Protected: Week 5 Discussion • Global Trade & WMD

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  • I think the major challenges to export control reform in the US are evident in the second lecture and especially in the Additional Materials for this particular Week 5, though these focus primarily on the adminstrative aspects, rather than the political. Specifically, the primary major challenge is the issue of disparate agencies with various levels and types of controls over the sheer variety of dual-use commercial items that are produced in the US. We have three agencies, thankfully now making an effort at combining their efforts into one single pipeline, who clearly have struggled to define exactly what they “control” and what they dont. This issue has been an ongoing one, and seems to only have gathered momentum in the direction of overall simplification of the export control process with the efforts of the Obama Admininstration.

    The second challenge, which is a subset of this, is the nature of the dual-use items in question that seem to have come under increased scrutiny in order to ease export controls, while still ensuring US national security. Of course, I am speaking of those items that are, in some way, affiliated with military uses. While it is clear that the US government’s maze-like export control system is far too complex and unwieldy – or at least more so than it need be – national security must come first. It would not be useful and would indeed be potentially dangerous to speed up the “funneling” efforts of the three agencies (whose administrative motives appear to seek to improve, not hinder the export process) at the risk of exporting even a single dual-use item that a nation like China might be able to use to improve its own military capabilities. As skilled as the Chinese are, for example, at reverse engineering, a too-swiftly examined and approved dual-use export item could have disasterous effects on what technological advantages the US military currently enjoys. In addition, while the idea of facilitating exports of dual use military items to allies seems, on the surface, a “no brainer”, this is simply not the case. These items must be examined for suitability for export just as w would for an other client state. The reality is that, once sold and shippped, the US no longer controls that item – and a bad actor who works for an allied air force, for example, could easily funnel that technology to a state that we’d otherwise deny.

    Finally, with regard to the political issues, though not addressed in as much detail as the administrative aspects, are critical as well. We want to maintain good relationships with our allies, and not deny them dual-use military technologies that would enable them to better defend themselves and, in so doing, aid the US in providing increased stability worldwide through development of more advanced and effective military systems. In short, the political component cannot be dismissed in examining the mechanics of improving the flawed dual-use control system that is in place. Military systems, in particular, are a potent military “poker chip” with which the White House conducts political actions with friendly and unfriendly nations. Maintaining stricter controls, in fact (when contrasted with the above discussions over lessening of controls) can be a powerful political weapon, in denying a client state a much-desired dual use military item.

    Dr. Tom Hunter2 July 2014
  • And as a side note – it would be interesting to note what the Department of Defense, itself, is doing in all this, and if it is being cooperative or resisting the proprosed changes. DoD clearly has a key role to play in the processing of dual-use military items and, I would hope, the final say as to what it would allow to be placed on the export list. I can only think that there must be a DoD office that deals with this issue and works with State to determine what is acceptable and what is not. This determination cannot be made solely by the three civilian agencies working on the reforms, that goes almost without saying, and therefore I hope DoD is “on board” with the streamlining process and not throwing up unreasonable roadblocks. While President Obama is the CinC, the Pentagon is entirely its own entity with its own politics, relationships with defense contractors, and other dynamics that the civilian agencies inherently do not. In sum, DoD could easily present a major bump in the road if it felt that these civilian agencies were pushing too hard on sensitive technological military dual-use items. Sorry – should have added this to the original post, but this just occured to me, having worked in the Pentagon myself.

    Dr. Tom Hunter2 July 2014
  • As far as I understand it, the envisioned standard for what stays on State’s list is items that provide a critical military advantage to the U.S. – as determined by the President’s judgment. This of course calls for political battle. Congress has always seen itself as the champion of nonproliferation and export controls. I think that Congress may be over-reacting here, though. Most of what is being transferred over to control by Commerce is not being seen as enormously sensitive. Moreover, “higher walls for fewer items” has the positive effect of channeling attention to the real critical items.

    Marco3 July 2014
  • I think a major challenge to export control reform in the United States would be the large amount of companies that produce and export controlled items, and the federal infrastructure needed to effectively and efficiently monitor that trade. Additionally, due to the large number of products on export control lists, it is a challenge to appropriately divide the types of controls for different categories of materials that maintains security for sensitive technologies while also not delaying the trade of less sensitive materials to trusted nations. This could lead to political disagreements regarding the sensitivity of many military products/materials, and there will have to be mechanisms for assuring consensus on the appropriate security measures for military items on export control lists. The U.S. Munitions List reforms discussed in this article seem to attempt to address those challenges by revising stricter lists to separate the most sensitive materials from the less sensitive materials, and easing restrictions on the less worrisome products so that they are more readily available to NATO countries and other close U.S. allies. Though this creates more work in the immediate future for large weapons producers and for the Dept. of Commerce as they are transferred a significant amount of items from the Dept. of State lists, it seems that in the long-term it will have more benefits for all parties involved. The article mentions that the changes will enhance cooperation and joint operations with close allies, as well as bring more business to U.S. companies because many products previously avoided by foreign buyers due to strict controls are now less regulated.

    Erin C3 July 2014
  • I came across a great video I thought I’d share here. It’s a 60 Minutes video discussing how Iran obtains US made materials.

    Dr. Tom Hunter3 July 2014
  • Also, if you are interested in the King’s College London study on the MKS case (the one I chose to pursue for the assignment), you can find it here. It’s an interesting read.

