Mar 25, 2016 - companies play a critical role in protecting the security of the United ... on controls for cybersecurity
Aerospace Industries Association American Association of Exporters and Importers The American League for Exports and Security Assistance AMT—The Association for Manufacturing Technology Business Roundtable Coalition for Employment through Exports General Aviation Manufacturing Association Industrial Fasteners Institute IPC - Association Connecting Electronics Industries Information Technology Industry Council National Association of Manufacturers National Defense Industrial Association National Foreign Trade Council Satellite Industry Association Space Enterprise Council
March 25, 2016
The President The White House 1600 Pennsylvania Avenue, N.W. Washington, DC 20500
Dear Mr. President: We are writing regarding your Export Control Reform initiative, which the Coalition for Security and Competitiveness (CSC) has long supported. We view this initiative as a means of focusing federal resources on managing the greatest risks for exports of controlled technologies, bringing transparency and coherence to these regulations, and enhancing the competitiveness of manufacturing and technology sectors in the United States. The CSC represents small and large manufacturers in every industrial sector and in all 50 states that drive America's global leadership in advanced technology. Many of these companies play a critical role in protecting the security of the United States, either directly engaged in providing the technology and equipment that keep the U.S. military the best in the world or in playing a key support role. We appreciate the interagency cooperation and significant progress made toward the initiative’s goals, and we urge you – with the Departments of State, Commerce and Defense – to tackle the remaining critical issues of the Export Control Reform (ECR) Initiative and to consider carefully how a future Administration can build on this important initiative. Action on issues outlined below, along with ensuring that relevant multilateral control regimes are updated to reflect them, will fulfill the objectives of the ECR Initiative that were laid out in 2009. A. Short-Term Priorities for the Current Administration.
Space Foundation TechAmerica U.S. Chamber of Commerce
1) Complete category changes in ECR and Institutionalize periodic review and revision of category changes: The CSC strongly urges the Administration to complete the review and reconciliation of the U.S. Munitions List (USML) and Commerce Control List (CCL). The relevant interagency review and stakeholder discussions have been completed, and we urge the Departments of State and Commerce to publish those proposed rules in the Federal Register and move toward finalizing the proposed changes. The CSC also welcomes the Administration’s announcement that it will review the www.securityandcompetitiveness.org
effectiveness of the USML and CCL changes on an ongoing basis. We urge the Administration to institutionalize that process, including changing federal advisory committee structures as needed to ensure broad technical inputs are received on the scope and application of controls on technologies 2) Complete harmonization of definitions in the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR): The Commerce Department is already working on harmonizing a limited number of definitions between the two sets of regulations, and the CSC urges completion of that process. 3) Complete transition to single information technology system and single portal/single form: The Administration has been attempting to transition the export licensing agencies to a single secure licensing database (USXports) for four years. When the transition is complete, the agencies will be able to administer more effectively the licensing process and ensure that decisions made by the different departments are fully coordinated. The CSC encourages you to expedite efforts to provide a single licensing form and a single application portal, to simplify the application process and make it easier to use for exporters, and to provide an opportunity for licensing agencies to streamline application review 4) Negotiate new multilateral controls on intrusion and surveillance items: The CSC applauds the recent announcement of the Administration’s plans to seek a renegotiation of the Wassenaar Arrangement (WA) 2013 agreements on controls for cybersecurity items like intrusion software and network surveillance systems. As evidenced by the robust comments on the proposed rule issued last year by the Commerce Department to implement the agreements, there are complex technical and policy issues at hand. We stand ready to work with the Departments of State and Commerce as they craft a new proposal, and we encourage the Administration to engage in full consultation with representatives from industry and the security community. 5) Ensure efficient processing times for license applicants at the Departments of State and Commerce: It is critical that the Departments of State and Commerce are able to handle day-to-day processing of license applications in an efficient, timely and effective manner, including the Department of Defense technology review process, to support U.S. economic and national security objectives. The CSC urges more attention to improve efficient processing, even as the government continues to pursue substantial reform and revision of the export control process. B. Medium- and Long-Term Objectives. 1) Establish expedited procedures for exports of defense and security technology that support U.S. government, military, and intelligence www.securityandcompetitiveness.org
interests abroad: A workable comprehensive licensing framework and appropriate license exemptions should be developed and implemented to cover technology-sharing with and amongst friends and allies on the government’s priority defense and security programs, as well as relevant space and homeland security programs. 2) Program licenses for commercial technologies: The CSC also encourages the Commerce Department to pursue a “program license” model for technologies controlled on the CCL that encompasses situations where multiple U.S. companies are exporting to a vetted overseas end-user or a single company has multiple export transactions with a vetted overseas enduser. 3) Implement an effective and efficient intra-company transfer (ICT) license exception: An ICT license exception that allows trusted companies to exchange technology freely within their own organizations, provided such technology is protected by internal compliance processes as well as technology and intellectual property controls, would greatly simplify licensing and compliance processes for many U.S. companies. The CSC urges the Commerce Department to pursue a “deemed export” ICT license exception that leverages the market imperative for U.S. entities to safeguard their intellectual property from unauthorized parties. This license exception should allow U.S. parties that adopt reasonable, practicable screening and technology control programs to release technology controlled under the EAR to non-U.S. employees in the United States. The United States has adopted the intracompany transfer concept to allow foreign companies to share ITARcontrolled information with bona fide employees, and we stand ready to work with the Commerce Department and other federal agencies to develop a workable solution for the EAR. 4) Develop simplified, recalibrated encryption controls: Simplified and recalibrated encryption controls should restrict only a narrow positive list of encryption-related items. There have been a number of adjustments in these controls since they were initially imposed, but most of them have not simplified the system – and all of them have failed to keep up with the rapid development of encryption technology. The CSC recommends that the Department of Commerce lead an interagency review process of the current encryption controls that leads to recommendations for policy changes. 5) Promote cooperation between commercial innovators and the Defense Department: The CSC recommends that the State Department update intellectual property terms and revise ITAR and other export control regulations, including contractual data handling requirements like those related to Unclassified Controlled Technical Information (UCTI), so that innovative commercial hardware and technology are not inadvertently captured by the ITAR. These regulations hinder the ability of commercial
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companies who export technology worldwide to collaborate effectively with government agency customers. 6) Develop a cooperative information-sharing program between the government and the exporting community: An effective informationsharing program between the government and individual exporters, in which the government would provide companies with information on potentially risky end users and companies would provide the government with information on entities seeking to purchase controlled goods or technology, would be mutually beneficial for all stakeholders. The Export Control Reform initiative is one of the significant efforts of your Administration, and we congratulate you on your initial decision to undertake it and your subsequent determination to carry it through. We look forward to working with you to build on this reform effort in ways that will both enhance our security and maintain our technological competitiveness. Sincerely, The Coalition for Security and Competitiveness
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