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Strategic Objective 1.2

Advance responsible economic growth and trade while protecting American security

STRATEGIC OBJECTIVE 1.2 TOTAL RESOURCES
(Dollars in Millions)
  FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
Fiscal Dollars $114.0 $119.9 $130.9 $160.4 $162.5 $163.4 $187.7 $187.1
FTE – Full-Time Equivalent 749 773 733 929 795 984 992 942

STRATEGIC OBJECTIVE 1.2 PERFORMANCE RESULTS
Rating Number of Reported Results
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
Exceeded Target 1 2 0 4 6 4 5 4
Met Target 1 1 2 6 5 6 7 7
Slightly Below Target 0 0 0 0 0 0 0 0
Did Not Meet Target 3 2 2 1 2 1 0 1
See Appendix A: Performance and Resource Tables for individual reported results.

This objective is important to the nation as it focuses on ensuring fair competition in international trade, advancing U.S. national security and economic interests by enhancing the efficiency of the export control system, preventing illegal exports and identifies violators of export prohibitions and restrictions for prosecution, enhancing the export and transit control systems of nations that lack effective control arrangements, ensuring U.S. industry compliance with the Chemical Weapons Convention (CWC) Agreement, and undertaking a variety of functions to support the viability of the U.S. defense industrial base.

The Department continues to face the task of advancing U.S. foreign policy and security goals while addressing viable opportunities to expand the U.S. market base. The Department’s success in reconciling these imperatives stems from its ability to integrate efforts to support the President’s commercial and foreign policy goals to promote freedom and liberty through free and fair trade while pursuing expanding profitable markets for U.S. goods and services. For this reason, the Department is readily working to reconstruct Iraq and Afghanistan, and to bring free trade to Africa and the Middle East.

The Department supports this objective by administering the U.S. dual-use export control system. Dual-use items, subject to the Department’s regulatory jurisdiction, have predominantly civilian uses, but could also have conventional military, weapons of mass destruction (WMD), and terrorism-related applications. The Department effectively administers the dual-use export control system by (1) writing and promulgating regulations, (2) processing license applications, (3) enforcing adherence to U.S. law and regulations, (4) conducting outreach to exporters, (5) strengthening the export control systems of other countries, (6) assessing the viability of key sectors of the defense industrial base, and (7) assuring the timely availability of industrial resources to meet national defense and emergency preparedness requirements.

