkowska (Poland) and Migration, Home Affairs and Citizenship Commissioner Dimitris Avramopoulos (Greece) that would restrict all “Semi-automatic firearms for civilian use which resemble weapons with automatic mechanisms.” This restriction is an attempt to ban firearms based upon form, rather than function. In addition, the restriction would apply to all firearms, including pistols, blank guns, and flare guns. This proposed restriction would be a constructive ban on nearly all semiautomatic rifles within the continent, regardless of caliber, model, historical significance, or value. Most importantly, the proposed regulation would seek “…to ban certain semi-automatic firearms, which will not, under any circumstance, be allowed to be held by private persons, even if they have been permanently deactivated.”

In addition to restricting “military-type” firearms, the European Parliament proposes that all firearm owners be subject to mandatory medical testing in order to own and possess firearms. The regulation reads: “Member States shall provide for standard medical tests for issuing or renewing authorizations as referred to in paragraph 1 and shall withdraw authorizations if any of the conditions on the basis of which it was granted is no longer met.” In effect, the European Parliament seeks to treat law-abiding shooters as mentally ill unless proven otherwise, by forcing mandatory medical tests to assess the “physical, mental and cognitive aptitude” of gun license holders.

If mandatory medical testing was not enough, additional restrictions on possession, ownership and sales are proposed. Under the proposed regulation, “good cause” must be shown to possess a firearm. The UK ‘Section 2’ system of licensing an unlimited number of shotguns would be outlawed. Instead, a good reason must be presented for each and every firearm purchased and possessed. Private sales via the internet would be prohibited by anyone other than a licensed dealer or broker.

Although each European country has laws in place dictating the deactivation of live firearms, the proposed regulation would harmonize the requirements with the UK standard. Under the proposed regulation, “deactivation” would require completely destroying and/or removing internal parts, replacing bolt carriers with dummy parts, and welding the action so that deactivated firearms cannot function.

Finally, the potentially most troubling proposal allows the creation of an EU-wide gun registry – similar to the type of registry pursued (and recently abandoned) by Canada. Such a database would have huge implication to personal privacy and individual liberty.

A press release detailing the proposed restrictions may be found online at http://europa.eu/rapid/press-release_IP-15-6110_en.htm

As of press time, the proposed regulation was facing strong opposition from the European public and from a majority of Members within the European Parliament. Nevertheless, in March 2016, an amendment was proposed that would regulate magazines with a capacity of 10-rounds or more. In justifying the proposal, British Labour MEP Claude Moraes was quoted as saying that “large magazines make firearms more dangerous and should be subject to license.” As American readers know, this effort was tried in the United States from 1994 – 2004, with little to no effect on crime rates.

As most within the shooting community know, terrorists are not law abiding and compliance with these proposed laws and restrictions seems doubtful. These latest restrictions are tired, played-out arguments that gun control pundits have been arguing in support of for years. Sadly, with the increase in violence within Europe, and the lack of a personal right to possess and bear arms, the political will may be great enough to pass sweeping restrictions against firearm possession.

Following the February 7, 2016 missile launch by North Korea, additional sanctions have been imposed by the US Government. The new sanctions impose a complete ban on all exports of goods and services to North Korea. The new sanctions read in part:

Sec. 3. (a) The following are prohibited:

(i) the exportation or re-exportation, direct or indirect, from the United States, or by a United States person, wherever located, of any goods, services, or technology to North Korea;

The new sanctions don’t add significantly to the restrictions that were already in place. Under the prior restrictions, the U.S. Commerce Department would allow food and medicine exports to North Korea, and exports of all other items (other than luxury items) on a case-by-case basis. And, although the new sanctions state a complete ban on all exports to North Korea, the Office of Foreign Assets Control (OFAC) issued nine new general licenses which authorize mail and telecommunications services to North Korea. In addition, the usual exceptions on exports of emergency medical services, legal services, intellectual property services, and personal financial remittances remain. So much for a complete ban on the export of goods and services to North Korea.

Gun Laundering Takes a New Turn

Richmond Attah, of Charlotte, North Carolina, was indicted on February 18, 2016 for attempting to export 27 handguns and 3500 rounds of ammunition without a required export license. The illicit cargo was hidden in a washing machine, a clothes dryer and a barrel. Destined to Ghana, the firearms and ammunition were discovered by U.S. Customs officials in Savannah, Georgia.

A criminal conviction requires proof that the defendant knew that he or she was violating the law in connection with the unlicensed export. Given that the 27 handguns were put into a washer and dryer bound for Ghana may make it difficult to argue that the defendant was ignorant of the law.

Travelling to Cuba?

Planning a trip to Cuba? Recent announcements from the US Government make it appear that travel to and from Cuba is now unrestricted, but this guidance is not accurate. The Office of Foreign Assets Control (OFAC) has expanded general licenses for U.S. citizens to visit the Caribbean country without a sponsoring organization. Travel to Cuba is allowed under a “people-to-people” general license, as long as the travel includes a “full-time schedule of educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba.” Drinking mojitos and lounging on the beach do not qualify as an ‘education exchange activity.” More importantly, under the rules for the people-to-people license, the individual traveler will need to “retain records sufficient to demonstrate” a “full-time schedule of activities” that result in a meaningful interaction with Cubans. Failure to retain adequate records could result in potential civil fines and although unlikely, potential criminal charges.

For many years, the import/export community has relied upon a combination of paper and electronic submission of required documents. As the U.S. Government gets pulled into the 21st Century (albeit, sometimes reluctantly) we are beginning to see increased automation and efficiencies in the import/export realm. ATF established the E-Forms system several years ago, allowing the electronic submission of import permit applications. Similarly, U.S. Customs and Border Protection established the Automated Export System (AES) as a means of electronically filing export paperwork. Despite AES, Customs entries for incoming shipments still required submission of clearance documents in paper format. Outbound shipments required exporters to present paper copies of export paperwork in person, so that CBP could enter the data into their system.

Under the legacy AES system, industry members were the nexus of all information. Importers filed for, and received ATF Form 6 import permits. Importers then filed the ATF Form 6 with U.S. Customs upon arrival. An ATF Form 6A was presented to U.S. Customs for execution. There was no way for U.S. Customs to speak directly with ATF without significant effort. Similarly, exporters applied for, and received BIS and DDTC export licenses. DSP5 export licenses were presented in paper format by exporters to Customs for entry into the CBP system. Shipping documents were examined in paper format by individual officers, often while holding up a shipment. That is, until now.

In April, 2001, U.S. Customs announced a modernization effort to import and export transactions, thus starting the Automated Commercial Environment (ACE) Portal system. In 2003, Customs began designing a web portal, and invited 40 importers to test and evaluate the system. By June, 2004, over 145 importer and Customs Broker accounts had been established within the nascent system. During the next ten years, the system was upgraded, tested, and verified by users in the import/export community. The system is now ready for full implementation, with plans to disable and shutter the legacy AES system.

