Obama to loosen export controls: Will it help economy or hurt security?

President Obama will announce Tuesday a plan to revamp the export controls on sensitive military equipment. The move could boost US trade, but it will have to be done carefully, experts say.

By , Staff writer

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    President Barack Obama, right, with Boeing President, Chairman and CEO Jim McNerney, Jr., center, and Commerce Secretary Gary Locke, left, spoke about exports, jobs, and the economy on July 7, at the White House in Washington. Obama is scheduled to talk about export controls Tuesday.
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The Obama administration says less will be more when it comes to limits on US exports that have potential military uses.

Simplifying the nation's system of export control, the administration argues, will help to boost US exports while still safeguarding the most militarily sensitive home-grown technologies. President Obama will help announce a plan to achieve this objective on Tuesday.

One example of flaws in the current system, according to the White House: The brake pads for an M1 Abrams tank require an export license, while nearly identical brake pads made for fire trucks can be exported to almost all countries without a license.

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The need for an overhaul of export controls was a matter of wide agreement before Mr. Obama arrived in office, but the move now meshes with the needs of a struggling economy.

Obama has set a goal of doubling US exports within five years as a way of creating much-needed jobs. Since many American exports involve high-level software or other advanced technologies, streamlining export controls promises to increase exports, trade experts say.

"This is a long-overdue attempt to apply good-government principles to extremely important and complex [issues]," says Charles McMillion, an economist at MBG Information Services in Washington. "The current situation is clearly a bureaucratic mess. Often various branches of the government don't know what's being allowed and what's being prohibited."

Simplifying a complex situation

The current system includes two different export-control lists, administered by different departments and "with fundamentally different approaches to defining controlled products," the White House said in a news release Monday. In addition, there are now three different primary licensing agencies, multiple agencies responsible for enforcing the control policies, and multiple computer systems used for tracking the policies.

In the proposed new system, goods facing export controls would reside on a single government list. A three-tier system will distinguish the most sensitive items and technologies from less important ones. A single licensing policy to be applied across all agencies, a single computer system will be used, and a center will help coordinate enforcement.

The result, the White House says, will be fewer items facing export controls. In the category of munitions, with 12,000 items now subject to licensing, the administration's preliminary estimate is that about 32 percent of the items may be decontrolled altogether, and it's possible that none will end up in the highest tier of control.

Technology experts say the Obama plan is rooted in the notion that military security is to some degree synonymous with economic strength, especially in an era of rapid technological change.

"It recognizes that a critical component of our national security is our economic competitiveness," says Stephen Ezell, a senior analyst at the Information Technology and Innovation Foundation in Washington.

A careful balance

More American exports, in general, should help US firms be competitive enough to continue to develop world-leading technologies. The new policy will still limit some exports "while easing up the controls on products that aren't as sensitive," Mr. Ezell says.

Implementing the new system, however, doesn't resolve exactly where to draw the line on that divisive question – deciding what technologies are militarily sensitive.

If the new policy is poorly implemented, Mr. McMillion says one risk is that "more advanced technology can be quickly reverse engineered in China or anywhere else and used in the production of other products," including military systems.

"It's a moving target," he adds, because of rapid product cycles. "Something that should be prohibited from export today might be ... perfectly appropriate for export this time next year."

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