Tag: export controls

Manufacturers: Export Control Reform is Continuous Process

The Export Control Reform Initiative marked a second major milestone last week, with the implementation of new controls for ships, submersibles, tanks, military vehicles and auxiliary military equipment. The text of the new rules was published six months ago by the Departments of State and Commerce, with a delayed effective date.

Earlier this month, the State Department published the third major final rule implementing the Export Control Reform Initiative, outlining changes to five additional USML Categories. Those revisions will take effect in June. In all, the State Department has published proposed revisions for 13 of the 19 USML Categories – building significant momentum for the initiative. An earlier tranche of revisions, impacting controls on aircraft and gas turbine engines, went into effect in October 2013.

Manufacturers have long advocated for a new approach to export controls, aimed at today’s threats rather than yesterday’s Cold War, and the NAM is pleased to see these important steps toward a modernized U.S. export control system. The changes now underway will help strengthen the industrial base, enhance national security and improve economic competitiveness. But while the Administration’s work to update the USML and the Commerce Control List (CCL) is a positive development in the President’s Export Control Reform Initiative, these modifications are really only the first step.

“With continued leadership from the White House, and from the Cabinet, the Export Control Reform Initiative will achieve the broad objectives laid out nearly five years ago,” said Paulson Manufacturing Corporation President and NAM Board Member Roy Paulson. “Many of the infrastructure improvements required to implement these reforms have been completed, yet there is so much more to do. If the initiative halts here, the system won’t be fundamentally better for exporters. Export Control Reform needs to be thought of as a continuous process, one that is always evolving to the needs of the stakeholders and the requirements of National Security.”

Looking ahead, the NAM has urged the Administration to take an innovative approach to identifying and addressing those unilateral export controls that are ineffective at achieving foreign policy goals and stifle U.S. competitiveness in the global economy. We also strongly support much-needed management reforms – including an effective program license framework, a truly connected IT system across licensing agencies, an efficient intra-company transfer license for trusted companies and simplified encryption controls – that would further streamline licensing and system administration. Further, addressing regulatory and statutory barriers to civil nuclear exports would further boost U.S. security and competitiveness.

In 2009, President Obama announced an Export Control Reform Initiative that was intended to fundamentally reform the U.S. export control system and rationalize U.S. export laws. As part of this process, the State Department is transferring some less sensitive items from the USML to a new section of the CCL maintained by the Commerce Department, and the agencies are adopting a number of additional regulatory changes. The Commerce Department has also produced a series of tools to help exporters, as well as new tool that will guide exporters in the use of the license exceptions. The NAM provided extensive input on the proposals and on the framework of the transition period, and we will continue to work with the Administration to ensure a smooth transition over the next few months.

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U.S. Takes First Step Toward Revised Export Control System

This week marked the first major shift in the U.S. export control system under the Export Control Reform Initiative, launched by President Obama more than four years ago. Manufacturers have long demanded a new approach to export controls, aimed at today’s threats rather than yesterday’s Cold War, and the NAM is pleased to see this important first step toward a modernized U.S. export control system. The changes now underway will help strengthen the industrial base, enhance national security and improve economic competitiveness.

The changes to the U.S. Munitions List (USML) and the Commerce Control List (CCL) that went into effect on Tuesday pertain primarily to controls on aircraft and gas turbine engines. According to the White House, these two control categories together account for the largest volume of U.S. export licenses and represent the highest percentage of licensed exports from 43 states, with licensed shipments of almost $21 billion a year.  These two categories also account for the largest amount (75 percent) of USML export licenses approved solely for parts and components.

In addition to stringent licensing requirements, manufacturers and exporters of items controlled on the USML are subject to annual registration requirements and fees. For the less sensitive items that have moved to the CCL, such requirements are eliminated. Additionally, many of the items moved to the CCL are now eligible for export without specific licenses if intended for the ultimate end-use by the governments of 36 U.S. allies and partners (these exports, though, carry additional compliance and reporting requirements).

In 2009, President Obama announced an Export Control Reform Initiative that was intended to fundamentally reform the U.S. export control system and rationalize U.S. export laws. As part of this process, the State Department is transferring some less sensitive items from the USML to a new section of the CCL maintained by the Commerce Department, and the agencies are adopting a number of additional regulatory changes. The final State and Commerce rules for a new definition of “Specially Designed,” as well as revisions to USML Categories VIII (Aircraft), XIX (Gas Turbine Engines), XVII (Classified Articles and Technical Data), and XXI (Miscellaneous Articles) were published in April. These went into effect on October 15. The Commerce Department has also produced a series of tools to help exporters, as well as new tool that will guide exporters in the use of the license exceptions. The NAM provided extensive input on the proposals and on the framework of the transition period, and we will continue to work with the Administration to ensure a smooth transition over the next few months.

Additional USML and CCL changes will be implemented throughout the next year, as the United States adopts a new export control system designed to address the national security and economic competitiveness challenges of the 21st century. You can learn more about the full scope of the President’s Export Control Reform Initiative, and other export-related issues, at www.export.gov/ecr/.

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Agencies Continue Shift to Modern Export Control Reform System

Manufacturers have long supported a new approach to export controls, aimed at today’s threats rather than yesterday’s Cold War. Real progress is being made to implement the President’s export control reform initiative, with further updates to the U.S. Munitions List (USML) and the Commerce Control List (CCL) published this week.

The State Department published on July 8 a final rule revising USML Categories VI (Surface Vessels of War and Special Naval Equipment), VII (Ground Vehicles), XIII (Materials and Miscellaneous Articles), and XX (Submersible Vessels and Related Articles). The Commerce Department concurrently published a final rule to add CCL categories for the military vehicles and related items; vessels of war and related items; submersible vessels, oceanographic equipment and related items; and auxiliary and miscellaneous items that the President has determined no longer warrant control on the USML. These changes will be effective on January 6, 2014.

This new rule follows previously published revisions to USML Categories VIII (Aircraft) and XIX (Gas Turbine Engines). The Commerce Department published parallel changes to the CCL, along with the initial Export Control Reform implementation steps, in April.

Previous proposed rules and public comments are available on this tracking document. BIS continues to host weekly teleconferences on aspects of the Export Control Reform Initiative. Details and past presentations are available online here.

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Executive Order a Positive Step for Export Control Reform

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.

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FY2013 Defense Authorization Bill Includes Fix for Satellite Export Controls

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…)

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Department of Defense Releases Risk Assessment on Removing Satellites from Export Control List

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…)

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Export Controls Matter for Manufacturing Jobs

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…)

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President Obama Announces Export Controls Reforms

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.”

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At the President’s Export Council, Export Controls

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.

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Export Control Reforms Coming, Top Priority for Manufacturers

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.

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