According to U.S Customs, “the ACE Secure Data Portal is a web-based application providing a single, centralized on-line access point to the ACE system and connects CBP, the trade community and government agencies involved in importing goods into the United States. The ACE portal gives users access to view their account information as it exists in CBP and to their transactional data, which they can use to identify and evaluate compliance issues and monitor daily operations.” Importers no longer need to present an ATF Form 6; the approved form is automatically uploaded into the ACE system by ATF. Although the form will still be required, the ATF Form 6A no longer needs to be presented to U.S. Customs. Similarly, exporters no longer need to present a paper copy of the DSP-5 export license to U.S. Customs, as DDTC will automatically upload a copy into the ACE system. In terms of efficiencies, the new ACE system will allow for faster and more streamlined transactions for imports and exporters.

In addition to ATF and DDTC, the ACE system plans to implement partnerships with the Centers for Disease Control, Defense Contract Management Agency, the Animal and Plant Health Inspection Service (APHIS), National Highway Traffic Safety Administration/Department of Transportation, and the Food and Drug Administration.

The system is not perfect; the ACE portal is still experiencing growing pains. At some point, the legacy AES system will be phased out. The deadline for shuttering AES has been pushed back several times, but migration has already begun.

As of February 28, 2016, CBP has announced that it will offer limited Client Representative and Technology Service Desk support, will perform AES maintenance during peak business hours, and will provide processing priority to ACE entries where corresponding AES entries are still available. Full migration is expected sometime during the summer of 2016.

Importers and exporters needing an ACE account will find the application for the new system relatively easy. In addition, there are plans to place historical AES data within the ACE system, to allow for seamless transition between the two systems. More information on the ACE data portal may be found at the U.S. Customs website, or by searching for additional information online.

Lockheed Martin’s High Mobility Artillery Rocket System (HIMARS) recently achieved a significant milestone with U.S. military forces, reaching one million operational hours. HIMARS is a lightweight mobile launcher, transportable by C-130 and larger aircraft for rapid deployment, that fires Guided MLRS and TACMS munitions. HIMARS consists of a launcher loader module and fire-control system mounted on a standard five-ton truck chassis. A specialized armored cab provides additional protection to the three Soldiers or Marines who operate the system. HIMARS is also fielded internationally.

With a 99-percent operational readiness rate over the past 10 years, HIMARS remains one of the most reliable systems used by the U.S. Army and Marine Corps. The system is currently being employed strategically by the U.S. military in ongoing operations.

“This milestone is a testament to the legacy of performance and quality of design of the HIMARS system,” said Ken Musculus, vice president of Tactical Missiles at Lockheed Martin Missiles and Fire Control. “HIMARS offers an unmatched strategic, combat-proven capability that helps Soldiers and Marines achieve their missions.”

HIMARS was initially fielded with the 3rd Battalion, 27th Field Artillery Regiment in May of 2005. Since then, 14 additional launcher battalions have been fielded with the U.S. Army in active and National Guard units. In 2007, the U.S. Marine Corps received its first HIMARS launchers.

ATF Publishes 41F

Within the January 15, 2016 publication of the Federal Register (Vol. 81, No. 10) was the final rule publication of 41F under Alcohol, Tobacco, Firearms, and Explosives Bureau. Rules – Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity with Respect to Making or Transferring a Firearm , 2658–2723 [2016–00192].  The rule can be found online at the ATF website. The rule changes the NFA paperwork requirements for non-person legal entities, and goes into effect 180 days from the publication date.

China Arms Sales Increase in 2015

According to figures released on 22 February by the Stockholm International Peace Research Institute (SIPRI), Chinese arms exports have jumped dramatically.

Chinese weapons exports ballooned 88% in the 2011-15 period compared to 2006-10. This compared with a 14% rise in the overall volume of international arms sales in the same timeframe. This represents major growth for China, although admittedly the country is progressing from a relatively low base compared to traditional arms-exporting states like the USA, Russia, France or Germany.

From 2011-15, China still only accounted for 5.9% of global arms sales, although this was much higher than the 3.6% share it had in the preceding five-year period. Especially important, along the way China has dramatically leapfrogged France, Germany and the United Kingdom into third place on the sellers’ list.

SIPRI calculated that China sold major arms to 37 states in 2011-15, of which 75% went to the Asia and Oceania region. The region saw something of an explosion in Chinese weapon imports, with purchases 139% higher than in 2006-10. Pakistan led the way amongst the regional buyers with 35% of purchases, followed by Bangladesh (20%) and Myanmar (16%).

January 2013: Defense Distributed, a nonprofit, gun-design digital publisher headquartered in Austin, Texas started offering free online technical information about gun-related items, including a 3-D printed magazine for the AR-15 rifle.

Following publication of the AR-15 magazine code, the Defense Distributed website provides instructions for a 3-D printed pistol called the Liberator. According to Defense Distributed, within days, users downloaded the files “hundreds of thousands of times.”

May 8, 2013: the U.S. State Department Directorate of Defense Trade Controls (DDTC) sent a letter to Defense Distributed, informing the company that the online instructions may have violated regulations for exporting defense articles and services. According to DDTC, ITAR restrictions may require Defense Distributed to obtain prior authorization from the Directorate of Defense Trade Controls before releasing the technical data online.

Following receipt of the Government’s letter, Defense Distributed removed the instructions to manufacture the Liberator pistol from the internet.

June 2013: Defense Distributed submitted the first commodity jurisdiction request to DDTC, seeking review of (10) 3-D printer files. No response is received from DDTC.

September 2014: Defense Distributed sent a request for pre-publication review to the Department of Defense Office of Prepublication Review and Security (DOPSR).

October 2014: DOPSR refused to review the Defense Distributed submission because DOPSR is uncertain whether the submission is subject to ITAR. DOPSR suggests that Defense Distributed submit a commodity jurisdiction request to DDTC.

January 2015: Defense Distributed sent a second commodity jurisdiction request to DDTC.

April 2015: DDTC determines that ITAR restrictions apply to the 3-D printer software, CNC software and firearm design files, but do not apply to the physical CNC machine or 3-D printer.

April 29, 2015: Defense Distributed, in conjunction with the Second Amendment Foundation, files a lawsuit against the U.S. State Department, alleging that pre-approval publication amounts to a violation of free speech rights, a violation of one’s right to keep, bear, and manufacture arms, and a violation of due process.

May 11, 2015: Defense Distributed seeks an injunction against DDTC, seeking to restrict the enforcement of any prepublication approval requirement against unclassified information under the ITAR, including all of the Defense Distributed files submitted for DOPSR review.

June 3, 2015: DDTC publishes proposed regulations to re-define the definitions of “defense services,” “technical data,” “public domain,” and “fundamental research.” DDTC also seeks to define electronic transmission and storage of technical data in terms of the ITAR. Within the proposed definition of “public domain,” DDTC attempts to restrict the publication of any firearm-related technical data online without prior approval.

New developments:

On August 4, 2015, the 5th Circuit Court issued a ruling on Defense Distributed’s request for injunction. When reviewing an injunction, a court will examine four factors in determining whether to issue injunctive relief:
1. Irreparable harm. The court will consider whether the significance of the harm suffered by the requesting party if he injunction is not granted.
2. Balance. The court will determine the effects of not issuing the injunction. That is, will the non-requesting party be harmed if the injunction is issued?
3. Public interests. If the injunction is issued, what effect will the injunction have on the public interest?
4. Likelihood of success. How likely is the party requesting the injunction to succeed at the end of the litigation?