    Dr. Tom Hunter3 July 2014
  • For this week’s discussion, explain what you think are the major challenges to export control reform in the US – both from an administrative and political perspective? And what is the outlook for industry if these reforms progress? Is there any reason for industry or the security community to be worried about the current and future direction of reform?

    Export control reform faces many administrative and political challenges. As it is intimately tied to national security, it brings a number of agencies and institutions with different mandates into play and for that reason demands extensive deliberation. There are many “keepers” of national security in the US and achieving consensus on how to best protect it and what type of items or goods should be controlled is a difficult task.
    In terms of the “four singles”, though in theory it is an attractive prospect from different perspectves, in practice it faces obstacles. A single control list could prove more complex to scan and review than two or three lists in different places, and establishing a single licensing agency is tricky when there are different institutions that have mandates and responsibilities over the handling of different types of items.
    Apart form the administrative issues there are political and economic factors at play. Congress naturally blocks any initiative that could threaten national security, and shifting items from one list to another forces complicated technical discussions which may produce resistance and suspicion and could simply lead to restriction and prohibition as the most comfortable and appealing solution.
    Then there is the pressure from industry, that wants less restrictions and a less regulated marketplace that can allow it to sell more. The pressure exerted is considerable when these companies have enormous political strength and can influence elections and nominations.

    Nicolas L.4 July 2014
  • Well, needless to say… this is not good…

    Mexico City (AFP) – The Mexican government warned Friday that a vehicle containing radioactive material has been stolen, and issued a dire warning to the thieves against taking the potentially deadly material from its protective container.

    Federal civil defense officials said the vehicle had been transporting deadly iridium-192, a radioactive substance used in making some industrial products.

    The substance “can be dangerous for human health if removed from its container,” the officials said in a statement, adding that the material can be lethal even if handled for only a brief time.

    The theft in Mexico state prompted officials to issue an alert throughout the capital region and in neighboring states.

    It recalled a similar incident in December, when thieves stole a cargo truck containing highly radioactive cobalt-60, apparently unaware of the deadly cargo within the vehicle.

    Authorities ultimately arrested several suspects in that case after recovering the lethal material.

    Dr. Tom Hunter4 July 2014
  • From an administrative perspective, reforming any bureaucracy has always proven challenging. The 4 Singles plan while sounding very practical, will inevitably run into problems and red tape. However, the current system seems to be challenging enough to U.S. industry as they try to both keep up with the changes to enhance security while also maintaing productivity and profit. The Commerce Department and the State Department have to work as closely together as possibly, continuing to share information and keep industry abreast of future changes in the system. As with previous themes in this course, while national security should always be in the driver’s seat, the economic concerns must never be overlooked.

    From a political perspective, it has been apparent in Washington for some time the drive to overhaul any major system in the U.S. While Congress should be concerned about shifting items from the munitions list to the dual-use list too quickly, they should listen to and address the needs and concerns of industry, and what these moves could do. Close dialogue between Congress, government agencies, AND industry should be maintained to allow things to proceed as smoothly as possible, until the day comes when a single control list, licensing agency, IT system and enforcement agency can be established, fully operated and monitored well.

    Scott Sharon5 July 2014
  • For this week’s discussion, explain what you think are the major challenges to export control reform in the US – both from an administrative and political perspective? And what is the outlook for industry if these reforms progress? Is there any reason for industry or the security community to be worried about the current and future direction of reform?

    ECR initials of Export Control Reform has gone through a long journey and definitely resulted in clearer guidelines for exporters, federal agencies regulating exports. ECR is a multi-phase process. It presents intra-agencies efforts between State, Commerce and other federal regulatory agencies.

    Kevin Wolf from Dept of Commerce conducts weekly conference calls at 2 pm on Wednesdays to listen to Industry suggestions and feedback on ECR. This is a great effort educating and informing all related parties to assist government in formulating policies.

    DDTC Directorate of Defense Trade Controls – State Department works closely with BIS Bureau of Industry Security- Department of Commerce to review USML ( US Military List) versus CCL ( Commerce Control List) and identify sensitive and very sensitive materials on WA Waassenar Arrangement List.

    The whole process of CJ Commodity Jurisdiction was better defined and streamlined.
    From administrative standpoint, ECR is certainly a great benchmark to simplify export jurisdiction.
    From political standpoint, ECR is also in line with other developed countries in the world.

    Industry will definitely have a better outlook when these reforms progress. The CCL commerce control list has more added ECCN Export Control Classification numbers, namely “Specially designed” series 600 and the latest designation of 9×515 for satellites and related parts.
    The transitioning of Electronics from USML to CCL has been foreseen for years.
    There is no reason for industry or the security community to be worried about the current and future direction of reform. U.S is certainly in line with the rest of the world in terms of compliance.
    Regarding 4 “Single Approaches” of which “Single control list” is the first one. I would guess – Not yet… EU maintains 2 different lists: military list and dual-use lists on Appendices 1-4

