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Export and Re-Export Controls

Export and Re-Export Controls. Brianna Joslyn Haroon Khan Michael Korschek. History of U.S. Export Controls. 1917 Trading with the Enemy Act 1935 Neutrality Act Export Control Act of 1949 Export Administrative Act of 1979

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Export and Re-Export Controls

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  1. Export and Re-Export Controls Brianna Joslyn Haroon Khan Michael Korschek

  2. History of U.S. Export Controls • 1917 Trading with the Enemy Act • 1935 Neutrality Act • Export Control Act of 1949 • Export Administrative Act of 1979 • Coordinating Committee for Multilateral Export Controls/Wassenaar Arrangement

  3. Agencies with Export Controls Responsibilities • Commerce Department • Department of State • Department of the Treasury • Nuclear Regulatory Commission • Department of Energy • Department of Defense • Department of the Interior • Food and Drug Administration • Patent and Trademark Office • Environmental Protection Agency

  4. Commerce Department • Export control is the responsibility of the Bureau of Industry and Security • Authorized by Export Administration Regulations (EAR), under Title 15, Chapter VII • Export controlled items are usually dual use (civilian and military applications) though non-dual use products are also controlled

  5. Commerce Controlled Categories • Nuclear materials, facilities and equipment (and miscellaneous items) • Materials, Chemicals, Microorganisms and Toxins • Materials Processing • Electronics • Computers • Telecommunications and Information Security • Sensors and Lasers • Navigation and Avionics • Marine • Propulsion Systems, Space Vehicles, and Related Equipment

  6. Penalties • If the Department of Commerce determines that a foreign firm has not complied with regulations, it may institute administrative enforcement proceedings, resulting in the possible imposition of civil penalties and/or denial of the firm to receive U.S. exports. • Punishments for domestic violators include: • Monetary fines • Imprisonment of up to ten years • Loss of export privileges

  7. Arms Export Control Act • Passed in 1976 • Grants President authority to control and export defense articles and services • Intended to only allow defense material and technology transfer that would further U.S. interests • Active enforcement

  8. Existing Policy Problems • Export controls inhibit U.S. competitiveness • Controlled goods that are freely available in other nations • Controlled goods that are not applicable to military uses any longer • Too many agencies with overlapping areas of authority • License process discouraging to small and medium sized businesses

  9. Selected Issue: Satellites • Major area of indictment for cases involving violation of export controls. • Large private market for satellites – wireless technologies. • Impacted by ITAR to decrease US market share.

  10. Satellites: The Issues • The industry has lost 40% of its business due to restrictions on exports abroad. • Sales of multinationals is declining. • Everyone has the same technology – diffusion is rapid. • Complex methods for acquiring licenses. • Department of State's interpretation of ITAR has led to more strict export controls on satellites due to security concerns.

  11. Competing Interests • Corporate competitiveness vs. export controls. • US market share vs. US security concerns. • Diffusion of technology vs. complex licensing systems. • Desire for US to be leader in satellite technology vs. restriction of commercial opportunities and a lack of government subsidies.

  12. Other Countries • Russia • Catch-all controls. • Inter-agency review of export license applications. • Criminal penalties exist, though limited enforcement capabilites. • China • Actively seeks international satellite contracts. • Goal of market share. • Has licensing clashes with US - Boeing.

  13. Policy Proposal • Shift responsibilities from Department of State to Bureau of Industry and Security (BIS) under the Department of Commerce • This will expedite the application process • Have no fear, BIS is here! • Let BIS do its job

  14. Policy Proposal cont. • Department of State overwhelmed after 9/11 with wars in Afghanistan and Iraq • Commercial satellite applications thus have to compete with articles deemed “war-time” necessities • Average of 7000 applications received by State Department’s Directorate of Defense Trade Controls (DDTC) personnel. • More applications = backlog for commercial satellite applications

  15. Policy Proposal cont. • US Satellite companies dominated the field of contracts for commercial satellites when Commerce had jurisdiction • BIS is fairly active in terms of enforcement • BIS even underwent a name change earlier to address ambiguity

  16. Policy Proposal cont. • China already an active participant in launching “ITAR-FREE” satellites • China obtaining contracts from other countries • Reform EAR and ITAR to address any fears of national security breach • Reform does not mean elimination of ITAR as it is still vital to protecting proprietary military information.