In making its decision, the Court determined that Defense Distributed proved a substantial threat of irreparable injury. Nevertheless, DDTC is tasked by law to regulate the export of defense articles from the country. If the injunction were issued, DDTC would also suffer harm, as it would not be able to perform its lawful duties in preventing foreign nationals from accessing the technical data provided by Defense Distributed via the internet. In the interest of the public, the court found that the harm of an illegal export outweighs the individual harms that Defense Distributed may suffer. Finally, the court found Defense Distributed likely would NOT succeed in its case against the Government. In reviewing Defense Distributed’s case, the court delved into each of the three alleged Constitutional violations.

Violation of the 2nd Amendment:

Defense Distributed alleged that the ITAR regulatory scheme violated their Second Amendment rights. The court disagreed. In very basic terms, the Court ruled that there were no restrictions placed upon the possession of the computer code created by Defense Distributed. Defense Distributed was in possession of the code, and DDTC made no effort to restrict Defense Distributed’s possession of the code. Co-Plaintiff, the Second Amendment Foundation (SAF) argued that by preventing distribution, DDTC violated the possessory rights of its members – that is, the right of SAF members to possess the computer code was restricted by DDTC via the Government’s restriction from publishing the information on the internet. The Court ruled that “SAF members are not prohibited from manufacturing their own firearms, nor are they prohibited from keeping and bearing other firearms. Most strikingly, SAF members in the United States are not prohibited from acquiring the computer files at issue directly from Defense Distributed.” As a result, the 2nd Amendment argument in support of the injunction failed.

Violation of Due Process.

The 5th Amendment to the U.S Constitution provides that no one shall be “deprived of life, liberty or property without due process of law.” In protecting due process rights, U.S. law acts to prevent the mistaken or unjustified deprivation of life, liberty, or property, and enables individuals to contest Government actions that are based upon a vague regulatory scheme. In this case, Defense Distributed argues that the terms “export,” and “defense articles” within the ITAR are vague.

The terms “export” and “defense articles” are defined within the ITAR. Defense Distributed argued that 22 CFR §120.6, the section that defines “defense articles” was too broadly written, to the point that it was unconstitutionally vague. One section to which Defense Distributed quoted included restrictions on information “which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles” which additionally “includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation.” Defense Distributed argued that it cannot determine whether its computer code is regulated under this section of the ITAR.

Similarly, Defense Distributed argued that it cannot determine whether placing its data on the internet would be classified as an export. Exports are defined to include “[d]isclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad.” 22 C.F.R. §120.17(a)(4).

There is no question that reading the ITAR regulations is difficult. The rules of Standard English seemingly do not apply, as sentences run on with multiple commas and semi-colons. Nevertheless, the court determined that placing the computer code on the internet would result in an export, pursuant to the regulatory definition. Similarly, the court found that although the definition for “defense articles” was extensive, the ITAR adequately defined and identified items with significant specificity. As a result, the 5th Amendment due process argument failed.

Violation of the 1st Amendment:

Defense Distributed’s best argument may lie with an alleged violation of the 1st Amendment right to free speech. In addressing First Amendment claims, there are three steps to the analysis:
1. Determine whether the claim involves protected speech,
2. Identify the nature of the forum, and
3. Assess whether the justifications for exclusion from the relevant forum satisfy the requisite standard.

Not all speech is protected. Individuals are not permitted to commit perjury, commit a true threat against others, commit blackmail, engage in defamation, incite actions to harm others, or make obscene materials. Instead, the 1st Amendment allows an individual (or group of individuals) to express their beliefs, thoughts, ideas and emotions about different issues free from government censorship.

The restriction against government censorship is a central issue within this case – if prior DDTC approval is required prior to publication by Defense Distributed, DDTC may have created a censorship scheme in violation of the U.S. Constitution. Prior courts have ruled that “[a]ny prior restraint on expression comes …with a ‘heavy presumption’ against its constitutional validity”; Shuttlesworth v. City of Birmingham, 394 U.S. 147, 150–51 (1969) Similarly, “a system of prior restraint avoids constitutional infirmity only if it takes place under procedural safeguards designed to obviate the dangers of a censorship system.” Collins v. Ainsworth, 382 F.3d 529, 539 (5th Cir. 2004) (quoting Southeastern Promotions, Ltd. v. Conrad,420 U.S. 546, 559 (1975). The prior approval scheme proposed by DDTC in responding to Defense Distributed and again proposed in June 2015 as an amended regulation cannot stand if it violates the 1st Amendment.

In arguing against Defense Distributed, DDTC argued that computer code is not protected speech, as the code is largely unintelligible to most people. The Court found that although Sanskrit is also largely unintelligible to most people, a book written in Sanskrit would be protected. In addition, Defense Distributed sought to distribute the file as open source, allowing others to read, amend, and change the original code. As a result, the court found that the first element of the review was met – the computer code written by Defense Distributed was protected free speech. All parties agreed that the internet was a public forum. As a result the second element of review was met.

In reviewing the third element of review, there are different standards of review. Depending upon the restriction on speech, two possible levels of review are possible. Restrictions that are based upon a content-neutral basis are afforded “intermediate scrutiny,” and will be permissible as long as the restriction is narrowly tailored to serve a significant governmental interest. A content-neutral regulation must allow ample alternative channels for communicating the affected information. Content-based restrictions are examined under strict scrutiny, meaning that the regulation must be narrowly tailored to meet a compelling government interest. Defense Distributed and DDTC disagree as to whether the regulation is content-neutral or content-based.

In determining whether the ITAR is content-neutral or content-based, the court looked to the U.S. Supreme Court, which found regulations to be content-neutral where the regulations are aimed not at suppressing a message, but at other “secondary effects.” The Court found that there is no doubt that the ITAR “clearly regulates disclosure of “technical data” relating to “defense articles,” [and that] the ITAR… unquestionably regulates speech concerning a specific topic.” Nevertheless, the Court found that the ITAR “does not regulate disclosure of technical data based upon the message it is communicating.” As a result, the ITAR was deemed to be a content-neutral regulation, and subject only to intermediate level scrutiny.

Intermediate level scrutiny requires that a “regulation of the time, place, or manner of protected speech must be narrowly tailored to serve the government’s legitimate, content-neutral interests but that it need not be the least restrictive or least intrusive means of doing so.” Ward v. Rock Against Racism, 491 U.S. 781. In this case, the parties agree that there is a substantial governmental interest in regulating the publication and distribution of military related technical data. The only issue at stake is whether the ITAR is tailored sufficiently narrowly to meet the government’s interests in preventing distribution of restricted technical data to persons outside of the United States.

The court determined that the ITAR was sufficiently narrow to meet the government’s interests, and did not infringe upon Defense Distributed’s ability to disseminate the information domestically. In making its ruling, the Court determined that Defense Distributed could use any medium of communication, to include the mail – as long as the chosen medium did not allow for international distribution.

By failing on all three claims within the motion for preliminary injunction, the Court ruled in favor of DDTC.

What’s next?

The most recent court action was only a motion for preliminary injunction. Nevertheless, the hearing was an important view into the Court’s thought process, and how the Court may rule when the full case is heard. Defense Distributed has appealed the motion, and a second hearing on the injunction will be heard at a future date. Surprisingly, a number of groups have come out in support of Defense Distributed, to include the Electronic Frontier Foundation, U.S. Congressman Thomas Massie, the CATO Institute, and the Reporter’s Committee for the
Freedom of the Press.

