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Volume 16, Issue 42
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Friday, February 27, 2009
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Export Control Reform Examined in Context of Economic Recovery
Export control reform has been an item of interest for a number of U.S. industries for several years, and a congressional hearing this week suggests that lawmakers may be ready to seriously consider it. Witnesses at a Feb. 25 hearing of the House Science and Technology Committee said that the current system puts U.S. companies at a disadvantage in the global marketplace and that reforms could play an important role in government efforts to promote economic recovery.
More Conducive Environment for Review. In the post 9/11 environment Congress has had little appetite for taking any action that could be construed as a liberalization of export controls. In opening the hearing, however, Committee Chairman Bart Gordon asserted that “it is time for Congress to take another look at the nation’s export controls regime to ensure that it is working effectively and without unintended adverse impacts.” As part of that review, Gordon stated, “we want to understand any negative effects that the current export controls regime may be having on our efforts to stimulate the economy and promote long-term growth through investments in science and technology.” Both Gordon and Space and Aviation Subcommittee Chair Gabrielle Giffords expressed hope that the House Armed Services and Foreign Affairs committees will review this issue as well.
Robert Dickman, who currently serves as executive director of The American Institute of Aeronautics and Astronautics, said he sees “encouraging signs” in this regard as well. “Just five years ago nobody was having this conversation in the public forum even though the problem clearly existed,” he told the committee. “Our policymakers did not seem ready to accept the realities of the effects of current export control policies, and they certainly did not want to open up the possibility of loosening restrictions on sensitive technologies during these uncertain and unsettling times.” However, Dickman said, today “there is widespread agreement that the time has come to fully address these issues,” due in part to the issuance of studies and reports illustrating how restrictive national policies on technology exports have caused a “direct decline in national security.”
Even so, some resistance is still expected, as evidenced by a statement from Rep. Dana Rohrabacher. “Everyone agrees ITAR [International Traffic in Arms Regulations] reform needs to happen. We need to make sure that our hi tech exports aren’t strangled by regulations,” he said. “On the other hand, we need to remain vigilant that our advanced technology doesn’t end up in the hands of nations who proliferate weapons of mass destruction. We know exactly who these nations are, and we must make absolutely sure that whatever changes we enact to ITAR and other export regulations, that these scofflaw and rogue nations are barred from receiving our high tech systems.”
Current System Has Negative Economic Effects. Retired Air Force Lt. Gen. Brent Scowcroft said U.S. national security controls on science and technology are “broken” because they do not reflect the current geopolitical reality. Scowcroft argued that an approach centered on unilaterally controlling dual-use items is no longer viable and can have significant economic as well as security consequences. For example, he said, such an approach can promote the offshoring of knowledge-intensive jobs critical to the U.S. economy, prevent U.S. commercial and military capabilities from expanding into new fields and accelerate the development of technologies in foreign research centers.
Thomas Young, who co-chaired the Center for Strategic and International Studies’ Working Group on the Health of the U.S. Space Industrial Base and the Impact of Export Controls, said this working group found that the U.S. is controlling technologies that are not critical to national security and are readily available in the global marketplace. Export controls are therefore adversely affecting U.S. companies’ ability to compete for foreign space business, resulting in lost international sales and a steadily declining share of the global space market.
The AIAA’s Dickman added that current policies are “actually harming our national security as key vendors in our technology sectors go out of business due to lack of export opportunities.”
Recommendations. Scowcroft recommended the creation of two administrative entities as a step toward reforming the current export licensing system. The first would be a coordinating center serving as a “one-stop-shop” for all export license applications. The chief role of this center would be to determine whether the Department of Commerce or the Department of State should handle the license application and to then dispatch the application to the appropriate place for decision. The second entity would be an appeals panel to hear and decide disputes about whether export licenses are required and whether particular decisions to grant or deny licenses were made properly.
Scowcroft also advocated the establishment of an economic competitiveness exemption that eliminates export controls on dual-use technologies where they, or their functional equivalents, are or soon will be available without restriction in open markets outside the U.S.
Young said that while critical space technologies should remain subject to control under the ITAR, items like commercial communications satellite systems and components specifically designed for commercial use should be removed from control and the government should annually review the appropriateness of controlling specific goods based on their criticality and availability outside the U.S.
Dickman outlined a number of steps the U.S. can take to “reestablish some faith in the system” while “developing the next generation of export policies.”
• The technologies and components that provide the U.S. with a distinct advantage in the national security arena should be regularly evaluated so the list of controlled items can keep up with changes and advances in technologies and capabilities. This process “should take place within the national security community as an honest discussion, not a protectionist blanket.”
• Global engagement in science and technology should be encouraged through policies that allow U.S. researchers to talk and share ideas, findings and recommendations without a fear of violating U.S. trade policy.
• There needs to be a process by which the government can review and update its controlled technology and components lists on a regular basis, streamline the lists for some uniformity and standardize licensing considerations and requirements. This should be done with a focus on understanding why items should or should not continue to be controlled rather than on adding components to an increasingly restrictive and misunderstood list.
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