  17. Policy Proposal cont. • President Obama has openly stated his interests to boost US exports • The Obama administration wants to retain Research and Development in the US • Congress is trying to address the issues of export and re-export controls

  18. Source: Allen, Karri. “Communications Satellites and U.S. Export Controls: Correcting the Balance.” Catholic University School of Law, December 2009, http://commlaw.cua.edu/res/docs/09-Allen-Final.pdf

  19. Policy Proposal cont. • China is winning the war on cyber space • China’s $3 trillion dilemma • Sharing of technology is a two-way street. Both parties learn about each others capabilities • Proposal is not intended to under US national security concerns

  20. Sources • Allen, Karri. “Communications Satellites and U.S. Export Controls: Correcting the Balance.” Catholic University School of Law, December 2009, http://commlaw.cua.edu/res/docs/09-Allen-Final.pdf. • Coalition for Security and Competitiveness. (2010). Recommendation for 21st Century Technology Control Regime. Retrieved from: http://www.securityandcompetitiveness.org/proposals/show/2253.html • Devol, R. & Wong, P. (2010) Jobs for America. Retrieved from: http://www.milkeninstitute.org/pdf/JFAMilkenInstitute.pdf • Export Control Basics (Exporting 101)." U. S. Bureau of Industry and Security. N.p., n.d. Web. 27 Apr. 2011. <http://www.bis.doc.gov/licensing/exportingbasics.htm>. • Hosenball, Mark and Brian Grow. “In cyberspy vs. cyberspy, China has the edge.” Reuters. April 14, 2011. http://www.reuters.com/article/2011/04/14/us-china-usa-cyberespionage-idUSTRE73D24220110414.

  21. Sources cont. • ITAR and the U.S. Space Industry. Space Foundation, 2008, http://www.spacefoundation.org/docs/SpaceFoundation_ITAR.pdf. • Lamb, Robert. “Satellites, Security, and Scandal: Understanding the Politics of Export Control.” Center for International and Security Studies at Maryland, January 2005, http://www.cissm.umd.edu/papers/files/lamb_exportcontrols.pdf. • Overly, Steven. “For the U.S. satellite industry, strict export controls cost market share.” Washington Post, March 27, 2011, http://www.washingtonpost.com/capital_business/for-the-us-satellite-industry-strict-export-controls-cost-market-share/2011/03/25/AFEMJVkB_story.html. • "Satellite Photos | Free Satellite Pictures ." Satellite Photos | Free Satellite Pictures . N.p., n.d. Web. 27 Apr. 2011. <http://photossatellite.com/>.

  22. Sources cont. • Schneider, Howard. “China’s $3 trillion dilemma: What to do with all that cash?” Washington Post. April 19, 2011, http://www.washingtonpost.com/business/ economy/chinas-3-trillion-dilemma-what-to-do-with-all-that-cash/2011/04/15/AFngE75D_story.html. • Scully, Megan. “House targets satellite export controls.” Government Executive. July 9, 2009, http://www.govexec.com/dailyfed/0709/070609cdpm1.htm. • "U. S. Bureau of Industry and Security - Russia and China - Non-Proliferation Concerns and Export Controls." U. S. Bureau of Industry and Security. N.p., n.d. Web. 27 Apr. 2011. <http://www.bis.doc.gov/news/2002/bormanrussiachina.htm>. • U.S. Department of Commerce. (2011). Guidance on the Commerce Department’s Reexport Controls. Retrieved from: http://www.bis.doc.gov/licensing/bis_reexport_controls.pdf

  23. Sources cont. • U.S. Department of Commerce. (2011). Streamlining and Strengthening Export Controls. Retrieved from: http://www.bis.doc.gov/eaa.html • United States Department of Justice Press Release. “Foreign Subsidiary of PPG Industries, Inc. Pleads Guilty to Illegally Exporting High-Performance Coating to Nuclear Reactor in Pakistan- Company Agrees to Pay $3.75 million in Fines and Forfeit $32319.” December 21, 2010, http://www.bis.doc.gov/news/2010/doj12212010.htm. • Weidlich, T. (2011). U.S. Indicts Two Chinese Citizens For Trying to Obtain Military Microchips. Bloomberg. Retrieved from: http://www.bloomberg.com/news/2011-04-04/u-s-indicts-two-for-attempting-to-export-military-microchips-to-china.html • Yardley, Jim. “Snubbed by U.S., China Finds New Space Partners.” New York Times. May 24, 2007, http://www.nytimes.com/2007/05/24/world/asia/24satellite.html. • Zelnio, Ryan. “Determining the Effects of ITAR Regulation on the Commercial Space Manufacturing Sector.” George Mason University, April 1, 2007, http://www.cspo.org/igscdocs/Ryan%20 Zelnio.pdf.

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