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American Shipper

U.S. lawmakers told export control system “broken”

U.S. lawmakers told export control system “broken”

U.S. lawmakers told export control system “broken”

   Industry representatives have become increasingly frustrated with Capitol Hill’s failure to modernize the country’s aging export control system.

   “The U.S. export control system is broken,” said Daniel Poneman, principal of The Scowcroft Group, a Washington-based international business advisory firm, to the Senate oversight subcommittee on government management on Thursday. “It was designed for a world that no longer exists.”

   The primary export control laws — the Arms Export Control Act and Export Administration Act — were developed in the mid-1970s at the height of the Cold War.

   The State Department controls exports of U.S. munitions, while the Commerce Department oversees so-called “dual use” exports, or items with both commercial and military applications.

   Poneman warned that the continuation of these laws, without substantive reform, further isolates the U.S. export industry.

   “Globalization has led to the proliferation of technology to individuals and officials around the world, undermining the possibility that ‘Fortress America’ approach to export controls could succeed in preventing advanced military technologies,” Poneman said.

   Backlogs and delays in approving thousands of export licenses within the federal government puts many U.S. companies at a disadvantage to producers of similar products overseas.

   “U.S. high tech exporters compete intensely against Japanese and European companies,” Bill Reinsch, former Commerce undersecretary for export administration in the Clinton administration and president of the National Foreign Trade Council, told the subcommittee. “Delay in approving a license can mean a sale lost. In addition, uncertainty about U.S. policy leads buyers elsewhere.

   “Overreach in our rules lead foreign manufacturers to ‘design out’ American parts and components so they can avoid becoming entangled in our licensing system,” he added.

   “Over time, unilateral U.S. export controls serve to strengthen the performance of non-U.S. firms in global markets and weaken the performance of U.S. firms,” said Edmund Rice, president of the Coalition for Employment through Exports, in his testimony.

   The industry representatives recommended that Congress get serious about overhauling U.S. export controls. They suggested reforms that recognize the reality of economic globalization, take into account multilateral control regimes, and eliminate license delays due to interagency squabbles over commodity jurisdiction.

   “This is admittedly a difficult area — it is complicated and controversial,” Reinsch told the subcommittee. “I hope your oversight efforts will lead you to some useful conclusions and that you will work with the (Senate) Banking Committee on legislation to implement them.” ' Chris Gillis

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