Where Industry and Security Intersect
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For
Immediate Release: November 08, 2007 |
Thank you for that kind introduction, Israel. And, of course, thank all of you for coming today. All of you are volunteers, and your generous investment of time, energy and expertise play a vital role in America’s export success. On behalf of the Department of Commerce and this Administration, I want to thank you for playing such a constructive role in securing a prosperous American future.
For the past five months, I’ve had the privilege to serve as the Under Secretary of Commerce for Industry and Security. As Under Secretary, I have the great fortune of working alongside some of the most talented and committed public servants in government. Some of them, particularly from the U.S. Commercial Service, are here today. And I would like to take this opportunity to publicly thank them for their marvelous and devoted efforts on behalf of U.S. exporters and our country. Thank you—it’s a privilege to serve in government with you.
Let me start by what is already obvious to all of you: trade is vitally important to our country. It enhances American prosperity, deepens America’s engagement with the world, and indirectly extends American values around the globe. Everyone at the Department of Commerce, including within the Bureau of Industry and Security (BIS), is committed to support you and to facilitate your success abroad.
At the same time, the Bureau of Industry and Security has an additional critical responsibility: to think about the many places and many ways that international trade and national security intersect, and to ensure that we are both facilitating American prosperity and enhancing American national security.
The Intersection of Trade and Security
Patrolling this interface where international trade and security intersect is a unique and important charge, one which encompasses many critical activities. By way of example, these activities include: (i) conducting CFIUS security reviews for the Department of Commerce and participating as a core member of the interagency CFIUS team, (ii) actively monitoring the vitality of our defense industrial (and innovation) base, (iii) administering the Defense Priority and Allocation System, and (iv) ensuring industry compliance with our anti-boycott regulations and certain multilateral treaty obligations. We do this all over the country, and around the world; and we do this every day, all the time. These activities rightly occupy the time and attention of the entire BIS senior management team, particularly since many emerging national security challenges have complex economic dimensions and dramatic changes in financial markets and global competitive geography have forced us to think about national security in new ways.
For the next few minutes, however, I’d like to focus my remarks on dual-use export control policy, a topic that is of great interest to U.S. exporters of all sizes and from a variety of industries.
Dual-Use Export Controls
Our core mission at BIS is to advance U.S. national security, foreign policy, and economic objectives by ensuring an efficient and effective dual-use export control system and by promoting continued U.S. strategic technology leadership.
First, as our mission statement makes clear, our dual-use export control system is not free floating, but meant to advance a variety of discrete governmental objectives. At a minimum, this requires that we actively think about what those policy objectives are, so that our regulations and our efforts are properly aligned to pursue them. And, as those objectives (or the circumstances under which we must pursue them) change, our system needs to recalibrate how to arrive at those policy objectives.
Second, our regulatory regime is designed to mitigate only one type of risk we must contend with--transaction risk. However, if we are to be faithful to the letter and spirit of our mission, we have an obligation to mitigate both transaction risk and systemic risk.
For example, because the system is built to review proposed transactions—the sale of a specific item, to a particular customer – any individual licensing decision necessarily has a transactional, near-term focus. And yet, the aggregate and cumulative effect of our licensing decisions may have substantial long-term impacts.
Also, because it’s in the near-term that our commercial and national security interests are most likely, if at all, to diverge, the prism of a licensing decision may distort how we think about the broader or systemic relationship between international trade and national security. In the near-term, there may instances where there is a tension between making a sale and safeguarding national security. And yet, over time, healthy export markets support the private investment necessary to develop cutting-edge products upon which an increasing number of mission-critical military platforms depend. Moreover, healthy export markets—and the U.S. exporters who forge them—extend our nation’s presence abroad and serve as an essential component of American soft power. In a strict sense, therefore, the challenge is not to balance national security and trade, but to balance transaction and systemic risk in order to advance our long-term economic and national security objectives.
Finally, our regulatory regime is essentially a regime of denial. In effect, it assumes that we have something that other nations don’t have or can’t get. In an era where technology and talent are ubiquitous, this assumption is no longer always and everywhere true.
A Changing Economic and Security Landscape
Today, we must apply our export controls in a dramatically changed international environment. We face more and varied national security risks from an increasing number of international actors--conventional challenges from nation states, asymmetric and potentially catastrophic challenges from both nation-states and non-state actors, and the diffuse challenge of disruptive technologies that may enable adversaries of all kinds to rapidly diminish our traditional overmatch advantages. At the same time, our allies-- who are also our economic competitors-- do not always share our security views, while globalization has increased the pool of world-class economic competitors.
We at BIS are absolutely committed to energetically and collaboratively working with our partners in government and in the private sector to ensure that our export control policy is fact-based, analytically rigorous, and narrowly-tailored to achieve our mission in this new environment.
Our Present and Future Vision
For the remainder of the Administration we will pursue a policy agenda that consists of three mutually-supporting categories of initiatives:
First, we will strengthen our enforcement architecture and refocus our enforcement activities.
We will continue to work with U.S. exporters, our front-line partners in enforcement, to refine and strengthen the regime we administer. An important part of this effort is the renewal of the Export Administration Act (EAA). Toward this end, the Administration recently proposed legislation, the Export Enforcement Act of 2007, to renew the EAA and to address key enforcement issues vital to national security.
But strengthening enforcement is not only about raising maximum penalties. It is also about increasing transparency and prioritizing efforts. First, we want to enhance the system’s effectiveness and aid America’s exporters, by providing more information about end users around the world that raise concerns. Second, we are sharpening our focus—and prioritizing our resources-- to those areas of the greatest concern: terrorists, proliferators and nations of transshipment concern.
Second, we will work to update our export controls.
By way of example, we have already begun to move towards an end-user based system by launching the innovative Validated-End User (VEU) Program. We recently announced the initial list of VEU companies in China, companies that will now be able to receive selected technologies without the need for individual licenses. We have also announced India’s eligibility for the VEU program. In time, in close consultation with our government counterparts, and in a paced way, we will endeavor to expand this trade-enhancing program to other select foreign markets.
Our last category of initiatives is among the most exciting. For the remainder of the Administration, we will actively look for new opportunities to expand secure high technology trade around the world.
Third, we will elevate and accelerate our international engagement.
To be clear, we already have existing staff-level dialogues with many countries-- and they will continue. What we are also doing is elevating and accelerating our bilateral engagement with select foreign markets to expand secure bilateral high technology trade.
For example, this past August the U.S. and Israel agreed to establish the High Technology Forum (HTF) to facilitate secure bilateral high technology trade and investment. As Under Secretary, I will personally chair the HTF for the U.S. to ensure that we are carefully (and proactively) nurturing our technology relationship with one of the most important technology markets in the world. At the same time, we are also looking at other markets—markets that either because of their sheer size or their dynamism make it worthwhile for us to consider such regular, senior-level engagement.
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Finally, let me conclude where I started, by saying that all of you are critical to America’s export success. Thank you, again, for being here. Rest assured that we at BIS-- and the Department of Commerce--look forward to working with you to ensure that U.S. exporters will continue to compete, win, and prosper.
Thank you very much.