The Department of State relaxed export controls on sound suppressors (aka silencers) in July 2020. The Directorate of Defense Trade Controls (DDTC) now authorizes exports of sound suppressors to non-governmental end users, ending a policy that had been in place since 2002.
DDTC’s requirements for DSP-5 licenses for exports of suppressors to civilians are stringent, however.
Here are 5 things you need to know if you want to export suppressors to civilian end users:
- Exports of sound suppressors continue to be governed by the ITAR
- Foreign dealers cannot import suppressors for stock; a separate DSP-5 license is required for each end user
- A purchase order, import permit, DSP-83, and end user statement are required with every license application
- Consider using a DSP-73 to supply dealers with samples
- Limit the number of suppressors you export to any one end user
Sound suppressors did not move to the Commerce Department in March 2020 along with other non-military firearms, parts and accessories. Suppressors remain on the United States Munitions List (USML) and continue to be classified for export purposes as Category I (e) defense articles. As such, suppressors remain subject to the International Traffic in Arms Regulations (ITAR).
This means that it is expensive to export suppressors. Exporters of suppressors are required to register with DDTC — $2,250 per year. (Manufacturers of suppressors are required to register even if they don’t export.) Exporters also must pay a fee of $250 per license if they obtain more than 10 ITAR licenses in a one-year period.
In addition, the more complex ITAR licensing requirements apply to licenses to export suppressors. DSP-5’s are required for permanent exports and DSP-73’s for temporary exports. Unlike Commerce Department licenses, ITAR licenses require that supporting documents be attached (more on this below).
Dealers Cannot Buy Suppressors for Stock; A Separate DSP-5 is Required for Each End User
In a major blow to the commercial potential for sound suppressors overseas, DDTC will not approve DSP-5 licenses for shipments to dealers or distributors who want to stock suppressors for resale.
Dealers in other countries are permitted to aggregate orders from their customers, but they must collect a lot of paperwork for each resale. Every ultimate end user needs to fuss with the supporting documents that are required for DSP-5 licenses.
Here’s how it works if a dealer places an order for one or more end users.
- The purchase order from the dealer to the U.S. exporter must not only identify the suppressors being purchased but also the customers to whom each suppressor will be resold. So, all the suppressors ordered by the dealer must be pre-sold.
- The dealer collects the supporting documents (see below) for each ultimate end user and sends them to the exporter.
- The exporter applies for a separate DSP-5 for each ultimate end user.
- When all the licenses have been approved, the exporter can ship.
- From a DSP-5 standpoint, the dealer is a foreign consignee identified in Block 16, not an end user in Block 14. The dealer’s customer is the Block 14 end user.
Obviously, with these rules, selling to distributors outside the U.S. for resale to dealers is out of the question.
A Purchase Order, Import Permit, DSP-83 and End User Statement Are Required with Every License Application
Required supporting documents for each DSP-5 license include the following:
- A purchase order on the letterhead of the purchaser. If a dealer is making the purchase, the purchase order should be issued on the dealer’s letterhead or the dealer’s normal PO form if it includes the dealer’s name and address. In addition to listing the items being purchased, the purchase order must identify by names the ultimate end user of each suppressor.
- An import permit issued by the appropriate authority in the destination country. If a dealer is purchasing for multiple end users, there should be a separate import permit for each end user because there will be a separate license for each end user.
- A properly completed Form DSP-83 is required. If a dealer is aggregating orders, there should be a separate DSP-83 for each end user. The dealer should sign Block 6. The end user signs Block 7. The exporter signs Block 9 last. Exporters should remember that they are not permitted to change the DSP-83 after it has been signed by any other signatory.
- Each end user (not the dealer) should sign an end user statement stating the intended use of the suppressor.
Licenses to Provide Dealers with Samples and Display Items
DDTC will approve DSP-5s to supply foreign dealers with display and demonstration suppressors but these items cannot be resold. They can be used only for display and demonstration purposes.
