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

A-S Wolf IMG 5400 REV 1



Thank you Eric.  It is still an honor to work for and with you.  You’re a terrific leader, public servant, and friend.  And, better yet, you are making a difference.

Thanks also to the attendees.  Export controls don't exist just to make the lives of half of those here more difficult and billable hours for the other half.  They exist for serious national security and foreign policy purposes of common interest.  Unless exporters and reexporters commit the resources and efforts to ensuring compliance, the national security and foreign policy objectives are not achieved.  You are here for the greater good.

Many of you have asked how I like my current job relative to my previous job.  It is indeed the case that my patience does get shorter the longer I'm here, but I'm still happy to serve and work every day to achieve the national security and foreign policy objectives of the controls in the least burdensome way possible.  It is not yet the least burdensome system possible by a long shot, but it is considerably better than when Eric, David, and I arrived nearly six years ago.  And we have set up a structure that better facilitates regular refinement and improvement.  In any event, whenever I get frustrated, I remind myself why I started and that keeps me going.   Also, my office is only three stories up, so, at best, I’d only break my legs if I jumped.

I will brag about my terrific Deputy, Office Directors, and other staff in a bit, but, since this is an Update conference, let me update you on the status of various things I know you are all interested in and give you a glimpse of a fairly fundamental change that we have in mind.  


Rules Now in Draft

We have nearly finished internal drafts of the definitions rules.  They are in good shape and benefited a lot from the many and very good public comments that we received.  Thank you for the time you all spent in thinking through and preparing the comments, particularly the ones that didn't contain any profanity.  This rule will continue to advance the goal of harmonizing the EAR and the ITAR to reduce regulatory burdens created merely by their differences.  To the extent there needs to be a difference between the two, then those differences will be made clear.  The rule also takes into account mod cons such as the Internet and cloud storage of data.  Because it is not yet in final, the lawyers won’t let me describe which comments we accepted and rejected, but I can say that most commenters and government officials will be generally pleased with the final rules.  I don't have a date yet for when it will be published, but it is the first rule in our queue.  I'm hoping for some time early next year given the need for all the usual interagency clearances.  

We are also nearly finished with a second proposed rule regarding USML Category XII and the corresponding CCL controls on things such as night vision items and sensors.  Again, thank you all for spending the time and resources to comment on the first proposed rule.  We went out of our way to ask for candid, frank, and well-supported comments, and we received them.  They have helped us make what I'm certain is a better second proposed rule that I hope you all will be equally aggressive in reviewing and commenting on.  I don't have a date for when it will be published, but I'm hoping for some time this year.  

We are also about ready to publish the proposed rule to update the now two-year-old controls on military aircraft, engines, and related items.  This is an example of what Eric and I have referred to as a core part of the new system that allows for constant refinement of the controls with industry participation.  The regulations should control that which warrants control, no more and no less.  Because technology, threats, and industry understanding (and misunderstandings!) evolve, the regulations needed to evolve along side of them.  The aircraft and engine categories are by far our biggest customers, so it is appropriate that they are the first of the reform rules that we'll be updating.  

On that theme, we have out now a notice of inquiry asking for your ideas on the second group of reform revisions, those pertaining to military ships, military vehicles, encryption for military and intelligence applications, armor and other materials, and submersibles.  For those in these industries, please review and give us your thoughts by December 8th.  We'll, of course, review them when preparing the proposed rule to update USML categories VI, VII, XIII, and XX, and the corresponding CCL controls to be published early next year.

We received a relatively small number of comments on our proposed rules to revise the biological and toxin controls, and the controls on directed energy weapons.  Again, I don't have a date for you on when it will be published, but it is in the queue after these other rules.   This was a very difficult rule to work through, not only because of the nature of the items controlled but also because it involved many parts of the US government not normally part of the export control system but that have expertise and an equity in the topic.

I know that the transition from the USML to the CCL is, in the short term, painful for those of you involved in the defense trade – new compliance procedures, new classification efforts, and a lot of retraining.  All this retraining, by the way, has been terrific about ferreting out of the system a lot of bad habits that had crept into internal compliance programs, so there is gain in the pain.  But, for every commodity and related software and technology that has moved over, remember all the burdens that no longer exist in connection with them – no defense services; no brokering; no registration; no registration or licensing fees; the availability of a de minimis rule for the non-embargoed countries; a vastly less burdensome direct product rule; one page licensing forms rather than complex MLA’s and TAA’s; more flexible dual/third country national rules; no fussing with concepts such as “in furtherance of;” no need for authorizations just to market or to manufacture abroad; no import requirements; no purchase order requirements (thus allowing for better business planning); and multiple license exceptions for trade with allied countries, such as STA, GOV for exports to the US and allied governments, and RPL for replacement parts.  Yes, I know of the complaints about STA.  We can discuss those in more detail during tomorrow’s session, but I’m still mystified about the concerns over signing an ultimate consignee certification when the same information would need to be provided as part of a license application process anyway.

