U.S. Department of Commerce

Bureau of Industry and Security

Update 2015 Conference

Rose Gottemoeller

Keynote Speaker

Thank you very much Eric. Wow, this is quite a crowd, I heard it was a sellout crowd. I kind of feel like I’m at a rock concert or something. But this is really, really cool. And thank you so much to the Commerce Department for the invitation today. For our part, in the State Department, I wanted to start out saying it right up front: we will work to finish President Obama’s Export Control Reform Initiative. That is our goal for the remainder of this administration. We also need to work with all of you to improve our ability to advocate for U.S. industry around the world. And that is also a very important goal. I would like to address both of these issues in my remarks this afternoon. First on export control reform, as 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 5 years is a testament to tremendous efforts among a number of agencies and Eric has mentioned them already: the Departments of State, Commerce, Defense, the National Security Council and other partner agencies. Further, American industry has made invaluable contributions by reviewing and commenting on the new rules and I am impressed when I hear how many comments come in. I know that you are definitely doing your work to help us move this important initiative forward. Thank you for all that you have done to support this effort over the last few years. 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 review the remaining USML categories in 2016. We anticipate that you will soon see another proposed rule guarding controls on night vision items and certain censors and lasers. Based on the detailed public comments, again, that many of you have seen and many of you have provided. Our attention will then turn to remaining USML categories. As Eric Hirschhorn has already noted, our thorough USML review and review of general reforms is not a onetime effort. The President challenged us to create a process to regularly review both lists, recognizing that our national security concerns will evolve as will the technologies that we control. It will be important to bear this in mind as we move forward and we will continue to do everything we can to ensure that this process is an evolving one. We began to re-review the revised USML categories earlier this year after requesting comments on 2 categories, aircraft and aircraft engines. We are continuing this process with four more categories currently open for public comment. In addition, ECR is creating more symmetry in the language of the ITAR and the EAR with the goal of ensuring 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 cloud computing, on using the cloud in its operations to conduct business. We want to revise our policies and practices to better align with the realities of the private sector’s operational environment in other words, and at the same time ensure that our national security and foreign policy interests are met through appropriate controls. In addition, the State Department is reorganizing its licensing staff to better serve you. Our compliance office is increasing outreach to you as an 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 of State for Defense Trade Controls. Brian’s sitting right here -- I know you’ve already heard from him in the course of this conference. As you know, people like Brian, they are the actual rock stars of Export Control Reform. I wanted to take a moment right now, in addition to calling out Brian, to call out a couple of individuals who have also been important to this effort: they are also sitting right here. That’s Mike Laychak and Beth McCormick from the Department of Defense, sitting right here, very glad to see them today, and Jasmeetee Seehra from OMB who is also sitting right here. They are as I said rock stars – some would say unsung heroes – at this effort so would you please give them a quick round of applause. Thank you. 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 of changes, we will continue our practices to support the spirit of ECR. Whether it is better aligning our FMS/DCS processes or modernizing the ITAR exemptions, we are committed to maintaining a more effective and efficient export control system. We will continue to work toward a system that is better able to respond to urgent acquisition needs of our allies, foster co-development of defense technology in a way that supports U.S. industry as well as our foreign partners, and also support the nation security and foreign policy interests of the United States. Now let me turn to the defense trade advocacy. Picking up on that thread, I want to talk about American leadership in the context of today’s security environment and how government and industry can better work together, particularly in the arena of defense trade advocacy. There are two fundamental facts in today’s geostrategic environment that drive our leadership. The first is that the world’s greatest challenges do not affect any one nation anymore. These are all transnational matters. Terrorism, climate change, communicable diseases – they don’t respect national boundaries so we really have to have policies that are not confined to national boundaries. We are, as the saying goes, all in this matter 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 of other countries, other partners, 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 way to accomplish that goal: whether we are building the capabilities of the Israeli defense forces or the Iraqi security forces; whether we are empowering our partners in South America or Southeast Asia. To this end, cooperation between government and industry is critical. The United States government benefits from the American brand that you help to 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 for the defense industry. As Secretary Carter, my boss, said recently, "The world wants what America makes." That advantage is a key to pressing forward on our national security interest. Likewise, American industry benefits from having U.S. leadership that is trusted, strong, clear and coherent around the world. 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, I don’t need to tell this room that. 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 are more aggressive and often have fewer restrictions and scruples about what they are willing to sell and to whom. While the United States will never trade profits for principles, we’re making adjustments to enhance our 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 21^st 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. A lot of them are process related and I want to speak a moment on behalf of process. I think that in this case we can really take some important steps to help increase communication between us and move this entire agenda forward. So we are looking at three actions to improve our defense trade advocacy. Many of you may be aware of these but I wanted to mention them today to assure you that these efforts are being worked on at all levels, within our government and across government-industry lines. First, when we in government work together, we are much more effective and powerful. I was very happy to hear Eric make mention of that in his speech this afternoon. It is extraordinarily important. There are many players in the security cooperation enterprise and we do a lot to coordinate inside the government. 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 Group. This group will identify areas that require heightened communication and extra advocacy work, permitting a tailored, unified and coordinated approach within the government from start to finish. Second, we have created an international trade show working group to better coordinate our meetings, deliver consistent messages and identify areas that we want to target. Although there is more work to be done in this area and no two shows are ever the same, I hope that some of you have seen some progress on this from this front in the recent period. Third, to be more transparent and responsive to industry, we launched a senior level quarterly outreach forum, and when I first heard about this forum, I thought that’s a great idea! And when it was reported back to me how the early ones went, I thought, great this sounds like it is moving in the right direction. I hope that you feel the same way. 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 from agency to agency to get answer. As I mentioned a couple of meetings have taken place: we launched this effort in July with a panel of senior speakers from the Department of Commerce, State, and Defense. We also had a similar panel last month and the next event will occur in January of 2016. I want to emphasize that these panels are about having a two-way conversation that is productive for everybody who is concerned. If you have something you want to talk about, please let us know. And there are opportunities, with people like Brian Nilsson here during this conference, to start shaping that agenda for January even as this conference is going on. Again I realize that government forming internal working groups may not seem like a very innovative idea but I do think in this case that it is important. I ensure you that increased communication and coordination within government will better serve our national interests and the interests of everyone in this room, 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 in hand, the interaction and feedback from you. I hope that you take us up on these offers, to meet, to coordinate, to communicate, and we look forward really truly to working with you. So once again thank you very much for the opportunity to speak to you all today. We are launching into an exciting year, 2016, as we move up the trajectory to finish our Export Control Reform and look forward to working with you throughout this year to get the job done. So thank you very much for your attention, and again to the Department of Commerce. I really, really appreciate the opportunity to speak to this impressive group today., Again, I do feel a little bit like I’m at a rock concert but you can turn the music back on now. I guess I will put it that way. So thank you very, very much.

