(Source: House video recording)
The House Small Business Committee held a hearing yesterday, 11 February, 2016, on the Export Control Reform (ECR) initiative, with testimony from the State Department’s Deputy Assistant Secretary for Defense Trade Controls (DDTC) Brian Nilsson and the Commerce Department’s Assistant Secretary of Commerce for Export Administration Kevin Wolf. The video recording of the full hearing is available here. The following is a transcript of a portion of that hearing containing the remarks of Rep. Tim Huelskamp (R-Kansas), Assistant Secretary Brian Nilsson, and Committee Chair Steven J. Chabot (R-Ohio), which focused on the reasons for the delay in publication of proposed rules to transfer export licensing jurisdiction for our industry’s products (USML Categories I [Firearms, Close Assault Weapons, and Combat Shotguns], II [Guns and Armament], and III [Ammunition/Ordinance]) to BIS from DDTC before the end of the year.
Rep. Huelskamp (to Mr. Nilsson): What is taking so long with Categories I, II, and III? I see from the government website absolutely no efforts reported on that. That would be the firearms, guns, and ammunition categories. I will note that you completed [names other categories], but for some reason, Categories I, II, and III have been sitting out there for two, three, or four years. I don’t know who would answer that and explain the reason for the delay.
Mr. Nilsson: I own those categories, so I’ll answer the question. The prioritization of the categories was based on the remarks of Secretary of Defense Gates when we did the roll-out in April of 2010. Sec Def’s view was that we needed to prioritize, based on interoperability with allies. So the categories that we’ve been doing have been based on providing the best benefits of interoperability with our key allies, and so, and we’ve been systematically working through those. And so we haven’t come to Categories I, II, and III yet. We’ve done some preliminary work on them, but we’re committed to finalizing all the categories this year.
Rep. Huelskamp: Is there an interagency group that recommended that you move forward on that?
Mr. Nilsson: Yes. It’s the same seven departments that have been working on all the categories. And so we’ve already done some, we’ve done work on all twenty-one categories from the out-start, so we’re just not quite there yet for publishing the proposed rules.
Rep. Huelskamp: But exactly why are those categories not making progress, and when will we make progress?
Mr. Nilsson: Well, we’re committed to publishing, to finishing the initial review and having those categories done this year. The primary reason is that —
Rep. Huelskamp: This year?
Mr. Nilsson: Yes, 2016.
Rep. Huelskamp: But this year, you’re going to run out of time. Again, there is absolutely no progress. You’ve got propose rules in 2011, five years ago for, like, Category VIII, and, it’s going – – I just don’t understand why those three have had absolutely no progress, in terms of this sheet [holding up USML category ECR progress status list], even though there have been recommendations from the interagency group that you move forward. When was that recommendation made?
Mr. Nilsson: We were working on rules in 2012, and so, on all twenty-one categories, and it’s been a prioritization of those twenty-one categories, and sort of meeting the Secretary of Defense priorities for those that contribute to the interoperability, and the firearms categories – –
Rep. Huelskamp: Again, it’s been with the Secretary of Defense for a while now, but my question is that I still don’t understand why these three categories don’t have any progress on them.
Mr. Nilsson: Primarily because, by prioritizing those that are key for interoperability of allies, and our firearms categories, that category warrants reform just as all the other categories, but over 90% of what I control in that category are not being exported to governments or militaries, and so there is not an interoperability issue with regard to those. But that begs the question that they certainly warrant going through reform, just as all other sectors warrant going through reform, so for the industries that have not yet benefitted going through reform, that’s firearms, that’s the large manufacturers of things like howitzers, its people who do toxicological agents, do chemicals, and so we, we will finish – –
Rep. Huelskamp: Categories I through III?
Mr. Nilsson: Those are all in categories that have not been deployed in final.
Rep. Huelskamp: But some of those are not in I, II, or III, obviously, but you’ve made a proposed rule on a number of those already. My question is on Categories I, II, and III. When can I expect – –
Mr. Nilsson: This year.
Rep. Huelskamp: This year? This Administration?
Mr. Nilsson: We will finish — we are going to finish the USML this year.
Rep. Huelskamp: Haven’t the rules been approved all the way up the chain and proposed those?
Mr. Nilsson: They haven’t been finalized yet, so – –
Rep. Huelskamp: Who hasn’t signed off on them yet?
Mr. Nilsson: The seven departments haven’t signed off on those for what the rules would propose, but we’re committed to doing the proposed rules on those categories, as all other categories.
Rep. Huelskamp: There are firms that are waiting on this, and have been waiting for years trying to fix – –
Mr. Nilsson: I agree.
Rep. Huelskamp: And you were given, I think you were, $10 million additional to finish some of these things, in the current fiscal year. So are you going to get it done in the current fiscal year, or are you talking about the next fiscal year before you would get it done? You say current year. I just – –
Mr. Nilsson: We need to go through, the way the process works is, we do proposed rules, then we digest the public comments on those to see what adjustments we need to make, then at that point, we would draft final rules, then we publish final rules, and then there is a delay in the effective date, to allow each affected industry to be able to have time to transition to the new rules, and so that’s the process for every category. So that process will run for Categories I, II, and III, just as we’re in the midst of Categories XII, XIV, and XVIII.
Rep. Chabot: The gentleman’s time has expired. [Side remarks omitted.] The Chair would just note that there is considerable, I think, suspicion by many members, at least probably half the members on this committee, that this Administration, because it is not considered to be a friend of guns or ammo, that this is sort of a willful neglect in part at least, and the irony is that it is because of this attitude towards, and concern about the Administration’s attitude toward guns, that there has been a boom in sales of guns and ammo during this Administration, so I think that’s probably the underlying sentiment of my colleague’s questioning there.
[Remainder of hearing omitted.]
House Video Recording: https://www.youtube.com/watch?v=9uRZEXrmoss&feature=youtu.be