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NFTC President Provides Outlook on the Future of U.S. Export Controls, Proposes a New System
Date: 5/28/2008

Washington, DC – National Foreign Trade Council (NFTC) President Bill Reinsch spoke today to the American Conference Institute's 11th National Forum on Export Controls, during which he discussed the future of U.S. export controls and outlined a set of recommendations to substantially reform the system.

To provide perspective on the current system, Reinsch stated, "Export controls are not a new concept. In the beginning, control policy was easy. We knew who the enemy was and where he was, and there was an allied consensus on what to do about him…. Now it is different. Adversaries are diffuse and are not always even states. While there is a degree of allied agreement on rogue states, most of the tough decisions relate to gray area states like China and India that are neither close friend nor determined foe and which are significant economic entities."

Reinsch noted that current proposals to deal with this new reality, "aim at real problems but in the wrong way," and argued, "there are essentially three approaches to export control reform. The first is tweaking the current system – applying duct tape and wire to keep it operating… The second is to eliminate interagency squabbles by creating a unitary, independent agency to administer both dual use and weapons programs. This approach would abolish completely the current authorities in Defense, State, and Commerce and create a new independent office reporting directly to the President and the National Security Council."

He pointed out that although this second approach is well-intentioned, it "cannot be enacted as proposed. At some point during Congressional consideration of such a bill, the Secretaries of State, Defense, and Commerce would each approach their authorizing committee chairmen and argue that while they could live with an independent agency, there is a small set of licensing decisions that require their direct involvement…. and in five years the system will look very much like it does now but with an extra layer of bureaucracy."

Noting the weaknesses of those options, Reinsch recommended a third approach – "a unitary system that operates within an interagency framework. The distinction between military and dual use items would be abolished – all would be subject to the same procedure, thus eliminating the commodity jurisdiction issue that has plagued the current system while still ensuring that all relevant parties are able to participate in the process. Since weapons and dual use items are subject to different multilateral obligations, the distinction between them cannot be abolished, but processing them the same way would be a significant simplification…[Further], by building in innovations like project licenses and the identification of trusted end users and implementing a robust list review program, we could reduce the volume of applications that are routinely approved and increase efficiency."

In conclusion, Reinsch stated, "This is clearly not a debate we are going to have this year, but the arrival of a new administration next year creates an opportunity for long overdue reform. Past efforts have foundered on politics and legitimate deeply held differences of view, but the law is so out of date and the process so creaky that even Congress is becoming embarrassed. I plan to spend a good part of my time trying to promote change, and I hope you will too."

To read the full remarks, please visit http://www.nftc.org/default/export%20controls/Reinsch%20Speech%20Export%20Controls.pdf

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Advancing Global Commerce for Over 90 Years
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.