    Bachlien Scanlan5 July 2014
  • One of the major challenges that ECR in the US, from an administrative point, is defining the high walls around what items should be closely controlled and what other should take advantage of the BIS licensing schemes, I have notices that efforts have been made in better defining, by objective parameters, what should remain on the USML, maintaining the military advantage, and what would be an acceptable risk if moved to the CCL. Both regulation have tried to define the objects in order reduce the grey areas but the biggest administrative challenges are going to be with the international community which is not staying in pace with the US reforms,
    The challenges will be with some of the remaining categories which have the line of demarcation between what is needed to maintain a military advantage and what is needed to maintain strategic business advantage so thin it’s almost not existent. This is more evident when we deal with Telecommunications, Computing and Satellite System. These in most cases use the same exact technology to stay one step ahead of the others.
    One of the reasons for export reform was to streamline the licensing process by affording certain less critical defense articles licensing exemption/exceptions that are provided for the EAR. I believe that form a legislative point of view it would have been a nightmare trying to include the same the ITAR and conceptually would not make any sense. Having two agencies doing the exact same thing makes absolutely non sense and would a waste of precious economic resources.
    For a political standpoint, I thigh it’s just a matter of deciding who should take the lead and reorganizing the current resource to work with each other and ensure the same that jobs will not be eliminated. I believe that in some agencies, for the level of activities being requested, are understaffed while other have resources that can assist to make the whole system more efficient giving industry a competitive advantage by getting their product to foreign markets faster. This is not to say that licensing and vetting process should be circumvented but having a streamlined system permits doing the same tasks faster and better.
    From an industry perspective, like all new things, there will be a learning process and a period of getting to know each other. Those who control does not want to lose their authority to decide and those who are controlled do not want to feel like that more controls are being added to objects that previously were not. This is, I feel, is just an interim phase and once all of reform objects, the four singles, have been implemented all will return to business as usual with licenses being requested when needed and the advantages implemented by ECR will be seen as, “why didn’t we do this earlier.

    Antonio6 July 2014
  • The shift from the USML (US Munitions List) to the CCL (Commerce Control List) is one of the steps in synchronizing items to one controlled list, a goal set by Obama’s Export Control Reform initiative. I have been part of several discussions in which the shift in administration is causing some grief, mostly because the State Department and Commerce Department treat exports of controlled items differently. DOS requires payment for an ITAR license, DOC does not, the licensing interfaces are different (D-Trade vs SNAP-R), destination control statements are different, AES filing timelines are different. Many of these small changes are of great concern to a company that may have only dealt with ITAR items and now has to work through DOC for an export license. Of course ECR makes sense in the long run but it’s this short term transition that causes the most pain. Exporters want to comply with the regulations and are clamoring to do so but this shift in the administrations/jurisdictions is making it difficult.
    Where I see the greatest issue is what the governing agency will look like. In many cases licensing officers are subject matter experts in the commodities in which they are reviewing licenses. I have already been party to a license application through DOC in which a former DOS licensing officer was the presiding licensing officer. The treatment of the DOC license was unlike the licenses in the past. As ECR moves to amass control lists, agencies, IT systems, and enforcement there are inconsistencies. The decentralized model is present in the centralized model and really the only way to correct this is to manage ECR with training for all personnel, outreach to the exporting community and to allow for dialogue between agency and exporter.

    Erin T6 July 2014
  • With the development of Dual Use technology, I think this reform is in line with the present time.
    The US reform highlights the significance of specifically designed as a key point to understand the Reform. in the name of a no bureaucratic approach the Reform plan to create a more efficient control licensing system based on a single Agency where there will be the control for export of USML and CCL. The challenge is to improve security throughout the coordination planned to shift some less sensitive military items from the USML to CCL as to manage the export of these items according their application.
    By a political point of view, it means that also the allies will have to distinguish and to comprehend the use and the management of the US origin items.
    Industries, has to re classify their items shift from the ML to the CCL and to establish for every customer how to export.
    As a foreign person I do not know if this is a big impact on US companies but, I am an European person and I think this Reform will have an impact on EU Rules in a significant way. Today in EU we have an EU Regulation with secondary national rules for the export of Dual use items and for the Export of Military items only national Rules because of the Security Member States. A first step will be the harmonization of the lists in Eu and in USA.

    Laura7 July 2014
  • One of the key challenges is the number of different stakeholders and interests involved. If I am in industry, I will want the rules to be as clear as possible- and as narrow as possible- so that I can do my business in as predictable and profitable a way possible. If I am in charge of making the lists of controlled items- my main responsibility isn’t profit or ease of business, but to maintain military advantage for security purposes. It is intrinsically difficult to make trade offs that can have the possibility of reducing security, even if it is a small amount of security traded for a much larger amount of ease of business. If somehow you were responsible for a dual use item being used in a foreign militaries WMD program because you took it off the control list incorrectly- that sense of responsibility is much different than if you were in business and made a mistake and face a fine, or if you can not sell an item to a potential customer because of a control list.

    On the other hand, industry lobbyists for the defense industry are powerful- and defense industries are smart in that they have spread their facilities throughout the U.S. to ensure that many in Congress depend on the industry for jobs in their district. Industry can use this influence to try to control the debate on things like controlled items.

    Leon Whyte7 July 2014
  • For this week’s discussion, explain what you think are the major challenges to export control reform in the US – both from an administrative and political perspective? And what is the outlook for industry if these reforms progress? Is there any reason for industry or the security community to be worried about the current and future direction of reform?

    Export reform faces challenges from both the admistrative and political sides.

    Reform is a difficult administrative task. The DOC and DOS must review the large volume of controlled items, decide which need to be tightly controlled and which less controlled, review the proposed list and wording of the revised control lists with industry experts, review the comments, finalize the new guidance, and then prpare to receive questions.

