In my last column, I summarized the origin of the proposed changes to the export controls on firearms, ammunition, and related materials, and dismissed some of the criticisms of these reforms as based on ignorance of how the system will work -- or on the presumption that if the Trump administration is doing it, it must be bad. In this column, I'll look at the up- and downsides of the proposed reforms.

The government itself gets a clear upside. The State Department’s Directorate of Defense Trade Controls (DDTC) processes about 39,000 export license applications annually. Of these, about 10,000 are in the firearms and related items categories. And of these, about 6,000 are for items that will move to the Commerce Control List (CCL) — including the vast majority of non-automatic and semi-automatic firearms under .50 caliber, and their ammunition. So in a stroke, the DDTC will cut its license business by about 15 percent, which is 15 percent of its time and staff it can devote to processing other license applications more efficiently. It is an waste of time for an experienced license processor to spend his or her time examining the export of a single collectible shotgun to Britain — and applications like that are a surprisingly large amount of DDTC’s workload.

For business, the reforms bring one clear and unavoidable downside. The current system of export controls for firearms is baroque and burdensome, but it is well known. By and large, business has adapted to cope with it. Switching to a new system, even if it is a better one, will be a lot harder than business — and I fear the government — realizes. It is entirely possible that the burden of that switch will create net losses, not gains, in the short term. In the long run, the proposed new system will be better, but business has to cope with the short run. This is an area where the government — in addition to tweaking the proposed reforms — needs to work with industry groups (especially the FireArms Import/Export Roundtable and the National Shooting Sports Foundation) to educate manufacturers and exporters. But all that said, it clearly makes no sense for industry to demand reforms and then to gripe about the burden imposed by the resulting changes when the reforms arrive.

This is particularly true because the proposed changes bring some very clear upsides. In summary:

• If the firearm (or part or component thereof) that you make is moving to the CCL, you no longer have to register as an exporter — which you have to do now even if you do not actually export — and pay the registration fee. That will save a lot of businesses a lot of money and bother.
• If your item is moving to the CCL, it may well be easier to employ non-U.S. nationals, as not all items on the CCL (depending on the technology and the country the employee is from) have controls on the export of technical data.
• If you want to make cosmetic changes to an item — if you want to sell a pink gun instead of a black one, for example — the more flexible Commerce Department licensing system will make it much easier to do so if that item is on the CCL.
• The CCL does not control defense services — such as training and assistance — so it will be vastly easier for U.S. firms to do business in this space.
• Under the CCL, you can publish technical data into the public domain if the data belong to you. Under the U.S. Munitions List, by contrast, you could go to jail if you publish data on a controlled item. Since almost every library in the U.S. has books containing data that were (and are) controlled (such as data on something as antique as a Brown Bess musket, circa 1722), this means that most educational institutions, public libraries, and publishers were in technical violation of the law.
• Small firms will find it easier to enter markets like engraving or stock manufacturing, as under the current rules even artistic or craft services related to firearms were controlled under the USML. If you take this into account, the new rules will likely cut license applications by more than 6,000 in practice, as many of these firms are now likely deterred from entering the market at all.
• Finally, and perhaps most significantly, the DDTC issues licenses only for actual exports. The Commerce Department, by contrast, has more flexibility to issue licenses on the basis of proposals or letters of intent. It is a major burden for U.S. exporters to try to bid on contracts without an export license in hand, because without a license they cannot guarantee delivery by a given date, or obtain financing necessary to build out a manufacturing line.

All of that leads me to welcome the proposed reforms. The proposed reforms are basically sensible, and the benefits are real. Of course, they are not a panacea, they are not decontrol, and they will not be painless. That said, two features about the proposed changes do trouble me.

• Not all items related to firearms are moving to the CCL. Most of the items staying on the USML — fully automatic firearms, mortars, and automatic stabilizers, for example — deserve to remain there. But noise suppressors (commonly if incorrectly known as silencers — the noise made by a firearm can be suppressed, but not silenced) will remain on the USML. This approach makes little sense. In most European nations, suppressors are an off-the-shelf purchase. Even if they do provide significant military capability, they are clearly not something on which the U.S. enjoys a monopoly, and we cannot hope to prevent others from using suppressors by controlling their export. The entire premise of export control reform was that we should not keep items on the USML if they are already widely available. Moreover, this decision contradicts the spirit of the wide support in the House for the Hearing Protection Act, which would make it easier to buy suppressors in the U.S. This is one area where the government needs to think again.
• The fact that automatic firearms will remain on the USML has the potential to partially vitiate the effect of the reforms, to impose truly burdensome costs, or even to lead to a restructuring of the firearms industry. Manufacturers commonly produce both automatic and semi-automatic firearms on the same line, or using the same parts. Under this rule, they might have to have separate production runs, build a new line for USML items, or even sell their automatic (or semi-automatic) business to a firm that will specialize only in USML (or CCL) items. Businesses in other defense sectors that have already been through export control reform have had to deal with the same problem. But the firearms sector is unique in that a lot of its end products should never really have been on the USML in the first place. As a result, it has a bigger lift in moving to the CCL.

I do not have a good answer for this issue, which appears to be inherent in the (correct) decision to keep fully automatic firearms on the USML. As long as fully automatic and semi-automatic firearms are made by the same firms with (most of) the same parts, this means that semi-automatic firearms may be captured more fully by the USML — even after the proposed reforms become final — than the administration appears to intend. This is an area where both industry and the government might benefit from doing a little more creative and cooperative thinking.

Both these issues are important. But that said, I welcome these proposed reforms. Over the next few weeks, we can expect the attorneys and manufacturers who know this business (and its rules and laws) best to weigh in, and they may bring to light concerns that are not obvious now. I trust that the government will listen to these concerns, and will continue to work in the same constructive and helpful spirit they have shown by proposing these reforms in the first place.