President Renews Export Controls for One Year, Reform Efforts Heat Up

August 17, 2009

On Thursday, August 13, 2009 President Obama extended for one year all export control regulations made under the authority of the Export Administration Act of 1979 (EAA) and certain provisions of the Arms Export Control Act (AECA). Simultaneously, the President directed the National Economic Council (NEC) and the National Security Council (NSC) to conduct an interagency review of the overall U.S. export control system, including both dual-use and defense trade processes.

The purpose of the review is to consider reforms that would enhance the national security, foreign policy, and economic security interests of the U.S. Interest in export control reform has also been building on Capitol Hill.  Chairman of the House Foreign Affairs Committee, Howard Berman (D-CA), announced last week that he hopes to introduce a new Export Administration Act in early 2010.

In early July, the Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade held a hearing on U.S. export controls in early July. Following the hearing, on July 31, 2009, subcommittee Chairman Brad Sherman (D-CA) and Representatives Donald Manzullo (R-IL) and Adam Smith (D-WA), introduced the Export Control Improvements Act of 2009 (H.R. 3515). The legislation seeks to strengthen U.S. export control enforcement in three ways: (1). Equips the Department of Commerce’s Automated Export System (AES) with information about U.S. export control laws and regulations to allow it to flag potential violations to users filing their shipper’s export declaration data; (2). Restores the Bureau of Industry and Security’s enforcement powers it had under the original EAA; and (3). Creates a new designation for countries identified as potential transshipment points of dual-use exports to Iran that could lead the U.S. to tighten its licensing requirements to those countries.  

Separately, Commerce Secretary Gary Locke has listed undertaking a review of U.S. export controls as one his top five priorities. During a speech at the Washington International Trade Association last month, the Secretary said that the U.S. “export control system must adapt to America's changing security needs without inhibiting the competitiveness of U.S. companies and institutions.”

The Secretary’s comments match recommendations from the Coalition for Security and Competitiveness, a private sector group of trade associations, calling for fundamental reform of the U.S. export control system. However, the private sector group has also indicated that its members would seek a review of the goods and articles contained on the U.S. Munitions List, a topic not yet touched on by any senior administration officials or congressional leaders.

We will continue to provide information on our website as to the status of the review ordered by the President, as well as any additional legislative developments regarding export controls. For additional information concerning potential reforms to the U.S. export control system, please contact a Barnes/Richardson attorney.