Establishing a U.S. Arms Manufacturing Facility: A Strategic and Legal Guide for Turkish Defense Companies.

1. Introduction

Türkiye’s defense industry has evolved into a robust sector with extensive capabilities in land systems, aerospace, naval platforms, and advanced electronics. As part of diversification and international growth strategies, many Turkish manufacturers are exploring the potential of establishing production facilities abroad — with the United States being a primary target due to its vast defense market, technological ecosystem, and long-standing NATO partnership.

However, the United States maintains one of the most rigorous regulatory frameworks in the world for firearms and defense-related manufacturing. A Turkish arms manufacturer seeking to set up operations in the U.S. must navigate a multilayered regime of federal, state, and local laws, alongside special scrutiny applicable to foreign entities involved in national security industries. This article provides a practical guide to the main legal requirements, compliance expectations, and strategic considerations, including an analysis of the most suitable states for establishing such a facility.

2. Key U.S. Federal Laws and Regulations

A Turkish arms manufacturer establishing operations in the United States must first understand the primary body of federal laws that regulate firearms and defense manufacturing. These laws impose licensing, operational, and compliance obligations at the national level, irrespective of the state in which the company operates.

Gun Control Act of 1968 (GCA)
Codified under 18 U.S.C. Chapter 44 and administered by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the GCA governs the manufacture, distribution, and sale of firearms and ammunition. To legally manufacture firearms in the U.S., an entity must obtain a Federal Firearms License (FFL), typically a Type 07 (firearms and ammunition manufacturer) or Type 10 (manufacturer of destructive devices). The process requires thorough background checks, facility inspections, and strict adherence to record-keeping rules.

National Firearms Act of 1934 (NFA)
Found at 26 U.S.C. Chapter 53, the NFA imposes additional controls on specific categories of weapons, such as machine guns, silencers, short-barreled rifles, and destructive devices. Manufacturers of such items must pay a Special Occupational Tax (SOT) and ensure all NFA items are registered with the ATF’s NFA Branch.

Arms Export Control Act (AECA) and ITAR
Under 22 U.S.C. 2778, the AECA authorizes the President to control the import and export of defense articles and services. The International Traffic in Arms Regulations (ITAR), found at 22 C.F.R. Parts 120-130 and enforced by the Directorate of Defense Trade Controls (DDTC), regulate manufacturing or exporting items listed on the U.S. Munitions List (USML). Notably, even if the manufactured products are only for domestic U.S. sales, registration with DDTC is required if they are classified as defense articles.

Export Administration Regulations (EAR)
Under 15 C.F.R. Parts 730-774 and administered by the Bureau of Industry and Security (BIS), the EAR covers dual-use items that could have both civilian and military applications. While less stringent than ITAR, manufacturers still must determine classification and licensing obligations under the Commerce Control List (CCL).

Foreign Corrupt Practices Act (FCPA)
This law, under 15 U.S.C. §§ 78dd-1 et seq., prohibits bribery of foreign officials and mandates accurate books and records. It applies extraterritorially, meaning both the Turkish parent company and its U.S. subsidiary must maintain strict anti-corruption compliance.

ATF Firearms Regulations (27 C.F.R. Parts 478 & 479)
These regulations implement the GCA and NFA, detailing licensing procedures, marking requirements (serial numbers and manufacturer details on each firearm), storage and security obligations, and protocols for periodic ATF inspections.

Customs and Tariff Laws
Under the Tariff Act of 1930 (19 U.S.C. §1202 et seq.), imports of machinery, raw materials, or even semi-finished firearms components are subject to customs duties and extensive reporting requirements.

Together, these laws form the cornerstone of the regulatory environment a Turkish arms manufacturer must operate within in the United States. Non-compliance can result in severe civil and criminal penalties, license revocations, and reputational harm.

3. Special Regulatory Concerns for Foreign-Owned Entities

For a Turkish arms manufacturer, setting up a facility in the United States introduces additional layers of scrutiny beyond the standard federal firearms and export laws. This is primarily because defense manufacturing directly touches on national security, triggering special regimes designed to monitor and, if necessary, restrict foreign involvement.

CFIUS (Committee on Foreign Investment in the United States)
The most critical concern is the jurisdiction of CFIUS, an interagency body authorized under the Defense Production Act (50 U.S.C. § 4565) to review — and potentially block or impose conditions on — transactions that could result in foreign control over a U.S. business engaged in critical technologies, infrastructure, or data.

Although establishing a wholly new “greenfield” facility generally does not require a mandatory CFIUS filing, if the Turkish parent company later acquires or partners with existing U.S. businesses in sensitive defense areas, a filing may be obligatory or strongly advisable to mitigate national security concerns. CFIUS also has the authority to initiate reviews on its own if it believes there is a potential risk, even post-closing.

