The President released an Executive Order today and an accompanying Fact Sheet outlining a crucial step toward implementing changes to the U.S. Munitions List (USML) as part of the President’s Export Control Reform Initiative.

On March 7, the Administration notified Congress – as required by Section 38(f) of the Arms Export Control Act – of the intended changes to USML Category VIII (Aircraft) and USML Category XIX (Gas Turbine Engines). Congress was reportedly given “pre-notification” in February, including text of the intended rule changes, and now has 30 days to review the modifications before the final rules will be published. The Administration has outlined a 180-day transition period that would follow the final rule.

The NAM has long advocated for a more predictable, efficient and transparent export control system. A study by the Milken Institute in partnership with the NAM previously estimated that modernizing export controls could boost real U.S. economic output by $64 billion and create 160,000 manufacturing jobs. Today’s news is a positive step to modernizing our export control system to keep us from falling behind our global competition.

Public comments on the State Department’s proposed rule for USML Category VIII are online here. Public comments on the Commerce Department’s proposed rule for control of items that no longer warrant control under the USML are onlinehere. Public comments on the State Department’s proposed rule for USML Category XIX are online here. Public comments on the Commerce Department’s proposed rule for control of items that no longer warrant control under the USML are online here. A full listing of proposed rules for USML Categories, and their accompanying Commerce Control List (CCL) categories, is online here.

Lauren Airey is director of trade facilitation policy, National Association of Manufacturers.

House Armed Services Committee Chairman Buck McKeon has filed the Conference Report for the FY2013 National Defense Authorization Act (H.R. 4310). Included in the NDAA Conference Report is a provision returning authority to determine appropriate export controls for satellites to the President.

This provision will benefit U.S. manufacturers of satellites—as well as their suppliers and the R&D pipeline—by rationalizing export controls and expanding opportunities for foreign sales. The full text of H. Rept. 112-705 is available here, and the Managers’ statement is available here. The satellite provisions can be found in Title XII (Matters Relating to Foreign Nations), Subtitle E.

The NAM has long advocated for this statutory fix, dating back to the 2009 House Foreign Affairs Subcommittee hearing on “Export Controls on Satellite Technology” and support for the 2008 CSIS report on the health of the industrial base. Earlier this year, the NAM co-signed a letter to Senate leadership supporting a satellite export control bill introduced by Senator Bennet (D-CO) and actively supported the Safeguarding United States Satellite Leadership and Security Act of 2011 (H.R. 3288) introduced by Reps. Howard Berman (D-CA) and Don Manzullo (R-IL). (continue reading…)

The Defense Department released a report today assessing the risk of transferring satellites and space-related items from the U.S. Munitions List (USML).  The so-called “1248 Report” was requested from the Secretaries of State and Defense in Section 1248 of the National Defense Authorization Act for FY 2010. The White House also issued a Fact Sheet on the report.

An excerpt:

“For the sake of national and economic security, the Departments recommend that authority to determine the appropriate export control status of satellites and space-related items be returned to the President. Specifically: The President should be authorized to determine the export control jurisdiction status of satellites and related items; and The Department of Defense should be authorized to determine the need to apply special export controls to U.S. companies providing technical services in support of foreign satellite or launch vehicle development and associated launch operations, and to be reimbursed as appropriate.”

Appendix 1 of the report includes a draft proposal of USML Category XV (Satellite and Related Items), and Appendix 2 includes a draft proposal for CCL ECCN 9X515 (Spacecraft and Related Commodities). These two proposals will need legislation to be enacted.

This issue was examined by the House Foreign Affairs Committee in February, with testimony by the Aerospace Industries Association and Satellite Industry Association. Earlier this year, AIA released a study on satellite export policy that outlined the case for modernized export controls on satellites and related components.

Rep. Howard Berman and Rep. Don Manzullo also introduced legislation (H.R. 3288) last fall that would allow the president to shift satellites from the USML to the CCL. (continue reading…)

The Washington Post today reports on a speech by Wes Bush, chief executive and president of Northrop Grumman, commenting on the top issues facing defense contractors and the federal government. Export controls figured prominently in his remarks, as modernization of the rules are of key importance to U.S.-based manufacturers competing in the global marketplace.

From “Northrop CEO says export controls should be eased“:

The government needs to launch new programs and ease export controls to ensure defense contractors remain capable and viable, said Wes Bush, chief executive and president of Northrop Grumman, in a speech to the region’s technology community last week.
(continue reading…)

In his remarks today to the President’s Export Council, President Obama ran through the various parts of his National Export Initiative, intended to double U.S. exports within five (now a little more than four) years. He reaffirmed the the importance of the U.S.-Korea Free Trade Agreement and closed on export controls.

Finally, we’ve also been working to reform our export control system with high-tech companies like some of yours in mind, so that American firms that make products with national security implications can stay competitive even as we better protect our national security interests.

When this council met in September, some of you asked that we make it easier for businesses to participate in these reform efforts.  So today, I’m pleased to announce that we’re publishing a first set of guidelines for what products should be controlled going forward, and the licensing policies that will apply to them.  As an example, we’ve applied those policies to one category of products.  In that one category, about three-quarters of products previously subjected to stricter controls will be shifted to a more flexible list, and many are expected to fall off the list altogether.  And we want input from businesses, from Congress and from our allies as we complete this reform.

