Where Industry and Security Intersect
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Welcome to the 2006 BIS Update Conference. Your attendance and participation here, as well as at other conferences of this type throughout the year, is an important acknowledgement on your part concerning the importance of the export control laws, and the role that they play in protecting our national security.
This is my very first Update Address. Accordingly, I would like to express my gratitude to the President for giving me the opportunity to serve in this position. It is an honor to serve in this Administration, and I greatly appreciate the confidence that he has reposed in me. This has been an eventful, challenging, and exhilarating year, during which my office has continued to make important strides in export enforcement.
Today, I would like to share with you the direction in which I intend to continue to lead Export Enforcement at BIS. In discussing that with you today, I want to place the challenges we must meet in their real world context. I will also review some of Export Enforcement’s accomplishments during the past year, which will serve as important markers for all of us in the future.
Let me begin by sharing with you my vision for the Export Enforcement division of BIS. It is as follows: Export Enforcement will remain a critical component of this Administration’s effort to protect the national security, foreign policy, and economic interests of the United States.
Although we must balance all three interests, there can be no doubt that, in today’s world, the national security interest must be paramount. Without national security the other two interests cannot and will not exist. Moreover by suppressing illegitimate trade, we foster legitimate trade, and thereby facilitate our country’s economic interests.
Accordingly, we will continue to investigate and pursue high impact cases involving WMD, terrorism and terrorism support, as well as the diversion of dual use goods and technology to unauthorized military end use. We will also continue to pursue antiboycott matters. We will help U.S. businesses comply with the antiboycott regulations, and we will pursue enforcement actions against those who fail to do so.
The challenges we face in today’s world demand that we focus our attention on all of these matters. Let’s remember what those challenges are.
Recently, we commemorated the fifth year since the September 11 attacks occurred. Those attacks continue to shape the policy priorities and initiatives of this Administration, and thus, those of Export Enforcement. The enemy that struck us on September 11 remains firm in its resolve to do so again. Indeed, every public statement that they have made thereafter demonstrates their continued resolve.
The President, in his Address to the 2006 graduating class at West Point, said that these enemies are “seeking weapons of mass murder that would allow them to deliver catastrophic destruction to our country. If our enemies succeed in acquiring such weapons, they will not hesitate to use them, which means they would pose a threat to America as great as the Soviet Union.”
The words of the terrorists themselves underscore the accuracy of the President’s statement. Indeed, Osama Bin Laden has stated the acquiring WMD is a “religious duty.”
That we have not suffered a major terrorist attack in the United States since September 11 is a testament to the President’s national security efforts. It is not because the enemy has stood down or given up its desire to strike us hard.
And let’s remember that the September 11 attacks were not carried out through the use of conventional weapons. Rather they were perpetrated by a mere handful of terrorists wielding box cutters and knives. Also armed with the critical element of surprise, the terrorists were able to commandeer only four civilian aircraft. Yet, as we know, the attack proved more deadly than the sneak attack perpetrated by the Japanese military at Pearl Harbor.
Given that, let’s just take a moment – right here and now – to imagine the destruction that would occur if such an enemy gained access to WMD. Now, take just another moment to imagine how the world would change – how it would have to change – as a result.
We must not lose sight of the fact that the enemy’s efforts are not merely to destroy lives and property, as devastating as those consequences are. It is not simply to crash airplanes and destroy buildings. And one need not psychoanalyze the terrorists to find out their true goals. These terrorists repeatedly and plainly state their goals, as well as the methods that they will use to achieve them. The enemy’s stated goal is to bring about a different world order. And that new world order would not be founded upon freedom and liberty.
In order to truly accomplish this objective they will have to destroy our economy and its underpinnings. To succeed in their overall mission they must do so, because our economy is an important cornerstone of our civilization. It reflects who we are and how we choose to live. And it prizes everything that they hate – including freedom, private enterprise, and individual effort.
Thus it is you – those of you who I am now looking at right now – who are the true target of the terrorists. Those of you who are in private industry and who work so hard everyday, individually and through your companies, to make our economy what it is – you are the targets. Make no mistake about that.
Again, to understand that, we only need take the terrorist at their word. Osama Bin Laden himself has urged his followers to continue to strike at the “economic nodes” as he did September 11.
And indeed the September 11 attacks had far reaching economic consequences.
In just one week following the attacks, the airline industry is estimated to have lost between 1 and 2 billion. The City of New York is thought to have lost between 2.5 and 2.9 billion in tax revenue. And several different industry sectors, including apparel manufacturing, air transportation, and securities, suffered double-digit percentage declines in employment.
That all of this, and much more, resulted from an attack with box cutters and civilian airliners, makes the prospect of terrorists using sophisticated conventional weapons – much less WMD – a truly frightening prospect.
Given the circumstances in which we live today, the position of the United States as the world’s technology leader presents us with quite a paradox. For, just as legitimate business seeks our technology because it is the best, so do the terrorists. Thus, denying U.S. technology to terrorists and countries of concern is akin to cutting an enemy’s supply line during a war.
