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Deputy Secretary Of Defense Urges Easing U.S. Export Controls

By | May 19, 2008

      U.S. controls on exports of products with militarily sensitive technology were written in the Cold War era and should be revised, perhaps by saying that a prohibition on export of a given item would last only for a certain time, U.S. Deputy Secretary of Defense Gordon England said.

      He also said that while some controls are needed to protect U.S. national security interests, controls should not disadvantage American-headquartered defense contractors against foreign-based rivals.

      Rather than focusing solely on ways that the United States can restrict exports of military technologies, England said that at the same time, the nation should also consider ways to encourage non-harmful military exports.

      "We should equally be thinking about encouraging technology exports," he argued. "In this world of coalition warfare and building partnership capacity, it’s essential for us and our friends and allies to have greater interoperability … even with vastly different levels of investment. This requires that we be more forward leaning."

      Agreements that the United States has negotiated with Australia and the United Kingdom that lessen paperwork by eliminating repeated approvals of like-product shipments may become model deals for other nations, England said.

      He spoke before a forum on export controls conducted by the Center for Strategic and International Studies, a defense-oriented Washington think tank, at the Hyatt Regency Capitol Hill.

      Another speaker was U.S. Deputy Secretary of State John Negroponte, who also said the United States should consider changing its export controls. The State Department, Commerce Department and Department of Defense may influence exports of military or dual-use (military and civilian applications) technologies.

      Many industry voices, such as the Aerospace Industries Association, also are calling for changes in export controls, to make it faster and easier to obtain approvals for exports.

      To be sure, England said, the United States still must protect critical military technology, to ensure that if it is exported, it won’t fall into enemy hands.

      The United States does "have a fiduciary responsibility to protect those technologies vitally important to our security," he said. While he didn’t mention it, China has stolen U.S. nuclear weapons technology, and U.S. quiet-submarine technology has wound up in Russian hands.

      Temporary Curbs

      But he raised a question as to whether a curb on exporting a particular military good should be permanent.

      "Here I suggest that we should think of our security in the context of time; that is, security systems only provide for a time advantage," he explained.

      "This implies that the nation should implement technology controls for a limited time period, recognizing that technology is constantly changing." In other words, what is a cutting-edge technology that today might be possessed only by the U.S. military and one of its contractors might, in a few years, be a commonplace worldwide.

      If the United States were to place an expiration date on export of a certain type of product with a given technology, that would reduce the workload of government reviewers, and help speed reviews of applications for exports of goods and technologies still requiring licensing, he said.

      "We could then concentrate on a smaller number of critical technologies rather than the broad spectrum under our purview today," England explained.

      As a practical matter, this would mean the U.S. military and its contractors would have to be engaged in an endless pursuit of new technologies, since any currently new technology would soon become part of a global commonplace.

      "Fundamental to this approach is understanding that the only sure way to protect our national interests, both militarily and commercially, is to continuously invest in [research and development], maintain our R&D centers of excellence and make sure the very best scientists and engineers are available to our nation to stay ahead in critical technologies important to our security," England said.

      He recalled that complaints about the U.S. export control system aren’t new, and there also is nothing novel in proposals for export control reforms, which are rife in Washington, with perhaps 60 of them being offered in recent times. While some are worthwhile, none is perfect.

      "Not all problems have completely satisfactory answers; that is, there are no silver-bullet answers," he said. "Some answers are better than others, but all have disadvantages and limitations."

      One difficult, unavoidable complication is that the United States must simultaneously aim to achieve multiple goals that are, at times, irreconcilable.

      Those goals, he said, are to continue protecting the security of the United States and ensuring that its critical technologies don’t fall into enemy hands, while at the same time encouraging investment in the United States, and not harming the ability of U.S.-headquartered defense contractors to compete abroad.

      On that second point concerning investment in the United States, while he didn’t mention it, foreign contractors have been able to buy U.S. defense contractors. Generally, the United States aims to be open to investment by foreigners, and to maintain open stock markets, while also urging that nations refrain from manipulating currency exchange markets. Other nations, however, are not so open. (Please see story on that point in this issue.)

      England said it is clear that many people are unhappy with U.S. military-technology export regulations. Many ministers and deputies from abroad who visit him complain about difficulties in getting the U.S. government to release goods and technology for shipment to those nations, England said. "This topic is also invariably at the forefront of discussions with industry, trade associations and with the Congress."

      These individual complaints about specific applications for export licenses overlay a larger and more basic issue, he said: whether the United States is well served by its existing arms export control law. The answer, he indicated, is likely in the negative.

      "The Arms Export and Control Act of 1976 is still grounded in the Cold War era," England said. "The nation should consider if the underpinning policy of this Act is still fully applicable in today’s, and tomorrow’s, projected global environment. I think not."

      England argued that it is time to change U.S. export rules and laws, because the world has changed, with globalization sweeping the planet, including in the defense industry.

      According to England, "The question that, in my judgment, needs to be asked is: How effective is each of these processes individually and, in total, and especially as the nation and U.S. industry operates and competes in what is predominantly a globalized commercial world? … a world not envisioned when these processes were first deemed as needed and implemented" back in the Cold War days.

      For example, he said, many important technologies have been developed in the commercial sector, such as satellite mapping, GPS navigation for cars and much more.

      "In many and ever more cases, commercial technology is as important or nearly as important, as military technology," he said.

      It may well be that attempting to control exports by U.S. defense industry firms, while technological innovation proceeds apace in a global civilian economy, may be headed for inevitable failure, he warned. "I tend to think that many of the controls we exercise in Washington are tantamount to damming the Potomac while other rivers flow freely," England said.

      He noted that U.S. contractors can be left out of opportunities, so that their rivals overseas snap up contracts. For example, he said, foreign firms are making satellites and weapons systems that are assembled from non-U.S. components, so that they are free of U.S. technology export restrictions.
      Importing Workers

      Beyond the issue of controlling U.S. military exports, England also turned his attention to limits on imports — of people. He referred to permitting foreign nationals to enter the United States to fill high-tech job slots under an H-1B visa program.

      "Our policy should consider more than just goods and services," England said. "For example, in other venues, the [United States] limits the number of essential and critical H- 1B visas and, therefore, restricts valued engineers and scientists … many educated in our own universities … from contributing to our nation’s needed competitive advantage," he said. U.S. high-tech firms would like to hire more of these foreign nationals, he indicated.

      Many U.S. military and space leaders have noted that the Department of Defense, NASA and their contractors face impending retirements of an enormous number of highly educated, highly experienced people holding security clearances who will be extremely difficult to replace.

      "These personnel are needed by many high-technology companies in our country. By limiting them, we also limit the innovation of U.S.-based companies — and this is ultimately a national security issue," he said.

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