U.S. Firms Launch Export-Control Reform Push


Regular Member
Dec 11, 2009
Declaring that the Obama administration presents the best opportunity in years to overhaul export rules that limit weapons sales, 19 industry lobbying groups have relaunched a campaign for sweeping reform.

The groups want to de-emphasize the current reliance on munitions and dual-use technologies lists, and base export decisions on such factors as whether an item can be bought from another country, whether it is widely used outside of defense and whether the buyer is a trusted partner.

The 19 groups, which represent hundreds of U.S. companies from warplane manufacturers to software coders, said Jan. 12 that a review of export control regulations now underway by the Obama administration offers real hope for change.

"We're expecting something to happen. In the past, we didn't," said Remy Nathan, assistant vice president for international affairs at the Aerospace Industries Association.

"The attitude of this administration is different" from any in decades, said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

In August, the White House announced the start of a broad review of export controls, saying that export controls should be updated to address current threats and changes in technology and the economy.

Vargo said that if adopted, the changes the industry groups want could increase U.S. exports by "tens of billions to hundreds of billions of dollars."

A key change would be to consider "foreign availability" more when deciding whether U.S. technology can be exported. That is, if weapons technology can be bought from other countries, there may be little to gain in terms of security by restricting U.S. exports of the technology.

The groups, which call themselves the Coalition for Security and Competitiveness, said that standard should apply to both the Commerce Department's dual-use technology list and the State Department's munitions list.

Advocates who favor stricter export controls say such a change in U.S. policy could be deadly.

"The Russians make a pretty good shoulder-fired surface-to-air missile. Does that mean we should decontrol ours?" asked Matthew Schroeder, head of the Federation of American Scientists' Arms Sales Monitoring Project.

"There are a lot of items on the U.S. Munitions List that you don't want to make available without some kind of license or other authorization," he said, citing military firearms as an example.

"Just because you can find an AK47 almost anywhere, does that mean we should stop requiring export licenses for our M4s? That doesn't make any sense," Schroeder said.

But to U.S. manufacturers, strict export controls are "shooting ourselves in the foot," Vargo said.

Recalling a meeting between Chinese trade representatives and U.S. Commerce Department officials, he said: "It was astonishing how broadly the Chinese believed that U.S. export controls would complicate their lives if they bought from the United States."

So the Chinese bought from European and other manufacturers, he said. U.S. industrial rivals have learned to take advantage of U.S. trade restrictions by "designing U.S. components out" of their products and advertising them as free of U.S. parts - and encumbering regulations, Vargo said.

Encryption is an example of technology that especially suffers under U.S. export controls, said Christopher Hansen, chief executive of TechAmerica, a coalition member that represents high-technology companies.

"The export-control system today is designed for a world that no longer exists," Hansen said. Encryption used to be a technology used solely for national security purposes, "but that changed a long time ago," he said. Now, it is routinely used in banking, credit card transactions, online commerce, to ensure privacy, and for a multitude of other purposes.

If military encryption is not the purpose of an encryption product, "then probably it does not need to be protected" by U.S. export controls, Hansen said. "It does not make sense to spend a lot of effort to control something that is widely used and produced outside the United States," he said.

To do so encourages the production of new encryption products abroad to the detriment of U.S. companies, he said.

Coalition members also want export rules to be more specific. For instance, unarmed unmanned aerial vehicles (UAVs) and blimps should not be controlled in the same way that missiles are. And commercial satellites and their components should not be treated as munitions, Nathan said.

The U.S. Munitions List itself should be "scrubbed" to remove items that no longer require control, and a clearer process should be established for deciding what qualifies as a defense item, the coalition said.

A recommendation for the Commerce Department's dual-use technology list is more radical: Everything should be taken off the list, then make the Commerce Department "justify" why any item should be put back on the list, said Catherine Robinson, director of high technology trade policy at the National Association of Manufacturers, a coalition member.

Foreign availability should be a reason for taking items off the dual-use technology list, and a sunset rule would automatically take items off the list "unless a justification can be presented" for keeping them on, the coalition said.

Robinson said export controls should be switched from a "transaction-by-transaction approach" to a "trusted partner" process. Thus, licenses would not be required for each sale if items were being sold to companies and countries that are determined to be trusted partners.

Schroeder argues against such a change. "Case-by-case licensing is one of the best ways to prevent diversion," he said. Diversion is when weapons licensed for shipment to a specific buyer end up being transferred to unauthorized end users.

The Federation of American Scientists, which is not part of the coalition, issued its own set of export-reform recommendations to the Obama administration. They call for clear export regulations and more detailed and public reporting of what's being exported and to whom.

The push for reforms is similar to a coalition effort in 2007 to convince the Bush administration to reform export rules.

As a result of that effort, licensing procedures were improved and waiting periods for export licenses were greatly decreased. But the Bush administration failed to act on all of the reforms the industry groups sought, so the coalition is trying again, said William Reinsch, president of the National Foreign Trade Council, a coalition member.

"We've been trying to fix this for 25 years without significant progress," Reinsch said, adding, "I think the stars are aligned now."

U.S. Firms Launch Export-Control Reform Push - Defense News

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