What Is The Government Role in Export Promotion And Controls?
Information Courtesy Congressional Research Service, IF11016
How does the U.S. government promote exports?
Several federal agencies promote U.S. exports and support U.S. investment. The Export-Import Bank (Ex-Im Bank), the Department of Agriculture, and the U.S. International Development Finance Corporation (DFC) administer various finance programs aimed at helping U.S. firms export and invest in certain developing countries, including through fee-based services. The Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act), enacted in October 2018, established the DFC as a new successor agency to the former Overseas Private Investment Corporation (OPIC), as part of the U.S. response to China’s Belt and Road Initiative (BRI). Agency mandates vary in their emphasis on U.S. commercial interests and foreign policy objectives, but their activities can have implications in both areas. In some cases, U.S. trade financing intends to help U.S. firms obtain a “level playing field” against foreign firms that may be receiving subsidized financing from their governments. In addition, the Department of Commerce’s International Trade Administration (ITA) promotes U.S. exports, particularly by small and medium-sized companies (SMEs), through various support services, such as through market research and business connections.
The Ex-Im Bank, the official U.S. export credit agency, provides direct loans, loan guarantees, and export credit insurance, backed by the U.S. government, to help finance U.S. exports to developing economies, in part to counter similar activities by foreign governments.151 It operates under a renewable general statutory charter (Export-Import Bank Act of 1945, as amended); the Further Consolidated Appropriations Act, 2020 (P.L. 116-94) extended Ex-Im Bank’s general statutory authority for a record seven years, through December 31, 2026. Presidential appointments to the board require Senate approval, and have been part of the broader debate over Ex-Im Bank and the role of government in financing exports.
What is the purpose of export controls?
Congress has authorized the President to control the export of various items for national security, foreign policy, and economic reasons. Export controls have been a controversial policy issue due to the difficulty striking a balance between national security goals and maintaining export competitiveness. Through the Arms Export Control Act (AECA), the Export Control Reform Act of 2018 (ECRA), the International Emergency Economic Powers Act (IEEPA), and other authorities, the United States restricts exports of defense items or munitions; dual-use goods and technology; certain nuclear materials and technology; and items that would assist in the proliferation of nuclear, chemical, and biological weapons or related missile technology. U.S. export controls are also used to restrict trade with certain countries on which the United States imposes economic sanctions. The Departments of Commerce, State, Energy, and the Treasury administer export control programs and various types of licenses required before certain exports can be undertaken.
ECRA (P.L. 115-232, Subtitle B, Part I), which became law on August 13, 2018, provides broad legislative authority for the President to implement dual-use export controls. The law repealed the Export Administration Act of 1979, which had been the underlying statutory authority for such controls until it expired in 2001. The Trump Administration sought to expand the application of export controls over emerging, surveillance, repression, and other advanced technologies, especially towards China, and exports to Hong Kong.
What are “dual-use” goods and technology?
Dual-used goods are commodities, software, or technologies that have both civilian and military applications. Examples include product categories like nuclear materials, microorganisms, electronics and computers, and lasers and sensors. Exports of dual-use goods and technologies are licensed by the Commerce Department’s Bureau of Industry and Security (BIS). Licenses are issued depending on an item’s technical characteristics, destination and end use, and other activities of the end user.