Export Control Revamp Effort a Major Step Forward, Industry Officials Say

Many aerospace officials consider Defense Secretary Robert Gates’ announcement of an overhaul of export control, to be led by the executive branch, the most significant development in years for what some consider a broken and antiquated system. But a full-fledged revamp has several steps to got to be a full fix, they said. Many in the space industry have said the International Traffic in Arms Regulations (ITAR), which restrict the movements and sales of satellites, caused lower international sales for U.S. satellite and component makers.

At the center of the multi-agency plan would be a transformation to one controlled export list, one main enforcement agency, one information technology system and one licensing agency. The government now uses two control lists to keep track of sensitive items. ITAR is overseen by the State Department, which controls a list of items and technologies licenses are needed to export, known as the munitions list. Many commercial satellite parts have been included on the State Department’s list, and satellite manufacturers, particularly smaller ones, have called the licensing process burdensome. It remains unclear which agency would be in charge of export controls, though many believe the Defense Department, State Department, or Commerce Department would take the responsibility. A request for comment from the Defense Department wasn’t answered.

A revamp of export control will occur in three phases, Gates said. The first will take executive action to refine the process while preparing legislative proposals. The second phase will result in “a fundamentally new U.S. export control system based,” on using Congressional notification to remove and transfer items from the munitions list. The third would complete the full transition and require legislative action. The decision on which agency will be responsible for export controls won’t be needed until the third phase, industry sources say.

Much of the industry considers the news a victory. “This is real change,” said Remy Nathan, assistant vice president of foreign affairs at the Aerospace Industries Association, which has long favored an overhaul. “This is certainly very comprehensive approach,” he said of the plan laid out by Gates and in a White House news release Tuesday. In particular, the plan’s multiphase approach allows for immediate improvements to the system while taking on larger-scale efforts, Nathan said. “I'm hopeful for the full range of benefits that run the gamut of near-term, medium-term and long-term changes. All have them have benefits."

Others aren’t ready to celebrate, because many specifics of the plan haven’t been revealed. “It’s too soon to say” whether the plan will produce genuine reform, said National Foreign Trade Council President William Reinsch. But President Barack Obama is taking the right approach by starting with the review and the reduction of items on the control lists in the first phases, actions that will have much wider effects on businesses in foreign trade, he said. Agency reorganization is much more important to government and has been the starting point for past failed efforts to overhaul systems in Washington, he said. “Structural reform really means postponement,” he said. Although the first two phases don’t require legislative action, the promise of executive action may not mean fast movement, he said. Past efforts begun by the president have sometimes been slow to happen, proving that getting even to the first step is “harder than people think,” said Reinsch.