Thank you, Eric for your introduction and for your stellar leadership of the Bureau of Industry and Security. From my first day in this job, you have helped me come to appreciate the work of BIS, the importance of export controls, and the necessity of a strong partnership between our department and America’s exporters. I also want to thank the entire BIS team, as well as our partner agencies, for their work to advance the President’s Export Control Reform initiative and to operate our system of export control licensing, regulations, and enforcement. It is always great to spend time with our private sector leaders. I am sorry I had to miss last year’s conference, but I am thrilled to be back.
BIS is an agency with little visibility in the public eye, but with an enormous influence on the safety of our nation and a tremendous impact on our country’s competitiveness. Today, I want to address two areas where BIS has been an absolutely essential leader in advancing the priorities of the Department of Commerce and the vision of President Obama: Export control reform, and our evolving relationship with Cuba.
As you know, early in this Administration, the President and the Secretaries of Commerce, Defense, and State recognized the urgent need for a broad-based review and comprehensive reform of our export control system. Our objective has been to increase interoperability with our closest allies, reduce incentives for non-American companies to avoid U.S.-made content, services, and technologies, and ensure our government is focused on the transactions, end uses, and end users that matter the most.
Given the strategic importance of these controls, teams across the federal government have worked to implement smart reforms – with BIS playing a major role and with unprecedented collaboration with private sector leaders like you. Thus far, we have revised 15 out of 21 U.S. Munitions List Categories, so that if an item does not perform a critical military function, its control is moved from the State Department’s munitions list to the more flexible Commerce Control list. We have proposed updates in three additional categories, and our next set of revisions is expected to be final by early next year.
Our goal is to streamline the licensing process, rationalize our system, and reduce the amount of paperwork and applications you have to file with federal agencies – all of which will make it easier for your firms to sell your products abroad to our allies. I recognize that there have been short-term pains stemming from this process. But we are confident that the long-term gains of a reduced regulatory burden on your companies will make the temporary disruption worthwhile.
Export Control Reform is an ongoing effort. BIS and the Commerce Department will keep improving and partnering with you to build a more efficient, more dynamic system that adjusts to emerging threats and to new commercial applications of your technologies. We will keep listening to the voice of industry on how new rules are playing out and impacting your businesses. For example, this spring, we sought and received considerable feedback about regulations for military aircraft and engines, issued in 2013 – about how these rules are working or not working, and where updates may be necessary. In the coming months, the Administration will utilize this input to design more tailored and effective controls in this sector. We will also stay focused on proposals to revise our dual-use controls – recognizing the demand for reform beyond the defense trade.
In order for our reform efforts to be successful, however, we need your help. You know your products, your competitors’ products, your customers, and your marketplace better than we do. We need you to look out for questionable sales, and to let us know if an inquiry or a proposed sale seems suspicious to you. Our partnership is essential to our success. Your presence and your voice matter tremendously to us.
Moving forward, we will aggressively maintain our controls on prohibited end uses, end users, and destinations. We will build on BIS’ two recent landmark victories: one case that ended with the largest criminal penalty assessed to date in a sanctions investigation, and another that concluded with a guilty plea from a network that smuggled $65 million worth of electronics to Russia in violation of U.S. laws. Finally, we will continue to do as much training, education, and outreach as possible, especially with small and medium-sized enterprises. Already, in the past two years, BIS has led or participated in over 300 outreach events, created online tools for exporters, spoken with more than 70,000 individuals or companies, and held regular calls with industry on Export Control Reform.
Taken together, our outreach, our rules changes, and our reforms speak to a broader message about the vital importance of BIS’ work: that export controls do not exist simply as another set of regulations for industry. They exist to ensure our technological superiority is never employed against us on the battlefield. They exist to ensure a level playing field, so companies that play by the rules do not lose out to those who profit from ignorance or willful disregard of the rules. They exist to ensure our security – our national security, our homeland security, our cybersecurity, and our economic security.
Beyond export controls, BIS has been a key voice in a far-reaching change for our country: the normalization of our relations with Cuba. As you all know, last December, President Obama announced the most significant shifts in U.S. policy toward Cuba in more than half-a-century. This historic announcement is rooted in a fundamental desire to employ a strategy of engagement over isolation, in order to improve the lives of people in both of our nations. We want to help all Cubans plug into the global economy and enjoy a higher standard of living, while giving Americans an opportunity to learn about Cuba and develop relationships with the people of an island just 90 miles from our shores. We want President Castro and his government to make it easier for Cuban citizens to trade and travel more freely, to enjoy the fruits of their labor, to access the internet, and to be hired directly by foreign companies. Doing so will pave the way for a more open relationship between our countries, and empower the Cuban people to achieve greater prosperity.
I was proud to lead a U.S. delegation to Cuba last month to deliver this message to government leaders. Our trip had three primary purposes: 1. to get to know our government counterparts, who we have not dealt with in more than 50 years; 2. to better understand how the Cuban economy works; and 3. to lead a regulatory dialogue between U.S. and Cuban officials. From the start, with the leadership of Matt Borman and Tony Christino, BIS has been part of a select interagency team developing and implementing key components of the President’s new approach. In close coordination with the Treasury Department, BIS has revised a series of regulations that govern American trade with Cuba.
Our changes include authorizing: Exports to entrepreneurs and other private sector actors in Cuba; Exports by U.S. persons traveling to Cuba for business or academic work; and Exports to improve internet connectivity and usage. Our changes mean that a private sector or state trade delegation no longer requires federal permission to travel to Cuba, and U.S. companies no longer need federal approval to send equipment to private agricultural cooperatives in Cuba. Our changes will support the safety of civil aviation, facilitating the establishment of regular commercial flights between the U.S. and Cuba, and our travel-related updates will make it easier for Americans to visit the island.
These all represent positive steps forward. But the U.S. embargo – which only Congress can overturn – limits what the President, our Department, and BIS can do in altering our approach. Let me be clear: our Administration strongly supports lifting the embargo, and we hope Congress will repeal it in the near future. In the meantime, we continue to support greater economic opportunity for the Cuban people. And BIS will remain on the front lines of the effort to build a different relationship – for the benefit of the families, businesses, exporters, and economies of both nations.
On Cuba, on export controls, on a variety of steps to strengthen our economy and advance our country’s interests – BIS’ leadership has been critical. Yet this agency cannot meet its goals, deliver its message, and implement more reforms alone. We need the help of you in the private sector. We need your help to educate your suppliers, employees, and customers on the work of BIS and the progress of Export Control Reform. We need you to be our allies in realizing the President’s vision: To streamline the process for exporters at home and our allies abroad, and to create a 21st century export control system that supports our economic competitiveness and our national security.
BIS and the other export control agencies will continue to lead the way, and we will rely on your ongoing support to keep America safe and strong. Thank you for being here.
Editor in Chief