FEATURE
Issue: 

Photonics to benefit from US export control reform?

The proposed reforms to US Munitions List Category XII are expected to be published soon, a change in regulation that could be controversial among the optics and photonics industry, writes Jennifer Douris, a lobbyist at SPIE

The stakes are high for the US Munitions List (USML) Category XII proposal, which, at the time of writing, is yet to be released for public comment. The rewrite of Category XII is part of the overall effort undertaken by the Obama Administration’s Export Control Reform (ECR) initiative. The USML contains the items controlled under the International Traffic in Arms Regulations (ITAR), and Category XII covers much of the optic and photonic commodities and components controlled under ITAR. Most of the other categories have already been addressed, but the Administration has saved Category XII for last due to its complexity and importance to both industry and the military[1].

As a representative of the affected industry, SPIE hosted an export control meeting at Photonics West to discuss issues with the current regulation for Category XII, as well as to emphasise the importance of company and university participation in the comment period once the proposal is published in the federal register. We plan to host a second meeting at the SPIE Defence, Security and Sensing conference in Baltimore on 21 April. The Administration has said they expect the proposal to be published in the coming weeks. If this stands true, our next meeting will be held during the 60-day comment period and therefore an ideal time to review the proposed changes and prepare impacted companies to submit their own comments.

The ECR initiative was launched in 2009 with the expressed purpose of building higher walls around fewer items. The reasoning behind this was to allow for better protection of what the military would consider its ‘crown jewels’, while recognising the economic realities that are important to industry. This approach is meant to strengthen US national security, while improving the competitiveness of US businesses[1, 2].

The economic realities seen by industry are becoming clearer and starker by the day. Outside of a few major contractors, the Department of Defense (DoD) does not and cannot invest enough research and development funds to sustain and grow businesses. This is especially important considering recent virtually flat funding appropriated to federal R&D, due to budgetary issues, while market opportunity grows rapidly[3]. Foreign companies with similar products are selling freely, and using the motto ‘ITAR-free’ to do so. Taking advantage of a market free of US competition, foreign companies are then able to invest this revenue back into their companies, creating the potential for rapid growth. This scenario comes at the detriment to US company growth and the high paying jobs that come with it.

Industry is greatly concerned that the proposal for Category XII will not reflect the need for reform that is called for by the current economic environment. The motivation behind the ECR process was taller walls around fewer items, and yet this rule has the potential of expanding restricted items. More so, it is critical that this proposal should allow for future growth of the photonics and optics industry. This can only be accomplished if the Administration draws the line of ITAR controlled commodities around items specially designed for the military, as opposed to the very edge of today’s commercial market. Regulating companies to the current market allows for no future growth in these rapid growth technology areas, and will disincentivise investment by US companies in emerging areas. Many of the commodities controlled by the USML would be more appropriately placed on the Commerce Control List (CCL). Though still controlled under the CCL, the list controlled by the Department of Commerce allows for more flexibility on how controls are applied, and can adjust to conditions more quickly than items under the USML. l

References
[1]  _www.export.gov/ecr/eg_main_047329.asp
[2]  _www.defense.gov/speeches/speech.aspx?speechid=1453
[3]  _www.aaas.org/sites/default/files/DefRD_0.jpg

About the author

Jennifer Douris is a lobbyist at SPIE, the international society for optics and photonics. She is moderating a session at SPIE DSS in Baltimore on 21 April from 5:00-7:00pm discussing the proposed reforms.