ITAR Ownership and Control Provisions
The ITAR imposes special requirements on companies that are controlled by foreign entities. Under 22 C.F.R. § 122.2, all manufacturers of defense articles on the U.S. Munitions List must register with DDTC, and the registration statement must disclose foreign ownership or control interests. This often leads to additional scrutiny of the corporate governance structure, security measures to safeguard technical data, and compliance practices to prevent unauthorized foreign access to controlled technology.

Export Control Risks for Turkish Parent Entities
Even when operating inside the U.S., the transfer of technical data from the U.S. subsidiary back to the Turkish parent company (or even to Turkish nationals working in the U.S. facility) may be considered an “export” under ITAR and EAR rules. This requires specific licensing unless a license exemption applies. This is known as the “deemed export” doctrine and is particularly sensitive in aerospace, advanced electronics, and munitions manufacturing.

U.S. Sanctions Compliance
While Türkiye is not subject to comprehensive U.S. sanctions, companies must still ensure that neither the parent nor any Turkish shareholders are on U.S. denied party lists, such as the OFAC SDN List or the BIS Entity List. Integrating robust screening protocols is essential.

Implications for Internal Controls
Due to these sensitivities, foreign-owned defense manufacturers typically adopt enhanced internal compliance programs, including controlled access protocols, U.S.-only engineering teams for sensitive work, and clear “technology control plans” to demonstrate that they prevent unauthorized disclosures.

Taken together, these regulatory concerns require a carefully structured ownership model and proactive legal planning to satisfy U.S. national security and export control regulators.

4. Navigating State and Local Regulations

While federal law establishes the primary framework for firearms and defense manufacturing in the United States, each state — and often individual counties or municipalities — imposes its own set of requirements that can significantly affect where and how a Turkish manufacturer sets up operations.

State Firearm Manufacturing Licenses and Approvals
Some states require separate state-level firearm manufacturing or dealer licenses even after obtaining a federal FFL. For example, Massachusetts, California, and New York maintain additional licensing regimes that impose stringent conditions, periodic inspections, and sometimes outright bans on certain types of firearm manufacturing. Conversely, states like Texas, Alabama, and Florida generally do not require additional state manufacturing licenses beyond standard business registrations.

Zoning and Local Permitting
Local governments control land use through zoning ordinances. Even in firearm-friendly states, counties or cities may restrict or prohibit firearms manufacturing in certain zones. A manufacturer will typically need a local occupancy permit and may be required to conduct public hearings or notify nearby property owners.
Additionally, local fire marshals and building authorities often impose extra safety requirements, particularly if the facility involves explosive or hazardous materials.

Environmental Regulations
States also enforce their own environmental protection laws. A firearms manufacturing facility involving coatings, heat treatments, or munitions assembly might trigger requirements under state hazardous waste regulations, stormwater permits, or air quality permits.

State Employment and Corporate Compliance
Operating in the U.S. requires registering with the state’s secretary of state to form a business entity, such as a corporation or LLC, and complying with state employment laws, wage rules, and workers’ compensation systems. Some states are “right to work” states (reducing union-related complexities), while others impose stricter labor obligations.

Taxation and Incentives
Each state imposes its own corporate income taxes, property taxes, and sometimes gross receipts taxes. Certain states aggressively compete for manufacturers by offering tax credits, exemptions for machinery, or grants to offset workforce training and infrastructure costs. States like Texas and Florida have no personal income tax, benefiting foreign executives relocating there.

Because of these local layers, a Turkish arms manufacturer must conduct a comprehensive state-by-state and locality-specific analysis before finalizing a site. This avoids costly surprises that might delay facility development or restrict operations after substantial investment.

5. Best U.S. States for Arms Manufacturing Facilities

For a Turkish arms manufacturer entering the U.S. market, choosing the right state is a strategic decision that impacts regulatory exposure, operational costs, workforce availability, and long-term growth. The following states are generally regarded as the most favorable for establishing firearms or defense manufacturing operations due to their regulatory climate, industrial base, and financial incentives.

Texas
Texas offers perhaps the strongest combination of advantages. It imposes no state income tax, maintains a highly favorable firearms regulatory environment, and has extensive aerospace and defense industrial clusters. Major defense contractors like Lockheed Martin and Raytheon have substantial operations there, supporting a deep supply chain and a skilled workforce. The state also aggressively promotes manufacturing through grants and local abatements.

Alabama
Home to Redstone Arsenal and key missile and aerospace facilities, Alabama has made defense a cornerstone of its industrial policy. It provides targeted tax incentives for manufacturers, low electricity costs, and streamlined permitting processes. Alabama’s state and local governments actively compete for foreign direct investment and are accustomed to facilitating defense-related projects.

Florida
Florida combines a pro-business tax structure (no state personal income tax) with a large defense contractor footprint, particularly in aerospace and naval systems. Its strong right-to-work laws reduce labor constraints, and it offers multiple state grant programs for defense and high-tech manufacturing.

