PAPER FOR MEETING ON EXPORT ADMINISTRATION ACT RENEWAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001800220004-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: August 14, 2007
• Sequence Number: 4
• Publication Date: August 24, 1982
• Content Type: MEMO

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EXECUTIVE SECRETARIAT
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ACTION
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Executive Secretary
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' UNITED STATES DEPARTMENT OF COMMERCE
The Under Secretary for International Trade
v/ Washington. D.C. 20230
'NT8s Q
AUG 24 1982
MEMORANDUM FOR: Dr. Norman Bailey
James L. Buckley.
Richard.DeLauer
Fred Ikle
Marc Leland
Dick McCormack
John McMahonV
Herman Roser
Dr. William-Schneider
FROM: Lionel H. Olmer
U
SUBJECT: Paper for Meeting-on Export Administration
Act Renewal
The attached paper lays out a proposed approach to the .
.Export Administration Act Renewal. This paper will serve.
as the basis for discussion at the.-Under Secretary's group
meeting oh Thursday, August 26.
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REVIEW OF THE EXPORT ADMINISTRATION ACT OF 1979
I. INTRODUCTION
The Export Administration Act (EAA) will be up for
review in 1983; Congressional hearings are expected as
early as the Spring of 1983. It is expected that the
1983 review will be lengthy and contentious due to the
sensitivity and visibility of the issues involved and
the interest for several large groups (industry, Black
Caucus, Jewish Service Organizations, etc.). In order
to prepare properly for the review, it is important to
develop an interagency position on the Act by March
1983.
In addition, the Administration's implementation of
export controls has recently come under fire from
different quarters for a variety of reasons. Foremost
among these is the argument that Commerce's trade
promotion role is in conflict with its export control
function. The business community has also argued that
the Boycott provisions in the EAA and the Ribicoff
Amendment are confusing and unnecessary. These and
other sensitive issues will require not only the
interagency process but also lengthy consultations with
affected parties.
The Hill has already taken the initiative in preparing
for the review.
Senator Jake Gam has recently introduced a bill
(S.2837) amending the EAA to create a new Office of
Strategic Trade (OST) which would take over Commerce's
licensing function. The OST, in conjunction with the
Department of Defense, would have almost exclusive
authority in making licensing decisions. The Bill also
recommends major substantive changes in areas such as
technical data, defining proscribed destinations, etc.
On the House side, Congresswoman Byron has also just
introduced the Strategic Trade Act (H.R. 6880) amending
the EAA to establish a new office, the National
Security Control Agency, wihin the Office of the Under
Secretary of Defense for Policy. H.R. 6880 transfers
to DOD licensing responsibility for all items under
national security control.
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II. OTHER PROBABLE AREAS OF CRITICISM
Foreign policy controls: These are likely to attract
conflicting criticism. On the one hand, some Members
of Congress are unhappy with what they perceive as a
liberalization of the anti-terrorism controls and the
controls on South Africa (Congressman Bingham is
sponsoring a bill that would reinstate foreign policy
controls as they existed prior to 1 March 1982.).
On the other hand, significant sectors of industry are
likely to criticize the controls on Libya and the USSR
oil and gas controls as overly restrictive, and are
mustering support from Congressmen whose constituencies
are being injured by the controls (The House Foreign
Affairs Committee has already passed a bill returning
the USSR controls to the level prior to December 1981.).
Economic Impact Analysis: Both Congress and industry
have criticized the Administration's "wanton disregard"
of the long-term economic impact of foreign policy
controls, and its lack of such in-depth analyses.
Militarily Critical Technologies List: The
Administration will most likely be criticized for its
tardiness in implementing the MCTL and for the broad
reach of items on the MCTL.
Excessive Time in Reaching Final Licensing Decisions:
Despite success in largely complying with statutory
review deadlines Commerce will probably still be
criticized for licensing delays, particularly where
interagency disagreements arise.
Technical Data Regulations: These regulations have
been the focus of a great deal of misunderstanding and
criticism by the academic/scientific community.
Distribution License: Questions may be raised as to
the degree to which the Distribution License
constitutes a "loophole in export controls.
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III. ISSUES TO BE REVIEWED
The following represents a list of issues that will
require review over the next several months. While it
is not an all-inclusive list, it does highlight the
complexity and scope of the issues. Also, some of them
are already being addressed in separate fora (Vice
President's Task Force on Regulatory Relief, Sub-ACEP,
etc.) but should be coordinated to ensure completion by
March 1983.
1. Licensing Procedures: U.S. businesses have
complained that the licensing process is lengthy
and complicated, imposing an undue regulatory
burden on them.
2. License Review Deadlines: U.S. businesses have
complained that the established deadlines (up to
180 days) are too long, and especially in those
cases which must be referred to COCOM for approval
(COCOM members can request as much time as they
wish to review a case).
3. Interagency Review Process: Industry has argued
that too many agencies review each case and
decisions are inconsistent.
4. Technical Data Regulations: Currently a very
controversial area. The academic/scientific
community perceive DOC efforts to enforce these
regulations as an "expansion" of controls over
open scientific exchanges and basic research. DOC
is currently working with other agencies, as well
as the academic/scientific community through the
National Science foundation and the Association of
American Universities, to clarify these regs.
Also, industry has argued that the technical data
regulations should be limited to MCTL items (this
area is currently under review by the Sub-ACEP).
