Gates makes pitch for major reforms of U.S. controls on sensitive exports

Defense Secretary Robert Gates on Tuesday called for an overhaul of restrictions on high-tech exports, arguing reform is necessary to strengthen national security. 

Gates criticized the existing system as outdated, arguing it fails to prevent harmful exports even as it makes it more difficult for the U.S. to export useful technologies to its allies. 

“The United States is thought to have one of the most stringent export regimes in the world. But stringent is not the same as effective,” Gates said in an address to the Business Executives for National Security. 

“A number of lapses in recent years — from highly sensitive materials being exported to vital homeland security capabilities being delayed — have underscored the flaws of the current approach,” he said. 

An updated system also needs to account for the fact that the U.S. military now takes advantage of many commercially manufactured items, such as electronic components, he said. 

The export controls system, intended to safeguard sensitive technologies that could be used for military and commercial purposes, has not been updated in decades.

An extensive overhaul would require action by Congress, something that in the past has been scuttled over national-security concerns. The last major effort ended shortly after the terror attacks of Sept. 11, 2001. 

Gates’s speech was highly anticipated in business circles and could lend momentum to a new effort in Congress to move forward with export-control changes. 

The lone holdover from the George W. Bush administration in President Barack Obama’s Cabinet, Gates commands the respect of both Democrats and Republicans in Congress and brings credibility to the issue through his extensive experience.

The speech is expected to revive an intense debate on Capitol Hill on how best to protect U.S. high technologies while boosting the economic output of businesses and manufacturers that for years have complained of being hamstrung by a cumbersome and outdated export-controls system. 

Gates indicated that the Obama administration is looking to have legislative backing for its major overhaul this year, and the chairman of the House Foreign Affairs Committee, Rep. Howard Berman (D-Calif.), is moving ahead with legislation to completely revise the Export Administration Act.

Berman said he is closely consulting with Obama’s senior advisers and will “carefully” consider  administration proposals.

House Armed Services Committee Chairman Rep. Ike Skelton (D-Mo.) welcomed Gates call for reform and said the effort would “better protect Americans.” Skelton expressed confidence that lawmakers can work with Gates and the administration team “to  make sure that the system protecting our technology is as excellent as the technology itself. 

Skelton’s Republican counterpart, Rep. Buck McKeon (Calif.) warned that reform needs to result “in greater protection and monitoring of key defense items and technologies.”

Critics for years have made arguments similar to the ones presented by Gates on Tuesday: The present system does not always control the export of dangerous technologies, while restrictions on the trade of some goods that are now widely available in the commercial market only have the effect of hurting U.S. companies.

Each year the government reviews tens of thousands of license applications for export to European Union and NATO countries. In 95 percent of the cases the export is granted. Additionally, many components of a major piece of defense equipment — such as a combat vehicle or aircraft — require their own export licenses, Gates said.   

“It makes little sense to use the same lengthy process to control the export of every latch, wire and lug nut for a piece of equipment like the F-16 when we have already approved the export of the whole aircraft,” Gates said. 

Obama administration officials have said the administration is unified on making progress with the reform effort and is in agreement on how to approach the changes. 

Additionally, Obama has the full support of his entire national-security team, Gates said in his speech. 

Last August, Obama directed a broad-based review of the U.S. export-control regime. He has called for reforms that focus controls on key technologies and items that pose the greatest national-security threat.  

“These include items and technologies related to global terrorism, the proliferation and delivery systems of weapons of mass destruction and advanced conventional weapons. In short, a system where higher walls are placed around fewer, more critical items,” Gates said. 

Gates said he worked with his counterparts at the departments of State, Commerce and Homeland Security, as well as with the director of national intelligence and the national security adviser, to develop a “blueprint for such a system.”  

The administration’s plan relies on several reforms: 

• A single export control list that will make it clear to U.S. companies which items require licenses for export and which do not. 

• A single licensing agency, which will have jurisdiction over both munitions and dual-use items and technologies, will allow the government to streamline the review process for export licenses. This agency would also reduce exporters’ current confusion over where and how to submit export-license applications (currently both the State and Commerce departments issue licenses) as well as which technologies and items are likely to be approved. The Obama administration is still deciding on the location of that agency. 

• A single enforcement-coordination agency to strengthen enforcement abroad and coordinate with the intelligence community. Violators will be subject to thorough investigation, prosecution and punishment. 

• A single, unified information technology infrastructure housed in a single online location and database that would receive, process and help screen new license applications and end-users. There will also be a list of entities — terrorist organizations, rogue states and others — that cannot be allowed access to sensitive items. Entities can be added at any time. 

The Obama administration is aiming to approach reform in three phases over the next year, Gates said.  First, the administration will use its executive authority to transition to a single list and single licensing agency by establishing criteria for a tiered control list. It will also launch an integrated enforcement center.  The second step will be to complete the transition to a single IT structure, implement the tiered control list and mak e “substantial progress” towards a single licensing system, Gates explained.  The third and most difficult step will be to win congressional backing for the overhaul. The administration will need legislation to create the single licensing agency and a single enforcement coordination agency. 

Gates said that Obama’s national security team will work closely with lawmakers to turn the administration’s proposals into legislation that Obama can sign “sometime this year.”

This story was updated at 7:29 p.m.

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