For Immediate Release: November 1, 2007
Thank you for that warm introduction, Eileen. And thank you to the terrific team at BIS that worked long hours to put this Update Conference together.
And, of course, thank all of you for coming today. It is absolutely vital that we in the Bureau of Industry and Security (BIS) work collaboratively with our colleagues in the interagency, in Congress, and in the private sector to ensure that we are fulfilling our duty to the nation. Thank you for playing such a constructive role in our work.
For the past five months, I’ve had the privilege to serve as the Under Secretary of Commerce for Industry and Security. Every day, I get to work alongside some of the most talented and committed public servants in government. Many of them are here today. And I have a special message for them: thank you for what you do, and for helping me serve as one of your number.
The Intersection of Trade and Security
The Bureau of Industry and Security has a unique and important charge, one which encompasses many critical activities at the intersection of international trade and national security. These activities include, for example, conducting CFIUS transaction security reviews for the Department of Commerce, actively monitoring the vitality of our defense industrial and innovation base, administering the Defense Priority and Allocation System, and ensuring industry compliance with our anti-boycott regulations and certain multilateral treaty obligations, among other things. These rightly occupy the time and attention of the entire BIS senior management team.
For the next few minutes, however, I’d like to focus my remarks on dual-use export control policy, about the current competitive and security environment in which we must formulate and apply export controls, and about BIS’s policy priorities for the remainder of this Administration.
Dual-Use Export Controls
Our core mission at BIS is to advance U.S. national security, foreign policy, and economic objectives by ensuring an efficient and effective dual-use export control system and by promoting continued U.S. strategic technology leadership.
First, as our mission statement makes clear, our dual-use export control system is not free floating, but meant to advance a variety of discrete governmental objectives. At a minimum, this requires that we actively think about what those policy objectives are, so that our regulations and our efforts are properly aligned to pursue them. And, as those objectives (or the circumstances under which we must pursue them) change, our system needs to recalibrate—much like the GPS on the dashboard of a car—how to arrive at those policy objectives.
Second, our regulatory regime is designed to mitigate only one type of risk we must contend with--transaction risk. However, if we are to be faithful to the letter and spirit of our mission, we have an obligation to mitigate both transaction risk and systemic risk.
For example, because the system is built to review proposed transactions—the sale of a specific item, to a particular customer – any individual licensing decision necessarily has a transactional, near-term focus. And yet, the aggregate and cumulative effect of our licensing decisions may have substantial long-term impacts.
Also, because it’s in the near-term that our commercial and national security interests are most likely, if at all, to diverge, the prism of a licensing decision may distort how we think about the broader or systemic relationship between international trade and national security. In the near-term, there may instances where there is a tension between making a sale and safeguarding national security. And yet, over time, healthy export markets support the private investment necessary to develop cutting-edge products upon which an increasing number of mission-critical military platforms depend. Moreover, healthy export markets—and the U.S. exporters who forge them—extend our nation’s presence abroad and serve as an essential component of American soft power. In a strict sense, therefore, the challenge is not to balance national security and trade, but to balance transaction and systemic risk in order to advance our long-term economic and national security objectives.
Finally, our regulatory regime is essentially a regime of denial. In effect, it assumes that we have something that other nations don’t have or can’t get. In an era where technology and talent are ubiquitous, this assumption is no longer always and everywhere true.
A Changing Economic and Security Landscape
Today, we must apply our export controls in a dramatically changed international environment. We face more and varied national security risks from an increasing number of international actors--conventional challenges from nation states, asymmetric and potentially catastrophic challenges from both nation-states and non-state actors, and the diffuse challenge of disruptive technologies that may enable adversaries of all kinds to rapidly diminish our traditional overmatch advantages. At the same time, our allies-- who are also our economic competitors-- do not always share our security views, while globalization has increased the pool of world-class economic competitors.
