Reforming the Maze of Export Control Regulation
You have to admire anyone who is responsible for export control compliance. They are brave people. It is a wonder that they can keep everything straight.
The Obama Administration, to its credit, has been trying to reform the export control system. It is about time that someone tackled this mess. The guiding principle is to try and separate the wheat from the chafe – tighten controls on items with strategic significance and loosen controls over items that have less strategic significance.
The U.S. export control system is made up of different regulatory regimes:
(1) State Department’s Directorate of Defense Trade Controls (“DDTC”) administers the International Traffic in Arms Regulations (“ITAR”), 22 C.F.R. Parts 120-130, which applies to military use items;
(2) Commerce Department, Bureau of Industry and Security (“BIS”), under the Export Administration Regulations (“EAR”), 15 C.F.R. Parts 730-774, administers dual use items – those items which can be used either for civilian and military use;
(3) Treasury Department Office of Foreign Assets Control (“OFAC”) enforces economic sanctions and embargoes; and
(4) Other government agencies, such as the Energy Department, Nuclear Regulatory Commission, and the Food and Drug Administration, also administer export controls specific to their regulatory focus.
The primary goal of the reform effort is to create a single list of controlled goods from the existing U.S. Munitions List (“USML”) and Commerce Control List (“CCL”), create a single licensing agency, a single enforcement coordinating agency, and implement a uniform information technology system.
The Administration has outlined three phases to this initiative: Phase I, which is basically been completed, is for each agency to revise and streamline the licensing process, and to establish a coordinated export enforcement center. In Phase II, the agencies will complete the restructuring of the USML and CCL, and finalize the lists of USML items to be transferred to the CCL, and implement a uniform single IT system. Phase III requires Congressional legislation to merge the USML and CCL into a single control list, stand-up a single licensing agency and complete implementation of a uniform IT system.
The Administration has made significant progress in this area. It is an example of good government at work.
Phase III is the most difficult because it requires Congressional action. Unfortunately, there is no consensus on Capitol Hill about how to reform the export control system. Some in Congress are suggesting that reform should move more slowly. It is unfortunate because the work to date has been very focused and successful. Congress should not stand in the way but should embrace the need for reform and move the ball forward.