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April 24, 2008 

Senate Committee Holds Hearing on Export Licensing Reforms

A subcommittee of the U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing on reforming export licensing agencies today which featured witnesses from the Departments of Commerce, State and Defense, the Government Accountability Office. The private sector witnesses included National Foreign Trade Council (NFTC) President and USA*Engage Co-Chair Bill Reinsch, Daniel B. Poneman from The Scowcroft Group and Edmund B. Rice, President of the Coalition for Employment through Exports.

In his testimony Reinsch outlined key issues plaguing U.S. export control administration, including delay, uncertainty, repetitive licensing requirements and an outdated list of dual use items. In addition to outlining the problems, Reinsch also recommended specific reforms in the interests of U.S. national security and economic competitiveness.

During his testimony, Reinsch addressed a number of export control administration problems, including “delay and uncertainty in decision making and, in the case of weapons, repetitive licensing requirements. Applicants can face these problems initially if there is uncertainty or interagency disagreement over whether their proposed export is a dual use item or a weapon, and then subsequently in the licensing process itself.” Reinsch also pointed out that the dual use list is outdated and that “this, in turn, means more licenses are required in cases where our foreign competitors are not similarly constrained, resulting in loss of competitive advantage for American companies and no damage done to the end user, who simply buys a comparable European or Japanese product.”

While Reinsch endorsed the set of administrative changes to make licensing more efficient proposed by the Coalition on Security and Competitiveness, a group of prominent trade and industry organizations, of which the NFTC is a member, he argued that more fundamental reform is necessary and recommended “a unitary system that operates within an interagency framework,” which would mean combining State and Commerce control processes into a single system that retains the existing agency roles of the current dual use system.

In conclusion, Reinsch stated, “I have not in my comments addressed the question of resources. That is not an oversight. A plea for more resources is the standard response of every federal agency to every problem, and more money would no doubt be helpful, particularly after significant BIS budget cuts this year, but I do not believe it is the most critical issue…Adding money will not clear away the obstacles to efficient export control administration; it will simply allow more people to be inefficient. I would encourage the Committee to address the fundamentals, however difficult that might be, rather than settle for with palliatives.”

The prepared testimony presented by all of the witnesses at today's hearing can be found here.

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