U.S. aerospace expects uplift from export reform
The Aerospace Industries Association welcomed the Obama administration's proposed rule to relieve low-risk technology exports of burdensome and unnecessary restrictions.
'For years the U.S. export control system has created confusion and delay in exporting defense equipment to our allies and driven up compliance costs across the industrial base,' said AIA President and Chief Executive Officer Marion C. Blakey, in a statement. 'These reforms are common sense ways of supporting our military partners and our export competitiveness.'
The rule proposes that after appropriate interagency review and consensus, technologies with low or no military or intelligence sensitivity will be moved off of the U.S. Munitions List to the Commerce Control List. Exports of these technologies to key military allies and partners — especially if previously approved — may be eligible for more flexible Commerce license exemptions. In addition, end items, parts and components that are not 'specially designed' for the military will now be subject to the same export control requirements as their commercial market equivalents.
'We support the national security focus of the administration's export control reforms, and pushed for tighter controls on the Commerce Control List to accommodate low-risk military-use technologies that are reflected in the proposed rule,' Blakey said. 'Properly identifying high-risk technologies that should remain on the U.S. Munitions List allows our government to focus its finite resources on controlling transactions that genuinely need the highest level of scrutiny.'
The Office of Technology Evaluation within the Commerce Department’s Bureau of Industry and Security recently surveyed companies involved in the manufacture of satellites to assess the impact of export controls on their operations. It found that while compliance costs as a percentage of total foreign sales for these companies were 1 percent to 2 percent, the total costs to these firms were $60 million a year.
“Even more stark was the compliance cost burdens for parts and component manufacturers, who tend to be small and medium-size companies that provide the innovation for the space industry,” said Kevin J. Wolf, Commerce Department’s assistant secretary for export administration, to attendees at the Bureau of Industry’s Update Conference in Washington on Tuesday.” About 8 percent of revenue from foreign sales goes toward export control compliance costs. That is a significant drag on the competitiveness of companies, and we must address it.
Later this year, BIS will issue a Federal Register notice requesting public comments on efforts that it can take to streamline and clarify the Export Administration Regulations. The agency is also reviewing public comments it received earlier this year on making the Commerce Control List a more “positive list.”
“Our goal is that by the end of 2012, we will have a comprehensive proposal to simplify the EAR and start addressing the regulatory compliance burdens that drain tremendous corporate resources but are not visible to the casual observer,” Wolf said.
AIA joins a chorus of U.S. industry groups that plan to continue their support of the administration and Congress to prioritize the review of the U.S. Munitions List and related regulatory proposals to provide the greatest immediate relief to exporters. ' Chris Gillis