U.S. Export Controls on Technology.

Presenters: David Nelson David Olave-Delgado Julia Pérez Meléndez U.S. Export Controls on Technology. Prepared for: Dr. Malawer International Trade Relations ITRN 603 Fall Semester 2007 Date:November26th, 2007

Agenda • Overview/Issue Summary • Legislation and Government Agencies • Issues and controversies • HCPs example • Key Issue • Policy Reform

EXPORT CONTROLS LEGISLATION • Congress and Commerce • U.S. Constitution, Article 1, Section 8: “..and to regulate commerce with foreign nations…” • Export Administration Act (EAA) • Through the EAA, Congress delegates to the executive branch its express constitutional authority to regulate foreign commerce • EAA provides the statutory authority for export controls on sensitive dual-use goods and technologies

ROLES AND RESPONSABILITIES

EAA Continued… • EAA Origins • International Emergency Economic Powers Act (IEEPA) • The EAA is the statutory authority for the Exports Administration Regulations (EAR), which are administered by the Bureau of Industry and Security (BIS) of the Department of Commerce • These regulations establish the framework for regulating exports of dual-use, potentially sensitive commodities, software computers, and technology. Exports can be restrictive by item, country and recipient entity

EXPORT CONTROLS—ISSUES AND CONTROVERSY • In 2006, U.S. high-tech exports accounted for $346 billion dollars, or 33 percent of all U.S. exports of manufactured goods. • In FY2006, BIS reviewed 18,941 applications with a total value of approximately $36 billion • High Performance Computers (HCPs), Encryption, Satellites, Machine Tools, Civil Aviation Equipment, Robotics, Telecommunications, and more • Coalition for Security and Competitiveness, http://www.securityandcompetitiveness.org

High Performance Computers (HCPs) • In the old economy, the United States dominated the markets for HPC's and where the production of these items was limited, it was feasible to control these exports. • In the new global economy, where most computers are HPCs (or can be configured to be HPCs), and are produced in many countries around the world, it has become increasingly difficult for the United States to control who gets access to these products.

EXPORT CONTROLS—ISSUES AND CONTROVERSY • Foreign Policy Controls • End-User Control or catch-all controls • Established after the Gulf War, introduced under the Enhanced Proliferation Control Initiative (EPCI), requires a license for export or reexport of any item, if the applicant knows or is informed by BIS that item will be used for nuclear, missile, chemical or biological proliferation activities • Deemed Exports • US companies are required to obtain export licenses for many foreign-born employees before they can work on certain technology projects, even at the company’s US facility

High Performance Computers (HCPs) • With the end of the Cold War discussions have arisen regarding how US computer controls should be updated and reformed to better serve today’s US national security and economic interests. • While these controls been successful, U.S. policymakers now must develop a new framework that can keep pace not only with a more politically uncertain global community, but also with the explosive growth of information technology (IT).

Performance-Based Controls for HCPs • Mandated by the 1998 National Defense Authorization Act (NDAA). • Recently changed to a new metric, “Adjusted Peak Performance," stated in the “Weighted Teraflops” (WT). • The current level of .75WT applies to Tier 3 countries. • This metric is generally seen as being a positive move, but it is widely felt that this level will need to be modified continually in order keep up w/ tech. advances such as those in commercial computers.

Key Issue • Key Issue- Adapting our current export control system to the rapidly changing global landscape. • Globalization-Present export controls were made for Cold War world. • National security policy and economic policies are becoming increasingly intertwined as the barriers to the flow of people, products, technology and information are broken down.

Key Issue • Implications • Policies once seen as primarily security-related, such as nonproliferation, now have important implications for economic policy as well. • At the same time, issues normally viewed only through an economic lens—such as foreign direct investment and visa policy—increasingly have security implications.

Key Issue • U.S. • Continues to base controls primarily on states or nationality when our greatest threats are from non-state organizations and terrorists who may hold passports from friendly nations. • Key challenge the US has is how to reform controls to reflect today’s world. • “The gravest threat our nation faces lies at the crossroads of radicalism and technology. The ability of a terrorist group to acquire Weapons of Mass Destruction will determine the future of our global prosperity.”-President Bush

Policy Reforms • Reform must involve three important constituencies: • Congress, the executive branch, and the private sector. • Each has an important and legitimate voice in technology controls. Must unify around a common vision of the threat and the solution. • BUT…due to globalization and increased world trade, cooperation between nations is essential.

Policy Reforms-Cont. • Short Term- Pass the Export Enforcement Act of 2007. A new EAA should take into consideration: • the increased globalization of markets and an increasing number of foreign competitors; • rapid advances in technologies and products; • a growing dependence by the U.S. military on commercially available dual-use items; • and heightened threats from terrorism and the proliferation of weapons of mass destruction. • Long Term-Government should work with the private sector and foreign governments to craft an export control system for the 21st century.

Policy Reforms-cont. • Help Facilitate Trade- U.S. should seek ways to reduce the amount of time it takes to process export license applications. Processing times have increased in recent years—from a median of 13 days in 2002 to 26 days in 2006. Also, at the end of 2006, State’s backlog of applications reached its highest level of more than 10,000 open cases. • Trusted Customer Program • The Commerce Department intends to launch a “trusted customer” program that will allow certain advanced technology products to be exported without the usual required licenses to companies in specific countries for civilian use. • The Trusted Customer program is expected to facilitate high-tech trade, since no export licenses will be required for certain controlled dual-use high-tech products. • Improve Interagency Cooperation- The US Dept’s of State/Commerce have different lists on exports to control. Causes confusion and inefficiency. Need better cooperation.

References • E-Customs.com accessed at. http://www.ecustoms.com/vc/authorities.cfm • Overview of US Export Control Laws. Accessed at http://usinfo.state.gov/journals/ites/0997/ijee/ejcontrl.htm • The Catholic University of America. Summary of Federal Laws. Accessed at http://counsel.cua.edu/FEDLAW/EAA.cfm • Bureau of Industry and Security. US Department of Commerce. Accessed at http://www.bis.doc.gov/News/2007/Padilla05152007.htm • Bureau of Industry and Security, U.S. Department of Commerce. Where Industry and Security Intersect. Accessed at http://64.233.169.104/search?q=cache:pGMli0SI0-4J:www.bis.doc.gov/News/2007/Sampson02222007.htm+trusted+customer+program+exports&hl=en&ct=clnk&cd=1&gl=us • FAS.org. GAO Export Control Report. Accessed at http://www.fas.org/asmp/resources/110th/GAOd071135t.pdf • Ian F. Ferguson, The Export Administration Act: Evolution, Provisions, and Debate. CRS Report to Congress, Order Code: RL31832

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U.S. Export Controls on Technology.