The United States is undergoing the biggest fundamental change to its export control regime in a generation, but risks stalling and losing out on the much needed reform benefits for American shippers.
Many of the country’s export controls were formulated more than 30 years ago when the United States and its allies were locked in a Cold War struggle with the Soviet Union and the Warsaw Pact nations. The goal of these regulations, which was largely successful, was to keep sophisticated technologies and other products out of the hands of the Soviet military.
Since the mid-1990s, certain lawmakers and legislative committees have proposed changes to U.S. export controls, but these efforts came up empty. Instead the regulations have become increasingly complex in the post-Cold War era with the addition of trade sanctions against countries with ties to terrorism and national security concerns involving China’s rise to power.
When the Obama administration in August 2009 ordered a broad-based interagency review of the U.S. export control system, the export industry naturally embraced it. The White House’s plan promised to deliver a single export licensing agency for both dual-use and munitions exports, unified control list, single enforcement coordination agency, and one integrated information system to cover all sanctioned and denied parties.
Within the Commerce Department, the administration put in charge of the export reform effort two highly experienced and capable appointees: Undersecretary for Industry and Security Eric L. Hirschhorn and Assistant Secretary for Export Administration Kevin J. Wolf. Both officials, who understand well the intricacies and difficulties of complying with U.S. export controls from their years in the private sector, have worked tirelessly on the White House’s directive.
Yet, there’s concern that the reform initiative may be losing steam due to interagency disagreements over what to decontrol, insufficient human resources, and dwindling political will on Capitol Hill for the follow-through.
Two extremely sticky issues for State and Commerce at the moment are reaching agreement on the handling of commercial satellite exports and forging a suitable definition for “specially designed” which identifies controlled components used in products or technologies.
A recent American Shipper survey
of more than 250 qualified exporters found the industry is less certain about the benefits of export control reform and unimpressed with the speed of the initiative.
No one said a regulatory reform of this magnitude would be easy, but that’s no reason for the industry to give up. In fact, it’s now more important than ever for companies that generate exports and their respective trade associations to educate their elected representatives on Capitol Hill about the economic value and need for export control reform.