Skip ITR banner
The Bureau of National Affairs, Inc. logo and tagline - Essential information. Expert analysis. International Trade Reporter Home Page
BNA HomeProduct CatalogContact BNAAbout BNASearchFREE Trials!
Skip left navigation
ITR Home Page
Table of Contents
Top Story Archive
Sample Issue
Current Report Archive
Export Reference Manual
Import Reference Manual
Decisions
Feedback
WTO Ministerial Draft
ITR Free Trial

Home > Top Story Archive > September 17, 2009

Top Story

The following story is from the September 17 issue of International Trade Reporter
Current Reports:

Export Controls

Commerce Targets Intra-Company Trade
In Administration Review of Export Controls

Officials at the Commerce Department's Bureau of Industry and Security (BIS) have begun internal discussions aimed at developing a set of recommendations for reforming the government's system of controlling exports of sensitive goods and technology, focusing on a new rule designed to facilitate intra-company trade, a senior BIS official said Sept. 15.

Matthew S. Borman, acting assistant secretary of commerce for export administration, said that U.S. Commerce Secretary Gary Locke has asked for the recommendations as soon as possible.

“Folks want to move this along promptly,” Borman said, adding that the recommendations will be part of the administration's overall review of the government's policies and procedures concerning export controls, announced by the White House on Aug. 13 (26 ITR 1116, 8/20/09)

Borman, speaking at a meeting of the Commerce Department's Regulations and Procedures Technical Advisory Committee (RPTAC), said that BIS will work to ensure that its recommendations were “not inconsistent” with efforts now under way in Congress to draft legislation to revamp and reauthorize the Export Administration Act (EAA).

Confident of EAA Bill

Rep. Howard L. Berman (D-Calif.), who chairs the House Foreign Affairs Committee, said last month that he hopes to introduce EAA-reauthorization legislation early next year (26 ITR 1116, 8/20/09).

At the RPTAC meeting on Sept. 15, Borman said that he was confident that an EAA bill would move in Congress, noting that Berman has hired Edmund B. Rice, a widely respected expert on export controls, to spearhead the drafting exercise.

He also noted that Rice, who most recently was president of the industry Coalition for Employment Through Exports (CEE), has compiled a long “track record” of success in championing export control reform.

Borman said that the set of recommendations that BIS will submit to Locke will focus on, among other things, making the proposed Intra-Company Transfer (ICT) license exception acceptable to business.

Last October, BIS published a proposed rule that would allow U.S. companies to transfer certain controlled products and technology to their foreign affiliates without obtaining individual export licences (73 Fed. Reg. 57,554 (Oct. 3, 2008) (25 ITR 1443, 10/9/08).

U.S. companies generally welcomed the initiative, saying that it would eliminate the need for thousands of individual export licenses.

John Engler, president of the National Association of Manufacturers (NAM), said that currently companies have to obtain from the government a separate export license for each shipment of controlled goods and technology to their branches overseas, even though they may be shipping basically the same products repeatedly to the same affiliates.

But NAM and other business associations and individual companies have also said that the program's success will depend on how it is implemented.

Hirschhorn Comments on ICT Proposal

Eric L. Hirschhorn, who was nominated to be undersecretary of commerce for export administration by President Obama on Sept. 14, said in comments submitted to BIS last November in his capacity as executive secretary of the Industry Coalition on Technology Transfer (ICOTT), that the ICT proposal was “long overdue.”

“We hope that when issued in final form, it will be user-friendly and accessible to far more than the twenty companies that the notice [published in the Federal Register] estimates would profit from its promulgation in the proposed form,” he wrote.

But Hirschhorn also emphasized that ICOTT member associations were “less sanguine” about certain elements of the proposal, including that it would require prior approval of all covered entities, “which is inconsistent with the concept of a license exception,” as well as of activities to be undertaken and specific categories of eligible items.

“We fear that many individual ICT applications will become hostage to a continuing effort by certain agencies to restrict the use of the license exception,” Hirschhorn wrote, “with the effort being manifested in objections to many individual proposed activities and [individual products].”

The proposal would also require extensive, pre-approved internal control programs, recordkeeping, and reporting, Hirschhorn said, and he said that the requirement that any violation, “no matter how minor,” would have to be reported to BlS would be “overly burdensome and is more likely to discourage use of ICT than it is to generate voluntary self-disclosures.”

Borman said at the RPTAC meeting on Sept. 15 that BIS will take account of industry's comments as it works to finalize the ICT regulation.

“We at [the Commerce Department] are not interested in promulgating another regulatory vehicle [designed to facilitate technology transfers] that no company wants to use,” Borman said.

By Gary G. Yerkey

Contact the Webmaster at webmaster@bna.com
 1801 S. Bell Street, Arlington, VA 22202 - Phone: 1-800-372-1033

Copyright © The Bureau of National Affairs, Inc. All Rights Reserved.