U.S. Department of Commerce

Bureau of Industry and Security

Update 2015 Conference

Remarks of

Eric L. Hirschhorn

Under Secretary for Industry and Security

November 2, 2015

Thank you Dan for those kind remarks. They do remind me of a line a friend of mine once used explaining the difference between a testimonial and a eulogy. With a testimonial, there is at least one person in the room who believes it. Thanks also to Karen Nies-Vogel, Rebecca Joyce, and our BIS outreach team, as well as the many BIS and U.S. government colleagues who have contributed so much to making this conference a success. I’d also like to thank our BIS management team, and our colleagues from the other departments and from the Congress who are involved in export controls and for their important work on the export control reform initiative. It is indeed an honor to work with all of you. Thanks also to the foreign governments who have sent representatives to this conference. It is important that we are able to work with you as well. Finally I’d like to thank Brian Nilsson who is a BIS employee of 21 years who worked tirelessly at the National Security Council for the last 7 years as Director of Export Controls and Nonproliferation. Brian recently has left both BIS and the NSC to move to the State Department where he is serving as Deputy Assistant Secretary for Defense Trade Controls at the State Department. Today I’d like to take a few minutes to outline the success we have achieved over the past 6 years in revising our regulations and processes to establish a control system that is responsive to today’s national security challenges. The success of ECR, Expert Control Reform, represents a successful blending of several critical elements. In 2009, President Obama made ECR a priority. The active support and commitment of former Secretaries Gary Lock, Bob Gates, and Hilary Clinton, the strong support of our current Secretary of Commerce, Penny Pritzker and the level of commitment and cooperation among the export control agencies is unprecedented in my nearly 40 years of experience in this field. An essential element of our success has been the commitment of the exporting community, including many of you in this room, and engaging in a very beneficial, mutually beneficial dialog. We’ve made a number of significant improvements to the Export Administration Regulations in recent years, but the review of the U.S. Munitions List and corresponding changes in the Commerce Control List represent the keystone of the reform effort. We’ve changed the U.S. Munitions List from a list based on open ended subjective design intent standards to one based almost entirely on objective technical or other parameters. This means that an item will be on the U.S. Munitions List only if determined by technical experts, and we rely very heavily on the military services for this, to confer a critical military or intelligence advantage on the United States. If an item is not listed on the U.S. Munitions List, it is not subject to the International Traffic in Arms Regulations. The USML review has removed casual controls for many thousands of unspecified parts and components. We’ve transferred many, many militarily less sensitive items to the licensing jurisdiction of the Department of Commerce. We’ve published final rules on 15 of the 21 categories of the USML and the CCL. All 15 are now effective. A key benefit of the regulatory reform process has been the recognition by all involved that reform does not have a finish line. Our March 2015 notice of inquiry on aircraft and gas turban engines, and a similar October 9^th notice about military vehicles and vessels realize that technology does not stand still and that development and production are not the exclusive province of the United States. We and the State Department anticipate issuing similar notices of inquiry for the other revised categories once they’ve been in effect for approximately 18-24 months. More work remains to be done to complete the remaining USML categories and to harmonize the definitions of common terms used in both the EAR and the ITAR. Assistant Secretary Kevin Wolf will be discussing these issues shortly in greater detail. License exception Strategic Trade Authorization, STA, was an important step in the administration’s effort to streamline the licensing and exporting process. STA as most of you know streamlines exports to 36 close allies and friends. Since July 2011, exporters have used STA for well over a billion dollars, that’s with a B, worth of exports. Exporters also continue to make use of other exceptions, such as those allowing for replacement parts, shipments to government end users, temporary exports, and limited value shipments. This action, in turn, has enhanced national security, by expanding military interoperability with our allies and reducing regulatory burdens on joint development and trade with those countries. Allowing the easier cases to be eligible for STA or other license exceptions also reduces the burden on U.S. exporters. We understand that getting a company to the point where STA is more efficient than the old system takes time and resources. Compliance systems must be revised, items reclassified, foreign partners educated, and old habits changed. But we believe that once such initial tasks have been completed, ECR works as intended. We are confident that the exceptions, which are already being used a great deal, will be used even more when exporters and their customers become used to them and make the requisite changes to their internal systems. BIS works hard to insure that we have an informed regulated community. In Fiscal Year 2015, which ended a few weeks ago, we conduced more than 50 outreach events that reached well over 5, 000 people. The bureau’s educational services to the exporting community include online interactive tools, webinars and training seminars, and exporter counselling. Assistant Secretary Wolf conducts a weekly export control call-in where he answers questions on proposed ECR rules and other aspects of the reform effort. These sessions are two way. They increase our understanding of industry concerns and of instances where our regulations could be clearer. We hope they are equally useful to those who phone in. Assistant Secretary Wolf and his colleagues also have conducted outreach to foreign governments and companies that receive controlled items to insure that they understand the opportunities and the obligations of the new system. BIS is committed to conducting as much outreach and industry training as our resources will permit. I hope there is somebody from the Appropriations Committee in the audience. We will continue to target activities that benefit small and medium sizes companies, particularly defense exporters, many of whom are new to the Export Administration Regulations. The benefits of our reforms cannot be realized unless you, the regulated community, understand and comply with them. On October 5^th, the Departments of Defense, Commerce, State and Energy completed installing an interagency referral module on the Defense Department’s USXports IT platform. As directed by the President, all 4 agencies now are reviewing and providing their positions on Commerce license applications on a single platform. The next step will be to seek input from industry as we begin to develop requirements for a single portal with a single license application form. Now those of you who recall Secretary Gates’ speech from April 2010 will recall that he talked about not only a smaller yard, in terms of what’s controlled and how it’s controlled but also higher fences around the smaller yard. Export enforcement is critical to our national security. It helps ensure that our technical superiority is not employed against us on the battle field. It also helps ensure a level playing field so that companies who play by the rules are not disadvantaged by those who would profit from willful or ignorant disregard of those rules. Over the past five years we have leveraged our resources through increased interagency coordination. We work with other agencies through the export enforcement coordination center to increase collaboration and the efficient use of all of our agency resources. At the front end of the process, consideration of license applications, our Information Triage Unit facilitates the review of foreign parties to proposed export transactions. During Fiscal Year 2015, again just ended, about 1/3 of our licensed denials involved information emanating from the examination that we undertake at the ITU. At BIS, the synergy created by Export Enforcement agents, working with their Export Administration licensing and regulatory counterparts is unique within the U.S. government. This expertise and teamwork enables a timely focus on issues ranging from complex enforcement cases to the administration of sanctions. Export Enforcement is developing new administrative enforcement guidelines to improve transparency and predictability as well as to bring our enforcement approach more into alignment with that of the Office of Foreign Assets Control. Tomorrow, Assistant Secretary David Mills will preview these important proposed revisions. I’d also like to repeat my long standing message that our enforcement efforts seek to focus on truly bad actors, not those who have decent compliance programs and a decent compliance culture, make a mistake and then work with us to remedy the situation. The exporting community has made extensive investments in reclassifying its products, modifying IT systems and training employees in the new process and the changes to the U.S. Munitions List, the Commerce Control List, and the corresponding sets of regulations. I’d like to take one more minute to share with you some of the quantitative and qualitative measurements of the return on your hard work. ECR can perhaps be best understood by viewing the countries of the world in three main groups. The first is the 36 NATO and other close allies that are eligible to receive military items subject to the EAR under license exception STA. Your benefits include timely exports to key defense allies, enhanced U.S. and partner country affordability throughout the product life cycle, the absence of unanticipated license conditions, and a reduction in licensing burdens. BIS‘s Munitions Control Division which licenses 600 series items and reviews STA transactions processed more than 13,00 licenses during Fiscal Year 2015. And remember three years ago the entire bureau processed only 21,000 licenses, so this is a big jump for us. We believe that for you, the exporters, the benefits substantially exceed the hard work and investment that you’re making to adjust to the new system. The second group of countries, the other end of the spectrum, are those subject to arms embargos. ECR will make no change in the long standing U.S. policy to deny sales, including sales of military items transferred to the CCL, to this group of nations. The third group, by far the largest, includes the rest of the world, as to which ECR provides worldwide market opportunities and eligibility for de minimis treatment. The one size fits all ITAR controls contain no de　minimis exclusion which means that even a small amount of U.S. content incorporated into a foreign end product subjects that product to U.S. reexport controls. Export control reform changes enhance the defense industrial base by reducing incentives for foreign companies to make their products ITAR free.