    Reform is also difficult from the policitcal side. Many parties will have an interest in what is more controlled and what is less controlled. Any company involved in exports will prefer to have its product listed on the CCL or not subject to regulation as opposed to the USML as a DOC license faces less scrutiny and is easier to obtain. Politicians will feel pressure to influence the proceedings from companies in their constituency. Politicians may also feel pressure from allies out side the US who desire increased access to US technology.

    Export reform will ultimately benefit industry. Companies wil be able to consider increased exports and global collabortion due to th eincreased ease of obtaining licenses for items migrated to the CCL or removed from control. Until then, there will be a challenging period of undertsanding the new regulation, retraining employees, re-evaluating the export classification of product catalogs, and reviewing and updating the license landscape.

    Sarah B7 July 2014
  • From the assigned article it seems like the major challenge to export control, from an administrative perspective, is the complex nature of the export control structure. It’s not as simple as just identifying and labeling manufacturing equipment; technologies and materials from all sectors are controlled to some extent on a variety of different lists and on a variety of levels. Additionally, technologies (like cloud technologies) evolve over time, faster than control reform can keep up. Politically, moving items from one control list to another impacts government departments and certain industries, who may protest the burden that reform places upon them.

    If reforms progress as they are intended, industries should have greater clarity as to their requirements, make fewer export mistakes, and build systems to more efficiently export sensitive or controlled materials. One concern, however, could be that as export controls are reformed and restructured, new vulnerabilities may be created for traffickers to exploit. In theory the reforms may be a good idea, but in practice they may open a new can of worms for non-proliferation efforts.

    Emma F7 July 2014
  • One of the major administrative challenges of export control reform is keeping up with which items are controlled by which list. Some companies that have been used to submitting a license application to DDTC for a USML item may now have to move over to DoC and submit an application there. Because of the different forms, systems, and requirements, this requires the company to alter its institutional knowledge a bit to adapt to the new system. Furthermore, while one intent of export control reform was to clarify what is actually being controlled by the USML, there may still be some gray areas. So, in the midst of a change to the list, a company may still have to file for a commodity jurisdiction to determine who controls the item, potentially slowing down business.

    As far as I can tell, so far, there are few political challenges. While there is a push for a single licensing agency, there appears to be cooperation amongst the major bureaucratic stakeholders (DDTC, BIS, and DTSA) in rewriting the control lists. There has even been some migration to a single IT system across the interagency (Check out this page for a clear tracker of ECR progress

    I think ECR is a net win for industry and security. For industry, rewriting the control lists will expedite and clarify the licensing process for some items. For example, before the rewrite, nearly every category of the USML had a “components” sub-category. This meant if a company wanted to export a bolt used on a controlled item, it was controlled as well. Exporters of spare parts were being held to many of the same requirements as exporters of the platform itself. By cleaning out these component sub-categories, parts manufacturers and exporters are no longer held to the USML requirements. That is not to say the items are de-controlled. They are now under Commerce jurisdiction under different requirements.

    For security, rewriting the lists allows State and DoD to focus on more sensitive technologies and commodities. As has been said before, this creates higher walls around fewer items. Licensing officials within DDTC and program officers at DTSA will be able to more closely examine and adjudicate license applications for the most sensitive military technologies that do not have commercial use.

    Cameron L.7 July 2014
  • The major challenges to export control reform on the administrative side are unifying the infrastructure for the two lists and keeping the existing lists relevant during this process. This is an incredibly challenging task in the US government today as evidenced by the inability of the DoD to effectively handle the transition of medical information for active duty personnel from their database to the VA database and their inability to combine the two. Moving items between these lists while keeping them both up to date and ensuring that no items fall through the crack is a difficult challenge by itself.

    Political issues to export control reform are mostly driven by differences in opinion about the security value of limiting sales of items with dual-use or direct weapons applications versus the economic value of keeping US companies competitive with their global peers. In addition in the current constrained budget environment it is very challenging to divert money that may be needed to reform the IT infrastructure due to recent high-profile failures of IT investments in the US government.

    The progression of these reforms is good for industry because it means their goods will be able to be sold to a wider audience with fewer restrictions. The one caveat to this is that if large segments of items are moved from one list to the other the short term compliance costs may be hard for smaller companies to bear if a significant fraction of their revenue comes through existing exports of items controlled under the munitions list. In addition having more clarity about which items are controlled by what list will reduce compliance costs for companies. A future unified IT system could also drastically reduce compliance costs.

    The progression of these reforms can also be good for the security community as it makes it easier to keep closer track on exports of items that have high strategic value that may be missed due to the larger number of items that are currently tracked.

    Cameron7 July 2014
  • One major challenge from a political perspective is having the right people from government and private industry agree on the items that should be transferred from the USML to the CCL. Or put another way, having the right people in the room to correctly balance the US’s security needs with the economic needs behind these reforms. The tendency is for industry to be a bit aggressive and for the government to be on the conservative side. Finding the right balance between the two is a major political hurdle. From an administrative perspective, once the items to be moved are identified, taking into account industry feedback, not to mention the actual shifting of the items from the USML to the CCL, will take a lot of time. In addition, the government will have to decide how to treat license applications that have already been filed and processed under the older version of the regulations, and how to address industry confusion on account of the same. (Note – to date it looks like the US government has manage this transition / process quite well.) Another administrative challenge that the article pointed out is companies having to spend the time/resources to re-classify their items.

