UPDATE 2-US Commerce chief proposes dual-use export reform

(Updates throughout)

By Doug Palmer

WASHINGTON Oct 1 (Reuters) - Commerce Secretary Gary Locke on Thursday proposed changes to Cold War-era export controls on U.S. high-technology goods that manufacturers complain hurt their efforts to boost overseas sales.

"Our current system was designed in the 1950s, and its Cold-War-era framework is ill-suited to manage the highly complex 21st-century threats currently faced by the United States and our allies," Locke said in a speech.

He proposed eliminating licensing requirements to export certain "dual-use" high-tech goods that have both civilian and military applications to "allies and partner nations."

The United States also should develop fast-track procedures to license such exports to "other key countries that do not pose a significant threat and have a strong history of export control compliance," Locke said.

Locke is a former governor of Washington state, home to Microsoft (MSFT.O), Boeing (BA.N) and other high-tech companies that have pushed for reforms of U.S. export controls.

He has taken the lead in an administration review ordered by President Barack Obama in August, meeting on Thursday morning with Secretary of State Hillary Clinton and last week with Secretary of Defense Robert Gates.

That high level of attention is encouraging and Locke's proposals are important first steps toward reform, said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

However, making major changes to the export control system has proved difficult in the past because of concern that sensitive U.S. technology could fall in the wrong hands.

"Make no mistake; any reform must maintain a robust and active enforcement regime to punish those who would seek to sell sensitive technologies to our enemies," Locke said.

But fundamentally reforming the system is a high priority for the Obama administration, Locke said.

"Our old adversaries are now some of our most significant trading partners. And no country or hemisphere has a monopoly on creating sophisticated goods and services," he said.

Commerce officials said the proposed reforms could affect U.S. high-technology sales to as many as 30 to 60 destinations, but offered no more specifics.

Western Europe countries and Japan would likely be included among allies and partner nations, while China and Russia could potentially fall in the second category.

(Reporting by Doug Palmer; Editing by Doina Chiacu and Cynthia Osterman)