Obama moving to decontrol U.S. defense goods exports

* Industry complains Cold War-era rules hurt U.S. exports

* Obama speaks on Tuesday at Commerce Department event

* Tank brake pads as tightly controlled now as tanks

By Doug Palmer

WASHINGTON, Aug 29 (Reuters) - President Barack Obama on Tuesday will outline steps his administration is taking to revamp U.S. export restrictions on defense and high-tech goods, which is expected to lead to thousands of less sensitive items being decontrolled, senior administration officials said.

"We've done this fundamentally for national security reasons so that we can ... focus our resources on protecting the most critical technologies," one of the senior officials told reporters at a briefing.

The initiative, which already has been one year in the making, responds to frustration felt by U.S. defense and high-tech companies, who say export controls that date to the Cold War cost them billions of dollars in lost sales.

U.S. allies also complain they often face long waits to get spare parts for U.S.-made weapons systems because of licensing requirements as rigorous as for the weapons themselves.

"We're talking nuts, bolts, screws, washers that require a license right now worldwide," a second official said.

For example, the United States devotes the same resources to protecting the brake pad for the M1A1 tank as it does the tank itself, even though the brake pads are virtually identical to those used in fire trucks, the officials said.

Obama, in taped remarks to a Commerce Department conference, will discuss the steps his administration is taking to harmonize two separate export control lists -- the Commerce Control List run by the Commerce Department and the U.S. Munitions List overseen by the State Department.

The new system creates a "bright line" between the two lists to clarify to exporters and foreign buyers which department has jurisdiction.

TIERED SYSTEM

It also classifies weapons, technology and related goods in three tiers, according to their military and intelligence importance and how available they are from other suppliers. Weapons of mass destruction are on the top tier.

"There's a lot more work to do to implement these decisions but we're already seeing the results of the effort," the first senior administration official said.

Starting with one category on the U.S. Munitions List, tanks and military vehicles, the administration expects about 42 percent of the 12,000 items it licensed last year to be moved to the Commerce Control List and about 32 percent could be decontrolled altogether.

About 26 percent are expected to remain on the U.S. Munitions List, with none in the highest tier, about 18 percent in middle tier and the remaining 8 percent in the lowest tier.

In the coming months, the administration will go through the same process for the 19 other categories on the U.S. Munitions List, which includes electronics, firearms, ammunition, aircraft, naval vessels and space craft, with the aim of finishing by early 2011.

"Generally speaking, we're very happy about this," said Bill Reinsch, president of the National Foreign Trade Council, whose member companies include Boeing (BA.N), General Electric (GE.N) and United Technologies (UTX.N) have long pushed for reform. "I think it will simplify things significantly."

Eventually, the administration wants to create a single control list run by an independent single agency outside of the Commerce Department or State. It also wants to create a single enforcement agency. All three goals require congressional approval and are not expected to happen to this year.

As an interim step, Obama plans to sign an executive order giving U.S. Immigration and Customs Enforcement (ICE) authority to coordinate enforcement of export controls now divided among several government agencies, the senior officials said.

The administration is also moving licensing operations at the State Department, Commerce Department, Defense Department and other agencies onto a single information technology system. It does not need congressional approval for that. (Reporting by Doug Palmer; editing by Todd Eastham and Bill Trott)