Restrictions on the export of defense articles have existed since the 1940s. The ITAR was enacted in 1976, and although it is updated from time to time, the regulatory language has never fully addressed the internet. Clearly, the regulation will need to be amended to remain current and applicable in the modern era; the only question will be how to amend the regulation while remaining within the bounds of the U.S. Constitution. Stay tuned, this case is not resolved yet.

As a rising superpower, China has entered the arms trade show circuit since 2002.  The sixth Asia Pacific China Police show was held on May 22-25, 2012 in Beijing China.  Situated within the China National Convention Center, the show is located within the Olympic Park Complex.  The National Stadium (also known as the Bird’s Nest) and the National Aquatics Center (also known as the Water Cube) are within the same complex, and within close walking distance.

With more than 30,000 attendees and 300 exhibitors from 14 countries, the majority of exhibits are dedicated to police equipment.  There are few exhibitors displaying small arms, but the arms on display are like nothing ever seen in the West.

Drum fed 35mm grenade launcher mounted on a tripod. Designated the QLZ10, the system fires standard Chinese 35x32mm HE and signaling grenades. Weighing in at 4 kilograms, the QLZ10 has a barrel length of 850mm, and a 6-round magazine capacity. The grenade launcher has a reported range of 250 meters.

The CBZ-95
The CBZ-95 battle rifle was on prominent display by the No. 208 Research Institute of China Ordnance Industries.  Chambered in 5.8x42mm and firing from a 30-round box magazine, there are three barrel lengths available.  A bullpup design, it was not possible to test the trigger pull or conduct a manual of arms to determine whether the rifle was ergonomic.  Nevertheless, Chinese Special Forces soldiers have utilized the rifle in international competitions, resulting in glowing reports of the rifle’s capabilities.

In addition, a sound suppressor with a claimed 30dB reduction was also on display.  Weighing .6 kilograms, 260mm in length, and 38mm in diameter, the suppressor was otherwise unremarkable.

Chinese made 40x46mm grenades.

The LM12 – An Indigenous Chinese Minigun
A Chinese Minigun?  Yes, it’s true.  The Chinese are now making a Minigun.  Chambered in 7.62mm NATO, the system is electrically powered, with a claimed cyclic rate of 2,500 – 6,000 rounds per minute.  Links for the system were not on display.  As displayed, the ammunition box was located on the left side of the receiver, with the feed chute crossing over the top to feed from the right side of the receiver.

Powered by an external electric motor, the system looked simple, yet robust.  The motor engages an externally geared hub to directly engage the barrel cluster and spin the barrels during use.  In addition, the barrels have a wrench flat built into the exposed portion of the barrel to allow easy barrel removal and replacement.

There was no opportunity to fire the system, but promotional videos of the system demonstrated high rates of fire in extended bursts of fire.

Left view of the LM12 Minigun. Note the feed chute from the left, feeding into the right side of the receiver.

Detail of the barrel cluster. Note the geared hub, connected directly to the external motor. Also note the barrel flats machined into the barrels to allow easy removal and replacement.

Right side view of the LM12 Minigun.

The CS/LS2 9mm Submachine Gun
In a departure from indigenous cartridges, the CS/LS2 SMG is chambered in 9x19mm NATO.  Similar to the QBZ-95, the CS/LS2 is also a bullpup design, with some outward appearance to the Israeli Tavor-21 system.  Utilizing a 30-round box magazine, the system appears to fire from the closed bolt, and features an integral Picatinny rail for optics.  As displayed, the CS/LS2 was fitted with a sound suppressor.  No cyclic rate information or sound suppression figures were available.

A 3-barreled .50 Caliber Gatling?
Not on display, but prominently shown in the background of the printed materials provided was a three-barreled Gatling-type machine gun chambered in .50 BMG caliber (12.7×99).  No information was available about this firearm at the show, but the weapon was shown at the AAD show in South Africa. While having the appearance of the GAU-19 three-barreled .50 BMG caliber made by General Dynamics, it is as different from the GAU-19 as the Chinese “Minigun” is from an M134. The feed is entirely different.

Top: 12 gauge drum fed shotgun with a 38mm less lethal grenade launcher. Bottom: AK74 type rifle with 38mm less lethal grenade launcher.

Less-Lethal Mania
Potentially due in part to the “police” focus, a large number of exhibitors displayed 38mm less lethal launchers and munitions.  Sophisticated in design, the launchers ranged from belt-fed 38mm systems similar to the U.S. Mk19 grenade launcher, the rotary drum Milkor-type design, as well as standalone single shot systems.  Of particular note was a belt fed automatic grenade launcher chambered in 38mm; the rounds on display were all less lethal in nature.  The belt fed 38mm automatic launcher, (nomenclature unknown) has a reported range of 50-300 meters, with a weight of 25 kilos and a claimed cyclic rate of 200 rounds per minute.

Also of note were several 64mm mortar systems.  Likely designed as a smoke and/or CS gas dispersion system, two models were on prominent display.  The first, a commando mortar type system, utilized a break action for loading and a simple trigger mechanism for firing.  The larger six-barreled model utilized electric firing controls.

Model LR2 bolt action, 50-caliber rifle. Listed only as 12.7mm, it is unclear what type of .50 caliber round this rifle utilizes. Fitted with an 8x optic, the rifle has a claimed range of 1,500 meters, and weighs 9.8kilograms.

It appears that the Chinese arms industry has made a decided push to offer weapons in NATO calibers.  While the basis for this decision remains unclear, one can presume that this is to enhance export sales to international markets, or to allow Chinese soldiers to better integrate with foreign forces in integrated peace keeping type operations.

During the Beijing 2008 Olympic Games, the fourth floor was a site for fencing preliminaries and finals, Modern Pentathlon (fencing and shooting);and the exhibition space on the first floor is the International Broadcasting Center (IBC) and the Main Press Center (MPC).  The Paralympics used the ballroom section as the site for Wheelchair Fencing and Bocce.  The CNCC is 26 km away from the Beijing International Airport, proximately taking 30 minutes by car.  A public transportation system connects CNCC to the city center and various tourism attractions.  There are more than 30 hotels for all budgets within 5 km from CNCC providing about 10,000 rooms.

“As Acting CEO, George demonstrated unprecedented leadership and drive,” said Walter McLallen, Vice Chairman of the FGI Board of Directors.  “In just his first six weeks as Acting CEO, George began rebuilding the company and making a series of strong new hires in manufacturing, quality control and operations.  Further, he led a successful campaign to combat anti-gun legislation in New York and successfully refinanced our operations and concluded a strong financial quarter.  George Kollitides is the clear choice as our permanent Chief Executive Officer.”

Kollitides had been at Cerberus Capital Management since 2003, where he served as a Managing Director, focusing on the defense, firearms and related industries.  Kollitides was the principal architect of the investments in FGI for Cerberus.  An avid outdoorsman, Kollitides is a long-time member of numerous hunting, shooting and conservation organizations.  He currently serves as a trustee of the NRA Foundation and Director of the NRA’s Hunting and Wildlife Committee, Presidents Committee on Advancement, and Nominating Committee.  He is also a Director of the New York State Rifle & Pistol Association.