Although the U.S. government's implementation of the Wassenaar Arrangement's cyber intrusion rule is not part of the reform effort, it is clearly the proposed rule that has received the most attention of any of our rules.  So, I'll give you the background and an update.  Normally, we publish in a final rule that which was agreed to by the multilateral regimes.  We are committed partners to the regimes and the best controls are those that are multilateral.  The cyber intrusion controls Wassenaar agreed to in 2013, however, were a little different than other regime rules in that we did not have a solid sense for what the collateral impacts would be.  Wassenaar intended it to be a narrow rule affecting only a small number of companies, but we were not certain if that was the case when read by those in the potentially affected cyber security ecosystem.  

So, instead of guessing and potentially harming the absolutely critical cyber defense and security industries, we published just that part of the rule as proposed asking for comments.  As with the proposed Category XII rule, we asked for candid and frank comments, and you provided them.  The status is that we are still working through them.  Moreover, we are working through the comments and the issues with multiple parts of the US government not involved in export controls but that have expertise and equities in cyber defense research and related areas.  All I can tell you for certain now is that, based on the clear evidence in the comments that the impact of the rule would be dramatically greater than originally intended, we will not be going directly to a final rule.  I can't tell you what the next step will be, but I can tell you we will not implement the controls until we've addressed all the reasonable and relevant concerns of the cyber defense research community and the rest of the US government with an interest in the topic.


Less-Discussed Changes to the EAR

We speak a lot about the number of USML categories we have revised.  That’s fine, of course.  They are the core of ECR, have the largest impact, and are easy to cite as a metric of progress.  Throughout the past few years, we have, however, done a lot of work on the EAR and the licensing process to make the system less burdensome.  These are the less sexy changes, and changes only export control nerds would love, but they are no less important to the effort of improving the system. For example, we revised a number of license exceptions, including TMP, RPL, GOV, and TSU, to broaden their scope and to make them less burdensome.  They still need scrubbing, but they are better. We’ve changed the license validity periods and greatly expanded, as a matter of practice, the flexibility of our licenses so that they can be tailored to specific transactions.  

We revised the support document requirements – requirements that were among the most convoluted sections of the EAR.  Specifically, the final rule removed the requirement to obtain an International Import Certificate or Delivery Verification, as well as limited the requirement to obtain a Statement by Ultimate Consignee and Purchaser to 600 series Major Defense Equipment.  Under the ITAR, the DSP-83 is the equivalent support document for license applications to DDTC, but the document is only required for Significant Military Equipment.  Thus, for 600 series and 9x515 items, the EAR support document requirements were much more burdensome, especially if an International Import Certificate was required from the foreign government of the destination country.  We estimate that these new changes to the support document requirements will reduce the burden to U.S. exporters by over 2000 hours annually.

On the back end of the license application process, we addressed issues related to license conditions for approved licenses.  About a year ago, we adopted standard text for all licenses – the “boilerplate” at the beginning of each license.  This text addresses the scope of the authorization and responsibility of the applicant.  This simple change has dramatically reduced the number of license conditions, especially those that simply re-stated provisions of the regulations.  By the way, BIS licenses for 600 series or 9x515 items should not contain more conditions or limitations than prior DDTC licenses for the same or similar transactions, all other things being equal.  If this isn’t the case for licenses you are receiving, don’t just stew about it – complain to me or Michael Vaccaro and we’ll look into it.  Mike’s home telephone number is XXX.   Call him any time, day or night.

We eliminated the Special Comprehensive License regulations.  They were way too complicated, had too many conditions and limitations, and, in any event, have been eclipsed by the more flexible licenses that BIS is now issuing in the ordinary course.  That is, with some work, we can do under a regular license everything that used to be done under an SCL far more simply.  In addition, we’re working on ways to expand the VEU authorization to effectively operate as a general program authorization in situations where there are multiple exporters of things to one or a small number of programs.

