The Obama Administration is expected to make international trade policy a higher priority next year, but one of the Administration’s key trade objectives – reforming U.S. export controls – may be derailed by the new Congress.

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President Obama is expected to make international trade policy a higher priority next year, partly because the new House Republican majority may be more likely to support some trade initiatives, such as enactment of long-pending Free Trade Agreements. However, one of the Administration’s key trade objectives – reforming U.S. export controls – may actually be derailed by the new Congress.

The Administration’s proposed export controls reform plan includes dividing controlled exports into a three-tiered system based on their potential utility in military and intelligence operations against the United States. An interagency task force is currently working to create a bright line between military items on the U.S. Munitions List (USML) and “dual-use” items on the Commerce Control List (CCL), as well as to reorganize the existing lists, to divide each USML category into three tiers of control, and to transfer less sensitive items to lower categories of control. The Administration also plans to streamline and rationalize the licensing policies applied to each tier of the categories, and to transition to a single computer system for the various agencies that control exports. All of these changes can be accomplished administratively.

Prospects in the House

The final phase of the Administration’s plan would involve merging the export control activities of Commerce, Treasury and the State departments into a single licensing agency, which would administer a single list that would replace the USML and the CCL. These changes would require legislative action, and the Administration has reportedly been drafting legislation to accomplish them.

Unfortunately for the President’s plan, Rep. Ileana Ros-Lehtinen (R-FL), who is likely to assume the chair of the House Foreign Affairs Committee, is known to be skeptical of export controls reform and is considered unlikely to make passage of such legislation a priority in the new Congress. Indeed, Rep. Ros-Lehtinen has shown herself to be unenthusiastic with regard to other Democratic export-related initiatives as well, such as writing a new Export Administration Act (EAA), which has been an important goal for current chairman Howard Berman (D-CA). Sen. Tim Johnson (D-SD), who will likely become the new chair of the Senate Banking, Housing and Urban Affairs Committee, is interested in a new EAA, but is expected to follow the lead of the House of Representatives.

Prospects for legislation further easing long-standing trade sanctions against Cuba will also be less likely next year when Ms. Ros-Lehtinen, a fervent supporter of the sanctions, takes over the Committee. She is also considered likely to push for additional sanctions legislation against Iran.

Export Enforcement

The Administration has stated that the export controls reform initiative is on track despite the changes in Congress brought about by the elections. In addition to the ongoing review of the export control lists, the Administration plans to focus on other administrative changes before seeking reforms that require legislative action. For example, the President on November 9 issued an executive order creating a new Federal Export Enforcement Coordination Center, tasked with coordinating various federal agencies’ efforts to detect, prevent, disrupt, investigate and prosecute violations of US export control laws. The new center will be directed by an official from the Department of Homeland Security and have deputy directors from the Departments of Commerce and Justice.