2 Overview U.S. Department of Commerces Definition of an Export: Any item sent from the U.S. to a foreign destination, to include items like clothing, commodities, software, technology, etc. Export have many modes of transportation Source: http://www.bis.doc.gov/licensing/exportingbasics.htm
3 Overview Export Administration Regulations (EAR) Export Control Classification Number (ECCN) Where are you exporting to? What will the export be used for? Source: http://www.bis.doc.gov/licensing/exportingbasics.htm
6 U.S. Laws Export Administration Act of 1979 Section 1377 of the Telecommunications Trade Act of 1988 (omnibus Act) International Emergency Economic Powers Act (IEEPA) Intellectual Property Rights Special 301 Section 337 of Tariff Act of 1930 Source: Hoekman, Bernard. The Political Economy of the World Trading System: From GATT to WTO. New York: Oxford University Pres, 1995.
Commercial Encryption Export Controls There are stringent U.S. Export Controls in place for software encryption. U.S. encryption export policy is based on three guidelines Review of the encryption products prior to sale. streamlined post-export reporting License review of certain exports and re-exports of strong encryption to foreign governments. Source: http://www.bis.doc.gov/encryption/ 7
Introduction of the EAA The Export Administrative Act (EAA) is the statutory authority for the Export Administration Regulations (EAR), which are administered by the Bureau of Industry and Security (BIS) located in the Department of Commerce. The Act provides for classification and licensing of dual-use exports by the Commerce departments BXA. The EAA regulations establish the framework for exports of sensitive dual- use goods and technologies: items that have both civilian and military applications, including those items that can contribute to the proliferation of nuclear, biological, and chemical weaponry. Exports are restricted by item, country, and recipient entity. Congressional Research Service Report for Congress – Septermber 28, 2007 8
History of the Statute The beginning of the Cold War led to a major refocusing of export control policy on the Soviet–Bloc countries. Enactment of the Export Control Act of 1949 was a formal recognition of the new security threat and of the need for an extensive export control system. The Export Control Act was renewed without amendment in 1951, 1953, 1956, 1958, 1960, 1962, and 1965. Policy of détente in late 1960s led Congress to pass the Export Administration Act in 1969 (focused on liberalization of export controls) to replace Export Control Act of 1949. Still less restrictive export controls continued in the renewal of the act in 1974 and 1977. The act was rewritten in 1979, and this act creates the basis of the export control system today. The act of 1979 was amended in 1985 with further importance of liberalization. CRS Report for Congress – September 28, 2007 9
Evolution of the EAA Evolution of the EAA Congress had not been able to find an agreement on measures to reform the EAA. The EAA, which originally expired in september 1990, periodically has been reauthorized for short periods of time, with the incremental extension. Legislation to rewrite the Export Administration Act was introduced in the 104 th (1996) and 106 th (1999) Congress. Export control legislation was again introduced on 107 th (2001), 109 th (2005) Congress with miner changes. On August 3, 2007, Senator Dodd introduced the Export Enforcement Act of 2007. The bill would reauthorize the EAA for five years and amend the penalty and enforcement. The EAA: Controversy and Prospects at http://www.ncseonline.org/nle/crsreports/econ-74.cfm 10
Parties involved During debates on export administration legislation, there are two major groups: 1) Liberalize controls to promote U.S. export - some members of Congress and most U.S. business representatives see a need to liberalize U.S. export regulations to allow American companies to more engage in international competition for sales of high-technology goods. 2) Against liberalization to protect national security goals - other members of Congress and national security analysts and advisors argue that liberalization of export controls over the last 10 years has contributed to foreign threats to U.S. national security. Therefore, some controls should be tightened and further liberalization should be rethink carefully. 11
Key provisions of the EAA National Security Controls Foreign Policy Controls Licensing and Dispute Resolution Process International Arrangement, Penalties, and Enforcement http://banking.senate.gov/docs/eaa/mprov01.htm 12
Major Problems Enforcing the varied types of export modes. Email Word of Mouth Etc. Too many Agencies and Departments in the enforcement of the law (I.e. State, Commerce, Energy, and Defense). 13
14 High Performance Computers (HPCs) United States export controls on computer technology originated in the Cold War era to prevent the Soviet Union and its allies from reaching military parity with the U.S. and its allies.