5. Simplification of the Export Administration
Regulations: As mandated by the EAA, Commerce is
in the process of simplifying the regulations to
make them more readable and useful. This includes
a reformat of the CCL. The Vice President's Task
Force on Regulatory Relief is scheduled to review
the EAR as well as undertaking a review of the
more substantive policy and procedural issues of
the licensing process.
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6. MCTL Implementation: DOC is reviewing the MCTL
with Defense, Energy and U.S. industry in order to
implement the essentials into the CCL. Also, the
Executive Branch has been criticized for taking
several years to develop the MCTL with no visible
changes to the CCL.
7. Unilateral Controls: U. S. businesses complain
that, because of foreign availability, unilateral
controls place them at a competitive disadvantage.
8. Foreign Availability Analysis: DOC has recently
taken steps to effectively perform this function:
acquiring a full-time foreign availability
analyst; working with the TACs to obtain foreign
availability information in industry's possession;
developing a form for applicants to fill out and
submit with application which will supply us with
the foreign availability information they regard
as relevant to their proposed export. Criticism
is expected from industry and the Hill noting that
Commerce has not progressed far enough and is not
taking foreign availability into account in case
processing.
9. Foreign Policy Controls: A thorough review is
necessary to fend off challenges as to the
efficacy of these controls in general, and to
determine the degree to which they achieve their
objectives in the face of foreign availability.
10. Economic Impact Analysis: Industry and the Hill
have argued that the Executive Branch disregards
the economic impact in imposing controls.
Although DOC is evaluating its estimation
technique, including utilization of economic data
provided by industry through the Sub-PEC, this
issue will be a dominant one in the EAA review.
11. Restriction of Imports (U.S. Sanctions): The EAA
of 1979 provides the Executive Branch with the
ability to restrict U.S. exports to foreign
violators and deny exporting provileges to U.S.
violators. For added flexibility in dealing with
violators, the power to restrict imports into the
U.S. by violating parties may be necessary to
enforce the EAA. This initiative may be opposed
vigorously by U.S. industry and foreign
governments.
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12. Short Supply Controls: With the elimination of
quantitative restrictions on the export of refined
petroleum products, the Moakley Amendment of the
EAA of 1979 simply results in a paperwork exercise
and delay in issuing licenses (a 30-day wait is
required while Congress reviews applications).
Industry has suggested eliminating the validated
license requirement while retaining the power to
reimpose controls if shortages occur.
13. Enforcement Issues: Consideration should be given
to amending the statute to provide specifically
for detention and seizures of suspected outbound
cargoes, search, seizure, arrest and firearms
authority for special agents of the Office of
Export Enforcement. The section 12(c),
confidentiality section, should be reviewed for
possible amendment in light of past difficulties
encountered in export enforcement situations.
Additional law enforcement tools should also be
examined including allowing court ordered
electronic surveillance in cases involving-
national security control investigations.
IV. METHODOLOGY
To provide general guidance in the review of the
above-mentioned issues, it is recommended that Commerce
chair an Interagency Oversight Group with members at
the Under Secretary level (membership composed of
representatives from all interested agencies plus two
from industry), and using the existing ACEP structure
to staff out each of the relevant issues. This
suggestion is based on the success of the preparatory
work done for the COCOM High Level Meeting overseen by
the Under Secretary's Group. Wherever posible, the
same procedures, and already-existing groups should be
utilized to avoid duplicative effort.
The Oversight Group will direct the interagency
working-level group (ACEP) at the AS level, which is
-already in place. The ACEP will be used to resolve
issues.
The ACEP Chairman will divide lead responsibility for
each issue among the agencies, who will then establish
lower-level Technical Working Groups to examine each
issue and provide recommendations to the ACED.
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Consultations
It is extremely important to consult with all
interested parties before the Administration formulates
its position. Accordingly, the Oversight Group, ACEP
members and other levels of government should lay out a
comprehensive consultative agenda that includes the
I SAC s , Sub-PEC, MAPAG, and TAC s . 'S ome
organizations--Sub-PEC, ISACs--are already working on
recommendations for the EAA and should be integrated
into the overall plan.
Public Hearings
In addition, public.hearings on the issues should also
be held in cities like Boston, New York, Chicago, San
Francisco, and Dallas. These areas contain the bulk of
the high technology companies that are affected by the
EAA. Results of these hearings will be submitted to
the ACEP for inclusion into the final recommendations.
V. PROPOSED SCHEDULE
1. The Under Secretary's Oversight Group will meet
every two months to review progress made to date,
and to provide necessary guidance.
2. The ACEP will meet every month to review progress,
and to resolve any differences which may arise.
3. The ACEP will divide issues and work assignments
by September 15, 1982.
4. The lower level groups designated by the ACEP will
submit an initial draft identifying problems,
including pertinent recommendations, by October
15, 1982.
5. The ACEP will integrate plans and issues by
October 30, 1982.
6. After submission of initial draft, consultations
with industry will start with industry on an
agreed-upon schedule (develop schedule by
September 15, 1982).
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7. Public hearings should start on October 15, 1982
with no more than one per month.
8. Drafts of proposals due from agencies by December
15, 1982 with integration and distribution to
agencies by January 5, 1983.
9. ACEP will complete integration of public comments
into the draft by February 15, 1983, and submit
final product to the U.S. Oversight Group.
10. Administration position due by March 31, 1983.
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