- The purchase order will list the dealer itself as the end user. The PO should state the intended use of the suppressors as display and demonstration items and should describe with specificity how they will be safely stored when not in use.
- The import permit should be for the dealer’s own use.
- The dealer should sign the DSP-83 in Block 7. Leave Block 6 blank.
Although DDTC will approve a DSP-5 for display and demonstration suppressors, consider using a DSP-73 temporary export license instead. The problem with using a DSP-5 is how to deal with the disposition of the suppressors when they are no longer usable for display and demonstration purposes. The DSP-5 does not allow the dealer to transfer them and if a DSP-5 was used to send them out in the first place, it will be hard to ship them back to the U.S. or to authorize a transfer in the foreign country. The exporter remains responsible for the ultimate disposition under ITAR Section 127.1(c) even when a DSP-5 has been used to permanently export the suppressor. So, if the dealer sells the suppressors at the end of their useful life without DDTC authorization, that’s the exporter’s problem.
You may make it easier to close the loop properly if you use a DSP-73 temporary export license, instead of a DSP-5. In most cases, a term of two or three years will cover the useful display and demo life of a suppressor, but you can select a term as long as four years. Before the license expires, the dealer should ship the items back to the U.S., where they can re-enter under the authority of the DSP-73. You can obtain a new DSP-73 to ship current-model replacements to the dealer.
Supporting documentation for a DSP-73 is a little different from the documents required for a DSP-5. Here is a quick summary:
- In lieu of a purchase order, prepare a letter for the dealer to put onto its letterhead, sign and send back. The letter should request the suppressors (identify them specifically in separate line items, as would be the case with a PO, with description, number of units, unit price and extended price). In the letter, the dealer should state that the items will be used only for display and demonstration, won’t leave the dealer’s possession and will be stored safely and securely when not in use. Describe how and where they will be stored. For your own benefit, the details of when and at whose expense the suppressors will be returned to the exporter should be stated.
- An import permit is required, just as would be the case with a DSP-5.
- A DSP-83 should be obtained, completed the same way as it would for a DSP-5 for an export to the dealer as ultimate end user.
- The letter that takes the place of a purchase order will substitute for an end user statement.
Limit the number of suppressors you export to any one end user
The process described above is so complex and expensive as to tempt foreign purchasers to buy suppressors not only for themselves but also to resell or gift some to others. As noted above, even legitimate dealers legally authorized to sell suppressors are not permitted to buy U.S. suppressors for resale. Individual end users who claim to be buying for their own end use certainly are not allowed to resell.
But the temptation will exist. How can you manage this risk?
When foreign dealers aggregate orders for their customers there is a certain amount of built-in control. Dealers should be reluctant to help their customers do what the dealers themselves can’t do. On the other hand, you’re here and they are over there, so it is hard to be certain that the foreign parties are behaving as they are supposed to.
This points to the importance of thorough due diligence of every commercial party to whom you export a sound suppressor — both dealers and ultimate end users. If all you do is run a restricted party screen through the BIS Consolidated Search Engine or through a commercial restricted party screening product, ask yourself whether a clean search gives you all the comfort you need.
Suppose an end user wants to buy 10 suppressors. That seems like a very nice order indeed from a single individual. But if the ten consist of four units of one model and six of another, is that the type of purchase people would make for their own use? Asking questions of the purchaser will give you answers, sometimes good ones, but that takes time.
It may be a good idea to impose a strict per-order and annual limit on the number of suppressors any one end user can buy. Good due diligence combined with self-imposed limits can help manage the risk that end users you don’t know and can’t see will buy your suppressors for resale rather than for their own use.
DDTC has said it will limit the number of suppressors it will approve for export to a single end user, as it should in light of its overall posture toward suppressors, but you are the one on the front line. Imposing your own limit would be consistent with your obligations as an exporter under ITAR Section 127.1(c).
Does this all sound too hard? If you make or sell sound suppressors in the United States, EasyExport can enable you to sell them from your online store directly to end users in 15 countries, with more countries to come. Schedule a call to learn more.SCHEDULE A CALL