Obama’s ITAR Reform Includes Creation of Single Agency to Oversee Export Control

In a speech before the Aerospace Industries Association last week, National Security Adviser detailed the Obama Administration’s plans to create a single agency to oversee ITAR export regulations.

“Reforming our export control system is critical to our national security, to effective political-military engagement with partner nations around the world, and to America’s economic competitiveness in a global and rapidly evolving economy,” Jones said in his prepared remarks.  “At the end of this process, with your help, we hope to have a fundamentally new system, a system defined by flexibility, transparency, and predictability, and which improves the ability of exporters to comply and for the government to enforce.”

Critics of the current system have said that overly strict ITAR laws have hurt American competitiveness in the global market, with other nations building up their high-tech sectors. These restrictions have hit aerospace hard, with foreign manufacturers advertising their satellites as being “ITAR free.”

Jones said that the current export regime is fragmented and broken.

Our approach to reform reflects the realities of our current system. We have:

• Two different control lists with fundamentally different structures, administered by two different departments;

• Three different primary licensing agencies, none of which sees the others’ licenses, and each of which has unique procedures and, significantly, their own unique definitions for the same terms;

• A multitude of enforcement agencies with overlapping and duplicative authorities; and

• A number of separate information technology (IT) systems, none of which are accessible to or easily compatible with the other. In fact, we have one licensing agency with no IT system that can receive license applications or issue licenses.

The Administration overhaul would be a three-stage effort that would greatly simplify the export review process, Jones said.

“Phases I and II will result in fundamental reform of our system while maintaining our current interagency structure. We have assessed that we can do virtually all these items via Executive action, with some legislative changes we would like to make in the enforcement area. We are doing all of this work in close consultation with Congress. Our Phase I and II actions also establish the necessary framework for Phase III, when we would deploy the following “Four Singularities:”

• A Single Control List;
• A Single Licensing Agency;
• A Single Enforcement Coordination Agency; and
• A Single IT system.

Phase III will require legislation. We have not had comprehensive export control legislation in over 30 years. We need a partnership with Congress to get this done.

The proposal brought praise from the AIA, a trade group that represents U.S. aerospace companies.

“One of AIA’s primary reform recommendations to the Obama administration was to move away from a one-size-fits-all regime to a capabilities-focused system that has the flexibility to apply the right level export controls based on an item’s sensitivity,” said AIA President and CEO Marion C. Blakey. “We are delighted that the administration has taken this step, and we encourage Congress to engage in this effort and to prioritize reforms that directly support the U.S. military, exercise carefully considered oversight and provide the legislation needed for implementation.”

However, DOD Buzz reports that there is opposition to creating a single agency — in large part due to a major Bush Administration debacle.

But the administration’s plans may founder on its desire to create a single new executive agency charged with overseeing both dual-use and military equipment that American companies want to sell overseas.

That may not happen. A congressional source who knows arms export issues reacted this way when asked about the prospects for legislation that would be needed to get things moving:  “Not good.  It’s a massive change for a single agency, and rationale has not yet been provided.”

The main reason for congressional caution are memories of what many people believe was the disastrous result of the creation of the Department of Homeland Security, this source said. While the new agency would constitute several hundred people from the State and Commerce departments, perhaps supplemented by personnel from the Pentagon’s Defense Technology Security Administration.