United States Export Policy Statement on Reduction of Export Disincentives.

United States business and agriculture proved in 1979 that Americans have not lost the will and capacity to compete in world markets. Our exports increased by nearly $40 billion over 1978. Many of our manufacturing industries scored significant gains in their shares of foreign markets. Rebounding exports and overseas earnings by U.S. companies combined to overcome the chronic deficit in our overall international balance of payments—the "current account" balance. The U.S. dollar retained its value relative to the average of other major currencies in 1979.

This progress is heartening. It must not, however, lull Americans into relaxing the export drive. Soaring oil import costs should remind us daily that further export growth is vitally important.

When I committed my administration in the summer of 1978 to an intensified export campaign, I said that our initial measures would only be the beginning of what must be a long, sustained campaign. These first steps have included:

—negotiation of fairer access for U.S. goods to foreign markets through the multilateral trade negotiations and through bilateral action with key countries;

—cooperation with other industrial democracies to assure orderly movements in currency values, so that international trade can be conducted at realistic exchange rates;

—domestic action to raise the export consciousness of American companies and to increase the utility of Federal and State trade services to exporters;

—increased support by the Export-Import Bank and Small Business Administration where necessary and justified;

—reconsideration of policies and procedures that restrict U.S. exports;

—reconstitution of the President's Export Council to broaden participation in export policy development.

Reexamination of our self-imposed restrictions on exports must be a continuing process. Over the years, the deliberate or incidental restraint of exports has increased, as Congresses and administrations have sought to achieve other national purposes. We must test continually the costs and benefits of these public interventions in our private international business.

Recently, in response to the Soviet Union's invasion of Afghanistan, I have imposed additional controls on U.S. exports and sought similar action by our allies, so as to warn the Soviets that they could not pursue such a course with impunity. I have temporarily restricted financial relations with Iran, hence inhibiting trade, in response to Iranian threats and hostile actions.

I have limited exports of U.S. goods and technologies that might directly or indirectly benefit South African military or police forces, so as to preclude American association with the enforcement of apartheid. On the other hand, when the reason for the United Nations trade sanctions against Rhodesia was corrected, we promptly ceased our enforcement of sanctions.

My administration has also scrupulously enforced U.S. laws requiring control of nuclear exports that might promote proliferation of nuclear weapons.

These actions, which illustrate the difficult balancing of our national interests in the application of export controls, do not preclude continuing and vigorous efforts to reduce unwarranted or unintended barriers to U.S. exports.

I have now received an interim report on the operation of laws and policies that impose or authorize prohibition of exports of certain goods or technologies, or otherwise handicap our export business—the so-called export disincentives. The Congress also studied some of these questions during its review and amendment of the Export Administration Act last year.

Five major export disincentives were the focus of the first phase of executive branch review:

—uncertainty as to the application or interpretation of the Foreign Corrupt Practices Act;

—overlapping antiboycott laws and regulations;

—foreign policy export controls such as sanctions in support of human rights;

—nuclear materials export controls; and

—restraints on conventional arms sales to foreign countries.

During the course of this review, my administration has reduced the burden of export disincentives on U.S. business by adopting a number of procedural reforms. These actions are described in a summary report of the executive branch task force that is being released with this statement. The study is not complete. Additional action on some of the major disincentives will be considered, and other export restraints will be examined.

I have asked the President's Export Council, which includes representatives of the Congress, business, and labor, to undertake a fresh examination of how to achieve better balance between our trade and other objectives. The Secretary of Commerce and the U.S. Trade Representative also will consult business and labor on these issues. I will convey to the Congress in July my views on export promotion and disincentives, as required by the Trade Agreements Act of 1979.

Our further review and Concurrent operational decisions will be guided by realistic analysis of costs and benefits of proposed export restraints. In administering laws and policies that impose disincentives on our exports, the Federal Government will continually seek to reduce unintended or unnecessary costs to our export industries.

In considering new export controls to achieve foreign policy objectives and in reassessing current sanctions, except in the field of arms exports, my administration will be highly selective in the use of controls where the affected country has access to alternative supply. In all appropriate fields, we shall seek broader international cooperation in pursuit of policy objectives entailing restraints on exports.