We at BIS are absolutely committed to energetically and collaboratively working with our partners in government and in the private sector to ensure that our export control policy is fact-based, analytically rigorous, and narrowly-tailored to achieve our mission in this new environment.
Our Present and Future Vision
For the remainder of the Administration we will pursue a policy agenda that consists of three mutually-supporting categories of initiatives:
First, we will strengthen our enforcement architecture and refocus our enforcement activities.
We will continue to work with U.S. exporters, our front-line partners in enforcement, to refine and strengthen the regime we administer. An important part of this effort is the renewal of the Export Administration Act (EAA). Toward this end, the Administration recently proposed legislation, the Export Enforcement Act of 2007, to renew the EAA and to address key enforcement issues vital to national security.
Additionally, the President recently signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act (the “Act”). The Act enhances administrative and criminal penalties that can be imposed under IEEPA and also amends IEEPA to specify that civil penalties may be assessed for certain unlawful acts. We welcome these enhancements provided by Congress and the President.
But strengthening enforcement is not only about raising maximum penalties. It is also about increasing transparency and prioritizing efforts. First, we want to enhance the system’s effectiveness and aid America’s exporters, by providing more information about end users around the world that raise concerns. Second, we are sharpening our focus—and prioritizing our resources-- to those areas of the greatest concern: terrorists, proliferators and nations of transshipment concern.
Second, we will work to update our export controls.
We have already begun to move towards an end-user based system by launching the innovative Validated-End User (VEU) Program. We recently announced the initial list of VEU companies in China, companies that will now be able to receive selected technologies without the need for individual licenses. We have also announced India’s eligibility for the VEU program. In time, in close consultation with our government counterparts, and in a paced way, we will endeavor to expand this trade-enhancing program to other select foreign markets.
Second, we will revisit the Commerce Control List (CCL) itself and reexamine our controls to ensure that we are focusing on the appropriate items. This summer, we issued a federal register notice soliciting ideas from the interested public about how we could update and improve the CCL—both in terms of what it covers and also how it might best be organized. Coincidentally, that feedback is due today. We’ve requested similar feedback from our Technical Advisory Committees (TACs) and very much look forward to reviewing their input. Let me take this opportunity to emphasize that this is an excellent opportunity to meaningfully contribute to the debate and advance the cause of export control reform. Going forward, I believe this CCL review should, as a matter of policy, happen on a regular basis.
Finally, we will soon address the important question of deemed exports. As many of you know, the Deemed Export Advisory Committee established by Secretary Gutierrez is expected to release its recommendations to the Secretary by year’s end. I am looking forward to reviewing the Committee’s recommendations with respect to this important issue.
Our last category of initiatives is among the most exciting. For the remainder of the Administration, we will actively look for new opportunities to expand secure high technology trade around the world.
Third, we will elevate and accelerate our international engagement.
To be clear, we already have existing staff-level dialogues with many countries-- and they will continue. What we are also doing is elevating and accelerating our bilateral engagement with select foreign markets to expand secure bilateral high technology trade.
For example, this past August the U.S. and Israel agreed to establish the High Technology Forum (HTF) to facilitate secure bilateral high technology trade and investment. As Under Secretary, I will personally chair the HTF for the U.S. to ensure that we are carefully (and proactively) nurturing our technology relationship with one of the most important technology markets in the world. At the same time, we are also looking at other markets—markets that either because of their sheer size or their dynamism make it worthwhile for us to consider such regular, senior-level engagement.
In addition to our policy agenda, we also are committed to a rigorous management agenda, an agenda that spans the recruitment, training and retention of the best and brightest, focuses on continuous improvement in our business processes, and prioritizes a measured investment strategy in our technology platforms. This agenda is at least as important as our policy agenda and will position BIS for continued institutional improvement and long-term success.
Finally, let me conclude where I started, by saying that all of you are critical to the work I’ve just described. Thank you, again, for being here. Rest assured, that we at BIS look forward to your constructive input, and are excited about the opportunity—and duty-- to do great things for America.