By Emelie Rutherford
The defense industry is applauding export-control reforms the White House unveiled yesterday intended to reduce barriers to selling U.S.-made military productions to foreign customers.
President Barack Obama will describe today the changes, which include harmonizing the State and Commerce departments’ lists of controlled exports and corresponding licensing requirements. In setting up the new system, the Obama administration already has overhauled the tanks and military vehicles category on the U.S. Munitions List; it found the vast majority of items that required export licenses last year likely will either be moved to the less-restrictive Commerce Control List or have export controls removed altogether.
“The clarification and eventual consolidation of the Munitions and Commerce Control lists will have a dramatic impact on small- and medium-sized companies,” Marion Blakey, president and chief executive officer (CEO) of the Aerospace Industries Association trade group, said in a statement. “These companies rarely have the resources to ensure compliance with the current export control regime. Simplifying the system offers them the opportunity to be more competitive in the international marketplace.”
Defense industry leaders offered nothing but praise for Obama’s initiative.
Lockheed Martin [LMT] Chairman and CEO Bob Stevens hailed it as the “most meaningful” export-control reforms in a generation, one that removes “outdated red tape requirements that have impeded the ability of U.S. companies to compete in the global marketplace.”
“These reforms will result in more American jobs while still fully protecting America’s vital interests,” Stevens said in a statement.
Northrop Grumman [NOC] CEO and President Wes Bush said the reforms will improve the functioning of the government as well as aiding the defense industry.
“It also allows industry to better utilize manufacturing capacity and improve efficiency, while working closely with our allies,” Bush said in a statement, pledging to work closely with the administration on implementing the changes.
Obama will outline the export-reform changes today during a recorded video to be aired at the Commerce Department’s Annual Export Controls Update Conference in Washington, D.C.
The new export-control system is being unveiled a year after Obama directed an interagency review that found the current setup is too complicated and redundant.
Government agencies are being charged with using new criteria to determine if munitions and so-called dual-use items should be subject to export controls, and with applying revised policies for deciding when export licenses are needed.
The items will be categorized in three tiers, with a top level containing systems that provide a “critical” military or intelligence advantage to the United States, a middle tier having items that provide a “substantial” advantage and are available from foreign partners and allies, and a bottom rung of items that provide a “significant” advantage but are broadly available, according to the White House.
Export licenses generally will be required for products on the top tier and not mandated for those on the bottom tier. Many items in the middle level will be authorized to be exported to partners and allies, in some cases after license exemptions are granted.
The White House said the “results are significant” of already-completed overhaul of the tanks and military vehicles category of controls on the U.S. Munitions List. The administration estimates 74 percent of the 12,000 items licensed last year in this category will either be moved to Commerce Control List or be decontrolled. The other 26 percent of items are made up of items only on the middle and bottom tiers of the new control categorization scheme.
A White House fact sheet highlights how, under the current system, brake pads for the M1A1 tank and for fire trucks are nearly identical, but the tank pads require a license to be exported to any country while the fire truck versions do not.
The White House also is creating a new center to strengthen enforcement of export controls and migrating to one computer system that will administer the export-control system for the departments of state, defense, and commerce.
The administration hopes to start issuing propose revisions to the export-control lists and licensing schemes later this year.
“While there is still more work to be done, taken together, these reforms will focus our resources on the threats that matter most, and help us work more effectively with our allies in the field,” Obama says in the video to be aired today. “They’ll bring transparency and coherence to a field of regulation which has long been lacking both. And by enhancing the competitiveness of our manufacturing and technology sectors, they’ll help us not just increase exports and create jobs, but strengthen our national security as well.”