Export Control Reform:  Are the Stars Aligned for Change?

International Alert

The following is President Obama's quote from the State of the Union address on January 27, 2010 regarding export control reform:

Third, we need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.

Earlier in the day, Defense Secretary Gates, along with others from the Administration, discussed their plans for wholesale reform with congressional leaders. General Brent Scowcroft also participated in those meetings.

For several months, Miller & Chevalier has been actively engaged in a private sector effort to develop recommendations to the President regarding reforms to the system. Those recommendations, on behalf of 14 trade associations, went to the White House on January 19, 2010. On January 28, 2010, the Administration approved the public release of internal guidance it gave to its export controls task force, which has been working for about two months to develop specific recommendations yet to be finalized and released.

Of course, we welcome the Administration's review and have shared our experience and ideas since last September in shaping stakeholder recommendations. These recommendations can both improve national security and reduce burdens on industry. We believe the most important recommendations are to (a) change the structure of the US Munitions List to distinguish multilateral from unilateral controls, (b) make the National Security Advisor the single decision maker for commodity jurisdiction determinations and allocations of multilaterally controlled items to the relevant lists, and (c) create an appeals process that will allow a company to challenge a commodity jurisdiction or classification decision to a board within the Office of the President consisting of ALJ's or experienced judges. Reduction in the control lists is also important, but in our experience such efforts have failed to deliver results because the interagency process does not operate effectively in balancing national security and the need to maintain an effective industrial base.

Perhaps the stars are aligned for meaningful export control reform as never before. Past efforts have failed to produce results. The process is just at the beginning, much work needs to be done, many pitfalls remain ahead, and the window of opportunity is short. Most of the recommendations the industry supports can be accomplished without legislation. Nonetheless, the industry needs to make its views known to both the White House and the Congress. Moreover, each corporation needs to understand and evaluate recommended changes in light of their business and compliance models.

Miller & Chevalier will remain engaged. If you have questions or would simply like to discuss developments, please contact:

Larry E. Christensen, lchristensen@milchev.com, 202-626-1469

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