Commerce Secretary Gary Locke Proposes Reforms to America’s Export Controls System to Enhance National Security and Improve Competitiveness

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U.S. Commerce Secretary Gary Locke proposed reforms to modernize America’s export controls system, which will enhance national security and increase the competitiveness of U.S. companies, in a speech at the Bureau of Industry and Security’s Update Conference on Export Controls today. The United States export control system seeks to prevent sensitive items from falling into the hands of those who seek to do us harm.

“Our current system was designed in the 1950s and its Cold-War-era framework is ill-suited to manage the highly complex 21st century threats currently faced by the United States,” Locke said. “We need to fundamentally revise our export control system to account for the emergence of new foreign markets, competitors and multifaceted threats that have arisen over the past few decades.”

U.S. companies are widely seen as losing business to foreign competitors because of an outmoded export controls system that both focuses too much on widely available technology exports to allies and diverts attention from more serious threats.

For example, a U.S. company recently lost two key sales to Italy for predictive maintenance imaging cameras—a standard commercial technology that utilities often use to monitor their equipment. The Italians didn't want to deal with the time delays in our control system so they bought the same technology from the Japanese.

Meanwhile, U.S. technologies are being “engineered out” of multi-national projects.

Charles Edelstenne, the president of the Aerospace and Defense Industries Association of Europe said in 2007 that the only way to resolve technology access and U.S. Government export restrictions is by "not including any U.S.-sourced technology in our products."

Recently, there was an instance where a major foreign aerospace company designed an American microchip out of its navigation subsystem for this reason. And it is now common to hear about provisions in sales contracts that explicitly bar the use of U.S.-manufactured articles because companies don’t want to have to deal with our export controls system.

Locke proposed that the Commerce Department—working with other counterparts in the federal government—immediately explore pursuing two reforms that will provide substantial relief to U.S. exporters while strengthening U.S. national security and foreign policy interests, allowing them to focus on actors who seek to attack us:

• Eliminating dual-use export license requirements for allies and partner nations;
• Implementing a fast-track procedure for the review of dual-use export licenses for other key allies;

“Make no mistake; any reform must maintain a robust and active enforcement regime to punish those who would seek to sell sensitive technologies to our enemies.”

In August, President Obama called for a broad-based interagency review of the U.S. export control system, including both the dual-use and defense trade processes.