Let me step outside of ECR for just a couple more minutes and give you some updates on country policy. First Cuba. Last December the President announced a new course in our relations with Cuba. A course that would engage and empower the Cuban people. These steps build upon actions taken since 2009 that have been aimed at supporting the ability of the Cuban people to gain greater control over their own lives and determine their country’s future. In January, the Commerce and Treasury Departments took coordinated actions that included changes to licensing policy and license exceptions in the EAR that are consistent with these goals. On July 22^nd, BIS published a second rule, implementing the Secretary of State’s rescission of Cuba’s designation as a state sponsor of terrorism. Most recently, BIS published a third rule on September 21^st that amended the terms of existing license exceptions available for Cuba, increased the number of license exceptions available for Cuba, and created a revised licensing policy in the EAR. Last most Secretary Pritzker visited Cuba to participate in the inaugural U.S.-Cuba regulatory dialog which will facilitate implementation of President Obama’s Cuba policy and associated regulatory changes. Deputy Assistant Secretary Matt Borman who accompanied the Secretary and is participating in the dialog will update you on this during his panel tomorrow. BIS and the Office of Foreign Assets Control have implemented a number of sanctions to deter Russian conduct that violates international norms. Specifically, we seek to convince Russia to desist from its territorial claims against Crimea, cease its interference in Ukraine and, importantly and I think too often overlooked, refrain from misconduct elsewhere. Our sanctions cover exports to the defense and energy sectors as well as transactions with specified foreign persons who have been placed on our Entity List. Most recently we issued a final rule on August 7^th adding a Russian oil and gas field, the Yuzhno-Kirinskoye field, (I never took Russian, I’m sorry) to the Entity List. Exports to this field are restricted because they present an unacceptable risk of use in producing oil in a Russian deep water location. BIS is coordinating with our international partners to identify items of strategic concern and is working hard to minimize damage to allies and friends. But we are prepared to impose additional sanctions if circumstances so require. The future of sanctions is dependent on President Putin’s willingness to comply with the Minsk II packages of agreements to alleviate the ongoing war in the Donbas region of Ukraine and to respect Ukraine’s territorial integrity.

On July 14^th, the P5+1 countries and Iran agreed on a Joint Comprehensive Plan of Action to ensure than Iran’s nuclear program will be exclusively peaceful. Building on key parameters that were announced by the same group in April 2015, the joint comprehensive plan, I haven’t got the acronym down yet, JCPOA will provide Iran with phased sanctions relief upon verification that Iran has implemented key nuclear commitments. Currently all of Commerce’s controls pertaining to Iran remain in place. The Office of Foreign Assets Control licenses the export or reexport of items that are subject both to our regulations and OFAC’s Iranian Transactions and Sanctions Regulations. When implementation day is reached, which would be probably early next year, most U.S. sanctions will remain in place. This is because they largely are directed not at Iran’s nuclear activities, but at its continued sponsorship of terrorism and ballistic missile development.

I’m about to go to China for the annual meeting of the Joint Commission on Commerce and Trade and I can tell you that we remain committed to facilitating trade with China, of commercial items including high technology items for civilian end uses and civilian end users. It is and continues to be U.S. policy however, not to support exports of military items to China, exports of many types of items for Chinese military end uses or end users, or exports that may be diverted to proliferation or military related end uses.

These then are some of the national and economical security benefits we’ve achieved by working together to make export control reform a reality. Our partnership and dialog with the exporting community have been dispensable to creating more reliable and predictable rules that in turn enable U.S. companies to be more reliable and predictable suppliers. This enhances our national security, which of course includes economic security.

