Export Control Reform: Protecting National Security and Strengthening the U.S. Defense Industrial Base

The Department of Commerce’s Bureau of Industry and Security (BIS) is one of the primary agencies charged with administering an effective U.S. export control system.  The U.S. maintains export controls to ensure that our most advanced technologies, commodities, and software do not end up in the wrong hands overseas.  BIS works to prevent sensitive items going to end users, or destinations that could result in harm to our interests or those of our allies.  Some items and activities have very strict controls, while others warrant fewer controls depending on the circumstances of a particular transaction.

BIS also strives to eliminate needless negative economic effects from export control regulations by managing efficient regulatory operations and by regularly updating and tailoring existing export control rules to reflect contemporary threats, concerns, technologies, and issues.  As an integral player in the President’s Export Control Reform Initiative (ECR), BIS is deeply involved in the important changes being made to the U.S. export control system.   

In August 2009, President Obama announced the ECR Initiative to update the Cold War-era export control system to address today’s national security threats and economic challenges.  ECR strengthens our national security by (1) focusing limited export licensing and compliance resources on the threats that matter the most, (2) increasing the United States’ ability to work with our close friends and allies, and (3) strengthening the U.S. defense industrial base by reducing the incentives for foreign manufacturers to avoid using U.S.-origin parts and components.  ECR also reduces unnecessary export control regulatory burdens.

Exporters benefit from ECR’s emphasis on making the U.S. defense industrial base more competitive.  Specifically, ECR makes it easier for businesses to engage in secure trade with our closest friends and allies, helps to create strong relationships between U.S. export suppliers and foreign customers, and strengthens the security of supply from small defense companies.  Reform also is yielding important collateral benefits by reducing the financial, regulatory, and “red tape” burdens on U.S. exporters.  This, in turn, is promoting manufacturing growth and creating U.S. jobs.   

Technical experts in the Departments of Commerce, State, and Defense, along with many other agencies, continue their work to update regulations.  As a result, hundreds of thousands of less sensitive military items, largely parts and components, are moving from the strict, inflexible controls of the State Department to the more tailored controls of the Commerce Department.  (The military items that provide the United States with a critical military advantage continue to be regulated by the State Department.)  Importantly, the items are still controlled, specifically to countries subject to embargoes and proscribed end uses, but the regulatory requirements for trade with our close allies and friends are dramatically less than in the past.

Although the full effect of the changes will not be known for several years, the State Department is already reporting a more than 60 percent reduction in the number of licenses it issues.  This positive trend will continue as grandfathering periods expire, exporters become more familiar with the regulations, and more items are transferred to the Commerce Department’s jurisdiction. As the reform effort progresses, BIS will continue to engage with stakeholders to help businesses learn about changes to export controls.  To find more resources for exporters, please visit the BIS website <http://www.bis.doc.gov/index.php/exporter-portal>.