    The long term benefits should outweigh these short term costs. Having items moved to the less stringent CCL will ultimately eliminate a number of headaches that companies currently must endure on account of having to navigate the ITAR’s stringencies. It will also potentially open more doors to international business as fewer foreign companies will choose to design-out US origin parts/technologies on account of ITAR compliance.

    And what is the outlook for industry if these reforms progress? In the short term, there will be both confusion and administrative work (for example, re-classification & dealing with licenses that have already been filed and granted) that industry will need to endure. Once these short term growing pains are dealt with though, the longer term benefits should more than outweigh them. The process for exporting all but the most sensitive items should be far simpler as those former USML items which have been transferred to the CCL will to always require a license. In addition, the “see through” rule which formerly applied to end items that incorporated ITAR components will no longer apply for those items that have been shifted. The less stringent de-minimus standard will come into play.

    Yes – both industry and the security community should be concerned about the direction of export control reform. To minimize these concerns it is crucial for government and industry to continue working together closely. This includes industry taking advantage of open lines of communication with the government on concerns they are having, and the government continuing to monitor how industry reacts as well as changes in the international security situation. A lot is riding on the successful implementation of these reforms. Getting the reforms right will have the dual advantage of both making US industry more competitive and keeping the US and its allies safer (by keeping “higher walls” around the most sensitive items). Getting it wrong could have the opposite or near opposite effect – adversely impacting both the government as well as domestic industries.

    James8 July 2014
  • I are really surprised and pleased to see the progress for ECR as there was no deadline mentioned in the beginning for implementing all reform however ll there is a good progress made and implemented also . Some of the summary and challenges that industries will face like
    • The International Traffic In Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”) to streamline and rationalize the U.S. export laws. As part of this process, the Directorate of Defense Trade Controls (“DDTC”) is transferring certain less sensitive items from the U.S. Munitions List (“USML”) to the newly created “Series 600” on the Commerce Control List (“CCL”) maintained by the Bureau of Industry and Security (“BIS”), and the agencies are adopting a number of additional changes to the ITAR and EAR. This will be major task for all company to re classifying there items once again. These Changes in the CCL will cause increased regulatory costs on the short term
    • Will make defense trade in the supply chain for NATO and other allies more efficient.
    • Will have more compliance obligations now and difficult to be track and monitor the same
    • Biggest beneficiaries may be defense contractors
    • Further burdening Commerce with thousands of new licenses; taking up all the oxygen from other “reforms” – intra company license, deemed exports, encryption
    • USML Cat XI military electronics XV space could prove problematic
    • Generally speaking China will be excluded from reforms
    • There will be a 180 day transition period for each USML Category from the date the final Category is published until the effective date of the newly published Category to allow exporters to review and prepare for the new license requirements. This will be challenging for most of the company to getting ready within 180 days . This will be really tough
    • Lower export restrictions may result in manufacturing processes moving abroad

    Umesh8 July 2014
  • Administratively, consolidating and changing offices means different jobs, and possibly different people. Changeover and downtime can generate all sorts of confusion. Confusion can be exploited by bad actors. Moving items from one office to another office means that the second office needs to either develop knowledge or acquire it (presumably from the first office). In the long term, regulations might become more clear, but the interim period would be troublesome.

    From a political standpoint, there would be two sides to every reform. The reform could be considered to be “pro-business” or it could be anti-national security. The reform would make it easier for companies to make licenses. However, the reform could also be viewed as making it easier for bad actors to aid illicit WMD programs or as eroding US military advantage.

    Both industry and the security community could be concerned with this reform. While the reform may ease the burden on industry by establishing clearer restrictions, industry may find it harder to export certain items due to the shift in scrutiny. The security sector should be concerned about which items are shifted to the dual-use list; the article itself points out that certain elements are what gives the United States “its military edge.” An administrative mistake (shifting a decimal point, missing a comma) could cause an item to be moved accidentally.

    Matt8 July 2014
  • Major challenges to U.S. export control reform — two fold:

    1) Creating an efficient, modern, and self-sustaining export control regime: these revised export control lists are welcomed because the rapid pace of technological change and shifts in the global marketplaces necessitate a modern control list. Efficiency is important, especially when the volume of export traffic continues to grow. A streamlined list that deprioritizes less sensitive items can allow private industry to better police itself over the long run in a sustainable manner. If every sensitive export item is equally important, then nothing is important.

    2) Creating an export control regime that doesn’t unnecessarily hurt the commercial interests of U.S. companies: Handelman’s point about trying to reduce incentives for foreign buyers to eliminate U.S. firms from supply chains because of restrictive export license requirements is a critically important one in today’s global economy. From a commercial perspective, U.S. officials want domestic firms to grow and excel financially. From a non-proliferation perspective, the more U.S. companies — and its allies — dominate these sensitive export arenas, the more likely its export control regime will be successful at limiting the spread of WMD. U.S. officials want to have the leverage this dominant position affords the United States.

    The U.S. industry that operates in this field should benefit from these export control changes over the long-run. Certainly, having to reclassify parts used in different weapons systems will complicate big weapons manufactures operations, but so would evidence that they were inadvertently exporting illicit items to countries of concern. Not good publicity for the bottom line.

    The security community should remain vigilant that the revised export control lists do not deprioritize truly sensitive dual-use and military useful items. However, a control list that covers every conceivable dual-use item will likely backfire and result in U.S. firms losing market share, foreign buyers abandoning U.S. companies in the supply chain, and a resurgence of countries and companies less concerned about broad non-proliferation goals.

