Obama Outlines Plan To Tackle U.S. Export Control Reforms

by

MAGNA, Utah — U.S. President Barack Obama outlined steps his administration is taking to reform the cumbersome U.S. export licensing system Aug. 31, though change is not expected to come easily, according to industry and congressional sources who say the White House is overconfident about how much can be achieved.

In a prerecorded video address to the U.S. Commerce Department’s annual export controls conference in Washington, Obama highlighted progress over the past year in reforming the export licensing system.

“In the past, there was a lot of confusion about when a license was required. It depended on which agency you asked,” Obama said in prepared remarks issued Aug. 30 in advance of the video speech. “Now, we will have a single set of licensing policies that will apply to each tier of control, bringing clarity and consistency across our system.”

Currently the U.S. State Department has export licensing authority over the most sensitive U.S. military technologies, which fall on the U.S. Munitions List (USML). The Commerce Department has licensing authority over so-called dual-use items on the Commerce Control List.

In addition to consolidating the two lists into a single, tiered index, Obama wants to centralize disparate export oversight functions within two new government organizations — one to oversee the export licensing process, and another to enforce controls.

Obama said he would issue an executive order to create an export enforcement center that would eliminate gaps and duplication across a host of agencies. A transition to a single, standard information technology system for license applications also is in the works.

While the president’s aggressive stance on export control reform is being lauded by the U.S. aerospace industry, which has seen its global market share decline in recent years under the current system, a wholesale reorganization of federal departments and agencies into a single licensing authority and enforcement center will require congressional action.

The U.S. House Foreign Affairs Committee is working on a bill to replace the long-expired Export Administration Act, which gives the president authority to control U.S. exports in the interest of national security and foreign policy, though the draft legislation does not address government reorganization. With the White House yet to deliver a legislative proposal in support of the planned overhaul, congressional sources say action is unlikely this year.

In a news release issued Aug. 30, the White House touted progress in its effort to simplify the export control lists, including a recently completed review of Category 7 of the USML. One of 20 categories that range from shotguns and ammunition to spacecraft and nuclear weapons, Category 7 deals directly with U.S. military vehicles.

“Our preliminary analysis is that about 74 percent of the 12,000 items we licensed last year in this Munitions List category will either be moved to the Commerce Control List or will be decontrolled altogether,” the news release states. “Our preliminary estimate is that about 32 percent of the total may be decontrolled altogether.”

Although the administration has discretion to rewrite the federal munitions and dual-use control lists, removing items from the USML — including commercial communications satellites placed there in the 1990s following allegations that China’s military was benefiting from launching U.S. spacecraft — necessitates review by the House Foreign Affairs Committee and Senate Foreign Relations Committee that oversee the U.S. export licensing process. These committees are accustomed to pondering the removal of items on a case-by-case basis. If the administration proposes removing hundreds of items all at once, the process could become bogged down on Capitol Hill.

In his speech, Obama said the executive branch would continue working with stakeholders in Congress and industry to move the export reform agenda forward.

“[A]s we implement these reforms and take further steps — including working to create a single licensing agency — I look forward to working with both Congress and the export control community to ensure their success,” he said.