SUMMARY REPORT OF TASK FORCE ON EXPORT DISINCENTIVES

This is an interim report of actions already taken by responsible executive branch agencies during the Task Force's review of five sets of laws and policies that constitute significant "export disincentives." Additional action is recommended in three fields.

UNCERTAINTIES AS TO THE FOREIGN CORRUPT PRACTICES ACT

The Congress, the administration, and all responsible businessmen share a commitment to the purposes of this act. Extortion and bribery should have no place in our international business. Our business should not, however, needlessly suffer loss of exports because of uncertainty as to the meaning of this act or as to differing interpretations by its two enforcement agencies, the Department of Justice and the Securities and Exchange Commission. The Justice Department will begin this month to provide guidance under the act to inquiring companies on any proposed international transaction. Companies will be able to obtain advance knowledge as to whether the Department will take an enforcement action if a transaction proceeds. The Department will give prompt general circulation to the substance of these decisions. After a year of operating experience with this procedure, the Secretary of Commerce and the Attorney General will initiate a review, inviting comments by business and other interested parties on the effectiveness of the system in reducing uncertainty as to the meaning of the act. The Congress then may find it appropriate to conduct its own review of the act.

Because unilateral U.S. action can have only marginal impact on the business standards of other countries, the United States should continue to work with other governments to coordinate procurement practices and reduce opportunities for corruption.

ANTIBOYCOTT LAWS AND REGULATIONS

U.S. law and policy prohibit cooperation with boycotts imposed by foreign countries against nations friendly to the United States. Our antiboycott regulations appear to be effective in deterring U.S. companies from complying with proscribed boycott action. However, differences among three applicable laws and related regulations have created uncertainties that cause unnecessary loss of export business. The Commerce and Treasury Departments, the agencies implementing the antiboycott programs, have lessened differences between their regulations, thereby reducing uncertainty and costs of compliance with two different sets of regulations. Some major boycotting countries have made significant changes in their practices with respect to terms of letters of credit, boycott questionnaires, and certificates of origin. Changes such as these have reduced the exclusion of U.S. companies from trade opportunities.

FOREIGN POLICY EXPORT CONTROLS

The Export Administration Act of 1979 has met some of the major concerns of business by inclusion of detailed provisions regarding use of export controls to further foreign policy objectives. In response to this legislation, the administration has publicly identified and shortened the list of controlled goods and technologies subject to restriction for foreign policy reasons, as distinguished from controls for national security reasons. Recognizing the general availability of controlled items from alternative sources, the administration should, when feasible, seek the cooperation of other governments in the application of export controls and be very selective in applying such controls when the affected country would have access to alternative supply.

NUCLEAR EXPORT CONTROLS

The agencies administering our nuclear export controls have taken steps to enhance the United States reliability as a supplier of nuclear materials and equipment, consistent with our firm commitment to prevent the spread of nuclear weapons. For example, we are now providing multiple reload licenses for components for most reactors abroad, and eliminating licensing requirements for nonsignificant quantities of nuclear material. A separate retransfer authorization is no longer required in cases where the retransfer was foreseen and approved in the license issued by the Nuclear Regulatory Commission. Moreover, in dealing with specific cases of proliferation concern, we have had considerable success in harmonizing our nuclear export policies with other key countries.

Further streamlining of our nuclear export licensing system should be considered. Meanwhile, executive branch agencies are undertaking these measures:

1. In considering exports of dual-use items of significance for nuclear explosives, they will focus attention primarily on countries of proliferation concern, minimizing interruption of commerce with countries that have good nonproliferation credentials; and

2. They will continue efforts to harmonize international conditions for approving or denying exports and re-exports of those dual-use items which we continue to license.

ARMS EXPORT CONTROL

During the course of this review, the munitions export licensing process has been expedited. Although the annual case load increased from about 24,000 in 1978 to about 30,000 in 1979, the average number of export applications awaiting decision for over 30 days dropped from about 675 in 1978 to under 400 in 1979. As a general rule, decisions now are being given within 20 working days.