    Timothy W8 July 2014
  • In my opinion, the major challenges to export control reform in the U.S. are:

    From a political perspective, to allign and coordinate

    From an admistrative perspective, to coordinate the work of a number of agencies involved in defense trade controls (

    Coordination and lessons learned from the different end-use monitoring programs (

    Manuel Martínez8 July 2014
  • (Apologies for the previous unfinished post).

    In my opinion, the major challenges to export control reform in the U.S. are:

    From a political perspective, to align the different political interests of the various units involved in the process within the Congress, the State Department, the Defense Department, the Commerce Department, the Department of Homeland Security, and the Department of Justice with the commercial interests of the industry and its lobbyists.

    From an administrative perspective, to coordinate the work between agencies involved in defense trade controls, to share lessons learned from the different end-use monitoring programs (Blue Lantern-State Department, Golden Sentry-Defense Department and Extrancheck- Commerce Department). In terms of improving the work with the agencies:

    • To allocate enough resources to properly train government officials
    • To create “country teams” tailored to local circumstances
    • To incorporate software technology in order to help scrutinize and identify possible red flags and not just rely on the experience and intelligence of the official.

    Manuel Martínez8 July 2014
  • The major administrative challenge to export control reform is simply aligning the massive bureaucracy that is the United States Government in a manner that is efficient, delivers the desired outcome, and is cost-effective for the taxpayer. The “Four Singles” makes complete sense, and achievement of such a goal sounds simple – but, regrettably, it’s not. Such efforts require huge levels of coordination among disparate agencies with disparate goals, and in this case, where efficacy relies on a system that is nimble and readily adaptable, even common interests will run into obstacles.

    Politically, there should be close attention paid to these efforts, as carelessness risks relinquishing US military or security advantage. The executive branch must rightly be sensitive to these concerns, which could be exploited by opportunistic opponents in the legislative branch.

    Industry would be right to be closely following such reform efforts. There are compliance costs that must be factored into a company’s bottom line if major revisions are made to export controls. The trend here, however, towards an easing of export controls, however, could have many long-term benefits for companies looking for foreign customers. Industry, thus, should not be worried, but should understand that lighter export controls and less items on the US Munitions List mean more business opportunities abroad.

    Pat D.8 July 2014
  • The major challenges to export control reform in the US, since the administrative perspective, is the numerous agencies there are in the different sectors of the government, with many types of controls of military goods and dual-use commercial items that are produced in the US, specially the Federal Agencies Involved in Defense Trade Controls, that has five big departments (the State Department, Defense Department, Commerce Department, Department of Homeland Security and Department of Justice), with approximately fourteen agencies working in. The Department of defense has the key role to clear a lot of military goods (US Munition List) that can be categorized as dual use goods allowing go to the department of commerce (Commerce control List),. Gathering the control list in only one agency will be a big opportunity to the manufacturing companies to accelerate the trade overseas of a large number of products on exports control list; and won´t delayed the trade of less sensitive materials and technologies. It´s necessary to have a balance between the national security concerns and the economic concerns. The reforms plan will have to decide a standardized forms, formats, requirements and how to assess the licenses applications, but the US government have to aware of the traffickers specially in the gray time period until the system regulated itself.

    Since the political perspective, the Obama administration decision to push the reform, conducted to a political battle in the congress in the last phase. The idea to put a big walls around smaller groups of items that need much control would have a positive effect, because will release a lot of items from the US munitions list to Commerce control list. The Congress has a trend in stricter nonproliferation and export controls…

    If the reform progress as were planned, will creates more commercial opportunities to the producer’s enterprises around the world. In the short term, there will a lot of works in the different departments of the government in the harmonization of the lists control items, determining the categories, the format, assessment and granted procedures and others administrative stuff, but in the long term will benefit all parties involved.

    The defense sector always will be concerned with this challenge reform, because they have to decided which items will be shifted from the US munition list to the dual-use list of the department of commerce.

    The coming new clearly lists of the dual use goods, and the single IT system, single enforcement agency and single license agency of the system, will permit less costs in the compliance program of the companies.

    Rodolfo Gamboa8 July 2014
  • As there are many national authorities/agencies involved in the export control regime and enforcement matters, U.S will have to deal with which will be a better way to coordinate between them in order to effectively regulate its export sytem and avoid diversion of the control list items, specifically with the sensitive ones/dual use items. Not only in terms of enforcement measures but also in terms of a preventative enforcement sense.

    Administratively the change of category from the Munition List to the Dual Use items will be a complex process due to the fact to decide which type of commodities willbe the ones and to adecuate the requirements of licences, where applicable.

    In this sense, politically will means that it will be necessary to balance the security and the economic interests. Industry surely will be reaching less controls to facilitate the commerce of that kind of items. Meanwhile, the reform will need a riguorus debate in the Congress. U.S has also a huge industrial base and lots of companies in that business. Perhaps it can be usefull t consider the inclusion of a “catch-all list” apart from a basic control list, as well as rethink on the existing monitring programns of the end-use/user.

    The international community will have special insterest to follow-up this reform process as U.S is member of all the suppliers groups and perhaps monitor if this reform is in compliance with its commitments.

