The seriousness of the technology export problem was exacerbated by an explosive rate of growth in export activities. Certainly there has been growth in “standard” (that is, physical) export transactions over recent years, as the U. S. economy has grown and as more companies have engaged in exports. However, non-physical exports of software and technology surely have grown at a far faster pace.
While data on this trend is not readily available, it is clear that there are more ways today than in the past in which non-physical exports and reexports can occur, and there are more software and technology “items” available for non-physical exportation and reexportation. A substantial growth in non-physical export activities can be attributed to the confluence of a number of factors: ? Significant Growth in High Technology Industries. The past two decades have seen enormous growth in high technology sectors such as computers, telecommunications, foundry (photo-lithography), and bio-technology.
These industries develop, produce, and use a great deal of software and technology that is subject to the EAR. ? Growth in Types and Complexity of Software and Technology. The explosive growth of the computer industry and circuit-driven consumer electronics has resulted in an enormous increase in the types and complexity of software and technology in the marketplace, both for use in development and production of products and as articles of commerce. ? The Electronification of Communications.
Over the past twenty years e-mail has emerged as a standard communications tool and greatly facilitates the sending of technical information and software. Software or technology that only a few years ago might have taken a day or more to express mail to a foreign destination now can be sent virtually instantaneously, without even the need to photocopy or download to CD-ROM or computer diskette. Many companies also have established intranets for internal communications among U.
S. and foreign locations. ? The Electronification of Commerce. The growth of the Internet has seen a corresponding surge in “e-commerce” – the buying and selling of items utilizing the Internet. The automation of such activities, without the need (or with a reduced need) for a storefront or sales force has allowed for a greater number of transactions – including export or reexport transactions – to be handled on an automated basis.
Even outside the realm of the Internet, the development of electronic telephonic systems for order processing – both voice recognition systems and the more mundane technology of touchtone menus – has assisted the growth of automated transactions, including export and reexport transactions. ? Increased Globalization in Business Structures and Business Relationships. Recent years have seen increased globalization of business structures and relationships, both between related parties and unrelated parties. Since 1982, foreign direct investment by U. S. companies has grown from US$207.
8 billion to US$1,521 billion, an increase of over 630%. Similarly, inbound investment into the United States has increased from US$124. 7 billion in 1982 to US$1,348 billion in 2002, a rise of 980%. ? Increased Workforce Mobility Across National Borders. As the number of companies with business presences in more than one country has grown, the number of people employed outside their home countries also has grown. An increase in foreign direct investment in the United States in the past twenty years has resulted in a larger number of foreign nationals in the U.
S. workforce as well, in significant part due to the demand for employees with high technology skills sets, such as computer programmers and electrical engineers. The combined effect of these changes in the U. S. economic and technological landscape is that U. S. export controls apply to an increasingly large percentage of U. S. and foreign companies’ business activities, even when no physical exports are involved, and even in some cases where there are no actual transmissions of information across a national border.
Legally speaking, all such non-physical activities are treated under the EAR as individual export transactions involving discrete “items,” with all of the export compliance and recordkeeping requirements that export activities under the EAR entail. This is a somewhat artificial way, however, to view activities such as research and development, customer service, meetings, or training that often involve multiple transmissions of information. The result is an approach to U. S. export controls that is fundamentally out of sync with transnational economic activities.