Arizona
Known for housing Raytheon Missiles & Defense and a network of precision manufacturing companies, Arizona offers attractive property tax incentives and simplified regulatory processes. The state also provides workforce training funds specifically tailored to defense and advanced manufacturing.

South Carolina
A preferred destination for foreign manufacturers, South Carolina has streamlined its permitting and licensing processes and offers aggressive incentives for capital investment and job creation. Its existing automotive and aerospace clusters provide transferable skills relevant to defense manufacturing.

Why Not California or New York?
States like California, New York, Massachusetts, and New Jersey impose significantly stricter firearms and environmental regulations. They often require multiple overlapping permits and inspections and may restrict manufacturing of certain types of firearms or munitions outright. High corporate taxes and elevated labor costs further reduce their attractiveness for new firearms manufacturing facilities.

Summary of Selection Factors
In choosing among these states, a Turkish manufacturer would typically weigh:

• Ease of state-level firearms licensing (or absence thereof).
• Proximity to major defense contractors and subcontractor networks.
• State and local tax obligations versus available incentives.
• Availability of a technically trained workforce.
• Political and community receptiveness to firearms and defense manufacturing.

Selecting the right state thus combines regulatory risk reduction with economic advantages that can be critical to the success and sustainability of the U.S. operation.

6. Practical Compliance and Operational Considerations

Once the legal structure and location are settled, a Turkish arms manufacturer must ensure the new U.S. operation is fully compliant in day-to-day practices. This goes well beyond securing federal and state licenses—it requires implementing robust systems that satisfy regulatory expectations and withstand agency inspections.

Facility Security and ATF Inspections
The ATF under 27 C.F.R. Parts 478 and 479 conducts periodic inspections of licensed manufacturers to verify compliance with record-keeping, storage, and marking rules. A manufacturing site must secure firearms and components against theft, maintain detailed acquisition and disposition records, and ensure each firearm bears the required serial number, model, and manufacturer markings. Facilities producing NFA items face even more rigorous inspection and secure storage requirements.

Record-Keeping and Traceability
Federal law demands precise records of every firearm manufactured, transferred, or destroyed. These records must be maintained on ATF-compliant forms and be readily accessible for audit. The inability to produce clean, traceable logs can lead to license revocation or civil fines.

ITAR and EAR Compliance Programs
Even with a plant inside the U.S., the facility must adhere to ITAR controls if manufacturing items on the U.S. Munitions List. This includes:

• Registration with the DDTC under ITAR Part 122.
• Implementing a Technology Control Plan (TCP) to prevent unauthorized foreign access to controlled technical data (including by Turkish nationals working at the facility).
• Maintaining export licenses or exemptions for any transfer of technical data outside the U.S. (or to non-U.S. persons inside the U.S.).

For products under EAR jurisdiction, proper classification and licensing procedures apply, including screening against BIS denied persons lists.

Deemed Export Rules
Under ITAR and EAR “deemed export” concepts, providing controlled technical data or access to controlled machinery to foreign nationals inside the U.S. may require prior licensing. This is especially critical when Turkish engineers or executives visit or oversee production.

Anti-Corruption, Sanctions, and Ethics Controls
The Foreign Corrupt Practices Act (FCPA) applies to the U.S. subsidiary and indirectly to its Turkish parent. Internal policies and employee training should ensure compliance with anti-bribery rules, accurate accounting practices, and thorough third-party due diligence to avoid dealings with sanctioned entities.

Insurance, Environmental, and Workplace Safety Compliance
Given the hazardous nature of arms manufacturing, adequate liability and property insurance are essential. Compliance with OSHA standards on machine safety, chemical exposure, and emergency response is mandatory. Depending on the processes involved, facilities may also require environmental permits for air emissions, wastewater, or hazardous waste management.

Together, these operational measures transform what could otherwise be seen as a purely legal licensing exercise into a comprehensive regulatory and commercial compliance program, which is critical both to passing government audits and to protecting the business from costly enforcement actions.

7. Conclusion

Establishing an arms manufacturing facility in the United States as a Turkish company offers access to the world’s largest defense market, advanced supply chains, and a skilled industrial workforce. Yet it also demands careful navigation through a complex overlay of federal firearms laws, export control regimes like ITAR and EAR, and rigorous scrutiny applied to foreign-owned operations that may implicate national security interests.

Adding to this, state and local regulations shape everything from zoning approvals to employment obligations and tax liabilities. Choosing a strategically favorable state such as Texas, Alabama, or Florida can reduce regulatory friction and operational costs, while proximity to defense clusters can strengthen industrial partnerships and facilitate workforce recruitment.

Success ultimately depends on building a robust compliance framework from the outset—covering ATF licensing, meticulous record-keeping, controlled access to technical data, and adherence to anti-corruption and sanctions protocols. This ensures that the U.S. facility not only operates lawfully but is well-positioned to integrate into sensitive defense supply chains, withstand regulatory audits, and fulfill both domestic and allied defense demands with confidence.