    Karina Hinojosa8 July 2014
  • The biggest challenge for export control reform seems to be striking a healthy balance between restriction and flexibility in controls. As we have seen in many cases, adhering with the current export control regime has proven costly and difficult for companies. This is especially true for those companies that work hardest to comply with regulations. The flip side of this is that if export controls are too stringent, it may have the effect of discouraging further investment in compliance by companies. In other words, at some point the returns on further restrictions are diminishing after a point.
    Politically speaking, determining a certain item’s sensitivity is a delicate task. While there are some who would prefer to maximize the items that companies can export (the profit motive), it is more likely that decision makers would err on the side of caution, lest their efforts to ease regulations result in increased proliferation activities. Thus the greatest political challenge to export control reform may be building a big enough constituency to lower the potential political costs of supporting the relaxation of certain regulations.
    Because the article’s mentioned reform contains many moving pieces (e.g. more clear language for restrictions, changing the status of certain items), there is substantial risk for many items to fall through the cracks. While ultimately export control reform may simplify and clarify the actions required of export companies, the transition period may dangerous due to the possibility of companies not being able to flawlessly adapt to changes in the export control regime.

    Steven Y8 July 2014
  • What’s that old saying? “If it ain’t broke, don’t fix it.” There should be a parallel saying that is more applicable in this context: “If it ain’t obsolete, don’t update it.” Meaning — export control reform should happen only when it is necessary. Not when it politically expedient, not when it eases the administrative burden for relevant government agencies — only when it is technologically necessary. Technological innovations will continue irrespective of whether certain items are moved from one list to another. The need for more technically precise specifications, however, becomes more important as that trend continues. And so, while undergoing export control review and revising those control lists may be a frustrating process, it must happen when technological advances mandate such revisions.

    Industry has two reasons to worry. First, as reforms take place, and as items are shifted from one list to another while other technical specifications become more accurate, it becomes harder for companies to conduct business in a fair, transparent and efficient manner. Having to check and re-check one item after another to see whether it is now controlled can become tedious and cumbersome — and can have a negative effect on the bottom line. On the other hand, if control lists are not regularly revised and updated for the right reasons, companies run the risk of mistakenly, inadvertently, selling a controlled dual-use item to an undesirable end-user. In tandem, when export control reform occurs due to political or administrative triggers, it does not benefit anyone — and companies stand to lose the most because the reforms are being driven forward by subjective considerations, rather than by objective criteria.

    Rizwan L8 July 2014
  • As far as illicit trafficking is concerned, wouldn’t the reclassification of sensitive items to dual-use, so increasing the dual-use list, increase illicit trafficking? As is, illicit traffickers are finding ways around licensing of dual-use items by shipping parts separately, or incomplete, etc., not to mention that the volume of emerging technologies that should be added to the dual-use lists is also increasing. If we are already having trouble managing the dual-use list, wouldn’t adding more onto it exacerbate the problem? I guess what I’m asking is- higher walls for less items are great for those exclusive items, but how would those higher walls affect the rest of the items?

    Bo K.8 July 2014
  • The large overhaul would be rather complex in negotiating a balance and consensus among the major departmental agencies especially in the streamlining of committees from the US Munitions list into that of dual use commodities export lists. From a political standpoint, the defense department would have major concerns because export controls compliance would put into friction and question more of their higher sensitive items, and the controls would likely force them to reveal more information they may be willing to expose. The challenges of reform is to gather consensus from the various and differing philosophies and goals of political agencies and departments (e.g. US Department of Commerce, DoD, DHS, Department of State), in addition to the input of Congress, special interest groups, and lobbyists. This feeds into the overall and overarching concerns of balancing security and commerce. Industry wise, it seems they would stand more to gain because the streamlining of lists could render more options of trade and commerce for them – especially given that lower tier and less sensitive items from the US Munitions list would be shifted away.

    Chris Samson8 July 2014
  • Although it would seem that the battle of wills will be between the Department of State and the Department of Commerce over which dual (or Militaristically ‘single’) use items will land on which list, the crux of the argument will rest on the age-old American balancing question of National Security versus Freedoms. One aspect of recent changes that will ease this debate, is the statement from Reuters that, “Items were left on the U.S. Munitions List if they were found to be inherently military, or had characteristics that gave the United States a critical military or intelligence advantage, and were almost exclusively available from the United States.” Because it is the Munitions List that is primarily being torn apart, this caveat will facilitate critical items relevant to National Security remaining on the proper list.

    However, logic dictates that if enough of the items from the Munitions List were to transition over to the List of Commercial Items, then additional scrutiny should be overlaid onto the List of Commercial Items at a later date. This movement certainly opens up a security gap for the nation, but at the same time eases barriers to economic prosperity. It is already apparent that illicit deals are being struck over dual-use items that are far up stream from one that will ultimately be used directly for WMD proliferation. Adding further items to the List of Commercial Items will likely only further facilitate this trend. Industry, however, will profit from these changes, likely due to the foreign demand for the newly available electronic items not previously available.

    This reform of evaluating what a “dual-use item” now is…certainly has a double edge to it. It will create a more liberal global market, and perhaps set an international trend of easing trade restrictions, but it will also open up sovereign states to a greater deal of risk due to the availability of new technologies. As we have seen in such cases as Russia in both Georgia and Crimea, Electronic Warfare is a desirable, upfront tool to use at the beginning of a surprise attack. This notion can carry over to many realms as well, including the nuclear one. I believe this reform cannot be accurately evaluated yet, and that only time will tell whether this was a good move or not.

