The Washington Forum included meetings with officials from the Commerce Department and the National Security Council to discuss export control reform. This is a very active area this year and some of the highlights are summarized here.

President Bush issued two directives in January 2008 calling for reform of the dual-use and munitions export control systems. The key elements of the dual-use directive are to:

• increase the focus on foreign end-users as opposed to countries, through the validated end-user and other programs,
• assess the controls in terms of U.S. competitiveness, including a regular and systematic review of the control list and revisions to intra-company transfer policy, and
• enhance transparency.

These goals provide a sense of direction in line with the export control reforms that our industry is working to achieve; however, the directives do not require specific action or create obligations on the part of the government. The implementation of the reforms is the key. This is particularly important given that this interagency group frequently differs on policy issues and that must reach consensus in decision-making. Futhermore, the Administration is working to enhance their enforcement capabilities and increase penalties.

A breakthrough came in 2007 with the creation of the Validated End-User (VEU) program. The program allows U.S. companies to ship eligible products to VEU companies without an individual validated license. This program was first made available to China as part of a larger “China rule” that included expanded controls related to military end-use. The U.S. government has since extended the VEU program to India and may consider other countries in the future. Five companies have been approved for VEU status so far. This program is still in an early phase and the U.S. and Chinese governments are discussing issues and implementation.

The Commerce Department is reviewing the Commerce Control List (CCL) that outlines which items require an export license. SEMI and many other groups provided detailed comments about this proposed review in the fall of 2007. As part of their response to the presidential directive on dual-use export control, the Commerce Department is hoping to initiate a review of each CCL Category every three years.

SEMI believes that a comprehensive review of the controls for semiconductor equipment and materials is long overdue. We seek a review process with full government and industry participation and will organize industry input. SEMI will continue to push for this in the coming months and with a new Administration in 2009.

The Commerce Department is preparing a proposed rule that would create a new license exception for intra-company transfers. This rule would eliminate some license requirements and would make it easier to conduct R&D on a global basis within a company. SEMI supports this type of license exception. Once the initial proposal is released, we will share it with experts at member companies and prepare comments from the industry. The proposal currently is being discussed in the interagency group and the Commerce Department is hoping to reach consensus and publish a proposal before summer.

The U.S. government requires “deemed export” licenses for certain foreign nationals if they are working with controlled products and technology while they are in the United States. Concerns and confusion about this requirement led to the creation of the Deemed Export Advisory Committee (DEAC) two years ago.

The DEAC issued its report in December 2007. With the report finalized, the Commerce Department has started an interagency review of deemed export policy and will seek public input on any potential changes. The Commerce Department is also creating a new technical advisory committee with both public and private sector participation. It will focus on emerging technologies and on refining the list of technologies that should be subject to deemed export requirements.