We are also working through the comments on our proposed harmonized Destination Control Statement requirements for the ITAR and the EAR.  The current requirements have caused confusion on which statement to include for shipments containing both ITAR and EAR commodities.  Harmonizing these statements will ease regulatory burden on exporters.  I don’t have a due date for you yet on a final rule, but it will be after the other rules I described earlier.

Now that the internal work on a common IT system for license applications is essentially done, we’re renewing the effort we started a few years ago to complete a common Internet-based license application portal for both BIS and DDTC and a single license application form common to both the EAR and the ITAR.   We will need a lot of industry input and advice as we move to this next step to make sure it is modern and effective.

I'll wait until next year's Update conference to give you a list of all the other improvements that we want to get done but have not yet finished, such as the effort to clean up the country group references throughout the EAR and simplification of the encryption and AT-only controls.  Also, I and others will be going in to the details of these and other rules we've published at other sessions during the conference.  The main point is that there is a lot of working going on unrelated to the category revisions to improve the regulations and the process. So, please thank your friendly BIS employees whenever you see them next.


Common Set of Regulations Idea

One of the purposes of keynote speeches is to lay out some big picture themes and ideas, so I'll give you one now that I think is fundamental to the improvement of the system – the creation of a common set of regulations that would be administered by BIS and DDTC.  This effort will not be able to be completed during the Obama Administration.  Nonetheless, a significant amount of groundwork on the details can be accomplished in the next year or so for presentation to officials in the next Administration.  Because you all are, by definition, super users of the export control system, I wanted to take this opportunity to set out the idea and get any reactions from you on it as we start work.

Remember that the purpose of export controls is to create a semi-permeable regulatory and enforcement net over the export, reexport, and transfer by foreign and domestic persons of commodities, software, technology, and services to specific destinations, end uses, or end users for various national security, foreign policy, and other reasons.   Some items and activities warrant strict controls, others warrant few controls, and most warrant a mix depending on the circumstances of a particular transaction.  

The two primary sets of export control regulations in the United States, the EAR and the ITAR, have entirely different structures.  They, for example, have completely different ways of describing their scopes, prohibitions, license application requirements, country-specific policies, notification requirements, appeals procedures, recordkeeping requirements, penalties and disclosure policies, and license exceptions and exemptions.  The forms are different; the definitions of the same terms are often different; many identical terms are used differently or are undefined; and the entire numbering and regulatory structures are completely different.  The current definitions rules only help with a small fraction of the regulations.  This is not to suggest that the levels of control over the types of items and services the two sets of regulations now control should be identical, only that the process and structure for describing those controls are completely different.  They are both a language with the same purpose of communicating export controls, but are Latin and Greek.

The differences between the EAR and the ITAR were of little significance for most of their Cold War regulatory lives because the companies, technologies, and compliance obligations rarely overlapped.  Those that were involved in the development, production, and export of military items were, in the main, one group with one set of technologies and those involved in all other technologies were a different group.  With the end of the Cold War and the changing nature of threats that warrant controls, the ever-increasing utilization of COTS items and technology for military applications, the leading role the commercial world now plays in the innovation of items with potential military applications, and increased involvement of companies in the development and sale of items for both military and non-military applications, the structural differences between the two sets of regulations impose a significant regulatory burden on US industry without a corresponding benefit to the national security, foreign policy, and other reasons for the controls.  To ensure compliance with US export control law, US companies – and all companies outside the United States receiving or working with US-origin items and technology – are required to review, understand, and comply with not one, but two very different sets of regulations.  Moreover, as a result of decades of accretion of individual policy decisions, massive amounts of complexity, redundancy, and regulatory cul-de-sacs have been baked into both sets of regulations without sufficient recognition of the need for internally coherent and consistent regulatory structures.

The core purpose of the Export Control Reform effort and its ultimate Phase III objectives of creating a single agency that would administer a single list and a single set of regulations is founded on the need to address this burden through regulatory rationalization.  Moreover, the Phase II objective of harmonizing, where warranted, common or similar terms between the ITAR and the EAR is a recognition of the same issue.  There is, thus, no disagreement that (a) the fundamental purpose of both regulations is the same and (b) there is no policy or logical reason for the regulatory structure of such controls to be different. The Phase II list and definitions review and revision efforts were specially designed to set out the policy and control groundwork for a single set of regulations, but there were no plans to actually draft such regulations until Phase III was in play.

