Modernize Export Controls

America's high-tech and defense industries contribute to our global competitiveness and economic security in crucial ways. Approximately 3.5 million workers are employed in these sectors, and they accounted for more than $350 billion in exports in 2008, representing nearly one-third of U.S. merchandise exports. These same industries are particularly affected by U.S. export controls, which have not kept pace with changes in global security and the international marketplace.

In this context, the U.S. Chamber has applauded the Obama Administration's initiative to modernize export controls. For the first time in decades, the stars are aligned for meaningful reform that will enhance U.S. national security and economic competiveness at the same time.

The general principles are simple. National security must come first, and sensitive technologies with military applications must be protected. Stronger controls may be warranted for the critical military technologies Secretary of Defense Robert Gates has referred to as the "crown jewels."

However, the U.S. export controls regime covers too many products that lack a significant military application or are readily available from other countries. National security must come first, but the United States should eliminate controls that serve no real security purpose.

At root, the current system is not optimized to support either effective defense cooperation with America's allies or our continued technological competitiveness. Today, licenses are required not only for the export of goods and services, but also for the sharing of technical data with overseas partners and allies.

In addressing defense trade issues, both the Administration and Congress must ensure that the United States can identify and safeguard sensitive and militarily critical technologies, facilitate deployment of technologies to support cooperation and interoperability with allies, and maintain U.S. technological leadership.

Only by injecting greater efficiency, transparency and predictability into the U.S. export controls system can the U.S. government ensure that critical technologies are truly protected, innovation is fostered, and the United States' national security and economic imperatives of the 21st century are secured.

Tens of thousands of U.S. jobs are at stake. In January 2010 the Milken Institute and the National Association of Manufacturers issued a study entitled Jobs for America: Investments and policies for economic growth and competitiveness. It found that "modernizing U.S. export controls could increase exports in high-value areas. By 2019, these policy adjustments could enhance real GDP by $64.2 billion (0.4 percent), create 160,000 manufacturing jobs, and heighten total employment by 340,000."

The U.S. Chamber is a founding member of the Coalition for Security and Competitiveness (CSC), which seeks a more efficient, predictable, and transparent export control system to meet the security and economic challenges of the 21st century. In January 2010, the CSC released a comprehensive set of recommendations for reform of the U.S. export control system. The CSC's recommendations complement the coalition's suggested principles for a 21st Century approach to export controls.

In addition, the pending bilateral defense trade cooperation treaties with two of our closest allies—the United Kingdom and Australia—establish frameworks for streamlined licensing to support government programs. Comparable concepts could be used to eliminate the need for licensing for certain non-sensitive components of a collaborative U.S. defense or security program, or at least reduce the number of licenses required for those program activities that are predictable and repeatable. The U.S. Chamber urges the Senate to approve both accords.

The U.S. Chamber—on its own and in conjunction with the Coalition on Security and Competitiveness—stands ready to work with the Administration to modernize U.S. export control policies and practices.

Chamber Recommendations

• The U.S. Chamber strongly supports the goals of the Obama Administration's initiative to build an export controls system "where higher walls are placed around fewer, more critical
• The Senate should approve the pending defense trade treaties with the United Kingdom and Australia.