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Export Controls Conference
As Delivered by Deputy Secretary of Defense Gordon R. England, Washington, DC, Monday, October 16, 2006

Remarks by the Deputy Secretary of Defense
The Honorable Gordon R. England

Export Controls Conference


16 October 2006


Thanks very much Mark [Foulon, Acting Under-Secretary of Commerce for Industry and Security]  - I’m delighted to be with you today at this conference.


Two thousand years ago, the Romans were persecuting the Christians and throwing them to the lions.  A lion came up to a young boy, but the boy whispered something in his ear… and the lion left him alone.  Afterward, the Romans asked the boy what he had said to the lion.  And he answered, “I told him that after his ‘lunch’, there would be speeches!” 


I do thank all of you who have come here today to talk about a very important subject – to the many representatives of industry, US Government agencies, and especially our international partners.  This is a very important annual conference – it’s important for our nation, and all the nations around the world. 


From a long career in industry and after 6 years in government, I’d like to share my perspectives on “export controls”, and how they fit into the national strategic vision. 


Looking back, the 20th century had no shortage of major security challenges – from the World Wars through the long scourge of the Cold War.  The security landscape of the 21st century is vastly different – but if anything, even more challenging.  America and our friends and allies now face a much broader array of challenges, and greater uncertainty, than ever before. 


For the Department of Defense, the top priority is the war on terror.   Terrorists are determined to destroy our very way of life – and of all who love freedom and liberty. 


This is an adversary that cannot challenge us with conventional methods – so the terrorists make full use of asymmetrical and irregular approaches.  Terrorists hide themselves among civilian populations, they target civilians directly, they target the economic infrastructure that supports developed civilizations, and they disdain and despise the international laws of war. 


Terrorists are also technologically savvy.  They adapt to new conditions extraordinarily quickly. Though they aim to undo centuries’ worth of progress, they take full advantage of the latest technological innovations, to communicate, recruit, transfer money, and share nefarious lessons learned.  Terrorists do not hesitate to make full use of any available technologies to further their course of destruction.


This adversary is absolutely ruthless, and no one – no nation – is immune.  As the President said a few weeks ago, this is a struggle “that will set the course for this new century, and determine the destiny of millions around the world”.  This is the fundamental strategic challenge of our time. 


But terrorism is not the only challenge.  America and her friends and allies still face potential state-based threats.  Renegade states still have the ability to do great harm – particularly if they acquire and use weapons of mass destruction.  Deeply worrying signs include North Korea’s nuclear testing, and Iran’s threatening rhetoric and nuclear weapon ambitions. 


At the same time, there is still some uncertainty about the paths that some major states with highly sophisticated capabilities will choose.  Both China and Russia are in the process of transitioning their economies, and integrating more deeply into global markets and the international community.   Their future choices will have a profound impact on both regional and global security. 


These changes in security alignments are taking place against the backdrop of even more fundamental change.  The ever-faster pace of globalization creates new opportunities for economic growth.  That growth is necessary for security and stability.  I’ve commented many times that economic development and security are two sides of the same coin.  Security is needed for economic development, but long-term economic development is also needed for security.


The broader reach of communications also helps extend the marketplace of ideas – including the basic precepts of democracy.  And scientific and technological advances are significantly improving the lives of the American people – and the lives of people around the world. 


But all of these changes – especially all of this acceleration in technology – are equally available to those who would abuse them, who would turn them into tools of violence or oppression. 


America’s strategic vision for the 21st century can be summed up in one word: “freedom”.  Freedom is the best possible antidote to both the false claims of the terrorists and the abuses by repressive governments. 


Now to be clear, expanding the reach of freedom and liberty is not exclusively – or even primarily – a military mission, or a mission of the Department of Defense.  It requires the thoughtful application of all elements of power – based on Interagency and international unity of effort. 


It also requires truly “strategic” communications – that is, clearly linking words with actions, and bearing in mind how our actions are likely to be perceived around the world.


International coordination and cooperation is critical.  No single nation alone can successfully face all of today’s security challenges.  As the March 2006 National Security Strategy notes, America’s national strength rests in part “….on strong alliances, friendships, and international institutions, which enable us to promote freedom, prosperity, and peace in common purpose with others”.


America’s strategic vision calls for renewing and updating our long-standing alliances around the world, and working closely with new partners to help build their own capacity and capabilities.  The local population is always best-placed to communicate and act effectively – so taking an ‘indirect’ approach is a central part of our strategy. 


President Bush has pledged, “We will act boldly in freedom’s cause!”  This is not the time for America to pull back from the world.  This is a time for America’s bold leadership, and for international cooperation and resolve – as we work together to extend the promise of freedom to those who have known far too little of it. 


America’s export controls regime is a very specific and very important part of achieving that strategic vision.   


Export controls require a balance between caution and openness, between security and trade, against a backdrop of very rapid globalization.  This is a very complex process, and the challenge is to strike the right, careful balance. 


Joint scientific research, and technology-sharing, are good ways to build strong partnerships.  However, partnerships – friendships – don’t just randomly happen between nations.  Rather, they are built through concrete interactions like scientific conferences, and academic exchanges, and business partnerships.  A shared economic stake in a specific technology is a particularly powerful way to build a relationship. 


Technology exports are also – quite simply – good for business.  An increasingly globalized world opens up markets and offers international trade opportunities that our parents could never have imagined.  New markets create incentives and spur innovation – and encourage the development and fielding of cutting-edge new technologies. 


But on the other hand, there are good reasons to exercise caution.   The US Government has a responsibility to preserve US military technological advantages; to prevent the proliferation of weapons of mass destruction and delivery systems; and to keep dangerous materials out of the hands of terrorists and others who would abuse them.   


