Business & Lobbying

Berman’s bid to revamp policy on exports holds hope despite tough odds

Berman (D-Calif.) faces a long and arduous process. It has been years since the nation’s export-control system has been revamped, and efforts over the past decade have run aground amid bipartisan opposition and intra-committee squabbling.

{mosads}Still, observers believe Berman has a strong chance for success because this effort has presidential backing.

President Barack Obama in August ordered an extensive, interagency review of export controls, and National Security Adviser Jim Jones and Director of the National Economic Council Larry Summers are taking the lead.

“It was a presidential decision to go forward and order the review,” said Bill Reinsch, the president of the National Foreign Trade Council, which has long advocated for an export-control overhaul.

Reinsch, a former Department of Commerce official charged with export-control policy, said he is cautiously optimistic the new effort will be successful.

 “Reviews did not get far in the past because they have been bottom-up rather than top-down. That is the reason they have floundered in the past,” he said.

The administration review is likely to produce recommendations by year’s end and will be followed with an executive order making some changes affecting dual-use technologies. The review is expected to inform Berman’s legislation. Congress will have to change U.S. law to effectively modernize the system.

The export-control system, seen by many as a Cold War relic, is intended to protect sensitive technologies that could be used for military or commercial purposes. Critics say dangerous technologies are not always controlled, 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.

Berman and his staff plan to have draft legislation ready by early winter and mark up an overhaul bill at the beginning of next year, according to congressional and lobbying sources.

Defense Secretary Robert Gates also backs the presidential review, providing key element.

Gates has dealt with the issue of export controls from different vantage points in his career: as director of the CIA, as deputy national security adviser and as the president of Texas A&M University, a school with a heavy focus on technology and sciences.

Additionally, Gates served as the chairman of the Committee on Scientific Communication and National Security, created to consider new approaches to regulating science and technology in support of national security, scientific pre-eminence and long-term economic growth.

Congressional and lobbying sources note that Obama only announced the review after meeting with Gates, who pressed him on the need to reform the system.

“Gates certainly has a lot of credibility in this field,” said Reinsch. “He has very direct knowledge of the issue.”

Former Rep. Ellen Tauscher (D-Calif.), now undersecretary of State for Arms Control and International Security, is also expected to play a key role.

{mosads}During her seven terms in the House, Tauscher was a strong proponent of reforming export controls.

Foreign Affairs staff plan to be in constant dialogue with members and staff on the House Armed Services Committee, a congressional source said. Earning support from Armed Services is critical, as the two panels battled over an export-control overhaul in 2002, when legislation died in the House.

Winning support from both Republicans and Democrats on those committees as well as the Intelligence, Science and Commerce panels is key, the congressional source said.

Trade insiders say that Berman will have to walk a fine line to satisfy both Republicans, who fear reform could jeopardize national security, but also Democrats who fear that they may be seen as weak on national security if new language is perceived as more permissive.

The National Association of Manufacturers (NAM) has endorsed Obama’s call for a review.

“This is exactly what the NAM has been seeking,” said Frank Vargo, the association’s vice president for international economic affairs.

“The president is right in recognizing that the existing export-controls system is rooted in the Cold War era and does not meet today’s security threats or global technological realities.”

Vargo stressed that the current system restricts too many technologies and is very costly. It also “creates delays and uncertainties for foreign customers, impedes defense cooperation with our allies and dissipates the government’s export-control resources in areas no longer relevant to our security,” Vargo added.

The aerospace industry also is a large stakeholder in reform. The Aerospace Industries Association (AiA) has also been pressing for changes to export controls for years.

NAM and AiA are the co-creators of the Coalition for Security and Competitiveness that now has 16 other associations as members.

{mosads}While NAM and AiA are interested in reforms that would ease exports, many observers say the system also needs better controls because some key technological advances are not accounted for by today’s regulations.

Areas such as biotechnology and nanotechnology are not adequately covered under so-called dual-use regulations governing technology for commercial and military use.

Those areas need to receive much closer attention in a redesigned export controls system, the congressional source said.

At the Pentagon, Gates understands that the IT revolution has changed the way people communicate and produce technology, Reinsch explained. “Gates understands that America’s great strength is to run faster than anyone else,” he said.

That also means that the Pentagon cannot rely on technologies custom-built for the military. It must be able to dip into developments readily available on commercial shelves.
But in order for the Pentagon to profit from advances in commercial technologies, those companies have to be profitable themselves, so that they can pour money into research and development, Reinsch explained.

The way those companies would stay profitable is through exports. The export-control system is in place to guard the technologies deemed for dual use, both civilian and military.

“Suddenly it is not in the Pentagon’s interest to restrict everything,” Reinsch said. “You have to focus your export controls in a much more narrow [fashion].
“Gates understands it and Obama understands it, but you have to do a scrub of the controls system.”

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