Finally, subsequent to the announcement of the Export Control Reform effort, the President issued Executive Order 13563, Improving Regulation and Regulatory Review, where he stated that:

Our 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.  It must allow for public participation and an open exchange of ideas.  It must promote predictability and reduce uncertainty. It must identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends.  It must take into account benefits and costs, both quantitative and qualitative.  It must ensure that regulations are accessible, consistent, written in plain language, and easy to understand.  It must measure, and seek to improve, the actual results of regulatory requirements.

There is no legal or policy reason to wait for statutory authority for a single agency to reap the regulatory rationalization benefits of creating a single set of export control regulations.  The current statutory authorities for the EAR and the ITAR – the International Emergency Economic Powers Act (IEEPA), the Export Administration Act (EAA), and the Arms Export Control Act (AECA) – are sufficiently flexible and provide significant discretion to the President to create, from the ground up, common regulatory structures within the existing Titles 15 and 22 of the Code of Federal Regulations.  Commerce and State would still publish and be ultimately responsible for their own regulations, but they would agree that all the words and the structures of their regulations would be the same.  Some of the words in Title 15 would not apply to items subject to the EAR and some of the words in Title 22 would not apply to items subject to the ITAR.  They would nonetheless be the same words such that an exporter could read either of the sets of regulations and know the requirements the items or services at issue.  The items that warrant control as “munitions list” items would still have the same AECA controls and requirements that exist today, but those items and all the controls and requirements related to them could be described in a common, identical set of regulations.  

A ground-up, zero based regulatory drafting effort would allow for a radical reduction in the total number of words in US export regulations, take advantage of the last several years of list and definitions reform, and implement in a dramatic way the President’s instruction to look back at old regulations and create new regulatory systems that are efficient, minimally burdensome, constantly improving, and informed by the open exchange of ideas with stakeholders and the public.  Such less burdensome regulations would enhance compliance, enforcement, and the overall purposes of the regulations.  Finally, such regulations would be the foundation of any single agency if ever the law were passed to allow for its creation.  If such a law does not come to pass, they would accomplish the same policy and rationalization objectives of the single agency without the creation of an actual single agency. Indeed, the drafting and implementation of a common set of regulations would allow BIS and DDTC to effectively act as a virtual single agency.

Again, for this idea to work, the drafting would be a ground up, “zero based” effort. The drafter would need to be able to answer the question of what the reason was for any particular control, requirement, or exception.   If no one can explain the reason why a control exists, it gets tossed.  “That’s the way we’ve always done it” would not be an acceptable response to any topic. For example, instead of having a “DSP-5” and a “BIS-748,” there would be requirements for an “Export License Application” in the regulations.  There will be hundreds of other such examples that come up during the drafting, which is why the drafter must have a strong, independent sense of the mission while being informed by the agencies’ and industry’s objectives and the reasons for the controls.

The constraints would be (a) the applicable statutory requirements and prohibitions and (b) the broader policy objectives of what should be controlled where and when and to whom.  The core drafting question should always be “What is a simple and clear way of describing the control, through license or conditioned exception, of exports, reexports, and transfers by US and foreign persons of listed and unlisted commodities, technologies, software, and services/activities to destinations, end uses, and end users for the foreign policy, national security, and the other reasons for control that exist?”  

The USML and the CCL will be combined into a common “Export Control List” that (a) is consistent with US commitments to the regimes (but not necessarily identical in wording to the respective regime lists given the need for more granularity), (b) has a numbering structure that allows for the corresponding multilateral controls to be known by US and non-US companies, (c) distinguishes between those items that are subject to the AECA and those that are not, (d) is internally consistent on key words, phrases, and structures, (e) allows for identification of items that are controlled unilaterally, and (f) reflects the last several years of work in revising the scope of the USML and the CCL.

The effort is largely a drafting, organization, and rationalization effort.  It is not an effort to materially change policies regarding which items are controlled or when they may or may not be exported to any particular end user, end use, or destination.  That said, small policy changes for the sake of simplification or to update such policies will be necessary.  For example, when the current EAR was revised in 1996, the instruction was to make no policy changes.  This resulted in the locking in of many outdated country groups and other concepts.  Country Group A:1, for example, was the COCOM list even though it had no relevance to the regimes that existed in 1996.  (We’ve since fixed this issue, by the way.)  A rationalization effort would reduce the number of country groups, even though this might mean, for example, imposing or removing various requirements of small numbers of countries around the edges.  In addition, simplifying the license exceptions may result in creating or removing licensing requirements for particular transactions.  Blind adherence to existing words will merely result in an even more wordy and complex set of regulations.  Judgment, subject to interagency approval in the end, will be required to be exercised during the drafting.

