US Needs Single Export Control List, Licensing Transparency, Commission Told

The U.S. government should combine its various export control and sanctions lists into two distinct lists, which could allow the government to better implement trade restrictions and improve industry compliance, a congressional commission heard this week. The commission also discussed whether U.S. export control agencies should have to release more information about their licensing decisions, with one witness saying more transparency would increase business certainty, while another said it would discourage candor between the government and exporters.

The government and Congress should give “serious consideration” to creating a single export control list, which would be used by multiple government agencies but which would incorporate standard definitions and classifications for a range of controlled technologies, said Giovanna Cinelli, a national security fellow with George Mason University’s National Security Institute. She said companies often face challenges trying to classify their items under lists such as the Commerce Department’s Commerce Control List or the State Department’s U.S. Munitions List, but a single list could make that process easier.

A single export control list would include “all items from the CCL, the USML, the nuclear regulations and other export regimes and can be used by any agency with export control responsibilities,” she said in her written testimony.

The "thresholds for technology and functional characteristics” would be “readily ascertainable” under a single list, Cinelli told the U.S.-China Economic and Security Review Commission during a hearing last week. “You [wouldn’t] need an engineer, a lawyer and an economist to figure out what type of controls you have.”

Cinelli, who is also a trade lawyer with Morgan Lewis, specifically pointed to classification challenges involving technologies related to artificial intelligence. “There's at least 15 different definitions from the Office of Science and Technology Policy, congressional definitions in myriad [defense spending bills], as well as through the Department of Commerce,” she said.

“If we cannot find common definitions to assess what export controls should apply to, we begin on a foundation of sand.”

Cinelli added that even though the list would be shared by all U.S. export control agencies, each agency would still have input on licensing decisions. “Whether it's the Commerce Department looking to license drones or the State Department looking to license drones, it's still drones, and drones should be defined in a common way,” she said. “And then the agencies that have equities in the licensing process can go to a common list and then carry their equities into their licensing decisions.”

Similar logic would apply to a single sanctions list, Cinelli said. She said she studied various denied persons lists -- including the Entity List, Chinese military companies lists maintained by the Treasury Department and the Pentagon, and others -- and said there’s usually “significant overlap.”

“Generally speaking, when you look at a company, you'll see it across 10 or 11 lists,” she said. “If I'm going to see the same name and the same address on 10 different lists, why do I need 10 different lists?”

Peter Harrell, a former National Security Council official under the Biden administration, agreed with Cinelli that “you often find the same entity on multiple of these different lists.” But he also warned against combining the lists in a way that, for example, imposes financial blocking sanctions on all companies subject to investment restrictions. He said adding a company like Huawei to Treasury’s Specially Designated Nationals List could hurt some U.S. allies’ ability to continue servicing their telecommunication networks, because some rely on legacy Huawei equipment.

“I think we will find, going forward, as we look to put pressure on large, globally significant Chinese companies that have global operations, we are going to need to take a sort of slicing-the-salami approach to them, which is going to result in some, but not all, types of restrictions being applied to them,” said Harrell, a nonresident scholar with the Carnegie Endowment for International Peace. He said he envisions companies on denied party lists will continue to be “subject to different types of restrictions.”

Commissioner Jonathan Stivers said he was “really interested” in the idea of a single export control and sanctions list. Commissioner Randall Schriver asked whether Congress should go further and authorize a single agency to either oversee sanctions or export controls.

Cinelli sided against this idea, saying employees from Commerce, the State Department, the Pentagon and other agencies all bring important, different perspectives to a licensing decision. A single agency risks eliminating “diverse” viewpoints.

“How do you limit that groupthink?” she said. “You would end up with a process that’s simply more bureaucracy, just consolidated.”

Kevin Wolf, a former senior Bureau of Industry and Security official and now an export controls lawyer with Akin Gump, said he spent “seven years of my life” in the Obama administration trying to create a "single agency with a single list and a single enforcement structure and a single [information technology] system” as part of the administration's export control reform effort.

“We got most of the way, but never actually finished,” he said.

Other commissioners also asked about export licensing, including co-chair Leland Miller, who suggested the process for adjudicating licenses should be more transparent. “The process is pretty much done entirely behind closed doors,” he said, adding that the “only way to learn about the licensing decisions is if some of these companies report it themselves.”

He added: “Why shouldn't all, or almost all, of the information on these licensing decisions be publicly available?”

Wolf said the government should be “perfectly transparent” about the “standard” it uses to adjudicate applications, but he cautioned against requiring governments to publicize detailed license application data, including proprietary business information.

“This isn't really a topic for the public to consider. It's between congressional committees” and the government agencies, Wolf said. “Otherwise you discourage candor and transparency and openness in companies coming into the government seeking permission” to export.

But Cinelli said more licensing information would be helpful, especially if it helps companies better understand what type of license they may need, and what steps they may need to take, before sending a controlled export.

“I do think it's important to have more transparency,” she said. “I do think the process is opaque.”