ATK Receives $266 Million in Small Caliber Ammunition Orders
ATK has received orders totaling more than $266 million for small caliber ammunition under an Indefinite Delivery/Indefinite Quantity contract with the U.S. Army Contracting Command, Rock Island.  This order includes a mix of 5.56mm, 7.62mm and .50 caliber military ammunition to be produced at the Lake City Army Ammunition Plant in Independence, Mo.  ATK has operated the Lake City plant since April 2000.

“ATK is honored to be the Army’s industrial partner at the Lake City Army Ammunition Plant, collaborating in the operation and maintenance of the nation’s largest ammunition production facility,” said ATK Small Caliber Systems Vice President and General Manager Kent Holiday.  “Since 2000, we have delivered more than 11 billion rounds of ammunition in support of our nation’s warfighters while modernizing the facility, increasing capacity, improving productivity and efficiency, and doing so in a safe and responsible manner.”

The Army and ATK are nearing completion of a $276 million modernization project at the Lake City facility.  This includes the capacity to increase production of the new 5.56mm Enhanced Performance Round.  ATK has delivered approximately 250 million of these rounds since transitioning to production in 2010.

ATF Letter to U.S. Firearms Dealers Addresses a Compliance Violation
An Open Letter from ATF addresses a situation that occurred in Miami where a Federal Firearms Licensee facilitated the licensed export of a firearm to a foreign buyer by checking in the firearm as luggage of the foreign buyer.  The ATF letter points out that this would be a transfer under the Gun Control Act (GCA), thus requiring a Form 4473 and NICS check.  U.S. based firearm licensees are reminded that firearms may not be checked in a foreign buyer’s luggage as a lawful means of export.  A copy of the ATF letter may be found at the ATF website, www.atf.gov.

International Gun Trafficking Ring Dismantled by Arrests of North Carolina Resident and Chinese Nationals
According to the FBI, the Defendants supplied semiautomatic weapons to be exported to China.  A criminal complaint was unsealed in federal court in Brooklyn charging Joseph Debose, a resident of North Carolina and Staff Sergeant in a U.S. Special Forces National Guard Unit, with illegal gun dealing and aiding others, including Chinese nationals Zhifu Lin and Lilan Li, in the illegal export of firearms to China.

According to the charging documents and facts presented by the government at Lin’s arraignment, between December 2010 and April 2012, Debose provided multiple shipments of firearms to associates who then secreted the weapons in packages and transported them to shipping companies to be sent to customers in China.  The smuggling scheme came to light after authorities in China seized a package containing firearms with defaced serial numbers that had been shipped from Queens, New York.  Thereafter, U.S. law enforcement agents traveled to China and examined the firearms, which were determined to be listed on the United States Munitions List and barred from export without a license issued by the U.S. State Department.

Utilizing forensic techniques, agents learned that one of the seized weapons had originally been purchased in North Carolina.  Among the weapons seized in China were those Debose provided to his associates for export.  An indictment was unsealed in Brooklyn federal court charging Lin and Li with illegally exporting firearms, including the seized firearms mentioned above, from Queens, New York to China without obtaining the required license from the State Department in violation of U.S. Arms Export Control Act.  Lin was also charged with operating an illegal gun-dealing business and transporting firearms with obliterated serial numbers.”  The defendants in North Carolina and New York allegedly ran a pipeline of illegal firearms from the United States to China.  We will utilize all available resources to stop the export of such weapons,” stated United States Attorney Lynch.

“The arrest of Debose marks the latest in a series of charges brought by this office against international gun traffickers.”  Ms. Lynch expressed her grateful appreciation to the task force of federal agencies that worked together to investigate the case and added that the government’s investigation is continuing.  “The defendants allegedly altered the serial numbers on various weapons to disguise their origin in order to export them to China – an indication these guns were going to fall into the wrong hands,” said HSI Special Agent-in-Charge Hayes.  “HSI maintains a zero-tolerance policy when it comes to the illegal export of weapons on the United States Munitions List.”

Smith & Wesson Converts Three Agencies to M&P Pistol
Smith & Wesson, a U.S.-based leader in firearm design and manufacturing, announced that it has recently filled orders from three law enforcement agencies for duty firearms from its Military & Police (M&P) Pistol Series.  In Florida, the Miami Beach Police Department (PD) has converted to the M&P40 pistol, while the Olympia, WA, Police Department and the Passaic County Sheriff’s Office in New Jersey have both selected the M&P45 pistol.  Each of the agencies has initiated the transition process and officers are currently using the M&P pistol in the field.

Miami Beach PD has received 460 pistols that will replace currently issued, non Smith & Wesson firearms.  During the agency’s review process for a new pistol, the M&P40 was subjected to a high volume of test firing in order to assess its reliability over an extended period of use.  The M&P40 performed to a high degree under close examination and was selected by the department for its ergonomic design and customizable features.  The Passaic County Sheriff’s Office has received 660 M&P45 pistols that replaced non Smith & Wesson firearms supplied by a European manufacturer.  Selected for its professional-grade features, low perceived recoil and reliability during firing; the M&P45 will be used as the primary side arm by the sheriff’s department.  In Olympia, WA, the Police Department has received 77 M&P45 pistols for duty use.  The department upgraded to the new sidearm after conducting a thorough evaluation of the new pistol.  Officials within the Olympia Police Department complimented the performance of the M&P45 during live fire assessment drills and also noted the ability of the M&P pistol to adapt to a wide variety of officer preferences.

Glock, Inc. Appoints Radecki as National Sales Manager
Glock, Inc. has named Bob Radecki as the new National Sales Manager for the United States.  Radecki will perform all leadership responsibilities in the Glock sales department.  Radecki has served in the pistol manufacturer’s sales department since 2004.  He began his Glock career in the Commercial Sales division before serving as the regional manager for the Central and Western regions.  “Bob Radecki has been a tremendous sales manager for Glock throughout the years,” said Glock Vice President Gary Fletcher.  “We are all extremely proud to have him on our team and look forward to his continued success as he transitions into his new role.”

Leupold Tactical Optics Lowers Price on Mark 8 1.1-8x24mm CQBSS
Leupold Tactical Optics is lowering the cost of the cutting-edge Mark 8 1.1-8x24mm CQBSS M5B1 Front Focal.  “We’ve worked with the production and assembly teams to increase efficiencies allowing us to reduce the cost of the CQBSS,” said Kevin Trepa, Leupold’s vice president of global sales.  “While this optic was designed for the American warfighter in theater, it’s an outstanding choice for competition and home defense rifles as well.”

With models now starting at $2,999 MSRP, Leupold’s versatile Mark 8 CQBSS riflescope offers the speed of a holographic red dot sight and the capability of an 8-power precision riflescope in one rugged, field-proven unit.  The 34mm maintube features a fully checkered ocular bell for making quick magnification adjustments even while wearing gloves.

ATF to Host Regulatory Conferences on Firearm Imports and Explosives
ATF will be hosting an explosives regulatory conference at ATF National Headquarters in Washington, DC in late 2012.  The conference will address a diversity of topics, such as current issues, explosives imports, licensing, pyrotechnics, field inspections, and U. S. Bomb Data Center activities.  It will also include speakers from other Federal agencies with authority over various aspects of the explosives industry.  Watch for additional information and registration opportunities in the coming months at www.atf.gov/explosives/industry/.