The C.F.R. Title number, Chapter, and Subchapter numbering will need to stay the same, but the part, paragraph, and subparagraph numbering will be identical.  Again, some provisions will apply just to items subject to the EAR, some just to items subject to the ITAR/AECA, but most will be identical.  If ever a single agency comes to be, the structure and content of the regulations would be the same, they would just be reprinted in a new CFR.

The flaw in most regulatory structures, including the export control regulations, is that they are the lowest common denominator of what is acceptable to all the relevant agencies and counsel.  As with almost anything written by committee, this results in unnecessary complexity and internal inconsistencies.  The drafter will need to be a strong enough intellect and personality to be able to work with the agencies and counsel eventually to achieve consensus around a simple, coherent, set of common regulations that satisfy the objectives above.

Export controls are inherently complex given that they deal with complex issues of technology, and multiple destination, end use, and end user issues.  They are also complex because they are the distillation of multiple different international arrangements and unilateral controls written without consideration of the whole structure of the system.  There is also an inherent tension in export controls between simple regulations, which will necessarily over control, and tailored regulations, which will be more complex.  The drafter will need to have the judgment to know when to adopt a simple approach that is broader than necessary, such as in USML VIII(h)(1), and a tailored approach that will result in more complexity, such as in USML XI(a).  

The regulations must be equally understandable by non-U.S. companies required to comply with U.S. export control law and U.S. companies, both large and small. They should be written in a way that makes them approachable and understandable to those outside the export control practitioner community.  They should account for contemporary and compliance business practices and technology, including globalized e-commerce and the Internet.

Finally, if the same point can be written with fewer words then it should be written with fewer words.

For this idea to work, the drafter will need to have an absolutely solid understanding of: the EAR, the ITAR, the relevant statutes, and multilateral regime lists; the reasons why the controls exist and the history behind them; the spirit, history, direction, and content of the ECR changes; how industry applies, complies, understands, misunderstands, and seeks to avoid the regulations; enforcement-related issues associated with export control regulations; the interagency process and the personalities involved; and when to draft subtle policy adjustments in the regulations for the sake of rationalization that are consistent with U.S. government policy in the relevant area.  The drafter will not be the decision-maker.  Nonetheless, the drafter must present to the agencies text that is complete and that satisfies the requirements set forth above and, again, have a strong enough personality and proposed rules to resist a result that is no more than a collection of all the agencies’ individual comments.

Export Administration (EA)


OK, now to an update on EA.  It is a terrific group of talented, smart, and dedicated public servants.  I am still proud to have a chance to work with them, and all our interagency colleagues that are key to our success.   They daily address a massive number of difficult technical, regulatory, and policy issues.  The licensing system is working, albeit not without hiccups that are ably addressed.  The interagency referral system works. The IT system works.  Morale is good, but we are even more busy than usual.  

In particular, we've had a roughly 50% increase in the number of licenses BIS processes as a result of ECR.  Although the aggregate number of classification determinations and commodity jurisdiction reviews is about the same, the number of disputed determinations or interagency disagreements has been dramatically reduced as a result of ECR.  So, whatever you think about the definition of “specially designed,” the evidence is clear that the number of disputes within the government and with industry about what is and is not within its scope is dramatically down – down to the point that we have not needed Assistant Secretary-level interagency meetings to resolve disputes over the term for almost two years now.  In addition, that the number of CCATS has not increased as our licensing load has doubled is a significant and positive fact.  Indeed, there could be far fewer requests regarding things that are clearly on or off the CCL.  So, please stop submitting “comfort letter” requests for things where self-determinations are easily done. They are wasting your time and ours.


Office of Exporter Services (OExS)

Karen Nies-Vogel is doing a terrific job leading OExS.  Let me give you some data about how much work this office has done for the greater good.  We estimate that our outreach programs resulted in over 100,000 interactions with U.S. and foreign persons. We conducted over 350 events for industry, including the weekly teleconferences on specific Export Control Reform topics that I host, the seminars that are held throughout the country and overseas, the industry group meetings at which we speak, our Technical Advisory Committee meetings, the small and medium-sized business conferences that we attend, the webinars we produce, and the many telephone and e-mail inquiries to which we respond.  In the past year, our outreach activities have taken us to 18 states and ten foreign countries.  Domestically, we count 51 seminars for FY 2015.

