1. Export and Re-Export Controls Brianna Joslyn Haroon Khan Michael Korschek

2. History of U.S. Export Controls • 1917 Trading with the Enemy Act • 1935 Neutrality Act • Export Control Act of 1949 • Export Administrative Act of 1979 • Coordinating Committee for Multilateral Export Controls/Wassenaar Arrangement

3. Agencies with Export Controls Responsibilities • Commerce Department • Department of State • Department of the Treasury • Nuclear Regulatory Commission • Department of Energy • Department of Defense • Department of the Interior • Food and Drug Administration • Patent and Trademark Office • Environmental Protection Agency

4. Commerce Department • Export control is the responsibility of the Bureau of Industry and Security • Authorized by Export Administration Regulations (EAR), under Title 15, Chapter VII • Export controlled items are usually dual use (civilian and military applications) though non-dual use products are also controlled

5. Commerce Controlled Categories • Nuclear materials, facilities and equipment (and miscellaneous items) • Materials, Chemicals, Microorganisms and Toxins • Materials Processing • Electronics • Computers • Telecommunications and Information Security • Sensors and Lasers • Navigation and Avionics • Marine • Propulsion Systems, Space Vehicles, and Related Equipment

6. Penalties • If the Department of Commerce determines that a foreign firm has not complied with regulations, it may institute administrative enforcement proceedings, resulting in the possible imposition of civil penalties and/or denial of the firm to receive U.S. exports. • Punishments for domestic violators include: • Monetary fines • Imprisonment of up to ten years • Loss of export privileges

7. Arms Export Control Act • Passed in 1976 • Grants President authority to control and export defense articles and services • Intended to only allow defense material and technology transfer that would further U.S. interests • Active enforcement

8. Existing Policy Problems • Export controls inhibit U.S. competitiveness • Controlled goods that are freely available in other nations • Controlled goods that are not applicable to military uses any longer • Too many agencies with overlapping areas of authority • License process discouraging to small and medium sized businesses

9. Selected Issue: Satellites • Major area of indictment for cases involving violation of export controls. • Large private market for satellites – wireless technologies. • Impacted by ITAR to decrease US market share.

10. Satellites: The Issues • The industry has lost 40% of its business due to restrictions on exports abroad. • Sales of multinationals is declining. • Everyone has the same technology – diffusion is rapid. • Complex methods for acquiring licenses. • Department of State's interpretation of ITAR has led to more strict export controls on satellites due to security concerns.

11. Competing Interests • Corporate competitiveness vs. export controls. • US market share vs. US security concerns. • Diffusion of technology vs. complex licensing systems. • Desire for US to be leader in satellite technology vs. restriction of commercial opportunities and a lack of government subsidies.

12. Other Countries • Russia • Catch-all controls. • Inter-agency review of export license applications. • Criminal penalties exist, though limited enforcement capabilites. • China • Actively seeks international satellite contracts. • Goal of market share. • Has licensing clashes with US - Boeing.

13. Policy Proposal • Shift responsibilities from Department of State to Bureau of Industry and Security (BIS) under the Department of Commerce • This will expedite the application process • Have no fear, BIS is here! • Let BIS do its job

14. Policy Proposal cont. • Department of State overwhelmed after 9/11 with wars in Afghanistan and Iraq • Commercial satellite applications thus have to compete with articles deemed “war-time” necessities • Average of 7000 applications received by State Department’s Directorate of Defense Trade Controls (DDTC) personnel. • More applications = backlog for commercial satellite applications

15. Policy Proposal cont. • US Satellite companies dominated the field of contracts for commercial satellites when Commerce had jurisdiction • BIS is fairly active in terms of enforcement • BIS even underwent a name change earlier to address ambiguity

16. Policy Proposal cont. • China already an active participant in launching “ITAR-FREE” satellites • China obtaining contracts from other countries • Reform EAR and ITAR to address any fears of national security breach • Reform does not mean elimination of ITAR as it is still vital to protecting proprietary military information.

