U.S. Department of Commerce

Bureau of Industry and Security

Update 2015 Conference



Eric thank you very much! It is great pleasure to be here. Thank you for that warm introduction and frankly for your stellar leadership of the Bureau of Industry and Security. Let’s give Eric a big round of applause. From my first day on the job, Eric has helped me to come to appreciate the work of BIS, the importance of export controls and the necessity of strong partnership between our department and America’s exporters. I also want to thank his entire team at BIS as well as our partner agencies for your work to advance the President’s Export Control Reform Initiative. And your work to operate our system of export control licensing, regulations, and enforcement. It is always fun for me to spend time with folks like yourselves, our private sector leaders. I am sorry that I had to miss last year’s conference but I am really excited to be back again this year.


BIS is an agency with little visibility to the public eye, but with an enormous influence on the safety of our nation, and a tremendous impact on our country’s competitiveness. Today I want to list two areas where BIS has been absolutely an essential leader in advancing the priorities of the Department of Commerce and the vision of President Obama. First, export controls reform, and second our evolving relationship with Cuba. As you know, early in this Administration, the President, and the Secretaries of Commerce, Defense and State recognized the urgent need for a broad-based review and a comprehensive reform of our export controls system. Our objective has been to increase interoperability with our closest allies, reduce incentives for non-American companies to avoid U.S.-made content, services and technologies, and third, to ensure our government is focused on the transactions, end users, and end uses that matter most. Given the strategic importance of these controls, teams across the federal government have worked to make smart reforms – with BIS playing a major role, and with unprecedented collaboration with private sector leaders like yourselves. Thus far we’ve revised 15 of the 21 U.S. Munitions List categories, so if an item does not perform a critical military function, its control is moved from the State Department’s Munitions List to the more flexible list that is controlled by the Department of Commerce. We have proposed updates also to three additional categories, and our next set of revisions is expected to be final by early next year.


Our goal is to streamline the process, rationalize our system, and reduce the amount of paperwork that you have to fill out and applications you have to file with federal agencies – all of which should make it easier for your firms to sell your products abroad. I recognize that there have been short term pains stemming from this process, but we are confident that the long term gains of reduced regulatory burdens on your companies will make the temporary disruption worthwhile. I hope you will keep in mind something very important, which is export control reform is an ongoing effort, it is not one and done. BIS and the Commerce Department want to continually improve. To do so though we must partner with you to build a more efficient, a more dynamic system that adjusts to emerging threats, and to new commercial applications of your technologies. So we are going to keep listening to your voices, the voices of technology, on how rules are playing out and how are they impacting your businesses. For example, this spring we sought and received considerable feedback about regulations for military aircraft and engines, regulations that originally were issued in 2013. We heard from you about how these rules are working, and in some instances not working, and where updates were necessary. And in the coming months, the Administration will utilize this input to design more tailored and effective controls in this sector. We will also stay focused on proposals to revise our dual-use controls, recognizing the demand for reform beyond the defense trade.


In order for our reform efforts to be successful, however, we need your help. You know your products, you know your competitors’ products, you know your customers, and you know the market place better than we do. We need you to look out for questionable sales, and let us know if an inquiry or proposed sale seems suspicious to you. Our partnership is essential to our success and to our national security. Your presence and your voice matter tremendously to us.


Moving forward, we will aggressively maintain our controls on prohibited end uses, end users, and destinations. We will build on BIS’ two most recent landmark victories: one case that ended with the largest criminal penalty assessed to date in a sanctions investigation, and another that concluded with a guilty plea from a network that smuggled 65 million dollars’ worth of electronics to Russia in violation of U.S. laws. Finally, we will continue to do as much training, education, and outreach as possible. Especially with small and medium-sized businesses. Already in the past two years, BIS has led or participated in over 300 outreach events, created online tools for exporters, spoken to 70,000 individuals or companies, and held regular calls with industry, on Export Control Reform.


Taken together, our outreach, our rules changes, and our reforms speak to a broader message, about the vital importance of BIS’s work: that export controls do not simply exist as another set of regulations for industry. They exist to ensure that our technical superiority is never employed against us on the battlefield. They exist to ensure a level playing field, so companies like yours that play by the rules do not lose out to those who profit from ignorance, or willful disregard for the rules. They exist to ensure our security, our national security, our homeland security, our cyber security and our economic security.


Beyond export controls, BIS has been a key voice in a far reaching change for our country: the normalization of our relations with Cuba. As you all know, last December President Obama announced the most significant shift in U.S. policy toward Cuba in over a half-century. This historic announcement is rooted in a fundamental desire to employ a strategy of engagement over isolation, in order to improve the lives of the people of both of our nations. We want to help all Cubans plug into the global economy, and enjoy a higher standard of living, while giving Americans the opportunity to learn about Cuba and develop relationships with the people on an island that is just 90 miles off of our coastline. We want President Castro and his government to make it easier for Cuban citizens to trade more freely, to travel more freely, to enjoy the fruits of their labor, to access the internet, and to be hired directly by foreign companies. Doing so will pave the way for a more open relationship between our countries and our peoples. I was proud to lead a U.S. delegation meeting in Cuba last month, to deliver this message to the Cuban government leaders. Our trip had really three primary purposes. The first was to get to know our government counterparts, who frankly we haven’t dealt with in over 50 years. Second was to better understand how the Cuban economy works. And third was to lead a regulatory dialog between the U.S. and Cuban officials. From the start, with the leadership of Matt Borman and Tony Christino, BIS has been a part of a select interagency team developing and implementing key components of the President’s new approach towards Cuba. In close coordination with the Treasury Department, BIS has revised a series of regulations that govern American trade with Cuba.


Our changes include authorizing exports to entrepreneurs and other private sector actors in Cuba; authorizing exports by U.S. persons, traveling to Cuba for business or academic work; and authorizing exports to improve internet connectivity and usage. Our changes mean that a private sector or state trade delegation no longer requires federal permission to travel to Cuba, and U.S. companies no longer need federal approval to send equipment to private agricultural cooperatives in Cuba. Our changes will support the safety of civil aviation, facilitating the establishment of regular commercial flights between the U.S. and Cuba, and our travel-related updates will make it easier for Americans to visit the island.


These all represent positive steps forward. But the U.S. embargo – which only Congress can overturn – limits what the President, our Department, and BIS can do in altering our approach. So let me be clear: our Administration strongly supports lifting the embargo and we hope that Congress will repeal it in the near future. In the meantime, we will continue to support greater economic opportunity for the Cuban people and BIS will remain on the frontlines of the effort to build a different relationship for the benefit of families, businesses, exporters and the economies of both of our nations.


On Cuba, on export controls, on a variety of steps to strengthen our economy and advance our country’s interests, BIS’s leadership has been critical. Yet this agency cannot meet its goals, deliver its message, and implement more reforms alone. We need the help of all of you. We need your help to educate your suppliers, your employees, and your customers on the work of BIS and the progress we’ve made on Export Control Reform. We need you to be our allies in realizing the President’s vision: to streamline the process for exporters at home, and allies abroad, and to create a 21st century export control system that supports our economic competiveness and our national security. BIS and the other export control agencies will continue to lead the way and we rely on your ongoing support to keep America safe and strong. Thank you for attending today and thank you for inviting me to join you.