Please take advantage of this conference. Ask questions and challenge us. Follow all of the conference coverage on Twitter, on our account at bisgov, no dot, and under the hashtag, I guess its #bisupdateconf. Thank you all for attending and thank you all for your attention.

I am now going to take a few minutes to introduce our next speaker, Kevin Wolf, who as our Assistant Secretary for Export Administration has been a prime mover of the reform effort. His energy, intelligence, collegiality, and least in his view, even his humor have driven and nurtured this effort. Nothing in the official catalog, and it is extensive, of his responsibilities begins to illustrate the way in which he served as a spark plug of expert control reform. Like Secretary Pritzker from whom you are going to hear at lunch time, he is full of energy and always committed to getting the job done. It is an enormous pleasure to have Kevin at BIS and to hear from him this morning. Please welcome Assistant Secretary Kevin Wolf.

U.S. Department of Commerce

Bureau of Industry and Security

Update 2015 Conference -- Washington, D.C.

Remarks of Kevin J. Wolf

Assistant Secretary of Commerce for Export Administration

November 2, 2015

Before I begin, I want to get a group photo. Last year I had a lens, this year a brought a fish eye so I can get all of you in. Sorry, so say cheese everybody, say cheese. Karen mentioned the game last night which I stayed up way too late watching. I grew up in Missouri as a Cardinals fan so congratulations to the Royals on their first legitimate World Series win. A lot of people here remember 1985, okay that’s good! So, thank you Eric. It is still an honor to serve with you, you are a terrific leader, public servant and good friend, and better yet, you are making a difference. Thanks to the attendees, export controls don’t exist just to make half of your lives more difficult and the other half of your lives full of billable hours. They exist for serious national security and foreign policy reasons and unless people understand them then they can’t be complied with. Unless people commit the resources and the time to complying with them, then the objectives aren’t met, so you’re all here for the greater good, thank you. Some of you have asked in the hallways, how my current job now, going on 6 years compares to my previous life. It is true that the longer I’m here, the shorter my patience gets, but I am still committed every day to the purpose of the objectives that I just described and to make the system as least burdensome as possible. We are not there by any means, but its’ far better than it was when David, Eric and I arrived. And as Eric described, we’ve set up a structure that allows I believe over time, for constant refinement and improvement which is a key element to the new system. In any event where I get frustrated, I think about the reasons I started and that keeps me going. And also my office is only three stories up, so I’d only break a few legs if I were to jump. Anyway, I will brag about my terrific staff, my deputy and office directors in a little bit, but since this is an update conference let me get straight to some updates on some key things that Eric and Dan didn’t touch on.

So on the definitions rule, we are nearly done with very good quality internal drafts of the rules. Thank you also for the public comments that you sent in, particularly the ones that didn’t contain any profanity. This rule, the objective of this rule is to continue the process of harmonizing the EAR and the ITAR and to reduce regulatory burdens that exist merely by the differences between the two sets of regs. And as described, to the extent that there needs to be a reason for the difference between the two sets of regs, that is explained and laid out more clearly. The rule also take into account mod cons such as the internet, and Cloud storage. Because it’s not yet in final, the lawyers won’t allow me to tell you exactly what we are going to do, what comments we’ve accepted or rejected, but trust me I think most commenters, the thoughtful ones, will be relatively pleased with what we are going to come out with. We don’t have a due date yet, it will probably be at best at the end of the year, more likely just after the first of the year given the need for usual interagency clearance, but the substance of it is essentially done. We are nearly finished with a second proposed rule, on USML Category XII pertaining to night vision item sensors, lasers and gyros and things like that and then the corresponding Commerce equivalent. When we published the proposed rule we asked for candid and frank comments and we got them. So actually that was part of the plan, so that’s not a failure that’s actually a success. They’ve actually helped us, and this was also always part of the plan to make what would be a much better second proposed rule. Again I don’t have an exact date of when it will come out as a second proposed rule, but it will be soon. Sometime in the neighborhood of the definitions for those two are the first two rules in our queue. As Eric also mentioned, we are about ready to publish a proposed rule to update our slightly more than two-year-old aircraft and engines rules, both on the Commerce side and on the State side. And this is part of the effort with industry participation to make sure that the rules control exactly that which warrants control in the clearest way possible and are going to be regularly updated and refined. Because technology, and threats, and industry understanding, and industry misunderstanding evolved and the regulations need to evolve alongside of that as well. And it is appropriate that aircraft and engines are the first category since they are by far the biggest customers we deal with. As Eric I think mentioned, we have out now a notice of inquiry asking for comments on the next group of rules that we published involving vehicles and ships and materials and military and intelligence encryption and submersibles and the materials which includes armor. The due date is December 8^th, so if you are in any of those effected industries, please send us in your thoughts, and then what we do is we take your ideas and then the ones that we’ve developed internally, and that will then translate into a proposed rule revising USML Category VI, VII, XIII, and XX and then the corresponding Commerce book ends. We received relatively few comments on the toxins and biologics rules that we published amending Category XIV, and, this is unrelated but in the same rule, the directed energy weapons rule. Again I don’t have a due date on that one but it will be after the topics that I just mentioned. This was a very difficult rule intellectually to work through. Not only the nature of the items, but it also involved a lot of parts of the U.S. government that have expertise and equity on the topic but aren’t normally involved in the export control system. And again, Eric mentioned that we know the transition from the USML to the CCL is painful for some. And in the short term it takes a lot of work and commitment, but I just wanted to also point out that all of this retraining and effort has really done a terrific job of ferreting out a lot of bad habits, even under rules that didn’t change that had crept into the system over the years. And whatever complaints, whatever difficulties, whatever hardships that you have in going through these, think about, as part of the transition effort, think about all of the burdens that no longer exist with respect to the items and related technologies and software that have transitioned over – no more brokering issues, no more defense services, no more registration, no more registration fees, no more fees for submitting a license application, that de minimis rule that’s really quite significant that Eric mentioned for non-embargoed countries, a much less burdensome direct product rule in the EAR than exists in the ITAR and as a condition of agreements, one page licensing forms for technology rather than complex MLA’s and TAA’s, no more need for permission just for the act of marketing or production overseas or calculation or reporting thereafter, simpler congressional notification requirements, no more having to deal with complex in furtherance of concepts, no purchase order requirements, which really allows for better business planning and thinking over time, over a 4-year period, about what a simple, a much more simple licensing system can be for you. And then of course all of the various license exceptions that Eric mentioned: STA, GOV for government shipments and RPL. And yes I know I’m going to talk a lot about, over the next couple of days, the complaints that you all have or your foreign companies have with respect to STA but it still puzzles me why folks would complain about signing a certification with respect to exactly the same information that would be required for the foreign party to give the U.S. party for the submission of an application anyway. Again we will talk about it, but that one still puzzles me. This is probably one of the situations where although we are responsive and friendly, I’m just going to say "Yeah, tough, suck it up."