17. Policy Proposal cont. • President Obama has openly stated his interests to boost US exports • The Obama administration wants to retain Research and Development in the US • Congress is trying to address the issues of export and re-export controls

19. Source: Allen, Karri. “Communications Satellites and U.S. Export Controls: Correcting the Balance.” Catholic University School of Law, December 2009, http://commlaw.cua.edu/res/docs/09-Allen-Final.pdf

20. Policy Proposal cont. • China is winning the war on cyber space • China’s $3 trillion dilemma • Sharing of technology is a two-way street. Both parties learn about each others capabilities • Proposal is not intended to under US national security concerns

21. Sources • Allen, Karri. “Communications Satellites and U.S. Export Controls: Correcting the Balance.” Catholic University School of Law, December 2009, http://commlaw.cua.edu/res/docs/09-Allen-Final.pdf. • Coalition for Security and Competitiveness. (2010). Recommendation for 21st Century Technology Control Regime. Retrieved from: http://www.securityandcompetitiveness.org/proposals/show/2253.html • Devol, R. & Wong, P. (2010) Jobs for America. Retrieved from: http://www.milkeninstitute.org/pdf/JFAMilkenInstitute.pdf • Export Control Basics (Exporting 101)." U. S. Bureau of Industry and Security. N.p., n.d. Web. 27 Apr. 2011. <http://www.bis.doc.gov/licensing/exportingbasics.htm>. • Hosenball, Mark and Brian Grow. “In cyberspy vs. cyberspy, China has the edge.” Reuters. April 14, 2011. http://www.reuters.com/article/2011/04/14/us-china-usa-cyberespionage-idUSTRE73D24220110414.

22. Sources cont. • ITAR and the U.S. Space Industry. Space Foundation, 2008, http://www.spacefoundation.org/docs/SpaceFoundation_ITAR.pdf. • Lamb, Robert. “Satellites, Security, and Scandal: Understanding the Politics of Export Control.” Center for International and Security Studies at Maryland, January 2005, http://www.cissm.umd.edu/papers/files/lamb_exportcontrols.pdf. • Overly, Steven. “For the U.S. satellite industry, strict export controls cost market share.” Washington Post, March 27, 2011, http://www.washingtonpost.com/capital_business/for-the-us-satellite-industry-strict-export-controls-cost-market-share/2011/03/25/AFEMJVkB_story.html. • "Satellite Photos | Free Satellite Pictures ." Satellite Photos | Free Satellite Pictures . N.p., n.d. Web. 27 Apr. 2011. <http://photossatellite.com/>.

23. Sources cont. • Schneider, Howard. “China’s $3 trillion dilemma: What to do with all that cash?” Washington Post. April 19, 2011, http://www.washingtonpost.com/business/ economy/chinas-3-trillion-dilemma-what-to-do-with-all-that-cash/2011/04/15/AFngE75D_story.html. • Scully, Megan. “House targets satellite export controls.” Government Executive. July 9, 2009, http://www.govexec.com/dailyfed/0709/070609cdpm1.htm. • "U. S. Bureau of Industry and Security - Russia and China - Non-Proliferation Concerns and Export Controls." U. S. Bureau of Industry and Security. N.p., n.d. Web. 27 Apr. 2011. <http://www.bis.doc.gov/news/2002/bormanrussiachina.htm>. • U.S. Department of Commerce. (2011). Guidance on the Commerce Department’s Reexport Controls. Retrieved from: http://www.bis.doc.gov/licensing/bis_reexport_controls.pdf

24. Sources cont. • U.S. Department of Commerce. (2011). Streamlining and Strengthening Export Controls. Retrieved from: http://www.bis.doc.gov/eaa.html • United States Department of Justice Press Release. “Foreign Subsidiary of PPG Industries, Inc. Pleads Guilty to Illegally Exporting High-Performance Coating to Nuclear Reactor in Pakistan- Company Agrees to Pay $3.75 million in Fines and Forfeit $32319.” December 21, 2010, http://www.bis.doc.gov/news/2010/doj12212010.htm. • Weidlich, T. (2011). U.S. Indicts Two Chinese Citizens For Trying to Obtain Military Microchips. Bloomberg. Retrieved from: http://www.bloomberg.com/news/2011-04-04/u-s-indicts-two-for-attempting-to-export-military-microchips-to-china.html • Yardley, Jim. “Snubbed by U.S., China Finds New Space Partners.” New York Times. May 24, 2007, http://www.nytimes.com/2007/05/24/world/asia/24satellite.html. • Zelnio, Ryan. “Determining the Effects of ITAR Regulation on the Commercial Space Manufacturing Sector.” George Mason University, April 1, 2007, http://www.cspo.org/igscdocs/Ryan%20 Zelnio.pdf.