Economics, International economy

Export Control Reform Update: Still Missing Key Details

National Security Advisor General Jim Jones gave some updates this week on where the Obama administration is going with its comprehensive export-control reform initiative. General Jones’ remarks before the Senate Aerospace Caucus were a follow-up to an April speech by Defense Secretary Gates, who initially laid out the administration’s vision for the reforms. Secretary Gates had announced that the administration intended to consolidate in three phases over one year the U.S. Government’s export control functions into a single control list, licensing agency, enforcement agency, and IT system. General Jones’ comments shed further light on how some of the details of the reform plan have moved forward. Here are some highlights and preliminary observations:

Congress: The administration has decided that only Phase III requires Congressional action. Has the administration sufficiently consulted with Congress on this decision? Will this affect Phase III’s political viability?

Export Control Functions: The Treasury Department’s sanctions programs administered by the Office of Foreign Assets Control (OFAC) now appear to be included. Adding OFAC is an important step in ensuring that the reforms are comprehensive. How about the nuclear licensing regime?

Control Lists: Apparently, Phase I has already been completed and, among other things, the administration has formulated “independent objective criteria” for cascading tiers of control and a “bright line process” for determining whether products, technologies, etc., belong on the Commerce or Munitions Lists. Having clear definitions and jurisdictional criteria for establishing what is controlled and how is vital to a well-functioning export control system. General Jones, however, did not elaborate on what these criteria and processes are and whether they will ever be made public.

IT System and Licensing: A single licensing application for all export licensing will be issued. Existing portals for export licensing will be consolidated into the Defense Department’s USXPORTS system. This is a helpful step for exporters, depending on how well the new electronic system works. While Commerce and State have electronic licensing systems, OFAC still uses paper and has no standard license form.

Enforcement: An Enforcement Fusion Center is being created to consolidate the enforcement agencies’ and intelligence community functions, eventually combining Commerce Export Enforcement Office and DHS’ Immigration and Customs Enforcement (ICE). Also planned are the harmonization of maximum export-control criminal penalties, added civil penalties, and a study commissioned with the U.S. Sentencing Commission to add mandatory minimum criminal sentences for export control violations.

Consolidation among enforcement agencies is a good idea, provided there is sufficient information sharing and coordination—not guaranteed simply by combining government personnel. The U.S. Government should be tough on violators, but the types of violations that would yield mandatory minimum sentences will be key to assessing whether or not this is good policy or simply political posturing.

Single Agency: A new independent agency will be created, not one housed in an existing cabinet department, to be headed by a board of directors composed of the current export-control agencies’ cabinet heads. This is a long-awaited announcement, but leaves many unanswered questions. Now that we know there might be an independent agency, how is an agency with a board of several cabinet officials supposed to work? How will decision-making be structured? Will all of the existing export control agency personnel be housed under the same roof?

Cross-posted from the Center for Defense Studies.

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