  1. The Department promulgates clear, concise, and timely regulations that set forth the license requirements for the export of dual-use items. Principal areas of focus include implementation of controls agreed to in the four multilateral export control regimes—the Australia Group (chemical and biological nonproliferation), the Missile Technology Control Regime, the Nuclear Suppliers Group, and the Wassenaar Arrangement (conventional arms and dual-use goods and technologies)—as well as furthering other U.S. foreign policy interests. For example, in FY 2006, the Department published an important regulation updating controls on high performance computers to bring them in line with technological and market developments. In the development of regulatory policy, the Department consults with industry through six Technical Advisory Committees (TAC). The TACs provide valuable input regarding industry perspectives on trends in technology as well as the practicality and likely impact of export controls. In addition, the Department often publishes significant rules in proposed form to give the exporting community an opportunity to comment before the regulations take effect. For example, in FY 2006 the Department published a proposed update to China policy in proposed form for exporter comment.
  2. The Department effectively and efficiently processes export license applications and related requests to enable U.S. companies to compete in the international market, while ensuring that U.S. national security is protected and U.S. foreign policy is advanced. In FY 2006, the Department continued to ensure the timely review of all licenses applications with an average processing time of 33 days. This slight increase over the average processing time of 31 days in FY 2005 is primarily due to a two percent increase in the average processing time for all referred applications and a 13 percent increase in the volume of applications reviewed. The Department processed 18,934 export license applications in FY 2006. This marked an increase of 13 percent over the 16,719 applications processed in FY 2005 and represented the highest number of applications processed since FY 1993, when the Department reviewed over 25,000 applications.
  3. The Department investigates and prosecutes violators of the laws and regulations governing dual-use exports, antiboycott policy, and the Fastener Act. Department Special Agents are sworn federal law enforcement officers with authority to make arrests, execute search and arrest warrants, serve subpoenas, and detain and seize goods about to be illegally exported. The Department works closely with attorneys in the Department of Justice (DOJ) and the Office of Chief Counsel for Industry and Security to prosecute criminal and administrative cases. In FY 2006, the Department took 872 actions that deterred an illegal action, resulted in a criminal prosecution, or led to an administrative charge; 79 percent of these actions were focused on the priority areas of WMD proliferation, terrorism, and transfers of advanced conventional weapons. The Department also conducts checks before licenses are issued to ascertain the bona fides of potential end-users, and after licensed commodities are shipped to ensure that the items are being used by the appropriate end-users in accordance with the license conditions. In FY 2006, the Department performed 942 such end-use checks.
  4. The Department advances trade while promoting national security with an industry outreach program to facilitate compliance with U.S. export controls. In FY 2006, the Department conducted 53 seminars, including a major seminar in October 2005 with over 700 participants, as well as five overseas programs. Seminars include one-day programs on the major elements of the U.S. dual-use export control system and intensive two-day programs that provide comprehensive presentation of exporter obligations under the Export Administration Regulations (EAR). Special topic seminars, such as exporter obligations, doing business with key trading partners, or key technologies, are also conducted. Over 120 outreach activities were conducted on the release of sensitive technologies (“deemed exports”) to foreign nationals in the United States.
  5. The Department provides technical support to countries developing strengthened export control systems, as required by UN Security Council Resolution 1540. In FY 2006, the Department addressed 40 targeted deficiencies in cooperating countries. The Department also worked with India on steps to strengthen its export control system.
  6. The Department performs detailed studies of strategic industries targeted at assessing the viability and competitiveness of the U.S. defense industrial base. In FY 2006, the Department completed one such study and launched two more.
  7. The Department also plays a role in defense preparedness and disaster response under the Defense Priorities and Allocations System (DPAS). DPAS assures the timely availability of industrial resources to meet national defense and emergency preparedness program requirements and provides an operating system to support rapid industrial response in a national emergency. In FY 2006, the Department used its DPAS authority to support U.S. forces in Iraq and Afghanistan, and in support of relief and reconstruction efforts in the wake of Hurricane Katrina.
SUMMARY OF STRATEGIC OBJECTIVE 1.2 PERFORMANCE GOALS
PERFORMANCE GOAL STATUS*
Identify and resolve unfair trade practices (ITA) Yellow, Signifcantly Met (75% to 99%)
Maintain and strengthen an adaptable and effective U.S. export control and treaty compliance system (BIS) Green, Met (100%)
Integrate non-U.S. actors to create a more effective global export control and treaty compliance system (BIS) Green, Met (100%)
Eliminate illicit export activity outside the global export control and treaty compliance system (BIS) Green, Met (100%)
Ensure continued U.S. technology leadership in industries that are essential to national security (BIS)** Black (Not Applicable)
* Green = MET (100%) Yellow = SIGNIFICANTLY MET (75% - 99%)  Red = NOT MET (<75%)  Black = NOT APPLICABLE  (back)
** This goal had one measure—Percent of industry assessments resulting in BIS determination, within three months of completion, on whether to revise export controls. No assessments were completed until late in the fourth quarter, so data or estimated data will not be available before January 1, 2007. Results will be reported in the FY 2007 PAR. (back)

Performance Goal: Identify and resolve unfair trade practices (ITA)
Help build a rules-based trading system in which international trade is both free and fair for U.S. firms and workers.

PERFORMANCE GOAL REPORTED RESULTS
Rating Results
Exceeded Target 2
On Target 2
Slightly Below Target 0
Below Target 1
See Appendix A: Performance and Resource Tables for individual reported results.

U.S. industries are entitled to the benefits of trade agreements negotiated by the United States. They are also entitled to the aggressive investigation of unfair trade practices that undercut those agreements. Two program units in ITA, Import Administration (IA) and Market Access and Compliance (MAC), are committed to ensuring that the U.S. firms receive those benefits and obtain prompt relief from unfair trade practices.

