Consensus needed on export controls

Consensus needed on export controls

During the press gaggle at the Bureau of Industry and Security's recent annual update, newly installed Commerce Undersecretary David McCormick stated the obvious: A new Export Administration Act is "a good-government issue."

How true. BIS is already awash with controversial regulatory proposals while basics remain ignored. The Export Administration Act, which governs exports of products that could be converted to military or terrorist use, was permitted to expire in August 2004.

Aside from creating anti-competitive compliance nightmares for exporters of every size and shape, the lack of an Export Administration Act has resulted in an amazing environment of regulatory "ad hoc-is." In this environment, ill-conceived export controls - such as those on night-vision equipment - have nearly destroyed a U.S.-born high-technology industry that once enjoyed market domination.

Absent a firm statutory foundation, some have grabbed the rudder and essentially dictated U.S. export policy without observing the statutory balance between national security and international economic performance. As a result, some of our more critical industries, such as the computer sector, have had to rely on wholesale lobbying of Congress and the White House to avoid being put out of business in the international marketplace. Others, being smaller and less organized, have seen their market share evaporate.

Congress's key pro-competitive export-control mandates of the 1990s (foreign availability, no unilateral controls, expedited licensing) have been abandoned. BIS has essentially refused submissions on foreign availability of products. Unilateral controls have proliferated, putting U.S. firms at vast disadvantage against their Wassenaar Arrangement competitors who aren't comparably restricted. Sense and balance are absent from proposed new controls.

While it sounds like an impossible job, the new undersecretary has at least sounded the key battle cry: "good government." There have been a wealth of examples in the recent past where good government resulted in excellence in export controls. Here are three:

-- In 1976, a blue-ribbon Defense Science Board task force chaired by J. Fred Bucy, then president of Texas Instruments, reported that the primary emphasis of the control system should be to preserve a significant lead time over adversaries in militarily critical technologies. The "Bucy Report" became the backbone of the strong EAA of 1979, affirming that the objective of the U.S. export control system was to balance U.S. technology and economic growth and national security.

-- The tension between Export Administration Act controls and the free exchange of scientific communication led Dale R. Corson, president emeritus of Cornell University, to chair a National Academy of Sciences panel whose 1982 report established a set of principles to resolve the tension.

-- In 1986, the National Academy again empaneled a task force of industry, academic and government experts to address the deteriorating efficiency of export controls, again with the support of the Commerce and Defense departments. Under the chairmanship of Lew Allen Jr., then president of the California Institute of Technology, the panel published its exhaustive report in 1987. It served as the basis for the significant overhaul of the dual-use export control legislative structure in 1988. Importantly, the Allen panel concluded that ". . . export controls are not a means for controlling espionage, which accounts for a high proportion of the (then-identified) successful and significant (foreign) technology acquisition efforts."

Since 1990, the Export Administration Act has been allowed to expire peridocally without prompt renewal, and our system of controls has been essentially propped up by presidential orders under overused emergency legislation from 1977. There now no longer exists a clear legislative, executive or industry-academic consensus on how best to control the exports of goods and technology in a dynamic global marketplace.

Clearly, changing this is a job for an undersecretary who understands the need for "good government" and who is aware of the past mechanisms for achieving it. The consequences of failure are profound. Now all Mr. McCormick has to do is to get on with the critical task of energizing the debate so that the government-industry consensus can be shaped. Congress will do the rest.

Donald Alford Weadon Jr. is a Washington-based international lawyer who has been an authority on export controls and customs law, policy and practice for more than 25 years. He can be contacted at (202) 965-4100 or at dweadon@aol.com.