Tuesday, January 29, 2008

President Issues Directives for U.S. Export Control Reforms

On January 22, 2008, the President announced a national security directive that requires action by the U.S. State Department and the Department of Commerce, Bureau of Industry and Security. With the continued threats to security, proliferation of weapons of mass destruction and increased reliance on outsourcing in our global economy, the United States must be vigilant to ensure that distribution of controlled technology to foreign entities is only allowed when properly authorized.

The President’s directive to the Department of Commerce addresses three major initiatives:

1. Foreign End-Users

This initiative focuses on foreign end-users of U.S. technology products to deny potentially sensitive technology to America’s adversaries while facilitating the development of technology with our allies. The use of the Validated End User (VEU) program facilitates legitimate exports to civilian end-users. After submitting the required information and receiving authorization from BIS, export, reexport and transfer of eligible items to approved end-users in eligible destination will be allowed. Exports to foreign parties with a record of activities in opposition to U.S. foreign policy and national security interests will be subjected to additional scrutiny.

2. U.S. Competitiveness

This requirement includes developing a regular process for review of the list of controlled dual-use items, the Commerce Control List (CCL), improved controls on intra-company transfers, revised controls on encryption products, and a review of reexport controls.

3. Transparency

Another aspect of the directive identifies the need for the Commerce Department to provide sufficient information related to dual-use export controls to U.S. exporters to help them comply with the regulations. To fulfill this obligation, Commerce will publish advisory opinions on the BIS website and a list of foreign parties that warrant higher scrutiny.

The directives issued to the U.S. Department of State also focused on three major areas, licensing, dispute resolution and enhanced enforcement:

1. More Effective U.S. Export Licensing

This directive is designed to limit the period of time the government is permitted to make license determinations for goods on the U.S. Munitions List (USML) to 60 days. Additional resources will be made available to carry out this mandate. In addition, the electronic licensing system will be upgraded to permit the submission of all types of defense trade licenses and to enable all agencies to access the same electronic information.

2.More Efficient Dispute Resolution Mechanism

A formal interagency dispute mechanism will be created to allow for timely resolution of licensing jurisdiction issues involving the Departments of State and Commerce under the Commodity Jurisdiction (CJ) process. The National Security Council will also undertake a review to make sure the CJ process is efficient and timely.

3. Enhanced Enforcement

A multi-agency working group will be established to improve procedures for conducting export enforcement investigations.

In concluding his communication of these directives, the President stated that the Administration continues to support reauthorization of the Export Administration Act with updated penalties and enhanced law enforcement.

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