 Today, we’re also unveiling a new export control reform web page as part of the revamped Export.gov.  This is something that Secretary Locke mentioned in our last meeting.  Typically, all businesses that export have to go through a maze of different lists, different formats, from different departments, to make sure they’re not selling their products somewhere or to someone that they shouldn’t be.  As important as that is, the process is repetitive, it’s redundant, and particularly onerous for small businesses without the means to navigate it all.

So we’re changing that.  Effective today, businesses can, for the very first time, go to Export.gov and download one consolidated list of entities that have special export requirements.

Here’s the webpage at Export.gov for the President’s Export Control Reform Initiative.

The President’s announcement embraces many of the recommendations the National Association of Manufacturers and member companies have developed, included in “The NAM Blueprint for a 21st Century Export Control Regime.” As NAM President John Engler said in a statement, “These proposed changes will strengthen national security, improve U.S. competitiveness, and increase export opportunities for manufacturers.”

The President’s Export Council, which includes many representatives of manufacturing and NAM-member companies, convenes at 9 a.m. today. Here’s the agenda, and the meeting is being webcast at http://whitehouse.gov/live.

President Obama is expected to speak at 10:15 a.m. unveiling new Administration proposals on export controls.

• Reuters, “Obama fleshes out plan to revamp US export controls“
• Bloomberg, “Obama Proposes Easing Export Controls on Europe, Japan, Canada“

Bloomberg’s Mark Drajem previews tomorrow’s announcement by President Obama, “Obama Proposes Easing Export Controls on Europe, Japan, Canada“:

The Obama administration proposed easing controls on the export of technology items that may be used for military purposes to 37 allies, including Canada, Japan, Germany and France.

In a rule set to be published tomorrow, the Commerce Department asked U.S. industry groups to review its plans to ease limits on sales for a number of products. Commerce Secretary Gary Locke proposed eliminating export controls for sales to close allies a year ago, and has pushed to get the rules released.

“Conceptually this is a very important move forward,” said Catherine Robinson, the director for high-technology trade policy at the National Association of Manufacturers…

The Milken Institute in January released a report sponsored by the NAM, “Jobs for America: Investments and policies for economic growth and competitiveness.” Modernizing export controls was a key recommendation:

Modernizing U.S. export controls could increase exports in high-value areas. By 2019, these policy adjustments could enhance real GDP by $64.2 billion (0.4 percent), create 160,000 manufacturing jobs, and heighten total employment by 340,000.

President Obama took steps forward this weekend to promote both U.S. trade and national security by announcing significant  export control reforms with India.  According to a Whitehouse Fact Sheet, “Indian Prime Minister Singh and President Obama committed to work together to strengthen the global non-proliferation and export control framework and further transform our bilateral export control cooperation to realize the full potential of the strategic partnership between the two countries.”

So what does this really mean?  For one, the United States is going to actively work with India to help the country gain membership in the four multilateral export control regimes.  This is significant not only because the National Association of Manufacturers specifically called for improved multilateral engagement in our Manufacturing Blueprint for a 21^st Century Export Control Regime, but also because effective proliferation controls depend upon strong multilateral controls. India’s membership will promote greater harmonization of export control systems and help drive consistent implementation of standards across member countries. Given India’s ever increasing and growing role in global security and economic matters, this integration is important for U.S. national security and the manufacturing sector.

Second, the United States will “realign” India in its dual-use export control regulations to reflect India’s status as a strategic partner, effectively treating India similarly to other close allies and partners. India will no longer be listed as a “country of concern” and will establish re-export controls to prevent bad actors from trying to export U.S. technology in India to proscribed third countries. This realignment is significant given the President’s previously announced reforms.  Under the Administration’s proposed three-tiered control list, allies and partners will receive considerably more favorable treatment and exports to those countries will be subject to fewer restrictions.
(continue reading…)

James Jay Carafano, a senior research fellow for national security at the Heritage Foundation, recalls President Reagan’s difficulties in addressing export controls and lauds President Obama for making smart, balanced reform proposals:

 From The Washington Examiner, “Export controls are an issue of good governance”:

To his credit, President Obama has made a good faith effort to manage export controls in a way that is both pro-trade and pro-national security. He has proposed several major reforms that are reasonable, responsible and — at the end of the day — very practical.

First, Obama wants to have clear, consistent rules for how licensing requirements are established and managed. Second, he plans to establish an Export Enforcement Coordination Center to “coordinate and strengthen the U.S. government’s enforcement efforts — and eliminate gaps and duplication — across all relevant departments and agencies.”

Third, he wants to create a common, government-wide information technology system to manage export controls.

The challenge will be to overcome entrenched political and institutional opposition, Carafano writes. Bureaucratic maneuvering can be anticipated, to be sure. Administration of export controls now rests with the State Department, Defense and Commerce. Still, the agencies have so far been willing to work in good faith toward a necessary modernization of the controls.

See also the National Association of Manufacturers’ statement from Aug. 30, “Manufacturers Support Efforts to Modernize Export Controls.”

Today, the Administration announced some important steps in our effort to modernize America’s outdated export control system. These steps will help increase exports, create jobs and make manufacturers more competitive while strengthening America’s national security. The President will make a formal announcement tomorrow.

The steps outlined today focus on the criteria for determining what products need to be controlled, the development of a common set of policies for determining when an export license is needed and the creation of an Export Enforcement Coordination Center to coordinate the federal government’s enforcement efforts. The NAM has been a leading proponent of export control reforms that enhance the government’s ability to protect U.S. national security interests while removing the burdens and disadvantages placed on U.S. high-technology manufacturers.

Manufacturers welcome these steps and have repeatedly stressed the importance of export control modernization.