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Top Story
The following story is from the July 15 issue of International
Trade Reporter
Current Reports:
Export Controls
NAM Says High-Tech Exports in Decline
Due to Out-of-Date Export Control Regime
John Engler, president and CEO of the National Association of Manufacturers, told Congress that the current system does not effectively distinguish between items that are truly sensitive in terms of national security and those that are widely available as commercial products in the global marketplace.
He said that high-technology exports last year were worth about $370 billion and accounted for less than one-third of total manufactured goods exports, down from more than 40 percent in 2001.
“The degree of change needed is nothing short of a major revamping of the export control philosophy, policies, and implementation mechanisms,” which can only be brought about with a new Export Administration Act (EAA), Engler said. “While the NAM appreciates the difficulties facing the Congress on this legislation, now is the time to develop a new EAA that will enact changes to bring the law into alignment with the current threats to our security, the realities of the global economy, and the interdependency between economic competitiveness, technological innovation, and national security.”
Engler made his comments at a hearing of the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade, chaired by Rep. Brad Sherman (D-Calif.).
Sherman agreed that the current system of controlling exports to countries such as China and Russia—based on an EAA that was last revamped in 1979 and that expired in 2001—was badly in need of reform and he said he would be introducing legislation later this year to that end.
Factory Gate
He said that some products should be “decontrolled,” while others will need to be controlled “at the factory gate,”
citing a study by the Government Accountability Office, released last month, that found that militarily sensitive goods and technology can be “easily and legally” purchased in the United States and exported to suspect destinations abroad (26 ITR 843, 6/25/09).
Sherman also said that he would like to see products categorized according to their risk to national security, using criteria including whether they are already widely available abroad and whether they have a purely commercial, non-military application.
NAM's Engler, meanwhile, told the subcommittee that, from the perspective of U.S. manufacturers, the present system of controlling exports “restricts too many technologies, is costly, and creates delays and uncertainties for foreign customers.”
He said it is fairly common, in fact, to see U.S. competitors advertising that their products are totally free of U.S. components and U.S. export controls.
“In this sense our export control system is a great export promotion program—for our competitors, not for us,” Engler said. “The current system is at odds with the way companies develop new cutting-edge technology today through international cooperation. U.S. companies collaborating on new technologies with their wholly owned foreign subsidiaries may be required first to obtain an export license even to send an e-mail, provide information over the telephone, or transfer a product across the Atlantic to its facility in another NATO country. These delays and uncertainties create a significant commercial disadvantage.”
By Gary G. Yerkey
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