Posted at 1:30 PM
Thank you, Eric (Hirschhorn). Good afternoon. It’s great to be with so many leaders in the export control community. I want to thank everyone at our Bureau of Industry and Security for organizing this conference. I know that this is Bernie Kritzer’s last conference as our lead organizer. He’s retiring this year. Let’s give him a hand.
Also, I know that BIS has many federal partners here today. Thank you all for working with us so closely. And there are many other experts here from the private sector and the international community. It’s great to be with all of you.
I’ll admit that I feel lucky to be stepping into the role of Secretary at such an exciting moment for export control reform. When I was coming on board, I had a meeting scheduled with Eric. Even though I had worked as an entrepreneur and business leader for 27 years, I didn’t have a full appreciation of export controls.
Eric came to that meeting with these two switches. They’re almost identical, as you can tell. The one with the shorter button was designed many years ago for a 737 commercial plane. But pilots on military cargo aircraft–the A400M–needed a slightly bigger button because the military planes were colder. The pilots wear gloves. We can export the first switch almost anywhere without a license. But until recently the second switch could have landed you in jail if you tried to export it without a special license from the State Department. I immediately understood the value of a strong and sensible export control system.
As you know, the rules are now changing for the better. We are on the cusp of accomplishing what has been tried over and over again for decades–a thorough review of everything on the export control lists–tens of thousands of items.
I’m a runner, so the analogy here is that we can see the finish line for the centerpiece of the President’s Export Control Reform initiative. And now we’re sprinting to reach it. So let me say this up front: I am fully aware that the number one reason we’ve reached this moment is because of you. Give yourselves a hand.
Export control reform will support both our national security and the economic growth we are seeing in the U.S. Clearly, our overall economy has come a long way these past few years. In 2009, we lost an average of about 400,000 jobs a month. The president took tough steps to stop the bleeding.
I saw this first-hand and close-up. At that time I was working with other business leaders on his Economic Recovery Advisory Board. Because of the administration’s actions–combined with the resilience and ingenuity of our businesses–we’re growing. In fact, over the past 40 months, our private sector has added 7.2 million jobs.
We still have a long way to go, but the direction is good. One of the reasons we are growing is because Made in America is stronger than ever. Last year, we set an all-time record for U.S. exports-$2.2 trillion. Exports made up 13.9 percent of GDP, tying the record we set in 2011. And just a few days ago, I announced that 29 of our top 50 metro areas hit record highs for exports last year.
Even though we continue to face headwinds due to other countries’ economic troubles, the data through May of this year shows that we’re slightly ahead of last year’s pace ($933.6 billion versus $916.5 billion). That’s good news. We want to build on the fact that exports now support nearly 10 million American jobs – over a million more than in 2009.
To help our exports keep growing, the administration has implemented new trade agreements. They are already bearing fruit. For example, the U.S.-Korea trade deal has boosted auto sales by nearly 50 percent. And U.S. exports to Colombia and Panama–our newest free trade partners–have already jumped about 20 percent compared to the previous year.
We’re not letting up. We’re pushing forward with the plan that the president outlined in his State of the Union address. We want to meet his goal of concluding the Trans-Pacific Partnership talks this year. And we just wrapped up the first round of talks with the EU for the Transatlantic Trade and Investment Partnership.
All of these trade promotion efforts are separate from export control reform, but it’s clear that export control reform will indeed strengthen both our national security and our economic competitiveness.
First and foremost, export control reform is a crucial piece of our national security agenda. We must continue to prevent key products and technologies from falling into the wrong hands. The core mission of our export control system is not being compromised in any way by these new reforms. In fact, these reforms are increasing our security by allowing greater interoperability with our allies.
But I was shocked to learn how much of our export control system was built on concerns, risks, and assumptions that date back to the Cold War. These excessive controls had been forcing us to spend time and energy in areas where we no longer should. It wasn’t smart government. In fact, some were saying that, without reforms, our export control system was actually becoming counterproductive to its national security objectives.
Since the Cold War, much has changed in our bilateral relationships, in the scope and nature of military threats, in technology, and more. Through these reforms, we’re finally adapting to these new realities.
Our approach to protecting U.S. national security rests on two fundamental principles that are reflected in the new reforms. First, rules should be predictable and transparent. As an entrepreneur and business leader for 27 years, I could not agree more with that principle. Second, the licensing process should be streamlined while still maintaining effective compliance safeguards. In other words, let’s make it easier on everyone when U.S. businesses want to export less-sensitive items, particularly to our friends and allies.
Let me be clear. The changes we proposed for less-significant military items do not mean that these items will be “de-controlled.” In fact, all of us in the federal government will continue to aggressively investigate and prosecute illegal exports. But, under these new reforms that we’re rolling out, we can now be smarter about where to focus our resources.
To get the ball rolling, in April, the departments of Commerce and State published amendments to key regulations. These rules implemented the initial reform changes that allow us to transfer certain export controls to the Commerce Department.
To start, they gave my Department control of parts and components for military aircraft and military gas turbine engines that no longer need to be on the State Department’s Munitions List. How many of you were happy about that? That means those two nearly-identical switches I showed you aren’t treated so disparately. It also means that we no longer control the exports of a bolt for a fighter jet in the same way that we’d control selling the entire jet to one of our allies.
Then, on July 8th, we published new rules that streamline the licensing of ships, ground vehicles, materials and equipment to our allies’ defense programs. Any folks here happy about this change? These first two sets of rules were a huge lift, and I want to thank all of you who submitted comments. Importantly, each of these final rules contains grace time, 180 days, for companies to modify their internal compliance systems.
Of course, we’re not stopping there. I’m pleased to say that the departments of State and Commerce, working with Defense and other federal partners, plan to publish proposed or final rules this year for all of the remaining categories, including electronics, satellites, and training equipment.
When all these revisions go into effect, we will have a clearer line between the State and Commerce lists so that exporters know who has jurisdiction over their products. Of course, I should note that we will still maintain our comprehensive sanctions against countries like Iran and North Korea.
We are achieving our goal of focusing on technologies that pose the greatest risk, while permitting more exports of items that pose less or no risk. That seems rational. Our businesses, our citizens, and this community deserve this logical and effective approach to export control.
In closing, I know that we just met, but I hope you don’t mind that I already have an important “ask” of all of you. I need your help. You see, this year is all about education. As all of these reforms roll out, we will need your help to spread the word. Even in a time of tight budgets, BIS is doing a great job with webinars, conference calls, and more. But we can’t do it all.
The fact is, each of you here in this room have your own vast network of peers, suppliers, customers, and officials, both here and around the world. Please think about the most valuable communications tools that you use and find ways to use those tools to spread awareness. My team stands ready to help you do that.
I know that we can achieve our vision. We can enhance our national security, strengthen our relationships with our allies, reduce unnecessary regulatory burdens, expenses and red tape for businesses, and, importantly, reduce the incentives for foreign companies to avoid U.S.-made parts.
We want the world to know that simply buying and installing a slightly different switch from an American company isn’t going to turn a commercial plane into a controlled item.
As more people learn about these reforms, I’m confident that life will be a little easier for all of us who work in this space. We are creating a 21st-century export control system that supports both our military and our economy.
My commitment to you is that my team won’t let up until the job is done–and done right. And, ultimately, we will indeed “fulfill the promise,” as the theme of this year’s conference states. Again, thank you in advance for your help as we get the word out.
Let’s continue to work arm-in-arm. Let’s keep America both safe and strong. And let’s cross the finish line together. Thank you.