Dumping (i.e. when products of one country are introduced into the commerce of another country at less than the normal value of the products) and the provision of certain subsidies have been condemned by the international community as reflected in the General Agreement on Tariffs and Trade (GATT) and subsequently in the WTO Agreement. IA’s administration of the U.S. antidumping/countervailing duty (AD/CVD) laws1 and its subsidy enforcement activities provide U.S. companies with appropriate remedies to address unfairly traded imports consistent with U.S. law and international obligations. The Agency’s work at the WTO helps ensure that access to these needed remedies is not weakened or undermined. In addition, IA’s assistance to U.S. exporters subject to foreign AD/CVD proceedings helps ensure that these companies receive fair treatment in proceedings that adhere to that country’s obligations under the WTO. Further, the Steel Import Monitoring and Analysis (SIMA) system was designed to provide U.S. steel producers and users with important real-time market information in an area that has traditionally been subject to market disruptions and unfair trade in a manner consistent with U.S. WTO obligations regarding import licensing.

IA identifies and monitors import surges created by imports that are sold in the United States at less than fair market value, foreign governments’ subsidy practices, and other harmful import trends. It defends U.S. industry against injurious trade practices by administering the AD/CVD laws of the United States. IA expedites investigations when warranted by import surges and foreign subsidy practices, defends the use of unfair trade remedies before the WTO, and coordinates the Department’s role in the Administration’s steel strategy. IA’s Unfair Trade Practices Team confronts unfair foreign competition by monitoring economic data from U.S. global competitors and vigorously investigates evidence of unfair subsidization and production distortions. IA’s China Compliance office devotes more resources to China cases and issues unique to non-market economies, such as IPR violations affecting the U.S. textile industry.

Trade compliance with negotiated trade agreements and access to foreign markets are existing problems faced by U.S. businesses that choose to sell their products overseas. These problems require U.S. government support. The MAC program unit ensures market access for American businesses, advances the rule of law internationally, and creates a fair, open, and predictable trading environment. In addition, the MAC program conducts critical trade policy analysis and negotiation support for the Office of the U.S. Trade Representative (USTR) and represents the Department in trade-related dealings with other U.S. government agencies.

MAC uses a range of techniques to advocate on behalf of U.S. businesses and intervene with other governments to ensure foreign compliance with existing trade agreements and to eliminate trade barriers. Trade agreement compliance and foreign trade barriers have been a continuous problem for U.S. exporting firms, large and small. Many companies, especially small and medium sized firms, do not have the resources, knowledge, or leverage to influence foreign governments, their laws, and regulatory regimes. Based on customer need, MAC has a sizeable caseload each year from U.S. firms that have encountered a trade barrier.

Government to government interaction is often required to influence and shape trade policies developed by foreign governments so the policies don’t become impediments to U.S. access of their market. The MAC program addresses the specific existing problem of helping U.S. firms become more aware of their rights and benefits under all trade agreements (bilateral, regional, or multilateral) signed by the United States, and to ensure that they encounter a level playing field when they enter a foreign market. MAC monitors or oversees the monitoring of over 250 trade agreements.

ITA faces new demands as the international trade environment changes from year to year: new barriers are erected, the role of international organizations and alliances is strengthened, and other foreign regulatory measures are implemented that have a negative impact on U.S. exports. Market access cases frequently arise from these foreign regulatory measures. Complaints are received by ITA from U.S. companies experiencing overseas barriers to U.S. exports that are not covered by trade agreements. Compliance cases arise from complaints received by ITA from U.S. companies regarding failures by foreign governments to implement trade agreements negotiated by the United States and through monitoring efforts by ITA compliance officers.

ITA takes the lead in the Department to ensure fair competition by obtaining greater market access and measures performance through concluded compliance cases. The number of MAC cases concluded is based on the number of cases processed by ITA where no further action by ITA is warranted, such as when: a case is successfully resolved; the complaint was groundless (i.e., no violation); industry decides not to pursue the complaint; the case is referred to USTR for consideration for formal dispute settlement resolution; or where the problem cannot be resolved despite ITA efforts.

