Support Grows for Easing of U.S. Export Controls

February 7, 2012 - via Defense News

While many in the U.S. Congress view the Obama administration’s plans to reform export controls as overly ambitious, there is growing support to ease regulations on certain parts and components.

At a Feb. 7 hearing of the House Foreign Affairs Committee, chairwoman Rep. Ileana Ros-Lehtinen, R-Fla., said she supports “common-sense improvements in our export control system that will enhance U.S. national security.”

However, she does not support what she sees as a “complete rewrite” of the U.S. Munitions List (USML), which is managed by the State Department, and transferring large numbers of defense articles to the oversight of the Commerce Department.

The revision of the USML and the Commerce Control List is a major step in the White House’s efforts to reform today’s export control system, which many in industry and government say is outdated and overly complicated. Revising today’s system would help U.S. companies compete globally, but it would also allow the government to focus on protecting the most sensitive military know-how and equipment, White House officials have said.
The U.S. remains the world’s top arms exporter.

There are 21 categories of items controlled by the USML. In July, the Obama administration released details for the first category — Category VII: tanks and military vehicles — and began accepting feedback on how to improve such transfers.

According to a State Department official, the comment period has now been completed for five categories. The plan is to brief Congress on two to three categories at a time, with a goal of completing all categories by the end of 2012, the official said.

Instead of overhauling both lists, Ros-Lehtinen said she’d like to see the Obama administration focus on the “removal of the least sensitive parts and components — nuts, bolts, cables and the like.”

The problem with this approach is there is no USML category devoted to parts and components; they are included in each of the USML’s 21 categories, from aircraft to vehicles.

Ros-Lehtinen has introduced a bill that would renew the Export Administration Act, which has been expired since 1994 and is renewed annually through executive order. Her bill includes a provision that says certain generic parts and components do not need to be regulated in the same manner as more sensitive defense articles. However, the legislation does not spell out what those items would be.

Under current law, Congress is to be notified every time an item is moved off of the USML list. The problem is that the USML does not identify specific defense articles but instead uses a catchall definition that says any part or component modified for use on a military system is to be included.

As the administration works to revise the lists and positively identify what belongs on each list, it has not captured all of the items that may have been included under the old definition. This worries members of Congress, who are concerned their oversight role is being sidestepped.

“The ranking member and I have repeatedly stated that we are ready to work with the executive branch to reach an agreement,” Ros-Lehtinen said. “However, we will not accept unilateral actions that substantially infringe on or ignore congressional oversight over these important national security matters.”

Rep. Howard Berman, D-Calif., the committee’s ranking member, credited Obama with taking on “the Herculean, some would say Sisyphean” task of reforming today’s system, referring to the character in Greek mythology who was condemned to roll a boulder up a hill only to watch it roll back down again.

The State, Commerce and Defense departments have been hard at work on Category XV — spacecraft systems and associated equipment — which includes the thorny issue of commercial satellites.

The 1999 National Defense Authorization Act transferred export-licensing jurisdiction over commercial satellites and related components to the State Department, making them the only items on the USML for which licensing jurisdiction is explicitly mandated by law.

The move was instigated by concerns on Capitol Hill that China had obtained secret U.S. technology through a commercial deal to launch U.S. commercial satellites into space using Chinese rockets. For years now, lawmakers, industry and government officials have said that law goes too far and over-regulates the U.S. commercial satellite business. To undo it requires congressional action.

The Aerospace Industries Association (AIA) estimates that from 1999 to 2009, the U.S. lost $21 billion in satellite manufacturing revenue and roughly 9,000 annual direct jobs. According to Patricia Cooper, president of the Satellite Industry Association, U.S. market share has dropped from about three-quarters before the law was signed to less than half of the global market.

Berman introduced a bill last November called the Safeguarding United States Satellite Leadership and Security Act of 2011 (H.R. 3288), which would authorize the president to remove satellites from the USML. It would still prohibit export of commercial satellites to certain countries, including China.

Berman described today’s law as a “well-intended restriction causing unintended consequences.”

Cooper said the satellite industry is not looking for changes to the China prohibitions and fully expects any new law to contain such safeguards.

Lawmakers are also waiting on the congressionally required “1248” report, which will outline the national security impacts of moving certain satellites off the USML.

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Author:Kate Brannen