Where Industry and Security Intersect
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The Department of Commerce’s Bureau of Industry and Security (BIS) requested public comments on existing foreign policy-based export controls maintained under Section 6 of the Export Administration Act of 1979, as amended (EAA) through a Federal Register notice published October 23, 2006 (71 FR 62065). In addition, comments were solicited from the public through the BIS Web page. Comments from the Department’s six Technical Advisory Committees and the President’s Export Council Subcommittee on Export Administration are solicited on an ongoing basis and are not specific to this report. BIS requested comments on how existing foreign policy controls have affected exporters and the overall public. The notice invited public comments about issues such as the effectiveness of controls when foreign availability exists; whether the goals of the controls can be achieved through other means such as negotiations; the compatibility of the controls with the overall U.S. policy toward a country in question; the effect of controls on U.S. economic performance; and the ability to enforce the controls.
The comment period closed on November 22, 2006 . BIS received three sets of comments from the following organizations: Industry Coalition on Technology Transfer, Sun Microsystems and Cogent Systems. BIS has made all comments available for review in the BIS Freedom of Information Act Reading Room available on the BIS Web page. BIS also makes the comments available for public review upon request. This Appendix summarizes the comments received.
On November 20, the Industry Coalition on Technology Transfer (ICOTT) submitted comments stating that because foreign policy controls are unilateral in nature, they are largely ineffective. For that reason, ICOTT comments that the United States should use unilateral controls where the United States can justify the resulting injury to American workers and businesses against the “symbolic character” of the controls. ICOTT also recommends that unless the United States is effective in garnering multilateral support for its unilateral controls, the Government should not renew such controls. In addition, ICOTT recommends that for unilateral anti-terrorism controls, License Exception RPL (Servicing and replacement of parts and equipment) should be available for emergency services, including one-for-one replacement of parts, for use on commercial aircraft that are located in, owned by, or registered in sanctioned countries.
On November 21, Sun Microsystems (Sun) submitted comments regarding two areas where it believes foreign-policy based controls have resulted in competitive damage to U.S. companies without providing a policy advantage: Enhanced Proliferation Control Initiative (EPCI) “Catch-All” controls and Anti-Terrorism (AT) controls. With respect to EPCI end-use controls, Sun stated that such controls (1) are overly broad; (2) are not effective in ensuring that particular entities do not receive non-listed items because these items can easily be obtained elsewhere globally; and (3) impose substantial compliance costs on U.S. companies. Sun recommends that the EPCI related end-use controls only apply to certain geographic areas and a narrow technological scope. Sun also opposes the extension of catch-all controls to other end-uses, such as conventional military end-uses.
With respect to AT controls, Sun stated that the items subject to AT controls do not demonstrate a clear export control objective and are out of date. In particular, in the area of information technology, Sun stated that the U.S. Government has not adjusted the controls in over a decade to accommodate technological advances. Sun specifically cites the controls applicable to computers and stated that the current parameters under Export Control Classification Number (ECCN) 4A994 are set at 0.00001 Weighted TeraFlops (WT), while the Wassenaar limit was raised last year to 0.75 WT. As a general matter, Sun recommends that AT controls be reviewed in order to better determine the objective of the control and asserts that most items caught by these controls are available from other sources worldwide. With respect to computer products in particular, Sun recommends that the level for AT-controlled computers be increased substantially to exclude “mass market” computer products and that controls be based on the new metric under consideration in Wassenaar.
On November 22, Cogent Systems (Cogent) submitted comments requesting that BIS exclude one-to-many fingerprint retrieval systems from the Crime Control classification under section 742.7 of the Export Administration Regulations, stating that it is no longer in the national interest to deny exports of these items to China under Section 902(b) of the Tiananmen Square Sanctions. Cogent claims that fingerprint retrieval systems from the world’s leading producers are already being sold in China and that continuing to deny exports of such items will only ensure that a U.S. system will not be used for the 2008 Olympics and that U.S. industry will suffer a competitive disadvantage in the long term. Cogent also asserted that denying exports of fingerprint retrieval systems to China prevents U.S. industry from exporting its products to one of the largest markets in the world. In addition, Cogent stated that the classification of fingerprint analysis technology under Crime Control is inconsistent with the security requirements of the United States , an assertion Cogent claims has been supported by the Department of Homeland Security. In its comments, Cogent also analyzes the six factors set forth in BIS’s Federal Register notice requesting comments, (effectiveness of controls when there is foreign availability, whether the goals can be achieved by other means, including negotiations, etc.) and asserts that each factor supports the removal of fingerprint retrieval systems from the Crime Control Classification. For example, with respect to whether the controls are likely to achieve the intended foreign policy purpose, Cogent argues that foreign availability of the systems makes it unlikely that BIS’s licensing policy will motivate China to improve its human rights record.