    Brandon S9 July 2014
  • The major challenges to export control reforms in the US from and administrative perspective is to make it easy to the industry to know the rules and all persons involved in the chain of trade: company sales department, salesman, managers, trade specialists and final customers. People in the electronics and machines production in different companies have other things in mind when they produce these items. In the case of the US when a new machine is developed the inventors/owners have to apply for a patent, or in the case of a modification, a registration. The patent office in the US could have a special section verifying if these new products could be used for different purposes, in that way since the very patent registration the owners know that this new product, when is sold has a special characteristic that makes it need an additional permit for export. In the end all is related to information and the easy access to it, in order to comply with the government and the international security community concerns.

    Of course, having the need to have more information and training from the industry, requires additional monetary resources from the private sector which sometimes they do not want to spend, as it may not be business wise to spend in something that it is not very likely to happen (to them). Investing money in training may be a no-no since the mentality -of some, not all- business oriented people, is aimed at increasing company profits.

    In the case of the political perspective in the case of these new reforms, there may be big companies with influential lobbyists to exercise pressure against the enhancement of these new reforms which involves adding new products that were not in the list. In the report, US officials said the “drive was aimed at reducing ambiguity for companies about which items required export licenses and which did not” as one of the problems for the industry has been to know which items specifically needs an additional permit compared to those that do not.

    The outlook for the industry as these reforms progress, its positive in my view, since according to the official “the changes should allow companies to better track and predict which items most concerned national security officials” that way, the industry knows the rules and the products that have special controls. In the end, all citizens wants to be safe, and it has a negative effect on how the taxpayers money is being used when an American product ends ups in the nuclear weapons of a “rogue state”. When this happens the media can use it in a negative manner thus creating a political communication problem for the government.

    A reason that the industry would be worried about the reform is that the regular/common customers may prefer acquiring non-US made products, and it translates into a profit topic that affects all the companies in the US specially with the current economy. In conclusion, the nonproliferation effort is important not only for the national security concerns of the country and its allies but also for the companies to avoid having security breaches thus affecting its reputation in the world.

    Karen Espinal9 July 2014
  • Consolidating and streamlining the export control lists, licensing and screening process makes sense, and
    from what I read in the Congressional Research Report, much already has been accomplished.

    For example, according to the report, the third singularity already is in motion as of 2010:

    “The third singularity involves the creation of a streamlined export enforcement system. Under
    Phase I of the new approach, a single export ‘fusion center’ would be created to ‘coordinate and
    de-conflict investigations, serve as a central point of contact for coordinating export control
    enforcement with Intelligence Community activities, and synchronize overlapping outreach
    programs.’ On November 9, 2010, the Obama Administration issued Executive Order 13558,
    which created the Export Enforcement Coordination Center (EECC). The center officially opened
    in March 2012 within the Department of Homeland Security and replaced and expanded on the
    functions of the existing National Export Enforcement Coordination Network (NEECN) in ICE.

    Also in the report – and especially important, I believe:

    “The fourth singularity is the creation of a single information technology system to be used to administer the export control system. The USXPORTS database, currently used by the Department of Defense to track license applications referred to it, is being expanded to State and Commerce. When completed, it will become the platform for a proposed single export license application form to be used by State, Commerce, and the Treasury’s Office of Foreign Assets Control. It will also be used by the Department of Energy, Immigration and Customs Enforcement, and the Export Coordination Enforcement Center. DDTC reportedly has adopted the new system, but sequester-related budget constraints have held up final adoption by BIS.”

    This will be a complicated process, and if the problems associated with the new Obamacare health care website are any indication, things will be rough in the beginning. Then again, perhaps that experience has been helpful in creating a pool of experts for this project.

    Politically, I don’t think that export control reform will be nearly as controversial, either. Given what we heard in the lectures, those at the highest levels of government and industry understand that we are moving into a global, interconnected economy and scientific community in which technology is rapidly evolving. The export system cannot function with efficiency given its current technological and conceptual limitations. The control lists must quickly reflect the introduction and maturation of technology, and so any legislation introduced should support a system that allows coordination of the most current expertise with both the Dept. of Defense and Dept. of Commerce.

    Also, by focusing on end users, and consolidating these lists for easy access for screening, and end use, the huge number of items currently on the list will become more manageable. This will benefit both those people working in both industry and government export compliance.

    Industry also is moving in this direction, using software and integrated systems for sophisticated supply chain control software, as well as export control licensing. Global Wizard, for instance, promises to by “the timesaver of international trade.”:

    “Welcome to Global Wizard, the timesaver of international trade. Global Wizard is a Software-as-a-Service (SaaS) application that includes the modules your company needs to complete Denied Persons Screening, determine International Trade Requirements, and fulfill Import/Export Documentation Requirements for over 200 countries. Our program assists global traders in the generation of import and export documents and completing the trade compliance process.

    Designed and updated by global trade experts, and hosted and managed on our secure and reliable dedicated servers, Global Wizard makes international trading easier, faster, and more cost effective for businesses. Since it is based on transaction-based pricing, the system has a rapid payoff and a high return on investment (ROI) for small and large companies alike.”

    The most challenging areas of control will continue to be in countries and with end users who operate outside the regulated export trade. As stated in the report:
    “It is worth noting that, according to the State Department, \’most diversions of U.S. Munitions
    List … items appear to occur outside the scope of approved licenses, not within foreign companies
    or organizations providing access to properly screened dual national or third country national
    employees.’ “

    Valerie "Terry" Ellis29 July 2014

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