Leveling the Playing Field by Removing Barriers that Hinder American Exporters

Free and fair trade is a two-way street that requires all parties to play by the rules. When the access of U.S. farmers, ranchers, workers, and businesses to foreign markets is thwarted by the failure of other governments to live up to their international commitments, the Department has taken aggressive actions to remove barriers for U.S. exporters. The Administration regularly negotiates solutions to potential WTO cases and unfair trade practices that achieve timely and meaningful results for U.S. companies and workers and avoid drawn-out, costly litigation battles. The Administration’s tough, practical, problem-solving approach has helped level the playing field for U.S. manufacturers, innovators, and workers, as well as farmers and ranchers. Two key areas that have been the focus of much effort under this goal include:

Trade Relations with China — Over the last five years, China’s economy has continued to grow at roughly 10 percent per year, and its growth has been closely tied to the open trade and investment regimes of the major economies of the world. Exports account for 40 percent of China’s GDP. China has depended on the growth of its export sector to spur the modernization of its economy, and has demonstrated that trade can support improved standards of living and lift millions of people in China out of poverty. According to Chinese data, the U.S. market has accounted for 21 percent of China’s export growth since 2001. Together, the United States and China are responsible for almost half of the economic growth globally in the past four years. U.S. consumers now have access to a wider variety of less-costly goods from China, and this has helped spur U.S. economic growth while keeping inflation in check. Access to Chinese inputs has also helped make U.S. companies and workers more competitive in the global economy.

Since 2001, when China joined the WTO, U.S. exports to China have grown five times faster than have exports to the rest of the world, and China has gone from being the ninth largest to the fourth largest export market for U.S. farmers, ranchers, manufacturers, and service providers. In fact, U.S. exports to China increased by an impressive 21 percent in 2005, building on similar growth in prior years and making China the fastest growing export market among major U.S. trading partners. ITA considers it is likely that China will remain a challenge and a priority for years to come. ITA will work to ensure that this significant trading partner is both transparent and fair:

  • ITA is committed to extensive follow-up from the commitments made during the China Joint Commission on China Trade (JCCT) meetings in April 2006, through the establishment of working groups and analysis of recent Chinese JCCT commitments (e.g. Government Procurement Agreement).
  • ITA has stepped up its engagement with China through the JCCT Structural Issues Working Group and the newly established Steel Dialogue intended to address steel subsidy issues. Subsidy concerns cover a wide variety of programs, including industrial policies, the role of state-owned enterprises, and China’s continued use of price controls.
  • Transparency remains a major obstacle to identifying and measuring subsidies in China, a difficulty furthered by China’s continuing failure to provide its annual subsidy notification to the WTO.
  • ITA currently maintains 58 antidumping orders on imports from China, including consumer goods, steel products, agricultural products, seafood, and chemicals. These orders represent 22 percent of all current U.S. antidumping orders. The estimated value of trade affected in 2005 by these orders was more than $5.25 billion.

Market Access Challenges — ITA is committed to addressing the removal of existing trade barriers and compliance with negotiated trade agreements. ITA will continue through bilateral and multilateral efforts to strengthen policy dialogues in key markets such as China, India, North America, and the European Union (EU). ITA advances trade policy through its close and significant support for the USTR in FTA, bilateral (e.g. JCCT, India Commercial Dialogue) and Doha negotiations. ITA is a critical player in monitoring compliance with existing trade agreements, and in initiating and resolving MAC cases. ITA remains tenacious in its focus on key crosscutting issues, such as standards and IPR. IPR protection is an essential component of a sound commercial foundation. ITA is a partner in the U.S. Strategy Targeting Organized Piracy (STOP, available online at www.stopfakes.gov), and ITA combats violators of IPR around the world. ITA will identify perpetrators along the entire chain, including manufacturers and importers, and will exert pressure on countries where problems are found. ITA is committed to working with U.S. industry and coordinating with other U.S. agencies, including USPTO and the U.S. Food and Drug Administration (FDA), to investigate allegations of piracy and to help resolve market access and trade compliance cases. Standards and related technical regulations affect an estimated 80 percent of world trade. ITA recognizes the importance of how it addresses standards-related issues, since standards can both distort trade and undermine U.S. competitiveness.

Performance Goal: Maintain and strengthen an adaptable and effective U.S. export control and treaty compliance system (BIS)
The Department administers and enforces controls on exports of dual-use goods and technologies to counter proliferation of WMD, combat terrorism, and pursue other national security policy goals. The Department also serves as the lead agency for ensuring U.S. industry compliance with the Chemical Weapons Convention (CWC).

PERFORMANCE GOAL REPORTED RESULTS
Rating Results
Exceeded Target 2
On Target 4
Slightly Below Target 0
Below Target 0
See Appendix A: Performance and Resource Tables for individual reported results.

