Please enable JavaScript to view the comments powered by Disqus.

Economic Forecasts

Looser Export Controls Likely by Year’s End

The days are numbered for Cold War limits on exports of dual use technology.

Export control reform, a longtime goal of U.S. industry, is within reach. An Obama administration review will produce recommendations by year-end, to be followed quickly with an executive order making some changes affecting dual use technologies. Rep. Howard Berman (D-CA), chairman of the House Foreign Affairs Committee, will follow this early next year with legislation to back up the changes. The aim will be to lift trade restrictions where such measures no longer protect national security -- or may even be harming it -- while retaining those on genuinely sensitive technologies.

"This is a once in a lifetime opportunity to fix an extremely flawed and broken area," says Del Renigar, corporate counsel on international policy and trade regulation for General Electric.

Standing to benefit most from greater access to foreign markets: information technology, aerospace, electronics, communications and chemicals.

Businesses have long argued that the current system is obsolete. Cold War controls designed to keep sensitive technology out of Soviet hands are making it increasingly difficult for the U.S. to take advantage of cutting-edge research and development conducted overseas. In addition, many of the technologies still under export restriction are freely available outside the U.S. The delays and expense involved in licensing the sale of such equipment, even to longtime allies, drive some to foreign competitors. Suppliers that depend on business from both military and commercial sales are suffering as well. Many are finding themselves pushed to the wall in the current recession.

"This issue is vital not just to a few large defense and technology firms, but to all U.S. manufacturing," says Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.


Since 1994, when the last Export Administration Act expired, the existing rules have been repeatedly extended under emergency powers. There have been several efforts to enact new legislation, most recently spearheaded by Berman in the last Congress. Political opponents have always blocked such efforts by raising concerns that any loosening of existing controls would risk sensitive technology falling into the hands of America’s enemies.

What’s changed is that the government’s national security team is on board. With Defense Secretary Robert Gates and National Security Adviser James Jones leading the effort, it’ll be much harder for political opponents to stop legislation. Buttressing Gates and Jones are a number of recent independent studies arguing that the existing export control system is broken. The most prominent of these is a report published by the National Academy of Sciences in January, entitled Beyond “Fortress America”: National Security Controls on Science and Technology in a Globalized World. Former National Security Adviser Brent Scowcroft cochaired the committee that produced that report and testified on its findings before a House panel in February.

For weekly updates on topics to improve your business decisionmaking,
click here.