Anyway, although the U.S. government’s implementation of the Wassenaar cyber intrusion rule isn’t really part of the reform effort, it is none the less a rule that has by far gotten the most attention out of any of our rules. So let me just give you an update and a status on that one. So the background of the rule is, normally we publish a couple months after agreeing in the regimes to whatever the controls were in the previous year generally, and the cyber intrusion rule which we are going to describe in more detail the next couple of day was agreed to in December of 2013, but unlike all other Wassenaar rules, as we begin to look into it more, we were uncertain that it would really have the very small scope and the small impact that was originally promised in terms of the objective of the rule. So in order not to be wrong, in order to not unnecessarily or inadvertently impose significant harm on the very critical cyber defense research industry and ecosystem, we decided to pull that rule out of our implementation of that year’s Wassenaar, and ask for comment. And just like with Category XII, we asked for candid and frank comments and boy did we get them. So the status is that we are still reviewing all of those comments. And when I say we, I mean not just regular export control agencies, but all the other parts of the U.S. government that have expertise and equity in the topic, cyber defensive research in particular. The only thing I can commit to you about the rule is that we won’t be going to a final rule on that topic as the next step. What the next step is, I don’t know yet because we are still working through the comments, we still have some other industry participation events to deal with and, again as I said, we still want to make sure that we get the input and expertise of all of the parts of the U.S. government, and we won’t proceed unless those in that ecosystem are comfortable with what we are doing.

So let me talk about some of the less discussed aspects of what we’ve been doing the last couple of years. We always speak a lot about the USML Category revisions, that’s great, it’s the core part of the reform effort, it’s a very easy metric to show progress, the number of categories. But there is a lot of really less sexy stuff that goes on to make the regulations better and less burdensome in order to accomplish the objectives of the regulations. We’ve done some pretty good revisions and updates in liberalizations of pretty much all of the license exceptions: TMP, RPL, GOV, and TSU. We’ve adjusted the validity periods for a license, and a practice within our licensing offices to make licenses a lot more tailorable and flexible given the fact that transactions are just not simply shipments of an item in a box from party A, to party B, to party C. We revised our support document requirements, which were heretofore one of the most convoluted part of the EAR. Specifically, we removed the requirement to obtain an International Import Certificate or Delivery Verification as well as the requirement to obtain a Statement of Ultimate Consignee, except for 600 series Major Defense Equipment, which is a very very small fraction of our total volume. So compare this to what existed when we started. Under the ITAR, the DSP-83 is the equivalent of that and it wasn’t required even when these items were on the ITAR, for the items that became Commerce controlled, because it only applied to significant military equipment. So oddly enough, you had a situation where the ITAR was less burdensome than the EAR in this legacy area. So we have dramatically reduced that burden that goes along with the process and the progress of license applications. And we estimate that for exporters on average it reduces 2,000 hours a year of regulatory burden. And on the back end of the licensing process, we substantially revised our license conditions practice and this has been manifested in what some of you have heard us refer to as the boilerplate that is at the beginning of each of our licenses. It had radically reduced the total amount of words and the total number of conditions that were routinely going into licenses, particularly those that did nothing more than restate obligations or prohibitions that were already in the regulations. And this has allowed for much more clear, much more consistent conditions, and again a lot fewer of them to reduce confusion. If, however, you, particularly for 600 series and satellite items, are receiving licensing conditions that are more burdensome than used to be the case when the items were ITAR controlled and all other things are equal, complain, don’t just stew about it. I mean, there are a lot of new people in the system both at the Defense and State and at the Commerce Departments, and we may not have had a particular history with your company or your past practices, and you know Mike Vaccaro is the head of the Defense Control Division, you should feel free to call him, anytime, day or night, his home number is 70..

So we also eliminated the Special Comprehensive License. This was a license structure that was very complicated, had a lot of conditions, and a lot of limitations, and a lot of words in the regulations and can all now be done far more simply under the practices that we’ve adopted for just regular ordinary licenses with a lot fewer words, a lot less paper, with literally an unlimited number of end users or other parties to the transaction all being within the scope of the same authorization. So we simply removed that and another thing that we are thinking about, that we are working on, is to expand the concept of the VEU program to effectively operate as a program authorization in those circumstances where you have multiple shippers, multiple exporters to one or a small number of recipients. We don’t have anything yet in writing on this, it’s an idea that we are working on with a few test bunny applications and probably at next year’s Update we will have some actual examples but I think that this is going to be a very clever way of reducing overall burden for the situations that are routinely approved with multiple exporters and the small number of recipients.

We are still working through the comments you all sent in on the harmonized Destination Control Statement idea that State and Commerce published., We realize that the current requirements have created a lot of confusion and unnecessary burden because they had the same objective with the groups of words, but the ITAR and the EAR were different for the same purpose. And as Eric mentioned, now that we have a common internal IT system, we are renewing the work that we started a few years ago to create a single export license form, one that would be common between BIS and DDTC, that one would apply to through a single internet based portal. It’s an IT project: a lot more work is needed on that and we are really going to need the help of industry on that to make sure it works and it is consistent with your current practices. I will give you, I’m going to wait until next year’s Update to go through a list of all the things that we also have on our list that we might not be able to get done.