To help Federal Firearms License holders stay on top of and in compliance with myriad federal laws and regulations, an ATF regulatory Conference will take place July 31 to Aug. 1 at the Hyatt Regency Reston Town Center in Reston, Va.  Last year’s event was sold out, so please plan ahead in getting registered. Hosted by the National Shooting Sports Foundation, interested parties may learn more and register at www.Nssf.org/ImportExport.

Export Control Reform Transition Plan
As part of the President’s export control reform initiative, the Directorate of Defense Trade Controls (DDTC) seeks public comment on the proposed implementation plan for defense articles and defense services that will transition from the jurisdiction of the Department of State to the Department of Commerce.  The intent of this plan is to provide a clear description of DDTC’s proposed policies and procedures for the transition of items to the jurisdiction of the Department of Commerce.  The revisions to this rule are part of the Department of State’s retrospective plan under E.O. 13563 completed on August 17, 2011.  The Department of State will accept comments on this proposed policy statement until August 6, 2012.  Interested parties may submit comments within 45 days of the date of publication by Email to: DDTCResponseTeam@state.gov with the subject line, ‘‘ECR Transition Guidance.’’

Elbit Systems to Upgrade Korean Air Forces’ C-130 Transport Aircraft Under Contract Valued at $62 Million
Elbit Systems Ltd. announced that it was awarded a contract valued at $62 million to upgrade the Korean Air Force C-130 transport aircraft.  Under the contract, the C-130 aircraft will be installed with various types of advanced electronic systems.  In addition, Elbit Systems will convert the existing analog cockpit to a “Glass-Cockpit” using Elbit Systems’ cutting-edge digital flight displays.  The project, to be performed over four years, will be executed in cooperation with Korea Aerospace Industries, Ltd. (KAI), who is the leading local aircraft manufacturer in Korea.

Yoram Shmuely, Co-General Manager of Elbit Systems’ Aerospace Division commented: “We are very proud of this award.  It marks an additional milestone in the projects Elbit Systems has performed for the Korean Air Force in collaboration with Korea Aerospace Industries.  This new contract is expected to further enhance capabilities of the Korean Air Force.”  Shmuely added: “The global demand for transport aircraft upgrades and the experience we have accumulated in performing various similar projects such as the previous program for the Korean C-130, as well as programs for the Romanian C-130 and the Brazilian C-95, position us as favorably for similar projects to follow.”

United Technologies Subsidiary Pleads Guilty to Criminal Charges for Helping China Develop New Attack Helicopter
Pratt & Whitney Canada Corp., a Canadian subsidiary of the Connecticut-based defense contractor United Technologies Corporation, pleaded guilty to violating the Arms Export Control Act and making false statements in connection with its illegal export to China of U.S.-origin military software used in the development of China’s first modern military attack helicopter, the Z-10.

In addition, UTC, its U.S.-based subsidiary Hamilton Sundstrand Corporation, and PWC have all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department in connection with the China arms export violations and for making false and belated disclosures to the U.S. government about these illegal exports.  Roughly $20.7 million of this sum is to be paid to the Justice Department.  The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10.  Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures.  As part of the settlement, the companies admitted conduct set forth in a stipulated and publicly filed statement of facts.

Since 1989, the United States has imposed a prohibition upon the export to China of all U.S. defense articles and associated technical data as a result of the conduct in June 1989 at Tiananmen Square by the military of the People’s Republic of China.  In February 1990, the U.S. Congress imposed a prohibition upon licenses or approvals for the export of defense articles to the People’s Republic of China.  In codifying the embargo, Congress specifically named helicopters for inclusion in the ban.

Dating back to the 1980s, China sought to develop a military attack helicopter.  Beginning in the 1990s, after Congress had imposed the prohibition on exports to China, China sought to develop its attack helicopter under the guise of a civilian medium helicopter program in order to secure Western assistance.  The Z-10, developed with assistance from Western suppliers, is China’s first modern military attack helicopter.

During the development phases of China’s Z-10 program, each Z-10 helicopter was powered by engines supplied by PWC.  PWC delivered 10 of these development engines to China in 2001 and 2002.  Despite the military nature of the Z-10 helicopter, PWC determined on its own that these development engines for the Z-10 did not constitute “defense articles” requiring a U.S. export license because they were identical to those engines PWC was already supplying China for a commercial helicopter.

Because the Electronic Engine Control software, made by HSC in the United States to test and operate the PWC engines, was modified for a military helicopter application, it was a defense article and required a U.S. export license.  Still, PWC knowingly and willfully caused this software to be exported to China for the Z-10 without any U.S. export license.  In 2002 and 2003, PWC caused six versions of the military software to be illegally exported from HSC in the United States to PWC in Canada and then to China, where it was used in the PWC engines for the Z-10.

According to court documents, PWC knew from the start of the Z-10 project in 2000 that the Chinese were developing an attack helicopter and that supplying it with U.S.-origin components would be illegal.  When the Chinese claimed that a civil version of the helicopter would be developed in parallel, PWC marketing personnel expressed skepticism internally about the “sudden appearance” of the civil program, the timing of which they questioned as “real or imagined.”  PWC nevertheless saw an opening for PWC “to insist on exclusivity in [the] civil version of this helicopter” and stated that the Chinese would “no longer make reference to the military program.”  PWC failed to notify UTC or HSC about the attack helicopter until years later and purposely turned a blind eye to the helicopter’s military application.

HSC in the United States had believed it was providing its software to PWC for a civilian helicopter in China, based on claims from PWC.  By early 2004, HSC learned there might be an export problem and stopped working on the Z-10 project.  UTC also began to ask PWC about the exports to China for the Z-10.  Regardless, PWC on its own modified the software and continued to export it to China through June 2005.

According to court documents, PWC’s illegal conduct was driven by profit.  PWC anticipated that its work on the Z-10 military attack helicopter in China would open the door to a far more lucrative civilian helicopter market in China, which according to PWC estimates, was potentially worth as much as $2 billion to PWC.

Today, the Z-10 helicopter is in production and initial batches were delivered to the People’s Liberation Army of China in 2009 and 2010.  The primary mission of the Z-10 is anti-armor and battlefield interdiction.  Weapons of the Z-10 have included 30-mm cannons, anti-tank guided missiles, air-to-air missiles and unguided rockets.

The National Shooting Sports Foundation (NSSF), the trade association for the firearms, ammunition, hunting and shooting sports industry, applauds the EPA’s latest decision and called upon Congress to immediately pass the Hunting, Fishing and Recreational Shooting Sports Protection Act (S.838/H.R.1558).  In the House of Representatives, the bill is also included in the Sportsmen’s Heritage Act of 2012 (H.R. 4089), an important piece of legislation that combines three other legislative priorities for sportsmen.  The bill (S.838/H.R.1558) amends the Toxic Substances Control Act (TSCA) to clarify that the Congress has excluded traditional ammunition from regulation by the EPA.  The legislation is supported by more than 35 national conservation and sportsmen’s groups.  The bill is even supported by the Fraternal Order of Police because a ban on traditional ammunition would apply to law enforcement and the U.S. military.

NSSF opposed the petition, which was filed by the Center for Biological Diversity (CBD) and other like-minded groups.  This was the second attempt by the CBD to ban traditional ammunition since it first petitioned the EPA in August of 2010.  In rejecting the CBD’s latest petition the EPA agreed with NSSF, telling the CBD that it did not have jurisdiction under TSCA to regulate ammunition.  The CBD’s petition purported to narrow the scope of the ban sought, but the EPA concluded that this change was a “distinction without a substantive difference.”  The EPA went on to say the new petition “contains no new information.”