Since beginning the weekly ECR teleconferences, we have offered 171 sessions heard by over 13,000 listeners.  On average, we’ve provided in-depth answers to eight questions during each teleconference, for a total of 983 questions.  Note that I will be doing “Live from Update” Open Forum teleconferences on Wednesday in both the morning and the afternoon and my team and I will take questions from the audience during those sessions.  

Cuba has been a major focus of our efforts this year and as a result, since the January announcement of changes in U.S, policy for Cuba, we conducted 17 events to provide information about the policy change and the new license exception created to support the change, license exception “Support for the Cuban People” (SCP) found in §740.21 of the EAR.

During the rest of 2015 and in 2016, we are planning to hold our popular “Essentials of Export Control” and “Complying with U.S. Export Controls” seminars in cities including Memphis in December; Phoenix in January; Tampa and San Diego in February; Pittsburgh and Denver in March; Newark, New Jersey in April; Newport Beach, California and Houston in May; Seattle and Hartford, Connecticut in June; Indianapolis in July; Los Angeles in August and San Jose and Buffalo in September.  We are also planning to host Export Control Forum in the San Francisco bay area in April and our second Compliance Symposium in Washington, DC in June.  This seminar schedule will be posted on our website soon. The BIS licensing officers, regulations and outreach staff, and personnel from Export Enforcement who speak at these events are often joined by representatives from the Bureau of the Census’s Automated Export System unit and the Department of the Treasury’s Office of Foreign Assets Control.  We appreciated the contributions of our interagency partners and thank them for their support.

We encourage you to use the interactive tools found on our web site: the CCL Order of Review, Specially Designed and Using the Strategic Trade Authorization tools. In FY 2015, these tools received over 33,000 hits.   We anticipate that the new on-line tool on the de minimis rule that we are in the process of rolling out will also be popular.

Last year, our two export counselling staffs, at the Western Regional Office in Irvine and Santa Clara, California and the Outreach and Educational Services Divisions here in Washington, together answered over 33,000 telephone and e-mail inquiries.  

We held 33 technical advisory committee meetings last year.  BIS hosts seven technical advisory committees (TACS) as well as the PECSEA, the President’s Export Council Subcommittee on Export Administration, each of which assists us with accomplishing our mission through their memberships’ diverse viewpoints on industry’s concerns and priorities.  

This past year we added over 6,700 new users to SNAP-R, our license application procedure bringing the total number of users to over 36,400.  


Strategic Industries and Economic Security (SIES)

SIES processed 13,250 600 series license applications in FY 2015, and has processed more than 22,000 applications overall.  SIES also continues to support numerous outreach and training events with U.S. and foreign industry and foreign governments to support the implementation of Export Control Reform, including participating in major international aerospace/defense shows in Europe and Asia.  SIES also continues to review industry’s use of STA with 600 series transactions, completing more than 40 reviews in FY 2015.

In addition, leveraging our export control and industrial base expertise, SIES has supported the Committee on Foreign Investment in the United States’ review of the national security implications of foreign investments in the United States.  It has also worked closely with the Departments of Defense and Homeland Security to administer the Defense Priorities and Allocations System (DPAS) regulation in support of national defense programs and national emergency planning.

Thank you Michael Vaccaro for doing such a great job leading the office.


Office of Technology Evaluation (OTE)

OTE continues to provide data analytics to inform policy decisions and support regulations, such as the Russia sanctions and the Cuba policy.  In addition, OTE has effectively used available data to study trends of the effects of the Export Control Reform on licensing and exports; trends of BIS’s export controls on licensing and exports with foreign countries and the world as a whole; and trends of VEU and STA use.  In order to support the Secretary’s goal of “Data” in her strategic plan, OTE has stood up a data portal on the BIS website and is demonstrating the portal in the BIS online services room here at Update.

OTE continues to work with U.S. Customs and Border Protection on export clearance issues, including the Automated Export System.  In addition, OTE continues to support export clearance regulations, such as the Destination Control Statement and Routed Export Transaction rules and AES Post Departure Filing.

Because of its effective use of data, OTE has partnered with our Export Management Compliance Division to implement a BIS compliance program that educates exporters who inadvertently report AES transactions that are potentially non-compliant with the EAR.