“Export controls” are not a theoretical, bureaucratic exercise.  Rather, the security threat is very real.  There are those who would exploit our openness and our own accomplishments to harm us, and to harm our friends and allies. 


In April 2005, the Office of the National Counterintelligence Executive put it quite bluntly:  Foreign access to sensitive dual-use and military technology has eroded the U.S. military advantage, degraded the US intelligence community’s ability to provide information to policymakers, and undercut US industry.”


To be clear, competitors – and perhaps potential adversaries – don’t necessarily need the final product and all the blueprints, to gain an advantage.  We know, for example, that competitors around the world use reverse engineering to extract trade secrets directly from the products themselves.  


The capabilities potentially at risk are not only the latest cutting-edge technologies on advanced weapons systems.  They also include critical related products, like encryption techniques for communications and information systems. 


The Nation simply cannot afford the risk of compromised communications or information systems.  And by the way – this is one area that actually keeps me up at night.


More broadly, the US Government has the responsibility to help preserve America’s technological edge.  America needs to stay ahead of the science and technology curve.  In my judgment, this is the greatest long-term risk to this great Nation – namely, falling behind in science and technology.  


Earlier this year, in his State of the Union address, President Bush stressed the need to “ensure that America will lead the world in opportunity and innovation for decades to come.”  That means encouraging science education, fundamental scientific research, and technological applications.  That also means protecting the cutting-edge technological advances of American industry - an “export controls” consideration. 


In practice, the Department of Defense has been working hard to streamline the process for the “customer”, to make it more transparent.  Part of that effort is reducing the time lines – like the time lines for commercial license review, which we do in partnership with the Department of Commerce.


In 1995, the Department of Defense reviewed 1,500 applications, and the average review time was 28 days.  Last year, the Department reviewed 14,000, and the review time averaged 15 days.  And most of those reviews produced favorable recommendations.  Of course, these are averages, and there are still many specific cases that take too much time.


Export control policies and practices are far bigger than any single agency.  Another way we’re working to improve the process is through ever closer collaboration – full unity of effort - among the responsible US Government agencies, especially Commerce, State and Defense. 


The other key players come from industry.  As part of being successful in business, industry of necessity builds close relationships with their international partners.  So frankly, industry is better placed than government to screen those partners, and to understand what they intend to do with the technologies they buy.  Industry can – and does – also help, by using their expertise and experience to comment on emerging policy discussions in Washington.  Your views are most welcome.


And of course, “export controls” are not just a question for the United States alone.  Technologies – and technological know-how – can now travel extraordinarily quickly around the world.  


Just yesterday, there was an article in the Los Angeles Times about a Japanese company that violated Japanese export law.  This company had been exporting measuring devices that can be converted for use in producing nuclear weapons.  The company is suspected of exporting the devices to Malaysia – via Singapore – and there are some newspaper reports that machinery manufactured by the company also turned up at nuclear-related sites in Libya.


If nuclear technology were to fall into the hands of terrorists, the whole world would suffer.  Every freedom-loving nation has a responsibility to help prevent the proliferation of dangerous technologies and especially weapons of mass destruction. 


So, multi-national efforts, like the Proliferation Security Initiative, are an important international extension of the policies of the US Government.  PSI – based on volunteer participation –includes more than 70 partner nations working together to interdict WMD shipments.


The bottom line – export controls can’t be seen as an “impediment” to progress. Rather, they are a multi-lateral, multi-national insurance policy, protecting all of us, and giving us even greater confidence in the international partnerships we’re building.


Let me say just a few words about a couple of current hot topics…


On China – Of all the world’s major and emerging powers, China has the greatest potential eventually to compete militarily with the United States.  China is investing heavily in its military – including capabilities that allow it to project power far beyond its borders. 


We also know – from China’s own 2004 Defense White Paper – that they intend to exploit civil technological development for military applications, targeting dual-use technology to advance modernization – frankly, it’s logical and smart.


In response, the US strategy is clear and dual-pronged. First, America and our friends and allies will continue to encourage China to play a constructive role on the world stage as a major stakeholder in trade and security.  At the same time, America will continue to hedge against the possibility that China could choose a hostile course – including improving the capacity of other regional partners. 


In concert with that overall strategy, the Department of Commerce has put together the draft “China Military Catch-all” regulation – released this summer as a proposal for comment.  The Department of Defense played a key role by listing items subject to new license requirements.  These were items that, in DoD’s judgment, have specific potential to improve the capabilities of the People’s Liberation Army. 


The intent is to refrain from contributing to China’s military modernization – while leaving the door wide open to constructive trade relations.


Another current issue is “deemed exports” - that is, technology transfers to foreign nationals working within the United States.  American universities, labs, and private research firms have reached out to the world’s best and brightest, to help push the frontiers of science – to great mutual benefit. 


Our shared responsibility is to be sure that sensitive and controlled technology is not compromised, in the process.  You’ll be hearing more about “deemed exports” during this conference.


In summary, America strongly endorses an interconnected global economy that opens markets and rewards the free flow of technology and products.  This openness is essential to maintain and improve the standard of living around the world. 


However, it’s important that we strike the right balance between openness and export control, and this is a shared responsibility.  Neither our nations nor our industries can survive in this dangerous and globally competitive world unless openness is balanced with the enforcement of export control policies.  As both an industry and a government person, I do thank you everyone here for your cooperation.


I thank each of you for your hard work and dedication, and for what you do every day, in government and business, to extend the promise of freedom and opportunity to others.  Ultimately, the object is to leave behind a better world for our children and grandchildren.  God bless all of you, and America!