Canadian Long-Gun Registry Finally Destined for Scrap Heap of History
Good riddance to the long-gun registry – possibly the most unfair and useless legislation ever to have been passed by Parliament of Canada.

In the wake of many hours of debate and anti-gun rhetoric from the opposition and lobbyists, the Conservative party has successfully laid the registry to rest with Royal Assent on Bill C-19.  Few issues have prompted so many Canadians to sound off on the shortcomings of a Canadian law.

“The Firearms Act has been a thorn in the side of hunters, sport shooters, farmers and heritage firearms enthusiasts for 17 years,” says Tony Bernardo of the Canadian Shooting Sport Association.  “We know the registry was a cheap political ploy from a previous government that pretended to keep Canadians safe.  It wasn’t gun control, and it wasn’t designed to do anything but frustrate honest, law-abiding firearms owners.”

The Senate of Canada passed 3rd reading of Bill C-19 to scrap the registry on April 4th.  Meanwhile, the Government of Quebec has vowed an injunction to try to prevent the data from being destroyed so it can be turned over to the province.

“Quebec wouldn’t know what to do with this data if they got it,” says Bernardo.  “The data is legendary for its inaccuracy and it’s way beyond its stale date.  Quebec couldn’t build a workable registry from the dregs of this white elephant because it was never workable in the first place.  It’s hard to believe that Quebec voters want their tax dollars fed into a paper shredder like this.”

The demise of the registry is the result of a coordinated effort by firearms enthusiasts, wildlife federations and associations from across the country.  The Conservative party campaigned on scrapping the registry and its recent majority provides evidence of the widespread appetite for getting rid of this offensive legislation.

SIG Sauer is Expanding
SIG Sauer announced plans to expand the company’s domestic production capabilities through the acquisition of a new facility at the Pease International Tradeport in Newington, New Hampshire, U.S.A.

As part of the firearms manufacturer’s strategic global expansion plan, the new campus will be home to the company’s corporate and manufacturing areas.  The state-of-the-art property will provide SIG Sauer with three times the usable work space of its current Exeter, N.H., headquarters.

“This campus will bring the majority of SIG Sauer’s employees and manufacturing under the same roof,” said Ron Cohen, SIG Sauer President and Chief Executive Officer.  “This will allow us to maximize our production capabilities as well as improve efficiency in manufacturing.”

Originally acquired in 1990, the Exeter facility has undergone a series of updates and enhancements to improve manufacturing processes.  “Our current headquarters has reached its maximum manufacturing capability.  Demand for SIG Sauer products has grown to the point where expansion is a must,” Cohen said.

The transition to the Newington site is expected to take 12 to 18 months and be completed by mid-2013.  The new site offers double the company’s current square footage and includes a 700-stall parking lot.

Freedom Group Announces New CEO
George Kollitides has been appointed acting chief executive officer and executive chairman of the board for Freedom Group, Inc. (FGI).  Kollitides, an avid hunter, shooter and firearms enthusiast, sits on three NRA committees, is a trustee of NRA Foundation and is a director of the New York State Rifle & Pistol Association.  He is a past director of the Safari Club International, Connecticut Chapter.  Kollitides was previously a managing director of Cerberus Capital Management, where he was the architect of FGI and its lead director.  Kollitides stated, “I am ecstatic to join the FGI team, where we have the greatest employees and a 200-year history of 100 percent American made.”

Former Glock CEO Convicted of Racketeering
Following a week of testimony, it took a Cobb County, Georgia jury slightly less than six hours to find former Glock CEO Paul Jannuzzo guilty of racketeering.  The racketeering charge was reached as the jury found Jannuzzo, 55, guilty of two other charges: stealing a pistol and conspiring with former Glock executive Peter Manown to skim millions from the Smyrna, Georgia-based Glock.

When Jannuzzo is sentenced, he could face 30 years in prison for the conviction.  His attorney, Robert Citronberg, says he will appeal the conviction.  Peter Manown pleaded guilty to three counts of theft in 2008 and was sentenced to 10 years probation and no jail time.  In return, he provided prosecutors with a statement outlining the embezzlement he and Jannuzzo had allegedly engaged in.

Jannuzzo was originally indicted in 2007, but was reindicted in 2008 so prosecutors could add the charge of obstructing law enforcement when he allegedly lied to Smyrna Police during questioning.  Had he not been reindicted, the statute of limitations would have expired on the gun theft charge.  Without that charge, Jannuzzo would not have been in jeopardy under the racketeering charge.  Glock founder Gaston Glock did not testify in the proceeding.

New Department of State / Directorate of Defense Trade Controls License Codes – United Kingdom ITAR Exemptions (SGB) and Australia ITAR Exemptions (SAU)
Effective March 30, 2012, two new License Codes for United Kingdom ITAR Exemptions (SGB) and Australia ITAR Exemptions (SAU) will be added to the Automated Export System (AES).

The International Traffic in Arms Regulation (ITAR) is being amended pursuant to the Security Cooperation Act of 2010 (Public Law 111-266).  Title I of the Security Cooperation Act, the Defense Trade Cooperation Treaties Implementation Act of 2010, implements the Defense Trade Cooperation Treaty between the United States and the United Kingdom, done at Washington, D.C. and London on June 21 and 26, 2007, respectively.  These revisions will include amending the ITAR to include “§126.17 Exemption pursuant to the Defense Trade Cooperation Treaty between the United States and the United Kingdom.”  The ITAR will be amended to add the provisions for the Defense Trade Cooperation Treaty between the United States and Australia when the Treaty enters into force.  It is anticipated that this treaty will enter into force later this year.

General Casey Elected to Colt Defense Board
Gen. George W. Casey, Jr., U.S. Army (ret) has been elected to the governing board of Colt Defense.  Gen. Casey served as chief of staff of the U.S. Army for four years, from April 2007 to April 2011.  Previously, he was commander, Multinational Force-Iraq, from July 2004 to February 2007.  Said Gerald Dinkel, Colt Defense president and CEO, “His experience and success as a military leader in the most challenging and complex environments makes him an ideal person to contribute to our strategic planning, business execution and overall corporate governance.”

SHOT Show Arrests Lead to Dismissal of All Charges
Those in the industry will remember the January 2010 arrests at the SHOT Show in Las Vegas.  In late 2009 and early 2010, a District of Columbia grand jury indicted 22 defendants, for allegedly violating the Foreign Corrupt Practices Act (FCPA).  The indictments all related to a purported deal to sell $15 million in military and law enforcement products to the Ministry of Defense for Gabon.

The FCPA, 15 U.S.C. §§ 78dd-1, et seq., makes it illegal for U.S. companies and citizens, foreign companies listed on a U.S. stock exchange, or any person acting while in the United States to make payments to foreign government officials to assist in obtaining or retaining business.  The FCPA specifically prohibits a person or company from making a bribe to a foreign official to influence that official to violate his or her lawful duties, or to secure an improper advantage in obtaining or retaining business.

Originally, the grand jury issued 16 indictments against the 22 defendants, but a grand jury later consolidated all 22 defendants into one case, the largest ever for an FCPA case.

