Meet Your Complex ITAR Requirements Using Agreement and License Types

  • by Rajen Iyer, Cofounder and CTO, Krypt, Inc.
  • June 15, 2008
See how to set SAP GRC Global Trade Services to use the appropriate agreement and license type for your imports and exports.
Key Concept

The US International Traffic in Arms Regulations stipulates that US importers and exporters must follow certain standards to operate for defense-related material and technologies. Included in this is the requirement to obtain different licenses based on the US Munitions List. The three main categories of licenses include hardware license, technical assistance agreement, and manufacture license agreement. Some cases call for multiple licenses across different processes.

Imagine that a defense equipment manufacturing company wants to bid on a design for equipment or a control system to be used in a missile or fighter jet. Before it can even engage on the bid and share specific product information, the US State Department requires the exporter to apply for a technical assistance agreement (TAA) to facilitate the sharing of information. The TAA operates very much as a license and you can designate it for a specific product, such as the US Munitions List (USML), customer, or country.

When an exporter wants to ship physical goods out of the country, the company needs to apply for an export license, such as a DSP-5 (for permanent export). The application for this license must refer to the existing and valid TAA associated with the project involved with this sale or shipment. The application of the DSP-5 must take into account the attribute on the TAA such as dates, values, and quantities. For a public exhibition, trade show, air show, or related event, even if the physical goods were previously licensed for public exhibition needs, you have to apply for a DSP-73 (for temporary export).

For situations such as these, you can make use of the agreements and license type functionality features within SAP GRC Global Trade Services Compliance Legal Control. I’ll show you some configuration steps to meet the US International Traffic in Arms Regulations (ITAR) requirement with license types referencing agreements and how the system manages them. I’ll continue with the example of the defense manufacturing company and show you how to create an agreement and assign a license to it so that the system uses the appropriate data in the sales order and display log. Though my example uses the defense industry, this article applies to any industry that deals with ITAR regulations or items specially designed for military use on the USML. I’ll start with some configuration steps and then move on to the master data setup.

Rajen Iyer

Rajen Iyer is the cofounder and CTO at Krypt, Inc. Rajen has written several in-depth, best practice articles, white papers, patents, and best-selling books on SAP Logistics and SAP Global Trade Services, including Effective SAP SD and Implementing SAP BusinessObjects Global Trade Services. He is also an invited speaker at industry conferences.

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