- The Washington Times - Sunday, June 4, 2000

Last month's agreement by the State and Defense Departments on improving the administration of U.S.

export control laws is a welcome step toward streamlining a convoluted, burdensome process.

It will relieve bottlenecks faced by both government and industry, saving time and costs for both, and it will eliminate much of the current maze of paperwork that currently stands between policy-makers and their objectives. But it will not convert export controls from the Cold War framework to the world of the 21st century. The agreement is a step, a first step, in a process of reform that requires a whole new approach to the control of technology.

I do not mean to minimize the importance of what is about to happen. When an understaffed State Department office has to process more than 40,000 export license applications for defense articles and services per year, and when licenses for referral to the Defense Department and other agencies in the past routinely required more than 100 days, streamlining promises important gains. As a single example, the agreement's provision to combine all elements of a major sale in a single license has the potential of reducing State's workload many times over. The sale of F/A-18 strike fighter aircraft to Finland required 48 separate export licenses.

Until the new State-Pentagon agreement, the most important single development in recent years worsened problems rather than relieving them. In March 1999, Congress shifted jurisdiction for exporting space satellites, related components and services from the Commerce Department to the State Department, treating them as military rather than commercial transactions. The result was slower processing of export applications as State's workload grew. The shifting was prompted by concerns about technology transfers to China, which accounted for a handful of licenses over a decade, but space business with other countries, also transferred to State, amounted to about 2,000 license per year. We punished ourselves and our allies with little effect on China.

Results were predictable. U.S. companies lost business to foreign competitors better able to meet customers' schedule needs. For example, Asia-Pacific Mobile Telecommunications Pty. Ltd. Of Singapore terminated a $450 million contract with an American company to build a satellite-based mobile telephone system to serve Southeast Asia. The contract went instead to a European rival. The bottom line is that China received even freer access to western technology and the U.S. lost jobs, market share and much of its ability to understand how the technology was being used.

America lost in other ways as well. The director of CNES, the French equivalent of NASA, told U.S. government and industry officials that France had no choice but to try to avoid using American launch vehicle parts due to lack of assurance they could be obtained when needed. Satellite launches by the European Space Agency's Ariane launch vehicles were being delayed for lack of U.S. parts.

But just as we must be aware of how important the newly agreed improvements are, we must realize, too, that even if they are implemented as well as everyone wants, we will have done no more than streamline a system devised for an age that no longer exists. When the State Department was given responsibility for military exports and the Commerce Department for commercial exports, the realities of the Cold War dictated restrictions that seemed reasonable. No one wanted the Soviet Union or its allies to benefit from technology developed for U.S. weapon systems, and no one contested the export control measures drawn up to accomplish this.

This situation grew more complex as the Cold War approached its end, and it clouded over entirely in the 1990s as international competition shifted from military to economic terms and took place among friends and associates rather than enemies. Technology, particularly computer and information technology, came to have dual uses, fueling commercial as well as military capabilities. Increasingly, technology was developed in the private sector and adapted for military purposes rather than vice versa. The transfer of technology from one party to another, accomplished on paper at the height of the Cold War, now takes place in real time on the Internet itself a onetime military capability that has become an engine of the commercial economy.

In the short term, government and industry must find ways to make the current system work better. State needs more people. It needs to be more efficient and make better use of technology. It needs to eliminate the requirement for reviewing the military aspects of licenses that do not affect U.S. security. The State-Pentagon agreement should help.

In the longer run, the next president and the new Congress should step back and look skeptically at the system itself. What controls over exports do we really need? Why? What articles and services? To whom? The conditions that led to the current system no longer exist, and the conditions that the system must serve today were not even dreamed of a generation ago.

Finally, it is important to note that the force behind the current reform is the Pentagon. The defense Department and its leadership deserve credit for leading the call to scrap an outdated process that actually hurt rather than helped American security.



John W. Douglass is president and chief executive officer of the Aerospace Industries Association.

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