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 21st 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.