The Department processes export license applications for controlled commodities of U.S. companies engaged in inter-national trade in accordance with EAR. An integral part of BIS’s mission is to facilitate compliance with U.S. export controls by keeping U.S. firms informed of export control regulations through an extensive domestic and foreign outreach program.

In FY 2006, the Department successfully promulgated 26 regulations that adapted export controls to the evolving national security and economic situation. Noteworthy regulations published include multilateral export control regime changes from 2005/2006 Plenary meetings, an updated metric for controlling exports of high performance computers, revisions to the Libya regulations in light of its removal from the list of state sponsors of terrorism, and a draft revision to China licensing policy to restrict exports to Chinese military end-users while facilitating civilian trade with trusted end-users.

The Department processed 18,934 export license applications and related requests in FY 2006. This marked an increase of 13 percent over the 16,719 applications processed in FY 2005 and represented the highest number of applications processed since FY 1993, when the Department reviewed over 25,000 applications. Nevertheless, the Department continued to process these applications in a timely manner with an average processing time of 33 days, thereby benefiting exporting companies and industries, and in the U.S. economy, while protecting national security and foreign policy interests.

The Department is able to fully and effectively meet its responsibility for administering the dual-use export control system using current legal authorities. However, there would be benefits in securing comprehensive dual-use export control legislation. Thus, the Administration continues to work with Congress to pass a revised, reauthorized Export Administration Act (EAA) that will increase penalties, clarify outdated control requirements, further specify interagency licensing processes, and codify procedural rights of exporters.

The Department also develops and implements export control policies toward key countries such as China and India. In FY 2006, the Department published a proposed China policy update and established a High Technology and Strategic Trade Working Group. The Department also supported President Bush’s Nuclear Initiative with India, including the strengthening of India’s export control system.

The following are reviews conducted by the Government Accountability Office (GAO) and the IG related to this goal:

  • In March 2006, the IG released a report on dual-use export controls to the People’s Republic of China (China). The review found that coordination between the various federal export licensing agencies was adequate during the dispute resolution process for export license applications involving China. In addition the IG made a number of recommendations related to U.S.-China export control activities. BIS has already completed action on four of the nine recommendations, and has plans in place to complete action on the remaining five.
  • In June 2006, GAO released its report on dual-use export controls in the post 9/11 environment. In light of the September 2001 terror attacks, GAO was asked to examine BIS’s dual-use export control system. In response, GAO reported on BIS’s (1) evaluations of and changes to the system, (2) screening of export license applications against its watchlist, and (3) actions to correct weaknesses previously identified by GAO. In this review GAO recommends that the Secretary of Commerce systematically evaluate the dual-use export control system, correct certain omissions in BIS’s watchlist and weaknesses in the screening process, and take action to address GAO’s prior unimplemented recommendations.

Performance Goal: Integrate non-U.S. actors to create a more effective global export control and treaty compliance system (BIS)
The effectiveness of U.S. export controls is enhanced by strong controls in other nations that export or transship sensitive goods and technologies. BIS works to improve the participation and compliance of existing members of the multilateral export control regimes and cooperates with other countries to help them establish effective export control programs.

PERFORMANCE GOAL REPORTED RESULTS
Rating Results
Exceeded Target 0
On Target 1
Slightly Below Target 0
Below Target 0
See Appendix A: Performance and Resource Tables for individual reported results.

The Department helps improve the effectiveness of the multilateral export control regimes (Australia Group for chemical and biological weapons items, Missile Control Regime, Nuclear Suppliers Group, and Wassenaar Arrangement for dual-use technologies and conventional weapons) by participating in U.S. efforts to update and adapt their control lists to the threats facing the United States.

The Department also assists in implementing its international activities by coordinating and managing BIS participation in the U.S. government’s Export Control and Related Border Security Assistance (EXBS) program, which provides technical assistance to strengthen the export and transit control systems of nations lacking effective export control systems. In FY 2006, the Department successfully remedied 40 deficiencies in the national export control systems of countries receiving technical assistance under the EXBS program.

Map of Bureau of Industry and Security FY 2006 Bilateral Technical ExchangesD

Bureau of Industry and Security FY 2006 Bilateral Technical Exchanges.

