One of the casualties of this fall’s terrorist attacks upon
the United States may have been the latest effort to reform controls
limiting exports of technologies that could provide a military advantage
to the nation’s potential enemies. The question is: How serious
is the wound?
The controls have a wide impact, Kenneth I. Juster, undersecretary
of commerce for export administration, said in a speech to the 2001
Export Control and Policy Update Conference in Washington, D.C.
“Today, more than 20 percent of the goods produced in the
United States are exported, and more than 200,000 U.S. firms are
involved in international trade,” he said.
Under current regulations, all products that have a defense-related
use—even those with both civilian and military applications—must
be licensed by the federal government before they can be exported.
Products whose applications are strictly military, such as combat
aircraft, tanks or small arms, require licenses from the State Department’s
Office of Defense Trade Controls under the Arms Export Control Act
Those with dual uses—including some computer hardware and
software, communications equipment and encryption technology—fall
under the jurisdiction of the Commerce Department’s Bureau
of Export Administration, as specified in the Export Administration
Act (EAA) of 1979. Sensitive cases often are referred to the State,
Defense, Energy or Justice Departments, or other agencies for review.
In fiscal year 2000, the State Department reviewed more than 46,000
applications for export licenses, according to a recent study by
the congressional watchdog agency, the General Accounting Office.
During the same year, the GAO said, the Commerce Department completed
more than 11,000.
This system is designed “to slow the spread of items and
technologies that can threaten U.S. national security—particularly
the security of U.S., allied and friendly armed forces,” Dave
Tarbell, former deputy undersecretary of defense for technology
security policy, told a congressional hearing earlier this year.
Export controls were imposed first before World War II to ensure
that U.S. supplies would be adequate to meet wartime needs. They
were continued during the Cold War to help keep U.S. defense technology
out of the hands of the Soviet Union and its allies.
In 1990, Congress and the executive branch failed to agree on terms
to renew the EEA, and it expired. Since then—with brief exceptions—presidents
have enforced the controls through executive orders. A year ago,
Congress reinstated the EEA, but it expired again in August.
President Bush immediately issued an executive order extending
the controls under the International Economic Emergency Powers Act.
He pledged to terminate the executive order as soon as Congress
passes legislation reforming the export-control system.
“Such legislation is long overdue,” Bush said. “The
EAA is a Cold War statute that does not reflect and is ill-suited
to deal with current economic and political realities.”
The need to update export controls is widely acknowledged on Capitol
Hill. When the first EAA was enacted, “Jimmy Carter was president,
bellbottoms were the style and disco was king,” said Sen.
Mike Enzi, R-Wyo. “Times have changed, and improvement of
this outdated legislation is past due.”
What kinds of changes are necessary, however, are hotly disputed,
noted Edmund Rice, chairman of the Export Controls Working Group,
a coalition of 130 companies advocating EEA reforms.
“There are two groups on the Hill with very basic philosophic
differences,” he told National Defense. One side, led by exporting
businesses, argues that since the end of the Cold War, many export
controls—particularly those on dual-use products—are
no longer required for national security. If it can be bought at
Radio Shack, said Sen. Phil Gramm, R-Tex., “you’re wasting
your time trying to protect that item.”
Larry E. Christensen, vice president for international trade content
for Vastera Inc., told the House International Relations Committee
that current controls impose “at least six types of burdens”
upon industry. He spelled them out:
1. Under the decade-old Enhanced Proliferation Control Initiative,
Christensen said, companies are required to avoid exporting to buyers
planning to develop nuclear, missile or chemical and biological
2. It is a felony, he noted, for a U.S. company to deal with “more
than 3,000 firms or people” who are blacklisted by the federal
government, mostly for acting as fronts for embargoed governments,
drug traffickers or terrorists.
3. Before a product can be exported, Christensen complained, companies
are required to determine whether it is on the Commerce Control
List and how it should be classified on that list.
4. Getting an export license, he said, can take months.
5. Companies must comply with differing regulations at each of
the federal agencies involved with exports, including the Commerce,
State and Treasury Departments, he said.
6. In addition, Christensen noted, many exporters have to master
not only U.S. regulations, but those of other nations, as well.
Every country has its own set of export controls, he explained,
and “even a medium-sized manufacturing firm in the United
States will often have manufacturing or distribution centers in
five other countries.”
