A Modest Post-ECR Proposal

2014/03/31

By: Scott Gearity

A longer and more technical U.S. Munitions List. Dozens of new Export Control Classification Numbers. A 1,588 word Export Administration Regulations definition of “specially designed” (the International Traffic in Arms Regulations manage a definition of the same term in a comparatively brief 987 words). A license exception (STA) with enough limitations and conditions to leave even the most grizzled ITAR veteran fondly recalling her DSP-5-related repetitive stress injury.

All are consequences of the recent revisions to the ITAR and EAR. The Obama Administration’s approach to Export Control Reform is largely succeeding in its aims to refashion the US export control system in a more sensible, more reasonable and less ambiguous direction. But, by this stage, it should be clear to even the not-so-keen observer that riding along with these very real and not to be understated improvements is an unwelcome passenger – increased complexity. Administration advocates for the reform initiative might argue that more complexity is the unavoidable tradeoff for enhanced transparency and flexibility. Many in industry would likely agree that the ECR changes are very welcome overall, and they would be loath to insist upon anything that could upset this steadily accelerating applecart.

No one seriously doubts the necessity of export control regulations. Still, regulatory complexity is unwelcome, regardless of what is being regulated. It increases the cost of compliance. And, as with anything else, when the “cost” of compliance increases, people can be expected to “buy” less of it. There is another, more insidious downside to overly complex regulations. They tend to breed contempt among the regulated. When well-intentioned, intelligent and diligent exporters feel little choice but to rely upon expensive attorneys or consultants to understand and interpret the rules for them, should we be surprised if the exporters develop a sense of cynicism about the regulations? That is a problem, because some strategic trade controls are very important (a category which certainly includes most defense articles described in amended USML categories and many 600 series items). All else equal, simpler rules are better.

If we assume that ECR as presently conceived will continue apace, the question is this – what else can be done to offset the added complexity introduced by the reform process? This is my modest proposal:

BIS should remove from the CCL every commodity, software and technology controlled exclusively for purported “anti-terrorism” reasons. Just get rid of them all.

You have likely encountered the controls to which I refer, which date, in their current format if not all the details, to the major restructuring of the EAR in 1996. These are the ECCNs which capture such advanced technologies as Clinton Administration-vintage PCs (4A994), 737 lavatory faucets (9A991), drugstore-bought disposable waterproof cameras (8A992) and that new Xbox One you just bought your kid (5A992). There are also cell phone antennas (5A991), the stainless steel pipes under your kitchen sink (2B999) and that GPS-enabled wristwatch you wear while jogging after work to offset the eight hours you just spent chained to your desk while painstakingly classifying low-end, mass-produced consumer goods (7A994).

These restrictions might (emphasis on might) have had some real meaning back when the list of countries subject to AT controls (effectively Cuba, Iran, North Korea, Sudan and Syria) was different from the list of countries subject to general export bans (also Cuba, Iran, North Korea, Sudan and Syria), but in today’s environment, they have very limited impact. Anti-terrorism, as an EAR reason for control, fails any regulatory cost-benefit analysis. And nothing is more frustrating (not to mention pointless) than regulations which serve little or no purpose. Does anyone really believe that AT controls do anything to reduce the actual risk of terrorism?

The benefits of giving the CCL the Biggest Loser treatment are clear: (1) fewer ECCNs means quicker, more accurate classifications by exporters; (2) as with ECR, concentrating controls on the more important technologies will improve respect for and compliance with the parts of the EAR which actually matter; and (3) this change will support a more level playing field with U.S. allies, who do not generally include these sorts of commonplace items on their control lists. If BIS is looking for a next act after completing the transition of items from the USML to the CCL, axing AT controls is a good place to start.

Tags:

Comments are closed.