 

Photo showing U.S. Ambassador to Georgia, John Tefft, speaking at the Eighth Central Asia and the Caucasus and the Regional Forum on Export Controls, held in Tbilisi, Georgia.

U.S. Ambassador to Georgia, John Tefft, speaking at the Eighth Central Asia and the Caucasus and the Regional Forum on Export Controls, held in Tbilisi, Georgia.

Performance Goal: Eliminate illicit export activity outside the global export control and treaty compliance system (BIS)
The Department’s enforcement efforts focus on sensitive exports to hostile entities or those engaged in onward proliferation, prohibited foreign boycotts, and related public safety laws. In the area of dual-use exports, the Department gives top priority to investigations and enforcement actions involving the proliferation of WMDs, terrorism, and military diversion.

PERFORMANCE GOAL REPORTED RESULTS*
Rating Results
Exceeded Target 2
On Target 4
Slightly Below Target 0
Below Target 0
See Appendix A: Performance and Resource Tables for individual reported results.
* Measures are the same as the first BIS goal, so numbers are not included in overall total. (back)

The Department engages in activities to prevent violations before they occur and to investigate and prosecute violators to dismantle illicit proliferation networks and deter future violations. Preventive activities include screening license applications for enforcement concerns; conducting end-use checks abroad to confirm the bona fides of parties to export transactions, confirm compliance with license conditions, and uncover diversions to unauthorized end-users/uses; and reviewing Shippers Export Declarations and foreign visitors’ visa applications to identify potential export control issues. Outreach activities include educating U.S. businesses on export control requirements and identifying suspicious transactions leading to successful preventative and investigative actions. Investigation and prosecution activities involve Department Special Agents conducting cases focused on significant proliferation, terrorism and military end-use export violations, and the vigorous pursuit of criminal and administrative sanctions.

Photo showing Assistant Secretary for Export Enforcement Darryl W. Jackson (center) and Hong Kong Customs and Excise Department’s Head of Trade Controls Raymond Y.M. Wong (far right) touring the container port of Hong Kong with Hong Kong port security officials.
Assistant Secretary for Export Enforcement Darryl W. Jackson (center) and Hong Kong Customs and Excise Department’s Head of Trade Controls Raymond Y.M. Wong (far right) tour the container port of Hong Kong with Hong Kong port security officials.

In FY 2006, the Department exceeded its targets by completing 872 actions that resulted in a deterrence or prevention of a violation and cases which result in a criminal and/or administrative charge, as well as conducting 942 end-use checks. The Department also met its goal of ensuring that 79 percent of its investigation case load was targeted on the priority areas of WMDs, terrorism, and military diversion. These actions resulted in 34 convictions for criminal export violations and the imposition of $3 million in criminal fines and the assessment of $13 million in administrative penalties.

In addition to dual-use export controls, BIS enforces the antiboycott provisions of the EAR. Implemented to support countries friendly to the United States and eliminate impediments to the U.S. economy, the antiboycott regulations direct U.S. businesses not to participate in foreign boycotts that the United States does not sanction. In FY 2006, the Department supported nine cases resulting in imposed administrative sanctions of $78,950. As well as investigating criminal and administrative violations of the antiboycott regulations, the Department actively supports the State Departments efforts to dismantle Arab governments’ boycott of Israel. The Department provides guidance to the exporting community regarding the antiboycott regulations through public outreach and its telephone and e-mail advice line.

Performance Goal: Ensure continued U.S. technology leadership in industries that are essential to national security (BIS)

The Department works to ensure that the United States remains competitive in industry sectors and sub-sectors critical to national security. To this end, the it analyzes the impact of export controls and trade polices—including deemed export policy—on strategic U.S. industries, studies the impact of defense trade offsets, advocates for U.S. defense companies competing for international sales opportunities, and evaluates the security impact of certain proposed foreign investments in U.S. companies. The Department also administers the federal government’s DPAS, which assures the timely availability of industrial resources to meet national defense and emergency preparedness program requirements and provides an operating system to support rapid industrial response in a national emergency.