I will be going into more detail on these rules at other sessions and others of our staff will in the next couple of days. But one of the purposes of a keynote speech, one of them, is to lay out sort of the big theme in a big idea. So I am going to lay out one now, which I think is really going to be in the end a terrific idea. And that is the creation of a common set of regulations between the ITAR and the EAR and basically rewrite, from the ground up, the ITAR and the EAR so that the words are common. This is not something that can be done, completed during the Obama administration. But it is something on which we can do a substantial amount of work and have it so that we can hand it off to whoever is in charge under the next administration. But take a step back and think, what is the purpose of export controls? Export controls are a semipermeable regulatory net that control the export, reexport and transfer of physical items, "thingies" as I call them, commodities in the legal term, software services and technology to certain end users, end uses and destinations for various foreign policy and national security reasons, and the EAR and the ITAR do exactly that. However, they have evolved over the decades in completely different structures. They have different terms, different phrases, different ways of prescribing their prohibitions, license application requirements, appeals procedures, record keeping requirements, penalty and disclosure policies, license exceptions and exemptions. The forms are different and although we are working on, as I just described, trying to harmonize them in the terms, the structures are all completely different, and so this is, I’m not just saying that the controls between the ITAR and the EAR need to be exactly the same, that’s not my point. It’s just that they are both a language that achieves the same objectives, except that one is Latin and one is Greek. And for most of their Cold War regulatory lives, this difference didn’t really matter. Those who were in the military world were funded in one way, and were one group of companies and people with one type of business, and those that were in the commercial and dual-use world were a different group. But with the end of the Cold War, and the evolving nature of COTS technologies and items for military applications, and intermingling of technology, and in fact in many areas where commercial development leads, the difference between the two sets of regs as such, creates an unnecessary regulatory burden. And so in order to ensure compliance with applicable U.S. laws, both U.S. and non-U.S. companies have to get used to and understand two very differently structured sets of regulations. And also as a result of decades of individual decisions that at the time made sense vertically, there has been created all sorts of cul-de-sacs, and variations between the two sets of regs that has not really made for an internally horizontally coherent structure of U.S. export controls. So this is really describing what the ultimate objective for phase III of the reform effort is: the creation of a single agency with a single set of regulations. It’s also part of the phase II effort which is to harmonize where possible the regulations. But it is also consistent by the way with an Executive Order that after the reform effort began, the President issued: Executive Order 13563 improving regulation and regulatory review, and he said he wrote, "A regulatory system must protect public health, welfare, safety and our environment while promoting economic growth, innovation, competitiveness and job creation. It must be based on the best available science and must allow for public participation and an open exchange of ideas. It must promote predictability and reduce uncertainty." And then it goes on to describe how to have regulations be the least burdensome possible. So the point of the grand idea of a common set of regulations is that there is no legal or policy reason to wait until phase III. There is no reason to wait to create a common set of regulations, the current statutory authorities for our regulations, IEEPA and the Arms Export Control Act, are sufficiently flexible for substantial revision to both sets of regs. So from the ground up, they wouldn’t be common. There would still be Title 22 and there would still be Title 15 but they would use the same words, the same structures, the same approach. Now of course they would identify the groups of items and the licensing policies for things that were subject to the Arms Export Control Act and those that there not but otherwise they would be a common set of words and one could look to either 22 or 15 and be able to know what the words are. It would be a radical reduction or an opportunity to radically reduce the total number of words in the export control regulations. It would take advantage of the last several years of thinking on a policy matter that we’ve been describing as part of the reform effort, and it would of course then ultimately enhance the objectives of the controls – of understanding, compliance, and enforcement. And if the phase III ever comes to be, then it would be all the work that would need to have been done anyway to create a single set of regulations, and if phase III never comes to be, if no law comes into being that would allow that, then we have achieved exactly the same benefits and opportunities and the purposes of phase III by creating two common sets of regulations between CFR 22 and CFR 30. So you know, this would need to be again a 0 based effort. If somebody can’t describe a reason why an existing control, it gets tossed. Saying that’s the way we’ve always done it would be an unacceptable answer for anything for which there are old ways of doing it. Like instead of saying DSP-5 and BIS-748P, it would be export license application. A plain English description of what the application is...I had no idea that was funny. Anyway, but apparently I struck a nerve with that one. So of course this idea would still be constrained by the relevant statutes and the Arms Export Control Act and the broader policy purposes for the controls but it would basically be, the core instruction with every sentence and everything that the regulations contain is, what is the simplest, most clear way of describing what warrants control and why. It also would need to be something that would be understandable not only to U.S. companies but also to non-U.S. companies. The current regulations are not really written in such a way, taking into account, the significant export regulations that exist outside the regs. They of course would be consistent with our regime obligations. They wouldn’t be worded exactly the same way because we would need to implement perhaps in a more granular way. The numbering structures would align so that one could sort of see across both sets of controls what the words are, and it will be consistent with the structure of the various multilateral regimes. They would be, as I’ve described, internally consistent on key phrases and ideas. So it is largely an organizing effort, I mean a dramatic and substantial organization and rationalization effort and not meant to materially change the underlying policies. However it cannot be captive to simply doing it the way we’ve always done it because there will need to be small changes around the edges otherwise you end up with some of the things that happened with the very good rewrite in 1996 where it said absolutely no changes and you lock in for example outdated concepts that don’t make sense, you know like country group A:1, and for years it was just the list of the old COCOM countries and didn’t really for the last however many years reflect the countries that warranted A:1 treatment, the Wassenaar member group countries. We’ve since the fixed that by the way. So the drafter is also not the decision maker, the judgement and the ultimate decision still rests with each of the individual agencies through the regular interagency clearing process. But when drafting they need to take into account and keep in mind that the flaw in most regulatory structures including the export control regulations historically that require interagency clearance is that they are the lowest common denominator of what the relevant agencies and attorneys can agree to and so, as almost anything written by committee, it gets unnecessarily complex and layered with internal inconsistency. So this effort, for it to succeed, will need to be aware of that going in. Now I understand that export controls are inherently complex. You have as I described in previous years this fundamental tension between over control and a tailored set of regulations that are by definition more complex. So in this effort we need to take into account and be able to exercise the judgement about when to have a simple, broader scope of regulations that perhaps over controls when a tailored set may be more appropriate, and a good example of that is USML Category VIII (h) (1) which is a broader catch-all phrase which was done in a simpler over-controlled way for the sake of simplicity, and then XI (a) which is a much more tailored, specific set of controls. Anyway so I will just sort of tidy up this thought, and also a general rule is that if the same thought could be written with fewer words, then it should be written with fewer words. That’s just an idea, we are not going to be able to complete of course during this administration, but you all are Uber users of the export control system so I wanted to toss it out to you. Something to think about over time. Feel free to send in ideas as this idea develops within the U.S. government.