OTE was instrumental in the publication of a final rule on July 15, 2015 that sets forth the policies and procedures for conducting surveys to obtain information to perform industry studies assessing the health and competitiveness of the U.S. industrial base to support the national defense.  

OTE published a short report to better understand the contributions of small businesses and the challenges facing these organizations in the U.S. Space Industry.  OTE continues to work on a variety of assessments, including Strategic and Critical Materials Supply Chain Assessments, which produced a Carbon Fiber Composites report in June 2015; and the U.S. printed circuit board industrial base assessment.

And thanks to Gerry Horner for doing such a great job in leading this group.


Office of National Security and Technology Transfer Control (NSTTC)

Eileen Albanese is doing a terrific job leading this office.  It is the point for all work with the Wassenaar regime, which is key to ensuring that most of our dual-use controls are properly calibrated and up to date.  They have had great success in this area.  For example, 23 of its 24 regime proposals were accepted by the regime this year.  The office is also the focal point for all the complex, and quick-moving work on the Russia sanctions that you will hear more about during the conference.  It has spent a massive amount of time working with the comments and issues related to the cyber intrusion rule that I mentioned earlier.  It is also doing its best to be creative in how to make the encryption regulations user friendly.  Little known to most, it is also the lead in handling the complex issues on the EAR's regulation of crude oil exports.  More known to most, it has shepherded an amazingly smooth transition to the EAR of control over spacecraft and related items. The data and anecdotes we are getting on the quality of those rules and current licensing practices are terrific, by the way.  This change is a true ECR success story.


Office of Nonproliferation and Treaty Compliance (NPTC)

The threat of nuclear, chemical and biological weapons proliferation as well as the missiles to deliver them has not gone away.  The Nuclear Suppliers Group, the Missile Technology Control Regime, and the Australia Group continued to focus on stemming the proliferation of these items.  These regimes are continuing to examine their control lists to strike the correct balance between stemming proliferation while still allowing for legitimate trade.

These regimes are also looking at expanding their membership and encouraging unilateral adherence to make their non- proliferation standards the global norm.  Over the next year we at BIS will not only look outward to the regimes but also inward at our own regulations and practices to see if there are domestic fixes that can be made to further enhance and expedite trade opportunities while still meeting our global non-proliferation commitments. I encourage you to reach out to our regime representatives with your thoughts and recommendations.

The office’s Treaty Compliance Division continues to play a leading role in ensuring the United States meets its obligations under the Chemical Weapons Convention (CWC).  In the past year, it collected 771 declarations and reports from 548 facilities and trading companies throughout the United States and managed the random on-site inspections conducted by the Organization for the Prohibition of Chemical Weapons (OPCW) at 16 chemical plant sites successfully demonstrating U.S. compliance while protecting the facilities’ confidential business information and other trade secrets, and minimizing the burden imposed by the inspections.  BIS has received approximately 15,600 declarations from 1,044 plant sites and trading companies since publication of its implementing regulations.  

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 the oversight of the Treaty Compliance Division.

The Foreign Policy Division has played a prominent role in formulating and implementing export policy related to two of the President's top foreign policy imperatives -- a new approach to Cuba and a nuclear agreement with Iran.  The Division coordinated publication of three major Cuba rules.  During this same time frame, it also provided invaluable advice and assistance concerning export controls and sanctions policy to Department of State and Treasury officials engaged in the P5+1 negotiations with Iran and materially aided the development of plans for U.S. participation in the associated Nuclear Procurement Working Group.  

Thanks to Alex Lopes for doing a terrific job leading this group and these complex issues.



Special thanks to my front office staff.  Matt Borman, of course, who continues to be the best, most stable leader of BIS.  He is the rock of EA.  Kathleen, Steve, Bob, and Darryl make things run smoothly, both on process and the content of multiple, complex issues.  Thanks to Mi Yong Kim and Eric Longnecker for shepherding the Operating Committee. Trust me, resolving licensing disputes among the agencies is not an easy job.  And thanks to Joe Cristofaro for ably shepherding the End User Review Committee and the VEU program.  Thanks to OCC for its counsel.  And, as always, thanks to EE for all its good work.  EA and EE work hand in glove for the common good.

Again, thank you all for being here.  Enjoy the conference.  Learn.  Ask questions.  Give advice.  Find that elusive sixth export control joke.  Export.  Do well.  Do good.  Export some more.  Comply.








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