In FY 2006, the Department completed an important study of the U.S. imaging and sensors industry, while launching two other studies of strategic industries essential to U.S. security. In addition, the Department established the Secretary’s Deemed Export Advisory Committee to provide recommendations for policies that will continue to provide U.S. industry, academia, and research institutions with access to talented foreign researchers while ensuring that U.S. security requirements are met. The Department also issued its annual report on the impact of defense offsets on U.S. industry and actively participated in an interagency committee to develop and implement policies for mitigating the use of offsets by U.S. trading partners.

STRATEGIES AND FUTURE PLANS

The Department will expand its analytical infrastructure to support timely and accurate assessments of (1) the impact on U.S. industries of the growth of regional trade pacts, and (2) the impact of major competitors exporting their discriminatory technical regulations to third markets in the developing world; develop strategies to support bilateral and multilateral trade negotiations that prevent the adoption of discriminatory international standards and regulations against U.S. products; work closely with foreign governments and regulatory officials in developing strategies that address regulatory barriers, head off potentially harmful regulations, and help shape good regulations and standards; monitor economic data from U.S. global competitors and vigorously investigate evidence of unfair subsidization and production distortions; identify legal remedies available to counter unfair trade practices and ensure that they are eliminated, rather than leave these small and medium-sized manufacturers in the United States with costly trade litigation; and focus and sharpen expertise on China through the recently created China Compliance office in IA. This effort devotes more resources and dedicated experts to China for compliance issues.

The Department continues to refine U.S. export controls in light of geopolitical and global market realities to ensure that they meet U.S. national security requirements. The Department also seeks to enhance the effectiveness of the EAR by educating exporters and other stakeholders in the export licensing process, thereby improving industry compliance with export control regulations. These efforts will increase the efficiency of the license processing system and thus enable exporters to be more competitive in the global economy while deterring transactions that threaten U.S. security interests.

The Department will also continue its efforts to strengthen multilateral cooperation on export controls to help strengthen U.S. security by extending controls over sensitive items beyond U.S. borders, and to help ensure a level playing field for U.S. exporters and otherwise permit them access to foreign markets. The Department will continue to develop and implement policy initiatives to integrate other key countries, such as China and India, more tightly into the global dual-use export system, thereby increasing U.S. security and facilitating the export of sensitive U.S. items to these markets.

Strong enforcement of U.S. export regulations is critical to protect U.S. national security interests. The Department will continue to focus on preventing, investigating, and prosecuting the most significant export violations involving proliferation, terrorism, and military end-uses. Focused partnerships with U.S. businesses will be maintained regarding specific goods and technologies sought for hostile acquisition, and the deemed export compliance program will be finalized and implemented.

The Department will also continue to strengthen its ability to promote U.S. competitiveness by improving deemed export policy, studying the impact of export controls and other factors on strategic industries, and evaluating the effects on national security of imports of certain items and foreign investments in U.S. companies.

CHALLENGES FOR THE FUTURE

Implementing an export control system that advances U.S. national security, foreign policy, and economic objectives in a dynamic technology and geopolitical environment.

Strengthening the legal foundation of the dual-use export control system. The EAA lapsed on August 20, 2001. Executive Order 13222 of August 17, 2001 (3 C.F.R., 2001 Compo 783 (2002), which has been extended by successive Presidential Notices, the most recent being that of August 2, 2005 (FR 45273, Vol. 70, 150, of August 5, 2005) continues the regulations in effect under the International Emergency Economic Powers Act (IEEPA). While the Department effectively exercises its authority under IEEPA, the legal foundation for the dual-use export control system can be strengthened. The Administration has vigorously advocated a streamlined and strengthened export control system that effectively promotes both U.S. national security and U.S. economic interests. To address this challenge, the Department continues to work with congressional members and staff on export control reforms that enhance the Department’s ability to facilitate legitimate global trade while reducing illicit traffic in dual-use items and targeting export control resources on transactions of greatest risk.

Managing export controls to maximize security with minimum impact on U.S. competitiveness. Trade must rest on a firm foundation of security, yet controls on trade must not disadvantage U.S. exporters needlessly. To meet this challenge, the Department will use its new Office of Technology Evaluation and other resources to understand better the impact of technology, markets, and geopolitical developments on U.S. security and competitiveness.

 

1 Tariff Act of 1930: Sections 701 – 783 • Uruguay Round Agreements Act: Section 281 (Subsidies Enforcement Office) (back)

 


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