HiBC -
The information is old, this thread started two years ago. But even more than that, the actual law is the Arms Export Control Act from 1976. Any manufacturer, broker or exporter of controlled arms is required to register with the Department of State, currently at $2,250 a year. In the Department of State, the Directorate of Defense Trade Controls, DDTC, administers ITAR.
Anything listed on the US Munitions List, which changes regularly and includes firearms, as well as things like submarines, guided missiles and technical data (think plans for 3D printing of guns), currently falls under the DDTC authority.
President Obama never sent any memo, it came from the DDTC, and the memo mentioned merely clarified what DDTC had been practicing for decades. The increase in enforcement actually started in the late 1990's when the State Department took control over the export of satellites. Until the mid 2000's, nobody paid attention to gunsmiths. Then the DDTC started sending notices to any newly registered 07 (Manufacturing) FFL, whether a major manufacturer or your mom and pop shop, about the required registration. And yes, drilling and tapping has always been, since 1976, the equivalent of international arms dealing, by definition of the laws. There's no distinction between drilling and tapping a hole to mount a scope on grandpa's single shot .22 and drilling and tapping a hole to mount a camera pod to the underbelly of a B52.
ITAR has no application for private individuals. It actually hasn't been applied to 01 FFLs (Dealers), which includes many gunsmiths. And it doesn't apply to all 07 FFLs either. And the reason for that is one of the reasons DDTC issued the clarification memo.
As defined by ATF, assembling a firearm from parts for sale is considered manufacturing and requires an 07 FFL. As defined by DDTC, assembling a firearm from parts is not manufacturing and does not require ITAR registration. The various functions listed in the memo are what DDTC considers typical of manufacturing.
As for payment of the fee being a cost of business, for thousands of gunsmiths across the country, it is. Compared to rent, insurance and other professional fees, it's in the smaller range of required payments. The paperwork is already required for any 07 FFL, it's a manufacturers report filed annually along with the excise taxes on each firearm manufactured. If that's an "overwhelming" regulation for your gunsmith, tell him not to perform manufacturing operations, many gunsmiths don't. Keeping the gunsmith's bound book and filling out occasional 4473 forms and background checks is a lot more paperwork.
As for the current situation, 07 FFLs haven't been receiving notices from DDTC about ITAR registration for over a year. The NSSF has been working with congress since 2016 to get responsibility for a lot of the US munitions list, including small arms and ammunition, transferred to the Department of Commerce, which deals with almost all other trade. The completion of this process is near.
As for the local gunsmith being endangered, every year there are more registrations for new gunsmiths than the prior year. Gunsmithing is actually back into an upswing. But the local gunsmith being doomed is a story that's been repeated for the last five decades. Just like the ATF not granting FFLs for home-based operations.
Lastly, don't assume every gunsmith threads barrels. Or performs machining operations. Most suppressors and muzzle brakes are sold for firearms with existing threaded barrels. And, in a few states, that muzzle brake is illegal anyway, unless it is welded or pinned on. Most scopes are mounted to existing rails or mounting holes in the rifle. Over the last five years or so, ATF has even pushed gunsmiths toward the 01FFL since it doesn't require ITAR registration, even for those gunsmiths who do thread a barrel.
Jeff