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High hopes for reform

High hopes for reform

Dr. Paul Freedenberg

This summer, the Obama Administration announced new initiatives to improve the international regulatory environment in which manufacturers operate. In July, Secretary of Commerce Gary Locke announced the formation of a business visa taskforce to speed up and make more predictable the processing of visas for foreign companies interested in doing business with U.S. companies. In August, the President himself announced his intention to reform the export licensing system. He named the National Security Council and the National Economic Council to lead the effort, and called on the various agencies involved to report to him with improvements.

The announcement of both of these efforts is good news. Four years ago, just as President Bush was beginning his second term, the National Foreign Trade Council announced the results of a study that documented the fact that our business visa system was costing U.S. businesses at least $30 billion per year in lost business, as foreign customers went to the European Union or Japan or Korea, anywhere but the United States, because the business visa system was so time consuming and uncertain. Secretary of State Condoleezza Rice pledged to fix the worst aspects of the system and to hire new staff and create new facilities in order to handle the vast volume of visa applicants, especially from China, India, and Russia. For a while this new commitment bore fruit, and the business visa system seemed to have made the necessary reforms. Customers and visitors began to benefit from the additional personnel and effort that had been expended. But around the time of the 2008 Beijing Olympics, the system began to break down once again. Old habits crept back in, and visa staff was assigned elsewhere.

What this indicates is that there seems to be a need for a business visa taskforce, if only to remind the Obama Administration of the lessons learned during the Bush Administration, that there is no substitute for management commitment and sufficient personnel. Of course, the taskforce also might conclude that there is no need to interview each and every applicant, and that the terrorist threat, while real, is not emanating from Chinese and Indian businessmen. Thus, precious resources might be spent elsewhere to deal with the original motivation for tightening up the visa system.

Last month’s column demonstrated that the announcement of a new presidential commitment to export control reform is welcome and necessary. As Under Secretary of State Ellen Tauscher admitted last month, the export control list of restricted items has grown longer and longer each year and items ought to come off the list as other items are added. Otherwise, our national security resources are too dispersed to focus adequately on those items that are truly critical at any particular time. Fortunately, Secretary of Defense Robert Gates, whose department is responsible for most of the control list lengthening and none of its shortening, has stated that he is fully behind the President’s export-control initiative. A good start and a sign of good faith would be for all of the agencies responsible for export licensing to sign-off on the Commerce Department’s recently completed foreign availability study of five-axis machine tools sales to China. Then, the Secretary of Commerce could take most of the five-axis machine tools off the control list, thereby beginning the vital work of shortening the control list that Under Secretary Tauscher said was so important to our national security.

During the period of my involvement with export controls, I have seen many reviews of the system and even a number of presidential commitments to reform. None of the reviews seem to have resulted in measurable change, and presidential commitments tend to wane, with attention being diverted to the crisis du jour.

Hopefully, we have begun a new era, where the theme of “Yes We Can” applies to such obscure problems as export control reform.

You can help revitalize U.S. manufacturing! Send this page to your Congressman, local and state government leaders, or your local newspaper editor. Add your own comments on the importance of manufacturing innovation to the health of our economy. Your comments are also welcome at [email protected]

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