U. S. Bureau of Industry and Security - 2001 Foreign Policy Report: Apendix I

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Summary of Public Comments on Foreign Policy Export Controls

The Department of Commerce requested comments from the public on existing foreign policy-based export controls maintained under Section 6 of the Export Administration Act through a Federal Register notice published November 6, 2000. A notice was also published on the BXA web site. In the notice, the Department sought comments on how existing foreign policy-based controls have affected exporters and the overall public. Specifically, the notice invited public comments about such issues as the effectiveness of controls where foreign availability exists; whether the goals of the controls can be achieved through other means, such as negotiations; the compatibility of the controls with the overall U.S. policy toward the country in question; the effect of controls on U.S. economic performance; and the enforceability of the controls. The Commerce Department also requested comments from the member companies of the Technical Advisory Committees (TACs) and the President's Export Council Subcommittee on Export Administration (PECSEA).

The Department received 14 responses to this request from the following organizations: the President's Export Council Subcommittee on Export Administration (PECSEA); the Regulations and Procedures Technical Advisory Committee (RPTAC); the Sensors and Instrumentation Technical Advisory Committee (SITAC); the National Council on International Trade Development (NCITD); the National Association of Manufacturers (NAM); the National Foreign Trade Council, Inc. (NFTC); the Petroleum Equipment Suppliers Association (PESA); Anter Corporation; Baker Hughes Incorporated; BMC Engineering; Clemson University; Conoco, Inc.; Halliburton Company and Sun Microsystems. The Bureau of Export Administration (BXA) makes the comments available for public review upon request. This Appendix summarizes the comments received.

Industry Comments

Seven of the fourteen comment letters addressed the need to lift U.S. unilateral reexport controls on Libya. The letters came from PECSEA, NAM, NFTC, PESA and Baker Hughes, Conoco, Inc., and Halliburton Company. Each letter struck a common theme: the Libyan market is growing and continued reexport controls ensure that U.S. companies will be left out of the market without any resulting foreign policy benefit. The PECSEA noted: "The chief impact of the reexport controls is to provide rationale for competitors to encourage countries to 'design-out' U.S. products for the Libyan market -- a market that is beginning a dramatic expansion. Without question the extension of these reexport controls would damage the reputation of the U.S. as a reliable supplier."

Many of these letters called for the Secretary of Commerce not to extend the reexport controls for 2001. The organizations cited the continued existence of an embargo on Libya, as well as the option of continuing reexport controls on items controlled for national security, non-proliferation or anti-terrorism reasons, while liberalizing non-sensitive reexports. Baker Hughes noted the value of at least a partial liberalization of reexport controls: "The continued existence of the virtually total U.S. embargo on trade with Libya ensures that the United States will remain out of the Libyan market, but the suggested change in the reexport control would provide a benefit for U.S. companies even in the context of continued broad U.S. sanctions against Libya."

Comments from RPTAC focused on two areas: (1) the need for clear and timely information to U.S. companies regarding the status of certain end users; and (2) the need for timely publication of regulations to implement the lifting of certain sanctions against Serbia and North Korea. RPTAC also reiterated the concerns it raised in its submission to the 2000 Report, which included the need for foreign policy controls to be imposed on a limited basis, be designed to achieve a specific objective, and be removed if the objective is not met.

SITAC advocates the movement of Category 6 items (namely 6A002, 6A003 and 6E002, all related to commercial night vision and thermal imaging equipment) from Regional Stability (RS) Column 1 (which precludes exports to all countries except Canada) to RS Column 2 (which allows exports to Canada, most EU members and Japan, among others). According to SITAC, this change would allow U.S. companies to compete with other countries who are developing their own domestic technology in this area, as well as allow the United States to more efficiently focus export control resources on areas of true regional stability concern.

The NCITD believes that U.S. unilateral export controls are ineffective in achieving the intended foreign policy objective and harm the competitiveness of U.S. companies who not only are left out of the markets directly, but who also suffer when U.S. components are "designed-out" to avoid reexport controls. NCITD stated that its members "are losing business opportunities at the same time they are devoting considerable resources to compliance with an increasingly complex regulatory environment." The challenges inherent in complying with foreign policy controls, particularly the Enhanced Proliferation Control Initiative (EPCI) controls in an e-commerce environment, were also noted by NCITD. Finally, NCITD stated that deemed export controls were not effective and prevented U.S. companies from hiring the expertise they need.

Anter Corporation, a manufacturer of scientific equipment, commented on the burden the sanctions on India placed on its business operations. Specifically, Anter asked that license requirements be waived for EAR99 products to all end users in India. The company stated that losses due to the India sanctions amounted to 25 percent of the company's annual sales, and as a result, has directly impacted their ability to retain skilled employees.

BMC Engineering provided comments on encryption technology controls. Specifically, BMC stated that when an encryption product is sold over the Internet the control is unenforceable since there is no way to verify end-user information. Clemson University submitted comments on the need to clarify the definition of "fundamental research" as it applies to foreign policy controls on dissemination of university research. Clemson stated that the criteria for export control restrictions should be more clearly defined so that all parties involved will have a correct understanding of the export control requirements.

Sun Microsystems criticized the performance-based controls on high-performance computers, citing in particular the high cost industry pays to comply with controls on Tier II countries. Sun stated that these controls hinder the ability of U.S. companies to respond flexibly to changing market conditions: "While most Tier II licenses are ultimately approved, they are processed with full interagency reviews, long delays, and complex restrictive conditions on use. The controls ultimately affect the perception of the customer on the reliability of U.S. vendors as solutions providers..." Sun also raised concerns about the difficulty companies face in complying with EPCI controls in e-commerce transactions. Sun offered some possible solutions, including the creation of a de minimis dollar value for screening of transactions.