In the face of such criticism, federal agencies have streamlined
their export-licensing processes extensively in recent years. The
Commerce Department’s Bureau of Export Administration reduced
the average processing time for cases that were not referred to
other agencies from 23 days in the first quarter of fiscal year
2000 to 11 days in the fourth quarter, according to the agency’s
most recent annual report. However, the report added:
“A challenge remains to reduce the average processing time
for cases that undergo agency review. In fiscal year 2000, 83 percent
of all completed licensing decisions were referred, with an average
processing time of 43 days.”
Other federal agencies are working to speed up their reviews. The
State Department’s office of Defense Controls is hiring additional
licensing officers. The Defense Department earlier this year established
a $30 million, three-year program—called the U.S. Export Systems
Automation Initiative, or USXPORTS—to standardize the automated
license-review processes of the Defense, Commerce and State Departments.
In the Senate, the reformers won the debate. On September 6, that
body voted 84-14 to pass the S. 149, Export Administration Act of
2001. The goal of this bill “is to eliminate unnecessary trade
barriers, while focusing controls on the items most sensitive to
our national security,” said Enzi, one of its cosponsors.
“At the same time, it takes into account the realities of
today’s global economy, incorporating the concept that some
items are very difficult to control. The bill recognizes that items
available from foreign sources or available in mass-market quantities
cannot be effectively controlled.” Specifically, he said the
“The United States is rarely the only producer of militarily
useful high-tech products,” Enzi said. Over the past decade,
he argued, “the effects of globalization—such as increased
flows of trade, foreign investment and international communications—have
contributed to the more widespread production and availability of
Export controls are still important to national security, Enzi
said. “Unilateral approaches, however, are not very effective.”
A multilateral process is necessary, he said.
Despite the overwhelming vote in the Senate, many in Congress oppose
any loosening of controls. In the final debate on the floor of the
Senate, Sen. Fred Thompson, R-Tenn., said that it would be a mistake
to do so “in an era of increased technological proliferation,
with the world becoming a more dangerous place, where rogue nations
are getting their technology from countries such as China and Russia.”
Traditionally, export administration legislation “has been
designed not to facilitate business, but to help protect the national
security interests of this country,” Thompson said. “Nobody
wants to bog these exports down, but the fact of the matter is,
they are not being bogged down.” The average processing time
for “a broad category of items” is 13 days, he said.
The purpose for such legislation should be “to make sure
that we are not assisting the proliferation of weapons mass destruction,”
Added Sen. John McCain, R-Ariz., “Hostile nations, like Iran
and North Korea, are disturbingly close to developing multiple-stage
ballistic missiles with the capability to target the United States.
“These and other nations, including Syria and Iraq, receive
significant and continuing technical assistance and material support
from China and Russia, with whom much of our trade in dual-use items
is conducted,” McCain said.
Such arguments apparently resonated in the House of Representatives,
where International Relations Committee Chairman Henry J. Hyde announced
that he had “substantive concerns” about the “overly
permissive standards” in the House version of the bill, which
he referred to the Rules Committee, effectively postponing a floor
The legislation’s sponsors hoped eventually to get some version
of it passed by the House, even if they opposed some of the provisions,
then go to conference with the Senate bill, and work out a compromise
acceptable to both sides.
Then, the world changed. On September 11—just days after
the Senate vote—hijacked airliners hit the World Trade Center
and Pentagon. Weeks later, deadly anthrax-tainted letters infected
media and government facilities in New York, New Jersey, Florida
and Washington, D.C.
In the aftermath of these assaults, all export-control reforms
are on hold at least until after the holidays, according to Capitol
Hill insiders. Said one industry source, who asked not to be named:
“Right now, the question is, are we even going to be able
to hold the ground that we took before September 11?”
Frank Cevasco, vice president of Hicks and Associates, a consulting
firm based in McLean, Va., agreed. “It’s not a good
time,” he said. “Those who don’t want the United
States to export anything more complex than ballpoint pens will
see their positions strengthened.”
The Bush administration, meanwhile, has signaled that it still
supports reforms. “The events of September 11 have only reinforced
the importance of our commitment to free trade,” said Juster.
“We must ... demonstrate to the terrorists that, even if they
destroyed the World Trade Center, they cannot shake the foundations
of the world trading system.”
Even without reforms, the president already has the power to waive
export controls in the interests of national security. In late September,
in fact, he lifted sanctions against Pakistan and India. The sanctions
were imposed in 1998, after the two long-time enemies both tested
nuclear weapons. But the president waived them in an effort to bolster
support for the war against terrorism. He might do the same for
other nations, he said, on a “case-by-case” basis, “where
the law allows.”