Changes to U.S. Export Controls are Good News for the Electronics Industry

Today, the White House announced plans to reform the U.S. export control system by updating and modifying export control lists, licensing policies, and export enforcement. U.S. export controls include the laws and regulations managing the sale or transfer of sensitive goods and technology, services, and expertise to non-U.S. citizens. The changes in export controls are intended to create narrower and more consistent export rules that will enable U.S. companies to increase their exports while better protecting national security. Changes in U.S. export controls should make electronics companies more globally competitive.

The current outmoded U.S. export control system impedes U.S. competitiveness. The export control system operates under two different control lists, the U.S. Munitions List (UMSL) and the Commerce Control List (CCL), which controls items such as software, technology, printed boards, blue prints, design plans, retail software packages and technical information. The bureaucracy also maintains three different primary agencies each applying their own export licensing policies. A U.S. company wishing to export must navigate a cumbersome and lengthy export licensing process, ultimately slowing down its ability to keep up with global competitors that are not subject to U.S. export controls.

The changes in export controls will update and modify export control lists, licensing policies, and export enforcement. The government will apply new criteria for determining what items need to be controlled. According to the administration, the new criteria will split the existing export control lists into three tiers. Items in the highest tier provide a critical military or intelligence advantage and are available almost exclusively from the U.S. Items in the middle tier provide a substantial military advantage and are available from “multilateral partners,” while items in the lowest tier are available more broadly.

New export licensing policies will be stricter for items that have direct warfare applications and looser for less-military sensitive products. “A [export] license will generally be required for items in the highest tier to all destinations. Many of the items in the second tier will be authorized for export to multilateral partners and Allies under license exemptions or general authorizations.” (Whitehouse.gov)

The President also announced an executive order establishing an Export Enforcement Coordination Center that will coordinate, strengthen, and eliminate gaps and duplication across the government. Federal agencies will focus and strengthen their enforcement efforts around the most sensitive items.

Electronics companies will be affected by these changes. The government’s preliminary estimate is that about 32 percent of the total items currently controlled by U.S. export controls may be decontrolled altogether. Electronics companies should pay close attention to changes, particularly in regulations controlling the export of dual use items, i.e. items that can be used for both commercial and military purposes.

For more details about the effect of U.S. export controls on electronics companies please visit http://www.ipc.org/export-controls or contact Ron Chamrin, IPC manager of government relations, at ronchamrin@ipc.org or +1 703-522-3964.

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  1. […] export reforms may particularly help many U.S. electronics manufacturers. An August 2010 article1 on IPC’s website offers a brief overview of relevant electronics industries export changes. […]

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