Fresh start for export control agencies

Letter from Paul DiVecchio.

   In tough economic times, the challenge of increasing revenues for international market share becomes critical for the survival of many companies. Add to this the importance for companies to establish and maintain comprehensive global export compliance programs in a highly volatile geopolitical environment.
   The task for companies meeting the both aforementioned objectives is greatly complicated by export control governing agencies that have lost sight of their responsibilities in ensuring consistency and accuracy of their decision making to provide security while maintaining a pro-trade philosophy.
   Companies rely on the governing agencies to provide clear and concise export control decisions so they can 'predict' the right course of action in their pursuit of international opportunities. Failing this, U.S. companies are at risk of losing business to international competitors or making the wrong compliance decisions, resulting in violations and enforcement actions.
   The incoming Obama administration, with its new political appointees, is in a perfect position to breathe life into the export control governing agencies by:
   ' Selecting appointees at the undersecretary and assistant secretary levels who will take ownership of their agencies and not use these positions strictly for ladder-climbing.
   ' Reassessing the agency infrastructures and creating an atmosphere of transparent decision making so that industry can have two-way dialogue with agency personnel, resulting in 'predictability' necessary for compliant business actions.
   ' Inducing consensus-building among federal agencies to minimize interagency disputes that result in long delays for resolution.
   ' Advocating for proper levels of funding for agencies to more efficiently serve the business community, which then places U.S. industry in a better competitive position in the global market.
   Areas of export controls the new administration must address include:
   ' Ending ongoing jurisdiction disputes between the State and Defense departments and Commerce as to which agency has ultimate say over the classification of products and technology. This festering turf battle leaves companies confused as to whose rules they must follow, heightening the risk of non-compliance. The key jurisdiction disputes have lately revolved around night vision, commercial aerospace, and avionics.
   ' Clearing up prolonged export license applications delays, which result in canceled orders or denials of license applications by agencies based on speculative information rather than verifiable facts. In particular, license applications for China are reviewed for 'plausible deniability,' rather than working with the companies to acquire and vet the information in a timely transparent manner to ensure a correct licensing decision.
   ' Fostering an environment of due process when companies face compliance enforcement actions. For example, if a company is accused of violating the export regulations, that company and its representative should have the opportunity to meet the governing agency to negotiate in good faith. This does not occur in most cases.
   ' Interpreting regulations in a consistent manner. There needs to be more emphasis placed on the importance of 'advisory opinions' as a benchmark for regulatory interpretations and ensuring that these advisory opinions are posted for all to see.
   ' Allocating resources within the agencies. A complete review of the agencies as to their budget needs and the actual allocation of resources must be done to run an efficient governing organization. This should be a top priority for the new administration. Failing this, there will continue to be low morale, many mistakes and loss of important legacy personnel.
   There is optimism in the air with the new administration, but the proof is in the pudding.

   Paul DiVecchio
   president, DiVecchio & Associates
   Northboro, Mass.