Earlier this month, President Obama announced two export control reform initiatives designed to help increase American competitiveness abroad, while also making it easier for organizations to achieve better export compliance. This is part of the president’s larger goal of doubling U.S. exports over the next five years. The two key reforms aim to help protect U.S. national security by focusing on critical technologies, while also making it easier for certain industries to compete globally.
The first is a new, online review process for companies seeking to export products with certain encryption technologies (such as cell phones and network storage devices). Right now, companies must undergo a review process that takes anywhere from 30 to 60 days.
President Obama said: “A new, one-time online process will shorten that review time from 30 days to 30 minutes, and that makes it quicker and easier for our businesses to compete while meeting our national security requirements.”
The second reform will seek to eliminate obstacles for exporting certain products to companies who employ dual-nationals and third-country nationals. Today, companies must comply with different standards under the ITAR and EAR. For example, DDTC (which administers the ITAR) considers all nationalities an employee may hold when evaluating whether to approve or reject licenses and agreements. On the other hand, BIS (which administers the EAR) only considers an individual’s most recent country of citizenship or residency when evaluating export license requests.
The new reform will “harmonize” those standards to make it easier for companies to comply. Although there are no details yet on which agency’s approach will be used, we expect to hear details on these reforms from DDTC and BIS soon.
In the meantime, it’s promising to see the White House make efforts to bring some much-needed overhaul to the current export control regulations. However, these two reforms are comparatively minor to the larger issues that still need to be addressed. A December 2009 analysis by the Defense Trade Advisory Group recommended some larger, more sweeping changes, in order to achieve a “21st Century Export Control System.”
Some of the changes DTAG proposed include:
- A single, coordinated export control system within the U.S. government, which transfers responsibility from the legislative to the executive branch
- New exemptions which permit the export of items in support of previously-approved sales
- A system where U.S. companies can “earn their trust” with the government through a history of good compliance measures, programs and internal controls
- Annual review of controlled items to eliminate unnecessary controls
- Minimal or no controls on items and technologies which are widely available for public use
- A faster, online licensing system
- And more…
During his speech to the Export-Import Bank this month, President Obama promised more changes and reforms as part of his larger National Export Initiative. This follows last year’s call for a “broad-based interagency review” of existing export control regulations.
It will be interesting to see if Obama is able to institute the much-needed reforms – protecting national security while delivering the “change” U.S. industries need.
Looking to make meaningful changes to your company’s export policy? Buy our ITAR manual today. It’s been used by hundreds of companies, and includes plenty of useful policies and procedures to help your organization comply.
Don Buehler is founder and president of Export Solutions, Inc., a consultancy firm which specializes in helping companies comply with ITAR and EAR.