Remarks at Department of Commerce Bureau of Industry & Security: 2015 Conference on Export Controls and Policy Agenda
Under Secretary for Arms Control and International Security
Thank you. It is such a pleasure to be here today. Thanks to our host, Under Secretary Eric Hirschhorn, for the invitation and the introduction.
It is not every day that I speak to a sell-out crowd. It makes me feel like a rock star – an export control reform rock star. That’s not a phrase that you hear all that often, but perhaps you should. The work that everyone in this room has done to contribute to a modern, more efficient export control system is something to shout about.
For our part, this Administration will work to finish President Obama’s Export Control Reform initiative. We will also work to improve our ability to advocate for U.S. defense sales.
Export Control Reform
First, as is well known in Washington, change within a bureaucracy can be hard. The success we have seen in implementing the President’s Export Control Reform Initiative over the past five years is a testament to the tremendous efforts of the Departments of State, Commerce, and Defense and our other partner agencies.
Further, American industry has made invaluable contributions by reviewing and commenting on the new rules. Thank you for all that you have done to support this initiative and to make it successful.
With your support, we have published in final form rules revising 15 of the 21 U.S. Munitions List (USML) categories, and our staffs are working to finish reviewing the remaining USML categories in 2016.
We anticipate that you will soon see another proposed rule regarding controls on night vision items and certain sensors and lasers, based on the detailed public comments many of you sent. Our attention will then turn to the remaining USML categories.
As Under Secretary Hirschorn has already noted, our thorough USML review and review of general reforms is not a one-time effort. The President challenged us to create a process to regularly review both lists, recognizing that our national security concerns will evolve, as well as the technologies we control. I am pleased to say that we have done so.
We began to re-review the revised USML categories earlier this year after requesting comments on two categories – aircraft and aircraft engines. We are continuing this process with four more categories currently open for public comments.
In addition, ECR is creating more symmetry in the language of the ITAR and the EAR, with the goal of ensuring easier compliance and comprehension for the increasing number of companies that work with both sets of regulations.
I believe this effort is most evident in the proposed rule on many fundamental definitions in both sets of regulations. We want this rule to help align, where appropriate, the definitions of “export” and other foundational definitions within these regulations.
Our efforts are also aimed at modernizing our system to be more responsive to modern business practices, such as the private sector’s increasing reliance on the “cloud” to conduct business.
We want to revise our policies and practices to better align with the realities of the private sector’s operational environment, and at the same time ensure that our national security and foreign policy interests are met though appropriate controls.
In addition, State is reorganizing its licensing staff to better serve you. Our compliance office is increasing outreach to U.S. and international industry to implement the ECR goal of ‘higher walls around fewer items.’ And I am very pleased to announce that we recently hired Mr. Brian Nilsson as the Deputy Assistant Secretary for Defense Trade Controls. He is sitting right there. As many of you know, Brian Nilsson is the actual rock star of ECR and I am sure he’s willing to take questions or sign autographs, as requested. I would also like to point out a few other people who were integral to this process – Mike Laychak and Beth McCormick from the Department of Defense and Jasmeet Serha from the Office of Management and Budget.
At the beginning of October, the entire State Department began adjudicating both USML and Department of Commerce licenses on the common IT system, USXports. This is already helping to expedite the licensing process.
As we complete the list-related changes, we will continue to improve our practices to support the spirit of ECR. Whether it is better aligning our FMS and DCS processes, or modernizing the ITAR exemptions, we are committed to creating and maintaining a more effective and efficient export control system.
We will continue to work toward a system that is better able to respond to the urgent acquisition needs our of allies, foster co-development of defense technology in a way that supports U.S. industry and our foreign partners, and support the national security and foreign policy interests of the United States.
Defense Trade Advocacy
Picking up that thread, I want to talk about American leadership in the context of today’s security environment, and how government and industry can work together – particularly in the arena of defense trade advocacy.
There are two fundamental facts in today’s geo-strategic environment that drive our leadership.
The first is that the world’s greatest challenges do not affect any one nation alone. Terrorism, climate change, and communicable diseases – just some of the challenges facing us – are not confined to national boundaries. We are, as the saying goes, all in this together.
Second, no single nation can solve these problems alone. The United States can lead efforts to combat the challenges we face, but without cooperation, it wouldn’t be enough.
We need to collaborate with our partners to solve problems in a durable and lasting way. Defense trade is an important tool for that, whether it is building the capabilities of the Israeli Defense Forces or the Iraqi Security Forces; whether it is empowering our partners in South America or Southeast Asia.
To this end, cooperation between government and industry is critical. The U.S. Government benefits from the American brand that you help build overseas. American companies create the most innovative and effective solutions to today’s global challenges and the world knows it.
You have all made American products the gold standard in the defense industry. As Secretary Kerry said recently, “the world wants what America makes.” The advantage is a key to pressing forward on our national security interests.
Likewise, American industry benefits from having U.S. leadership that is trusted, strong, clear, and coherent. We each have a stake in the other’s success.
When we decide that security cooperation with a foreign partner will further our national security, it is in our interest to work in a speedy, organized, and collaborative way to advocate for American interests, which includes American industry.
We face serious challenges in today’s defense trade market. With budget constraints here at home, many businesses are looking to the increasingly competitive international marketplace.
We realize that other governments can be more aggressive and often have fewer restrictions and scruples about what they are willing to sell and to whom. While the United States will not ever trade profits for principles, we are making adjustments to enhance competitiveness.
We realize that our licensing system is imperfect. We know that sometimes the waits are too long or the process is too opaque. That is exactly why we are implementing Export Control Reform. We are adapting to the 21st century, focusing our efforts on a narrower set of items that really matter and providing greater clarity and transparency to you in industry.
Of course, Export Control Reform is just one part of the puzzle, so we must also focus on refining other tools at our disposal.
To aid in our efforts, there are three actions we are taking to improve our defense trade advocacy. Many of you may be aware of these, but I wanted to mention them today to assure all that these efforts are being worked at all levels within our government.
First, when we in government work together, we are much more effective and powerful. There are many players in the security cooperation enterprise and we do a lot to coordinate. But there have been instances – specific sales – when our different agencies have not always synchronized our actions to support such sales.
That’s why we have built a single group, the Defense Advocacy Working Group. This group will identify areas that require heightened communication and extra advocacy work, permitting a tailored, unified, and coordinated effort from start to finish.
Second, we have created an international tradeshow working group to better coordinate our meetings, deliver consistent messages, and identify areas we want to target. Although there is more work to be done and no two shows are ever the same, I hope some of you have seen progress on this front.
Third, to be more transparent and responsive to industry, we launched a senior-level, quarterly industry outreach forum. As our partners, you should be able to ask about our objectives and get a reasonable steer on the types of sales the USG would support, without going agency to agency to get an answer.
We launched this effort in July, with a panel of senior speakers from the Departments of Commerce, State and Defense. We held a similar panel last month, and the next event will occur in January. I want to emphasize that these panels are about having a two-way conversation that is productive for all concerned. If you have something you want to talk about, please let us know. Again, Brian is sitting right there.
Now, I realize that government forming internal working groups may not seem like an innovative idea, but I assure you that increased communication and coordination within government will better serve our national interests and the interests of U.S. industry.
Codifying this coordination will help ensure that our communication and collaboration on matters of interest to you does not occur on an ad hoc basis, but rather as the result of a concerted and deliberative process. Of course, our efforts will only succeed if we have that third element – the interaction with and feedback from you. I hope that you take us up on this offer and we look forward to working with you.
Again, I am so glad that I had the chance to speak with you today and I look forward to our next meeting. Thank you.