U.S. to revamp export controls

WASHINGTON Tue Apr 20, 2010 6:15pm EDT

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WASHINGTON (Reuters) - Defense Secretary Robert Gates announced plans on Tuesday to overhaul Cold War-era rules on selling military equipment and technology abroad, saying they undermined national security, hurt defense industries and caused friction with allies.

Outlining a major administration effort championed by U.S. industry but likely to face resistance in Congress, Gates called for streamlining a regulatory system guided by a "byzantine amalgam of authorities, roles and missions."

"America's decades-old, bureaucratically labyrinthine system does not serve our 21st-century security needs or our economic interests," Gates told an audience of business executives in Washington.

"It is clear our current limitations in this area undermine our ability to work with and through partners to confront shared threats and challenges -- from terrorism to rogue states to rising powers."

Gates proposed a new system where "higher walls are placed around fewer, more critical items," and one which would streamline regulations to create a single export control list, a single licensing agency and a single enforcement agency.

He said the Obama administration would start laying the groundwork for these reforms in the coming months and "would love" to get legislation approved this year.

"We need a system that dispenses with the 95 percent of 'easy' cases and lets us concentrate our resources on the remaining 5 percent," Gates said.

Evoking national security as the main reason to overhaul export controls is a departure from failed attempts at reform in years past, which focused instead on how the rules hurt American industry by reducing U.S. exports.

CONTROLS COULD BOOST OUTPUT

A study by the Milken Institute for the National Association of Manufacturers estimated that modernizing export controls could boost real U.S. economic output by $64 billion and create 160,000 manufacturing jobs.

Executives welcomed the push but questioned whether Gates wasn't promising too much, too fast, given a heavy agenda in Congress that includes financial regulatory reform.

"It's very ambitious, to say the least," said Catherine Robinson, director of export controls for the National Association of Manufacturers.

Any reforms would have win over skeptics in Congress, adverse to relaxing controls on technologies sought by adversaries. Still, initial reaction from both Republicans and Obama's Democrats was positive, if cautious.

"We need to ensure it results in greater protection and monitoring of key defense items and technologies," said Howard McKeon, the ranking Republican member of the House Armed Services Committee.

Gates has criticized NATO allies for failing to invest enough in defense and championed getting U.S. technology into the hands of its closest allies.

In his speech, Gates said existing controls kept technology from allies, something which "tests their patience and goodwill and hinders their ability to operate with U.S. forces."

He cited a case of a British C-17 aircraft that spent hours disabled on the ground in Australia because U.S. law required Australians to seek U.S. permission before repairing it.

"These are two of our very strongest allies for God's sake," Gates exclaimed.

He called for the U.S. Senate to approve defense cooperation treaties with the United Kingdom and Australia before the summer recess in August.

A former director of the CIA, Gates noted how international consensus on technology transfer "has completely collapsed" since the end of the Cold War. He voiced hope that a simpler system could win back allies' support for restrictions.

(Editing by David Alexander and Chris Wilson)

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