And that is my job – and the job of others in Export Enforcement at BIS. It is to make sure that our enemies do not use our technology to attack us or our allies. If, heaven forbid we were to be attacked again, the impact of such an attack will, by definition, be lessened if our enemies do not have the best technology with which to mount it.
Faced with these threats, the Export Enforcement division of BIS has redoubled its efforts to enforce the export control laws. Between fiscal Years 2001 and 2005, criminal convictions increased four-fold over the previous five fiscal years. Administrative actions over the same period that resulted in penalties rose by 28 percent.
When you hear the Enforcement panel that will follow, you will learn more about how our criminal convictions, administrative cases, and penalties – including those in our antiboycott cases – have all increased during the past year.
Our Special Agents’ efforts are now significantly devoted to three main areas of concern: WMD proliferation, terrorism, and unauthorized military end use. Approximately 75% of the cases that our Office of Export Enforcement chooses to investigate are focused on those three areas. You will hear more about our cases and ongoing efforts during the Enforcement panel that will follow me today.
Our efforts are exemplified by the General Order that now requires licenses for all goods subject to the EAR that are being shipped to the UAE importer, Mayrow General Trading. This is a company that was acquiring electronic components that are useful in Improvised Explosive Devices, which are a threat to our troops operating in Iraq and Afghanistan. This alone shows that BIS is at the heart of the war on terror.
Our efforts are also exemplified by the recent criminal convictions in the Khalil and Grinberg cases. These cases involve attempts to export controlled night vision units to Greece, knowing that they would be further shipped to the terrorist organization Hezbollah, in Lebanon.
Our cases also reflect the ongoing concern that China should not be allowed to divert dual use goods and technology to modernize its military, a topic I discussed earlier this year in testifying before the U.S. - China Economic and Security Review Commission.
Criminal convictions obtained this year concerning China include one involving Wen Electronics, a small Wisconsin electronics distributor formed by two Chinese nationals who shipped controlled U.S.-origin technology to China without the required licenses, and who used an array of methods to attempt to avoid detection.
There are a number of developing issues that are of importance to those of us in Export Enforcement, including the proposed new China regulation. In May, I traveled to China with former Under Secretary McCormick. There, we discussed the proposed rule with Chinese government officials before it was made public. Export Enforcement awaits the formation of the final rule and, thereafter, will deploy its enforcement resources as appropriate.
Deemed exports is another issue of importance to us. The Deemed Exports Advisory Committee held its first meeting just last week. Deemed export cases are reflected in our caseload and the issue is an important one that involves protecting our national security. We look forward to the deliberations and work of the Committee.
I know that I have just finished some tough enforcement talk, but I also know that you are here today because you are interested in avoiding violating the export enforcement laws. And while I intend on being a vigorous enforcement official, I also believe that gaining the cooperation and compliance of good corporate citizens is the best way to strengthen our national security.
Thus, we are interested in continuing to conduct outreach to industry and we also value your voluntary self-disclosures. When you see something suspicious, you need to keep in mind that, if someone who is seeking to do our country harm cannot get the technology from you or your company, they are likely to try to get it from another company just down the road or in the next city or town. To put it simply, you have more eyes than we do. Your cooperation and patriotism can make a tremendous difference in protecting our national security – and indeed it has done so in a number of our cases. And we thank you for that.
We will continue to pursue cooperation domestically, and we will also continue to pursue cooperative international efforts. International cooperation will include our interaction with enforcement agencies and countries around the world that share our concerns about weapons proliferation, and realize that this is not a matter that bears soley upon the national security of the United States; rather, it is a matter of global security. I know that representatives from several such countries have traveled a long way, and at great expense to attend this Update Conference, so let me extend my special thanks to all of you who have done so. The world in which we live today demands that nations of good will consult, coordinate, and cooperate in these important matters.
Toward that end, back in May, in addition to visiting mainland China, I traveled to Hong Kong and to Singapore for government to government export control meetings.
In Hong Kong, I led the 11 th U.S. – Hong Kong Bilateral Enforcement Discussions.
In Singapore, I led the first bilateral export control meetings that we have had with that country. We are working to develop further our relationship with export control officials there. I must say that I was personally heartened by the seriousness with which both Hong Kong and Singapore regard export controls.
And on the international front, as you know, we have Export Control Officers (ECOs) stationed in five locations around the globe – in Hong Kong, Beijing, New Delhi, Moscow, and in the UAE. In order to increase cooperation, we will be moving forward to regionalize some of those positions, so that they cover multiple countries. Our Hong Kong ECO will be the first to be regionalized; he now will also cover Singapore and several other countries in Southeast Asia. Regionalizing other ECOs will follow.
In conclusion, let me say that I can think of no more important mission than protecting our national security – and especially in today’s world. I am excited to have the opportunity to serve with the Export Enforcement team here at BIS, which works so hard to do so. And I am happy to have the chance to work with you.
During the past five years all of you have made great efforts and sacrifices to help protect our national security. As we leave here today, you are called upon to continue to doing so, which is far from easy. But the task at hand is not easy. I believe that future generations will thank you for making these efforts and sacrifices. And I want to thank you today for doing so.