The Commerce Department yesterday proposed a set of new export regulations that will make it easier for many high-technology companies to ship their goods overseas in exchange for much heavier "self-policing" requirements.
The move is designed to improve the existing program of distribution licensing of exports -- special licensing that permits multiple shipments of strategically important technologies. The existing program had come under both Pentagon and industry criticism.
Pentagon officials said that they were not "actively consulted" in the preparation of the new regulations and that the Defense Department may seek to change the proposed rules if they don't meet certain national security criteria.
The new rules represent a major effort by Commerce to balance national security concerns about sensitive technology falling into the hands of the Soviet Union and complaints from the U.S. high-technology community that it was losing out to foreign competitors because of time-consuming export procedures.
More than $20 billion worth of goods are shipped each year under the program, according to Commerce.
"We're telling the companies that they will be assuming greater legal and program responsibility for export controls ," said William T. Archey, acting assistant secretary for trade administration. "It used to be that companies didn't have to do an internal audit on their export shipments, now they will.
"We think this package will withstand the scrutiny of both national security and the right of companies to export."
There is a 60-day comment period before the rules go into effect. Archey expects to begin implementing them in January.
The new export rules come nine months after a proposed rule change in January was greeted by widespread industry criticism, with more than 250 comments from individual companies and trade associations as well as foreign governments. Archey said in a press conference yesterday that many industry suggestions had been adopted in the new proposals.
Specifically, Commerce will no longer insist that companies "certify" that their customers will not re-export the goods without U.S. permission. Moreover, Commerce has backed down from its initial demand that foreign consignees of U.S. goods provide customer lists to the department.
"That was perhaps the most controversial item of all," Archey said. Trade attorneys point out that, in addition to problems of legal extraterritoriality, there was no way that foreign distributors would give the names of their customers to U.S. companies that might use the list as a basis for direct marketing efforts.
Commerce also has changed its eligibility requirements for distribution licenses that stress an individual company's internal control procedures rather than quantitative measures such as number of items to be shipped.
The new rules require companies to create internal mechanisms to monitor their export practices, enabling Commerce to audit just how well those practices are followed. To enforce the rules, Commerce is widening the number of penalties it can impose on violators. The department also is expanding the number of people in the distribution licensing program from one to 18 this year; another 10 will be added next year. More than half will be conducting "export audits" to determine whether companies are complying with the new regulations.