15 Three primary aspects to computer export control debate 1. Performance-Based Controls - 1998 National Defense Authorization Act (NDAA). 2. End-Use Controls – Enhanced Proliferation Control Initiative (EPCI). 3. Knowledge Controls - "deemed export" CRS Report for Congress, The EAA, 2007
16 HPCs Advanced computers that can perform multiple, complex digital operations within seconds. (aka: supercomputers). Until recently the benchmark for gauging HPCs was: Composite Theoretical Performance (CTP) measured in: MTOPS – millions of theoretical operations per second. 190,000 MTOPS (2002).
17 "Moore's Law" - power of microprocessors (chips) doubles every 18 months. Many mass-market computer products will soon hit the MTOPS ceiling and be subject to unnecessarily restrictive controls. Cost of computing drops nearly 25% per year. An increasing number of foreign competitors have emerged - located in countries that do not belong to or do not strictly enforce multilateral or unilateral export control regimes. Clustering" and "parallel processing" - connecting many lower-level machines together to perform tasks at high speeds. http://www.fas.org/sgp/crs/RL31175.pdf
18 Adjusted Peak Performance (APP) Adopted by BIS (Bureau of Industry and Security) in 2006. (Wassenaar Standard). APP adjusted peak rate at which digital computers perform 64-bit or larger floating point additions & multiplications. Measured by weighted teraflops (WT). Control level: 0.75WT (HPCs), 0.04WT (software), 0.1WT (development). CRS Report for Congress, The EAA, 2007
19 6/13/2014 TOP 500 LIST DATA Moores Law is not a linear relationship. PDR CTP APP http://www.casc.org/meetings/sep06/young1.ppt#282,15,Slide 15
20 Commerce Department Tiers Tier 1 & 2 No license (NATO allies and a few other no/low risk countries). Tier 3 Cautious approach (Russia, China, Israel, India, and Pakistan). Tier 4 Virtual embargo (Cuba, Iran, North Korea etc…) 883 PLI/Comm 49
21 License Exceptions TSR and APP Levels for Computers, Technology and Software License Exception DestinationECCNFormer CTP level in MTOPS Current APP level in WT TSR §740.6 Country Group B,4D001 & 4E00175,000 to 190,000 0.04 to 0.1 APP §740.7 Computer Tier 14A003, except 4A003.e Unlimited Subgroup of Computer Tier 1: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey or the UK 4D001 & 4E001 (except for 4A003.e) Unlimited Deemed exports to foreign nationals of Computer Tier 1 (other than the subgroup of Computer Tier 1) Development and production software (4D001) and technology (4E001) 75,000 to 190,000 0.04 to 0.1 Deemed exports to foreign nationals of Computer Tier 1 (other than the subgroup of Computer Tier 1) Use technology (4E001) and source code (4D001) 75,000 to 190,000 0.04 to 0.75 Computer Tier 34A003NONE Deemed exports to foreign nationals of Computer Tier 3 countries. Development and production software (4D001) & technology (4E001) 75,000 to 190,000 0.04 to 0.1 Deemed exports to foreign nationals of Computer Tier 3 countries. Use technology (4E001) and source code (4D001) 75,000 to 190,000 0.04 to 0.75 http://www.bis.doc.gov/hpcs/tsr.html#ftnt1
22 Policy Proposal 1. Performance Controls on Computers Are No Longer Effective: Reduce such performance-based controls; review and strengthen protections against the export or diversion of specially designed military software and databases.
23 Policy Proposal 2. Proliferation End-User Restrictions Need Improvement: Seek greater multilateral cooperation on export restrictions to WMD proliferators and rogue states.
24 Policy Proposal 3. Reform employee access controls: Provide U.S. IT companies with a free hand to complete internal projects using all their labor force.
Policy Proposal 4. Designate one Department/agency to enforce U.S. Export Control Regulations. 25
Thank you for your attention! Questions? For further information on U.S. Export regulations and controls please refer to the Department of Commerce, Bureau of Industry and Securitys webpage: http://www.bis.doc.gov/index.htm 26