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Volume 16, Issue 199
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Tuesday, October 6, 2009
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Commerce Secretary Seeks to Eliminate Some Export Licenses, Streamline Others
In a recent speech to the export community, Commerce Secretary Gary Locke proposed two reforms that aim to modernize the U.S. export control system. The proposal would eliminate requirements for some export licenses and streamline the process for obtaining others, and it is expected to be considered as part of a broader interagency review.
“Just as financial regulations designed in the 1930s have proven unable to effectively manage the risks of complex derivatives and other facets of today’s financial markets, our export control system cannot handle a world where goods and services cross national borders freely, and where items bought at an electronics store in mid-America can end up hurting American troops in Iraq,” Locke said. “The challenge we face is to design a new system that keeps us safer by increasing export control measures on the items and technologies most critical to our national security and freeing American companies from an out-dated set of rules that often prevents them from selling items that are readily available from non-U.S. companies.” Locke stressed that a “comprehensive overhaul of our flawed export system is not a race to the bottom and a slackening of controls” but instead means “fundamentally revising our export control system to account for the emergence of new foreign markets, competitors, and multifaceted threats that have arisen over the past few decades.”
While fundamental reform of the U.S. export control framework “will likely require new statutory authority and action from Congress,” Locke proposed that relevant federal agencies “begin moving forward on two reforms that will provide substantial relief to U.S. exporters while strengthening U.S. national security and foreign policy interests.”
• The Bureau of Industry and Security will consider eliminating certain dual-use export license requirements for allies and partner nations (about 40-60 countries), consistent with statutory and international obligations. This “low-risk and high-impact change … would stem the trend of foreign suppliers having a competitive advantage over U.S. companies in these critical trade markets due solely to the difference between export control policies.”
• BIS will also explore implementing a fast-track process that would “dramatically reduce” (from 60 days to 15, according to Inside US Trade) the time it takes to review dual-use export licenses for other key countries that do not pose a significant threat and have a strong history of export control compliance. Although license applications to these countries are generally approved and processed within regulatory timelines, the time taken to review a license application can undermine U.S. sales abroad. Locke stressed that the envisioned process would maintain the same rigor and commitment to U.S. security as before but would operate on a faster timeline.
Observers say the work done under these initiatives is likely to be rolled into the comprehensive interagency review of the U.S. export control system that the White House ordered in August. That process is moving ahead with the involvement of officials at the highest levels, including Locke, Defense Secretary Robert Gates and Secretary of State Hillary Clinton, but agency representatives say they are “still at the very earliest stages.”
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