Obama Administration Pushing Export Control Reform

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February 10, 2010

Last week, President Obama’s administration released a fact sheet describing its parameters for reform of the current system of U.S. export controls during a meeting with key members of Congress. The fact sheet is divided into two sections.

 

The first section is a “Statement in Policy,” in which the Administration describes the current export control system as a “potential national security risk based on the fact that its structure is overly complicated, contains too many redundancies, and tries to protect too much. As a result, the system encourages foreign customers to seek foreign suppliers and U.S. companies to seek foreign partners not subject to U.S. export controls.” Nevertheless, the statement describes export controls as an “important tool to promote national security and foreign policy.”

In August 2009, the President created an inter-agency task force tasked with reviewing the overall U.S. export control system, including both the dual use and defense trade policies and processes. The task force, comprised of staff from National Security Council, Departments of Commerce, Energy, Homeland Security, Justice, State and Treasury, and the Office of the Director of National Intelligence, provided the following principles for the review in the “Specific Actions to be Taken” section of the fact sheet:

• Controls should focus on a small core set of key technologies and items that are capable of being used to pose a serious national security threat to the U.S., which includes items related to global terrorism and the proliferation of WMD, their delivery systems and conventional weapons;
• Controls should be fully coordinated with the multilateral export control regimes. Export controls must be multilateral to be effective, and the U.S. should seek to ensure that the multilateral regimes focus on controls over the core set of key items and technologies that are either available almost exclusively from the U.S. and its regime partners, or for which the U.S. and its partners have a profound, quantifiable advantage;
• Controls applied unilaterally to items that are widely available from foreign sources generally are ineffective in preventing end-users from acquiring those items. Controls should not be applied to these items unless the controls are required by law, are essential to furthering U.S. foreign policy goals, are necessary to U.S. munitions or intelligence systems, or are prudent for certain dual-use and munitions items even if comparable items are foreign available;
• It must be clear both inside and outside the U.S. Government which technologies and items are controlled, and a process should be created to easily update the controls both to remove items and add them;
• A structure for the system must be created to ensure that it is transparent, predictable, and timely, has the flexibility to be adapted to address new threats in the future, and allows seamless access to and sharing of export control information among all relevant agencies;
• Implementation and enforcement capabilities must be enhanced to improve capabilities in monitoring, intelligence and investigation, and allow for greater penalties for violations an a greater ability to interdict unapproved transfers; and
• Controls should be balance with U.S. counterterrorism policy to ensure the ability to export items and technology in support of counterterrorism, critical infrastructure, and other Homeland Security priorities.

The Administration is touting export control reform as way for the U.S. to boost exports. During his State of the Union address, President Obama announced that export control will be part of his larger “National Export Initiative,” which will support as many as “two million jobs in America.”

Private industry is overwhelming supportive of the President’s intentions to overhaul the country’s export control system. Many proponents view the fact sheet’s statement that “controls should focus on a small core set of key technologies,” as a call to limit the number of items on the U.S. export control lists. They are also applauding the Administration’s decision to call for export controls that are “fully coordinated with multilateral export regimes,” as it is generally thought to promote predictability and transparency in any export control regime.

Congress is also largely supportive of the export control reform. Already, House Foreign Affairs Chairman Howard Berman (D-CA) has begun redrafting the Export Administration Act which governs controls on dual-use goods. However, congressional staff members called for the Administration to collaborate closely with them on reform, opposed to the Bush Administration which frequently implemented changes without consultation.

Separately, Secretary of Commerce Gary Locke has promised to move forward with two export control reform proposals that would eliminate license requirements for dual-use items exported to close allies and accelerate the granting of licenses for exports to other key countries.

Please continue to visit www.barnesrichardson.com for future updates on export control reform.