What are export controls?
Export controls are the means by which the United States Government manages the sale or transfer of sensitive goods and technology, services, and know-how to non-U.S. citizens in a manner consistent with the nation’s national security interests, foreign policy goals, and international obligations. Arms export controls are applied to the sale of defense articles and services to prevent the nation’s adversaries from gaining military capabilities, while also promoting the other goal listed in the Arms Export Control Act of promoting defense cooperation with countries friendly to the U.S. With regard to controls on civilian goods and technology that have military applications (“dual-use” items), the U.S. Government controls these exports for a variety of national security and foreign policy reasons, without imposing unnecessary burdens on U.S. competitiveness and economic prosperity.
What sector of the U.S. economy is primarily affected by export controls?
Export controls apply primarily to high-technology manufacturers. This group includes the defense, aerospace, high-performance computers, electronics, telecommunications equipment, semiconductors, semi-conductor manufacturing equipment, advanced machine tools, and scientific instruments industries. The U.S. employs nearly 4 million workers in its high-technology industries. In 2006, U.S. high-tech exports accounted for $346 billion dollars, or 33 percent of all U.S. exports of manufactured goods.
Who handles export controls?
The State Department leads the interagency process that reviews license applications to export defense articles and services (see section 2794 of the Arms Export Control Act). These items are detailed and categorized in the U.S. Munitions List (USML) and their export is governed by the International Traffic in Arms Regulations (ITAR).
The Export Administration Act (EAA) authorizes the Department of Commerce to regulate U.S. exports of dual-use items, as well as non-sensitive items. Dual-use items are identified in the Commerce Control List (CCL). The Export Administration Act expired on August 21, 2001. In its absence, the President has used his authority in the International Emergency Economic Powers Act (IEEPA) to continue the EAA’s provisions. The Commerce Department’s Bureau of Industry and Security leads the interagency process that reviews license applications for these items.
Does Congress have a say in export controls?
Congress provides the legislative framework and regulatory oversight for the Executive Branch to administer U.S. export controls. In the case of arms sales, Congress also receives formal notification of export license applications and is given the opportunity to raise questions, concerns and/or objections about applications. In the case of dual use exports, the Congress receives formal notification of certain sales to China and of certain proposed sales to countries that are designated as supporting terrorism. There are also extensive annual reporting requirements. The committees of jurisdiction for arms export controls are the House Foreign Affairs Committee and Senate Foreign Relations Committee. For dual-use controls, the House Foreign Affairs Committee and the Senate Banking Committee have jurisdiction.
What safeguards are often in place to make sure weapons are not transferred to our adversaries?
Licenses are reviewed and approved to ensure consistency with U.S. policy, interests, and goals. First and foremost, this means ensuring that U.S. technology that could provide military capabilities to adversaries, countries of concern, and others does not end up in their hands. Some countries are prohibited from receiving these U.S. items outright. In many cases, licenses contain provisions that prevent the re-export of items to other states and persons, as well as requirements for the exporter, and in some cases the end user, to have internal controls and/or technology transfer plans. Both the Commerce and State Departments have pre-license and post-shipment verification programs that ensure sensitive items are received by the licensed end-user and are being utilized in a manner consistent with the license.
There are also four multilateral regimes through which the United States and key trading partners regulate the export of sensitive goods and technologies in a consensus-based, voluntary arrangement. The regimes seek to prevent the proliferation of different types of sensitive technologies relating to arms development, weapons of mass destruction, missiles and other critical areas. Each participating government has discretion on how to interpret the standards and apply the controls. As a result, whether or not and how controlled items are exported can differ among regime participants.
How many licenses are processed each year?
Approximately how long does it take for a license to be processed? According to State Department officials, the agency processes over 65,000 licenses each year. This number has been growing by approximately 8% each year. Because the “demand” for license review and approval is outpacing the “supply” of licensing officers, backlogs and delays have been created. Last year the State Department had a 10,000 case backlog that they are now working to reduce. With regard to license processing, according to past GAO reports, it takes on average 65 days for a license that must be staffed outside of the State Department (to the Defense Department, for example) to be reviewed and approved. This figure of 2+ months is itself high, and because it is an average it masks the much more extensive delays experienced by many exporters.
As for dual-use items, in FY 2006, Commerce’s Bureau of Industry and Security (BIS) reports it processed 18,941 export license applications (a 13% increase from the previous year) valued at approximately $36 billion. The average processing time was 33 days. Again, this average masks much longer processing times for some applications that received extensive reviews.
Why is the Coalition for Security & Competitiveness pressing for export control modernization?
Export controls are needed, but the current export control system is cumbersome and inefficient, and has not kept pace with important changes in the global security and economic environment. As a result, there are challenges to our ability to share technologies with allies and coalition partners. This is undermining interoperability on the battlefield and good relations and trading opportunities with our foreign partners. Because the current process also impedes mutual technology sharing between U.S. and European companies, U.S. warfighters are denied the best technologies at the best value for the American taxpayer in a timely fashion. The export control system also puts U.S.-based manufacturers at a significant disadvantage when U.S. companies (and their foreign customers) have to contend with a U.S. export control system that is cumbersome and unpredictable. This discourages exports from the United States, contributes to the deliberate “design out” of U.S. components in foreign products, and erodes the U.S. industrial base, economic competitiveness and global leadership in key high-technology sectors. The bottom line is that the U.S. export control system needs to be more predictable, efficient and transparent to make the United States both more secure and competitive.
What is at stake if modernization does not occur?
If the U.S. export control system is not modernized, our ability to fully support military interoperability with our friends and allies, to facilitate mutual sharing of critical technologies for the benefit of warfighters, and the competitiveness of the U.S. industrial base will be slowly eroded over time.
What changes to the export licensing process are being advocated by the Coalition?
The Coalition is advocating a set of proposals that will make the current system more predictable, efficient and transparent while still safeguarding sensitive U.S. technologies. Each of these proposals can be implemented by the Administration without any changes to existing legislation, but the Administration should do so in consultation with Congress. Our proposals deal with organizational changes, process improvements, new licensing mechanisms, better regulatory interpretation, and policy clarity, among others.