Changes Weighed in Military Exports

August 29, 2010 - via Wall Street Journal

President Barack Obama will announce a series of initiatives this week aimed at streamlining the system that governs the export of weapons but also commercial products that have a potential for military use.

The policies are part of a broader effort to boost the competitiveness of U.S. manufacturing and technology sectors.
Mr. Obama, in videotaped remarks to be delivered Tuesday to an annual Department of Commerce conference on export controls, is expected to outline measures aimed at laying the foundation for a new export-control system to replace a decades-old system that critics say is burdensome and outmoded.

Among other steps, government agencies would revise their lists of items requiring export licenses to create a tiered system. It would distinguish between the "crown jewels" of military technology—such as stealth aircraft technology—and other more mundane and less sensitive items such as vehicle parts.

Such changes "will allow us to build higher walls around the most critical items to be exported, while allowing other items to be exported under less restrictive conditions," a senior administration official said in a briefing.

The U.S. defense industry, which is looking to expand sales to overseas markets in the face of a flattening U.S. defense budget, has generally welcomed the administration's push. Raytheon Co. Chief Executive William Swanson said in a recent interview that the current system was "trying to protect too much, and if you protect everything, you protect nothing."

The measures the White House is announcing this week will be carried out primarily by executive order. The administration has outlined additional plans to create a single licensing agency, a measure that would require congressional action.

The U.S. export control system was originally designed to prevent the Soviets from getting their hands on sensitive U.S. technology.

The U.S. government now maintains two primary lists of items subject to export control. The Munitions List, administered by the State Department, covers weaponry. The Commerce Department maintains a second list of commercial items that have possible military applications.

Officials describe the Munitions List as more open-ended, which means that every nut, bolt or screw on a weapon system may be subject to formal licensing requirements, even if similar items are commercially available. Thus, the brake pads on an Abrams tank require a license to be exported, even though they are virtually identical to the brake pads on a fire truck.

Mr. Obama also plans to sign an executive order creating an export-enforcement coordination center at U.S. Immigration and Customs Enforcement, which would work with other enforcement agencies that have overlapping authorities.

In addition, federal agencies involved in the process are supposed to move toward a unified IT system.
Secretary of Defense Robert Gates has backed the initiative, saying in an April speech that the "decades-old, bureaucratically labyrinthine system does not serve our 21st-century security needs or our economic interests."
U.S. defense manufacturers, which have long complained that the current system undercuts their competitiveness, are likely to welcome the move.

"You will find a lot of enthusiasm in the business community for the whole enterprise," said Bill Reinsch, president of the National Foreign Trade Council, a business group advocating an open global trading system.

Remy Nathan, assistant vice president for international affairs at the Aerospace Industries Association, a U.S. trade group, said industry has been calling for change for years. But now "it's the apparatus that's responsible for our national security taking a good hard look at the mechanism for export control."

Clif Burns, an export-control attorney at the law firm Bryan Cave LLP in Washington, D.C., expressed doubt that the next phase of the administration's plan would get through Congress.

"For people on both sides of the aisle, export reform is dynamite, because it's less understood than most things by voters," he said.

"But it's easily characterized as, 'Rep. so-and-so made it easier to send things to the Russians."'

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Author:Nathan Hodge