Before going to trial, three defendants pled guilty.  In 2011, the first group went to trial, but the Court declared a mistrial after jurors could not reach a verdict.  The second group went to trial in September 2011.  One defendant was acquitted based on insufficient evidence before the jury even received the case.  In early February 2012, the jury acquitted two other defendants and the Court declared a mistrial when the jury could not reach a verdict on the remaining defendants.  After the string of legal losses, the U.S. Government moved to dismiss the indictment and entire case with prejudice, which the D.C. federal court granted.  End result:  Dismissal of all charges against the 19 defendants that chose to go to trial.

Prior Notification and Approval
Under the old regulation, a broker was required to pass through a three step process – provide prior notification of the brokering activity, get approval for the brokering activity, and then submit an annual report of brokering activity performed.

The regulatory requirement to provide advance notice of brokering activity to the U.S. State Department was eliminated via a 2011 amendment.  The proposed amendment goes one step further in confirming that prior notification is no longer required, and states that detailed guidance on how to obtain authorization of brokering activities will be provided.  In the past, written correspondence was submitted to the U.S. State Department, and a written response (either approving or denying the transaction) was sent back.

Scope of the Brokering Regulations
Under the current regulation, a person performs brokering when “taking of any other action that facilitates the manufacture, export, or import of a defense article or defense service, irrespective of its origin.”  Under a very strict reading, a foreign broker negotiating non-U.S. made goods to a non-U.S. buyer would be considered a broker, and be required to register with the U.S. State Department.  As written, the current regulation is nearly unenforceable, and likely exceeds the jurisdiction of the U.S. State Department.

The new regulation clarifies that under § 129.2(e)(3) “brokering does not include activities that do not extend beyond administrative services such as providing or arranging office space and equipment, hospitality, advertising, or clerical, visa, or translation services, or does not include activities beyond the provision of legal advice by an attorney to his client.”  The proposed change is a step in the right direction, but still demonstrates the seeming desire of the U.S. State Department to control the movement of arms worldwide.

Manufacturers and Exporters Need Not Register as Brokers
Currently, manufacturers of defense articles must register with the U.S. State Department.  The registration fee is $2,250, even if no export activity is performed by the manufacturer.  If the registrant conducts export transactions, the annual registration fee increases with the number of exports that are performed within a twelve month period.  If a registered manufacturer also performs brokering activities, the current regulation requires the manufacturer to also register as a broker.  The annual registration fee for brokering is fixed at $2,250, regardless of the number of transactions that are performed.  It is not usual for a party to be forced to pay both fees – resulting in a minimum fee of $4,450 per year to manufacture and broker defense articles.

Under the proposed regulation, manufacturers and exporters would no longer be required to also register as brokers, as long as the manufacturing/exporting registration was current.  The proposed regulation proposes that:

“U.S. persons who are registered as a manufacturer or exporter in accordance with part 122, including their U.S. or foreign subsidiaries, joint ventures, and other affiliates listed and covered on their Statement of Registration, and who are required to register under part 129, are not required to submit a separate broker registration or pay a separate broker registration fee as long as they have listed and identified themselves as brokers within their manufacturer or exporter Statement of Registration.  All other requirements of part 129 would apply to such brokers and their brokering activities.”

If adopted as proposed, this would lift a large burden off those parties that both manufacture and broker defense articles and services.

The Indifferent
Under the proposed amendment, it would be easier for foreign parties to register.  The paperwork is reportedly being amended and consolidated to make it easier for foreigners to understand and complete.  In addition, the requirement for all parties to make registration fee payment via electronic funds transfer means that foreign parties no longer need to submit U.S. funds drawn on a U.S. bank as previously required.

In addition, the procedure for prior approval of brokering activities is being touted as “new and improved,” but remains unchanged in practice.  The request for prior approval shall describe fully the brokering activities that will be undertaken, including:

(1) The action to be taken by the applicant to facilitate the manufacture, export, import, or transfer of a defense article or defense service;

(2) The name, nationality and country where located of all persons who may participate in the brokering activities;

(3) A description of each defense article or defense service that may be involved, including:
(i) The U.S. Munitions List category and sub-category;
(ii) Name or military nomenclature of the defense article;
(iii) Whether the article or service is significant military equipment;
(iv) Estimated quantity of defense articles;
(v) Estimated U.S. dollar value of defense articles and defense services;
(vi) Security classification; and (vii) End-user and end-use;

(4) A statement whether the brokering activities are related to a sale through commercial channels or under the U.S. Foreign Military Sales Program or other activity in support of the U.S. Government; and

(5) The type of consideration received or expected to be received, directly or indirectly :
(i) by the applicant;
(ii) by other persons who may participate in such brokering activities from or at the direction of the applicant, and the identity of such other persons; and
(iii) the U.S. dollar value amount and source thereof.

Most of this information is already required in a broker approval request; the guidance isn’t significant to get very excited about.

The Bad: Employees are Brokers?
Under the proposed amendment, employees may be considered as brokers, resulting in all part-time, and potentially some full time employees being required to register.  In addition, prior approval may be required before being able to work on export projects.

Under the current regulation, employees are not considered brokers, as the rules make it very clear that one must be “acting as an agent for others” in order to rise to the level of being a broker.  The employee is not acting as an agent; the employer is likely the agent acting for the foreign party.  Under the proposed regulation, one no longer need to “act as an agent for others.”  Instead, brokering is defined as “any person that engages in brokering activities.”  Brokering activities are defined as “any action to facilitate the manufacture, export, re-export, import, transfer, or retransfer of a defense article or defense service.”

The proposed regulation provides some exemptions from brokering activities.  U.S. Government employees are exempt from brokering registration.  In addition, work of a clerical and administrative nature would also be exempted.  Under the proposed regulations, full time employees working for a manufacturer may be exempt, if the employer elected to also register as a broker within the registration form.  Sadly, there is no exemption for part-time employees, sales agents, or other parties that are frequently party to a transaction.

Will employees be forced to register?  In all likelihood, no. Instead, the proposed language demonstrates sloppy drafting, questionable policy making, or a failure to understand how the industry operates.  Given the overreaching jurisdictional issues in the current (and proposed) regulation, it may be impossible to answer what the U.S. State Department had in mind when writing this aspect of the proposed regulation.

As the proposed regulations have not been implemented yet, there is no way to predict how the final regulation will be adopted and implemented.  Readers are warned to continue to follow existing law and regulation until official notice is published on the final rule.  Sadly, the comment period for the proposed regulations closed on February 17, 2012, and no additional comments can be made in favor or against the proposal.  Stand by – the final amendment may not be released until Autumn 2012, but you can be assured that Small Arms Defense Journal will report on the final version of the regulation.

Mr. Wong is a Washington licensed attorney.  He regularly provides legal counsel to the firearm and defense industry via his law firm, The Firearms Law Group.  Mr. Wong also maintains Hurricane Butterfly, an import/export company that assists U.S. firearm manufacturers and foreign buyers that do not wish to wade into the regulatory morass of U.S. import/export regulation.  He may be contacted via email at jmwong@FirearmsLawGroup.com.

The guidance provided within this article was correct and current at the time it was written.  Policies and regulations change frequently.  The preceding article is not intended as legal advice, and should not be taken as legal advice.  If the reader has specific legal questions, seek competent legal counsel.