So let me switch from big picture ideas, to Export Administration. It is a terrific group of very smart and talented people. I am every day proud to work with them. They daily handle a massive number of very complex regulatory issues and policy issues and legal issues. The system is working. Albeit with the occasional hiccups which I am sure I will hear about, but that’s okay, we are here to fix them. The interagency referral system is working, the IT system is working, morale is good, but we are busier than ever as Eric mentioned. In percentage terms we’ve had a 68% increase in the volume of licensing activity in EA from this time to last year. What’s interesting about that is that the aggregate number of classification requests – this is a little surprising – other requests have stayed about the same. And what’s even more interesting and pleasant on a purely subjective basis, because you can’t quantify something like this, the number of disputes within the government and between industry and government with respect to topics that are the subject of classification requests is dramatically down. We haven’t had to have an Assistant Secretary-level meeting in almost two years to resolve – what used to be a monthly occurrence – to resolve disputes among the agencies on jurisdictional and classification issues. So whatever you think of "specially designed", and there are still more issues to work through, the data show it is radically reducing the number of disputes by and among and between companies in the industry. Yes there are always individual circumstances, Tim Moony and I and others will have a session on this to work through fact patterns, but it is working. By the way, please if you could stop so many as I call them ‘comfort letter requests,’ where what is clearly the case is that something either is on the CCL or not on the CCL. We will of course process them but if you are able to make a self-determination, please do so for your sake and for ours.

With respect to each of our offices: Exporter Services – Karen of course you met earlier and she is doing a terrific job at leading Exporter Services. Let me give you a couple of additional data points for what they are doing for the greater good. So the outreach programs in the aggregate have resulted in over a hundred thousand interactions with U.S. and foreign persons. They’ve conducted 350 events in total, including the weekly teleconferences, the Technical Advisory Committees, and as Eric described, they are focused largely on small and medium sized enterprises.

Since beginning the weekly teleconferences we’ve had a hundred and seventy one of them, and that have been heard, at least by those who have called in, by over 13,000 people. I don’t know how many, we just count each call-in as one, we don’t know how many people may be listening in on the same phone, so it’s probably even a little bit greater. We average 8 questions and answers per call for a total of 983 questions we’ve answered on those weekly calls. And as described, I will be doing an open version of that on Wednesday.

Cuba has been a major focus of our outreach efforts. We’ve conducted 17 events to describe the changes and then over the course of the rest of 2015 and 2016 there is a long list of other export control seminars and sessions that are going to be taking place around the country often in coordination with our friends at the Bureau of the Census and the Department of the Treasury. Up on our website soon will be an updated list of all the various sessions throughout the country over the course of this year and next. Don’t forget about our interactive tools that we’ve developed as part of the reform effort. We’ve got the CCL order of review, the specially designed on how to use license exception STA online decision try tools, just for the last year there were over 33,000 hits. We are about ready to roll out a de　minimis licensing tool, I mean a decision tree tool, and we suspect that will be quite popular. Our call centers both in the Western Regional Office and here in DC have answered over 33,000 additional phone calls from you all about the regulations and the status of licenses and how you apply, etc. We’ve held 33 Technical Advisory Committee meetings. As you know we host 7 TACs as well as the PECSEA, all representative of industry and government participation to give us advice and to react to the various rules. This year we’ve added over 6,700 users to our SNAP-R system, now we have over 36,000 users of our licensing system.

Another office, SIES, Strategic Industries and Economic Security, is mentioned for a dramatic increase in the number of licenses that we’re handling and they are doing it quite well. They also are quite active in outreach and training on the defense trade side. They also handle our internal work with respect to the Committee on Foreign Investment in the United States and work closely with the Departments of Homeland Security and Defense on the DPAS regs in support of national defense programs. So thank you to Michael Vaccaro, if he hasn’t left already because of my home number reference that I made, but anyway he is doing a great job at leading that office.

OTE, the Office of Technology Evaluation, continues to provide data analytics to inform policy decisions with respect to, well, data, such as the Russian sanctions and the Cuba policy, and has been studying, on a really daily and monthly basis, trends with respect to the export control reform efforts so we don’t delude ourselves in what we are doing, that we actually have data in terms of who’s using what, and what’s going where, when. And in order to support the Secretary’s goal of data in her strategic plan, OTE has stood up a data portal on our website and will be demonstrating that in a room over there. They continue to work with CBP on export clearance issues including the Automated Export System and the Destination Control Statement and routed export rules in the post-departure filing process. They’ve partnered with the Export Management Compliance Division to educate exporters who inadvertently report AES transactions that are potentially noncompliant. They were instrumental in publishing the July 15^thrule that sets out the policies and procedures for conducting surveys to obtain information to preform industry studies, to assess the health and effectiveness as various industries as a part of our industrial based work to support the national defense. They published a short report to better understand small businesses and the challenges facing these organizations in the U.S. space industry and they continue to work on a variety of assessments including one involving carbon fiber composite reports in June, and the printed circuit board industrial survey assessment. Thanks to Gerry Horner for his terrific work in leading that group.

Our office of National Security and Technology Transfer group is ably lead by Eileen doing a terrific job with a wide variety of topics. This office is the point for our Wassenaar work and they are doing a terrific job. Just to give you an example, for this year, 23 out of 24 of its proposals were accepted. And this work is really quite critical to ensuring that our dual-use controls are properly calibrated and updated. This office is also the point with respect to the fast moving and very complex issues involving the Russia sanctions. It is also doing its best to do what it can do be creative in terms of making us more user friendly, in the encryption rules and the license exceptions. Little known is that it is also the part of our office, our bureau that takes the lead with respect to handling issues involving crude oil exports. And it’s also the office that is responsible for the new controls on commercial satellites and spacecraft that have moved over from the State Department. And that is a really terrific ECR success story. The data and the anecdotes that we hear from industry about sales that otherwise wouldn’t have occurred and the reduction of burden and the efficiency of the licensing process on the commercial satellite and spacecraft related activities is really, really terrific.

