U.S. Business Community's Principles for Comprehensive U.S. Export Control Reform Outlined

In a speech at the Practising Law Institute's annual "Coping with U.S. Export Controls" conference in Washington, DC, National Foreign Trade Council (NFTC) President Bill Reinsch today outlined the business community's principles for reforming the U.S. export control system to enhance national security and economic competitiveness. Reinsch, a former Under Secretary of Commerce for Export Administration in the Clinton Administration, also discussed current efforts by the Administration and Congress to reform the outdated system, noting, "for the first time in 20 years, prospects for reform are realistic."

"That reform is overdue is one of the biggest understatements of our time. The EAA has not been amended since 1987. There has not been major control list revision since 1994. The always-controversial encryption regulations have now gone ten years without major change. Meanwhile, the world has been changing rapidly," said Reinsch. "First, our adversaries are now diffuse and not always nation-states...Second, the pace of technology change is accelerating, and the line between civilian and military is fast eroding...Third, and perhaps most important, the nature of the global market has changed dramatically. In the good old days, an export was an export. You made it here and shipped it over there in a box. Now we are in the era of global supply chains."

"From a security point of view, knowledge and technology matter more than the box, because it is the key not only to our national security but also to our economic competitiveness. It should be clear from all these developments that controlling exports is harder than it ever was, and the burden on our policy makers and enforcement officials much greater. In fact, it forces them to radically rethink our policy," he continued.

After making the case for reform, Reinsch outlined the business community's key principles for reform, developed by the Coalition for Security and Competitiveness, a group of companies and associations representing aerospace and high tech companies, and the Export Control Working Group, composed of many of the same companies, practitioners and seasoned compliance experts. The principles recommend that any reform effort should draw clear lines of agency responsibility and ensure accountability; pursue controls and enforcement in partnership with the business community rather than as adversaries; keep pace with technology change and the development of global supply chains by revising and reducing control lists; enhance cooperation with our allies and rely on multilateral controls; and complete the transition to an end user based system by developing procedures for trusted end users and exporters.

In addition, Reinsch pointed out that the "higher fences around a smaller number of items" concept should play a key role in the development of the reforms, and that the reform "process needs to be based on a constantly updated understanding of technology changes here in the United States and overseas." While not advocating radical reorganization of the interagency process, Reinsch stated that the "process for making commodity jurisdiction decisions must be regularized," and that "in order to improve allied cooperation, we need to take the multilateral regimes seriously."

He also endorsed the prompt implementation of a number of thoughtful proposals made over the past year or two – the intracompany transfer, expansion of the Validated End User program, project licenses for munitions exports, Secretary Locke's proposal to eliminate licensing requirements for NATO and other allies, and proposals for expedited treatment for trusted end users.