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I would like to join Under Secretary Juster in welcoming all of you to Update 2004. We’re especially pleased that so many distinguished officials from our export control partners abroad have joined us today. I look forward to talking with all of you throughout the day and at our reception this evening. I’m also very pleased to be joined for this Plenary session by Susan Burk, Acting Assistant Secretary of State for Nonproliferation, Turk Maggi, Managing Director of the State Department’s Directorate for Defense Trade Controls, and Cindy Lersten, Acting Assistant Deputy Administrator for Nonproliferation and International Security at the Energy Department. Lisa Bronson, Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation, was regrettably unable to be here today. Susan, Cindy, Lisa and their staffs have worked very closely with us to manage and improve our export controls, and we sincerely appreciate it.
I know that all of you are eager to plunge into a day of detailed back-and-forth about the specifics of the U.S. export control system. And don’t worry – it will all be covered – from encryption to de minimis and beyond. But I’m going to ask you to defer those pleasures a bit, in order to share some more general thoughts about our work on export control policy over the past year, and – equally important – what we plan to work toward in the coming year.
The overall theme of my remarks is "export controls in a changing world." The Administration is strongly committed to ensuring that our export controls respond quickly and appropriately to significant changes in the global technology, economic and security environment. Because our controls are essentially based on judgments about technology and the risks posed by exports to certain countries, our controls can’t remain static in a dynamic environment. Technology changes more and more quickly every day. And controls may become ineffective if foreign producers start exporting the controlled technology. The risks change too – as some countries reform their old ways, and others take actions that threaten our security. So we must make sure that our controls don’t get out of date. If they do, we will be imposing unnecessary burdens on U.S. exporters without safeguarding our security.
We have worked hard this year to update our regulations. To reflect changing technologies, we are updating our computer and microprocessor regulations. And we will shortly impose new controls on night vision equipment made with amorphous silicon technology – which didn’t exist when our current controls were written. We also acted quickly to revise our regulations based on the results of the December 2003 Wassenaar Arrangement Plenary – thereby ensuring that U.S. exporters did not face a competitive disadvantage relative to their competitors in other Wassenaar countries.
We have also responded to global security developments. Some of these developments involve heightened security risks. As Under Secretary Juster noted, we have imposed new restrictions on exports to Syria, pursuant to Congressional legislation. These restrictions respond to the troubling actions by the Syrian government relating to proliferation and terrorism. On the other hand, other security developments have been more positive. In response to the positive actions on non-proliferation and terrorism taken by the Libyan government, we have significantly revised our regulations for exports to Libya. And in response to the overthrow of Saddam Hussein and the progress toward a democratic, pro-Western Iraq, we have comprehensively revised our regulations for exports to Iraq.
Of course, there’s more work to do in the year ahead. In the computer sector, we will make sure that our hardware controls focus on the systems of greatest national security concern. In the semiconductor equipment sector, we will explore creative ways to expedite licenses for the critical Chinese market. We made important progress this year with agreement on enhanced U.S.-China end-use visit cooperation and other bilateral issues. For instance, Susan led an export controls conference earlier this year in Beijing. This progress may allow us to expedite our licensing process for certain end-users of semiconductor equipment in China.
In addition to these particular product sectors, there are areas where we are reviewing our regulations and processes to ensure that they reflect recent technology trends and private sector activities. I’d like to mention three of these. First, many of you will be familiar with our "de minimis" rule for determining when a reexport is subject to U.S. jurisdiction. Our Regulations and Procedures Technical Advisory Committee, and other industry groups, have urged that we update this rule to reflect changes in technology, such as how software today is incorporated into hardware – for example, when a U.S.-origin chip provides instructions for a foreign car’s engine. The merging of software and hardware makes it appropriate to review whether we should continue to treat software and hardware separately under our de minimis rule.
The second issue relates to our "deemed export" controls on the release of technology to foreign nationals in the United States. We plan to review these controls to ensure that they continue to appropriately protect national security, while permitting business and the academic research community to employ the foreign nationals that play an increasingly important role in their operations.
Third, we should continue to improve the commodity jurisdiction standards and procedures to account for the growing use of defense articles and components in commercial products. The U.S. Armed Forces are increasingly reliant upon commercial off-the-shelf technologies. We need to ensure that the commodity jurisdiction rules and procedures continue to take this trend into account.
Some reforms, however, can’t be accomplished by administrative actions alone. They require legislation – specifically, a new Export Administration Act, or EAA. Because the EAA has expired, we are operating under an emergency statute, the International Emergency Economic Powers Act. We can and do control exports effectively under this statute. But it is still important that we renew the EAA in order to have a permanent foundation for our controls – particularly in light of the recent passage of United Nations Security Council Resolution 1540, which Under Secretary Juster described. Moreover, the EAA should be revised. It is a Cold War statute that was drafted when the Soviet Union was the major national security threat to the United States. Yet today Russia and other former Eastern Bloc countries are our strong partners in the multilateral export control regimes and bilaterally. The EAA should focus on today’s national security risks, not yesterday’s.
We have worked hard this year to accomplish this goal, but it is a difficult task that we have not yet achieved. We will continue to work with the Congress toward this important goal. The private sector has an important role in this effort, and indeed the President’s Export Council will be focusing on this issue in the coming year. In the meantime, of course, we will continue to administer our export control system effectively under our current legal authority.
More generally, you in the private sector are our necessary partners in order to ensure that the export control system stays current. Most obviously, you do this by telling us when you think changes in technology warrant changes in our controls. But you also have a critical responsibility to keep your internal systems up-to-date. After all, the U.S. export control system doesn’t stop with our regulations – it depends on those export control manuals you write, on the training you provide to sales staff, and on the day-to-day decisions you make. So please review your procedures – especially given all the changes that we have made this year – and make sure that everything is as it should be.
Finally, I want to take a minute to express my personal thanks to all of the BIS staff who have worked long and hard this year on the initiatives that we will be discussing over the next two days. To mention just a few people, Deputy Assistant Secretary Matt Borman and Office Directors Bernie Kritzer, Eileen Albanese, Steve Goldman and Dan Hill deserve our warm appreciation for everything they do. I also want to commend several BIS officials – Joan Roberts, Brian Nilsson, Karen Nies-Vogel, Kevin Kurland, Sharron Cook, Sheila Quarterman, Norm LaCroix, Gene Christianson, Brian Baker and Mark Webber – for their dedication to the protection of U.S. national security and their responsiveness to the exporting community. Please join me in showing our appreciation for their hard work.