The Office of Nonproliferation and Treaty Compliance is well led by Alex who is doing a great job there, Alex Lopes, and you know he shepherds our Nuclear Supplier’s Group, Missile Technology Control Regime, and Australia Group regime efforts. Those are of course really quite critical to the reason export controls exist, to stem proliferation with respect of these items. They are doing a lot of work these days to expand their membership and to expand compliance norms and nonproliferation norms around the world and always looking for ways in which those objectives can be handled more simply. The office’s Treaty Compliance Division continues to play a leading role in ensuring the U.S. meets it obligations under the Chemical Weapons Convention. In the past year, for example, it collected 771 declaration reports from 548 facilities and trading companies, and took part in the OCPW inspection of 16 chemical plant sites, successfully demonstrating our compliance with those obligations. The successful destruction by a U.S. company of precursor chemicals retrieved from the Syrian chemical weapons program and verification of this destruction by the OPCW was a signature success due in large part to help from this group. And our Foreign Policy Division in this office has played a prominent role in developing and working through our policies regarding Iran and Cuba that Eric described.

So let me just finish up there, I want to give special thanks to my deputy director, Matt Borman, who is the best leader in all of BIS, the rock of EA. Kathleen, Steve, Bob and Darryl in my front office for making things run so efficiently and for handling not just the process but the substance of multiple issues. You are very good at what you do and make EA and BIS proud. Thanks to Mi-Young Kim and Eric Longnecker for shepherding our Operating Committee, trying to resolve interagency disputes on license determinations, trust me is not easy. Eric finished after a long stance and Mi-Young has taken over and they’ve both done a terrific job. Thanks to Joe Cristoforo who is doing a terrific job at shepherding our End User Review Committee and the VEU program and then also special thanks of course to our Counsel and OCC for always providing really quality, practical, useful legal advice and our friends down the hall in Export Enforcement where we work hand in glove on all issues. So anyway, thanks for being here, enjoy the conference, do well, learn, give advice, find that elusive 6^th export control joke, export, learn the regs, export some more, and comply. So thank you very much.

U.S. Department of Commerce

Bureau of Industry and Security

Update 2015 Conference

Opening Plenary Session

Karen H. Nies-Vogel

On behalf of the Department of Commerce, the Bureau of Industry and Security, welcome to the annual update on export controls and policy. I am Karen Nies-Vogel, I am the director of the Office of Exporter Services and I want to tell you a little bit about the highlights of the conference and then quickly go over some housekeeping items with you. This year’s highlights include, our keynote speaker at lunch today. We are very honored to welcome the Secretary of Commerce, the honorable Penny Pritzker. Now tomorrow, tomorrow’s lunch, our speaker is Rose Gottemoeller the Undersecretary of State for Arms Control and International Security. Once again this year, a team of BIS’s IT Specialists is available to demonstrate questions about BIS’s electronical licensing system, SNAP-R, also our web-based interactive tools. The IT team can also assist you to register your company to use SNAP-R if that’s something that you need assistance with. The IT team is located in the Cardozo Room on the terrace level and they will be available until 5:00 today, until 6:30 tomorrow, until 3:30 on Wednesday. On Wednesday, Assistant Secretary Wolf will hold morning and afternoon sessions to take comments and answer questions about the ongoing implementation of export control reform. These sessions will take the same format as his popular Wednesday afternoon teleconferences and we hope that you will be able to attend and to ask questions. If you are not able to attend, there will be an open teleconference line which will be in "listen only mode", just as it usually is for his weekly teleconference. If you have not done so already, please review the emergency information on page 13 of you program book. The Hilton’s emergency number is 60 which you can dial from any house phone and if you are staying in the hotel, we suggest that you review the emergency procedures information that is provided in your room. Please remember that your name badges must be worn at all times during the conference and should be visible to conference staff. Your badge serves as your entrance to all events. If you are not wearing your badge or if it is not visible, conference staff may stop you and ask to see it. Materials for all of the panel sessions are loaded on the computers in the internet café, which is located in the DuPont Room on the terrace level. You can download these materials onto the USB drive you’ve been given, or you can print them out. There is paper available for printing. There are a variety of sessions available to all of you over the next several days, many of them will be offered more than once. Seating for all of the sessions is available on a first come first serve basis. If seating capacity for any one session is reached, we will have to close the session. Standing in the back of the room is not allowed due to fire regulations and safety concerns. If you have a special dietary requirement and you checked the box related to that requirement when you registered for the conference, and you have not picked up your ticket for those special meals, please do so at the registration desks. The opening plenary today, the interagency plenary tomorrow, and our luncheon keynote speakers will be videotaped and those video tapes will be posted on the BIS website along with transcripts after the conference. Please be sure to stop by the exhibitors’ booths on the terrace level in the Columbia Hall. The exhibitors also invite everyone to a reception tomorrow evening from 5-6:30 pm. The reception will be in Columbia Hall, and it’s a great opportunity to visit with the 33 government and private sector exhibitors that we have joining us this year. We understand that many of you may have business that you need to attend to during the conference however we hope out of consideration for other attendees, that you will turn your electronic devices either off, or to the vibrate mode. If you need Wi-Fi access it is provided in the hotel lobby and hotel staff can assist you with logging on if you need that. Your evaluations are very very important to us: please take the time to complete the individual session evaluations as well as the sheet for the overall conference. And finally, if you need assistance or you have questions, please ask me, any other member of the conference staff, or any of the many many BIS employees who are helping to facilitate the conference. We will do our very best to help you. It is now my pleasure to introduce BIS’s Deputy Undersecretary, Daniel Hill. As the bureau senior career official, Deputy Undersecretary Hill manages BIS’s daily activities and advises Undersecretary Hirschhorn on a broad range of policy and management issues. Prior to his appointment as Deputy Undersecretary, Mr. Hill was the director of BIS’s Office of Strategic Industries and Economic Security, where he implemented and managed programs to ensure that the U.S. defense industrial base has the capacity and the capability to meet current and future national security, economic security, and homeland security requirements. Among other duties, Mr. Hill was a representative to the Committee on Foreign Investment in the United States and the interagency working group on offsets. He was a member of the government coordinating council for the defense industrial base, and represented the United States government as a member of the Industrial Planning Committee at NATO. Prior to his 10 years at BIS, Mr. Hill was the assistant administrator for technology at the Small Business Administration. In addition to directing the SBA’s Small Business Innovation and Research and Small Business Technology Transfer programs, he was a member of the White House National Science and Technology Council, and chair of the small business working group of the United States innovation partnership. He was also a member of the National Science Foundation’s advisory board and served on the President’s council of Y2K conversion. Ladies and gentlemen, Deputy Undersecretary Daniel Hill.