Analysis of the Effects of U.S. National Security Controls on U.S.-Headquartered Industrial Firms (1986) / Chapter Skim
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III. Department of Commerce Information on the Individual Validated Licensing System
III. Department of Commerce Information on the Individual Validated Licensing System
Pages 27-44
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From page 27... ...
Much of the public perceptions related to operation of U.S. export controls are based on information related to the ILL administrative process.
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From page 28... ...
The Department of Commerce processes in excess of 120,000 Individual Validated License applications annually. Table lO provides summary data on the number of cases handled by the DOC quarterly between 84.3-86.1, the dollar value, the dollar value of denied license applications, and the percent of cases Returned Without Action (RWA)
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From page 29... ...
The point is that the degree of restrictiveness cannot be directly gauged by the percent of licenses denied nor the associated dollar value. This point is discussed further in Chapter V
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From page 30... ...
firms actually 36The mapping between CCL categories and Standard Industrial Classifications (SIC) is not that strong.
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From page 31... ...
The fact that the number of foreign enterprises involved with the U.S. licensing system is over 30 times the number of U.S.-based firms begins to indicate the broad reach of the system abroad and why any competitive disadvantages created by it can ripple outward over a large number of enterprises.
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From page 32... ...
Applications for exports to COCOM, not requiring referral, take an average of 14 days, while applications involving the People's Republic of China were taking an average of 156 days.40 Records for average processing times for earlier periods indicate they have not varied significantly in the past four quarters.41 While the average processing time is 27 days, the distribution is very skewed -- with 74 39See response to NAS Questionnaire, Appendix C, for example or the American Electronics Association Questionnaire, Appendix D 40PRC case handling times have probably declined since this profile was prepared.
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From page 33... ...
This definition of license processing time includes the time from when the firm initiates its filing for a license, plus DOC's pre-screening time, as well as the DOC processing time plus any time related to an application being returned without action and refiled.43 Thus, it is a better measure of the distribution of processing times for license approvals as seen by the firm because it covers the total time, except for the time required to send the approved license back to the firm. This second definition we called Total Processing Time.
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From page 34... ...
Figure 10 compares the two definitions of processing times again, this time on a cumulative basis. Note that over 80 percent of the cases under the DOC definition fall under 30 days, whereas only half of the cases do under the Total Processing Time definition.
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From page 35... ...
What these figures indicate is that while reported average processing times are under 30 days, the distributions of processing times independent o f destination have fairly wide dispersions. This creates uncertainty for firms using the system.
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From page 36... ...
Table 14 is again based on the DOC Processing Time definition; Table 15 uses the Total Processing Time definition. Using the Total Process Time definition shown in Table 15, small firms experience an average 14 percent longer time for processing.
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From page 37... ...
Almost half of all large firm East-West licenses were approved under 40 days versus only 13 percent of small firm licenses. Thus, using Total Processing Time as the measure, the hypothesis regarding small firms having greater difficulty with the system seems supported by the evidence.
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From page 38... ...
. In terms of work load in the license processing system, RWAs are an important factor because according to Department of Commerce information, approximately one of every six cases processed by DOC each quarter is RWAd.46 The RWA rate is a somewhat misleading statistic, since some cases are RWAd a multiple number of times, the actual proportion of licenses RWAd is less.
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From page 39... ...
There is no way to know which of these possible explanations is most likely. The next category of license data analyzed relates to reexport license applications.
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From page 40... ...
A sample of 1,618 licenses was analyzed by Commerce Department license officers who identified, independent of actual destination, the level of military criticality of the item being exported. These licenses represented approximately 50 47The Memorandum of Understanding is an Executive Directive requiring Defense Department review of controlled exports to 15 named countries.
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From page 41... ...
Four levels of technology were specified: within Administrative Exception Note 9 (ANN) , within PRO Green Zone, eligible for distribution license (DL)
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From page 42... ...
The supercritical zone should be the most sensitive level of technology.49 Slightly over one-third of the sample was within AEN limits, slightly under one-third met PRC Green Zone limits, with 20 percent eligible for a Do, the supercritical category accounted for 13 percent of the sample. The average processing times increase with the sensitivity of the destination, as expected, but it is important to note, not with the level of criticality.
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From page 43... ...
; do not vary with criticality level, (i.e., across the rows for COCOM or Other-West or MOU ) except for unilateral foreign policy cases; do not vary as a function of unilateral versus multilateral controls; and are nearly SO percent longer for foreign policy than for national security controls.
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From page 44... ...
-- larger by a factor of 9; the denial rate to the Bloc was 2 percent, but only 42 percent of the applications exceeded AEN level; whereas non-Bloc applications above AEN were 62 percent of the total, and a large share of applications to COCOM (36 percent or 17 percent of the total sample) were submitted and processed in error, i.e., they were eligible for General License (GCOM)
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