II.
Findings

Each of the committee’s findings is summarized and then discussed in detail in the text that follows.

FINDING 1

Designed for the Cold War when the United States had global dominance in most areas of science and technology, the current system of export controls now harms our national and homeland security, as well as our ability to compete economically.

  1. In almost all cases, the technology base that supports our national security also supports the high-technology sector of the civilian economy.

  2. Many controls imposed in the name of national and homeland security do not, in fact, improve national and homeland security.

  3. Many current controls (outside of narrowly defined military niches) aimed at protecting national security, in fact weaken U.S. innovation and competitiveness in global markets, thereby reducing economic prosperity, which is an essential element of U.S. national security.

The current system of federal controls on the flow of scientific information developed, by accretion, over almost six decades. It is based largely on the experience of the Cold War years when the United States was confronting a unitary threat from the Soviet Union, and on the conditions of economic and technological competitiveness that existed in the 1950s, 1960s, and 1970s. Although economic and security conditions have changed dramatically, our approach to export controls has



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II. Findings Each of the committee’s findings is summarized and then discussed in detail in the text that follows. FINDINg 1 Designed for the Cold War when the united States had global dominance in most areas of science and technology, the current system of export controls now harms our national and homeland security, as well as our ability to compete economically. A. In almost all cases, the technology base that supports our national security also supports the high-technology sector of the civil- ian economy. B. Many controls imposed in the name of national and homeland security do not, in fact, improve national and homeland security. C. Many current controls (outside of narrowly defined military niches) aimed at protecting national security, in fact weaken u.S. innova- tion and competitiveness in global markets, thereby reducing economic prosperity, which is an essential element of u.S. national security. The current system of federal controls on the flow of scientific information developed, by accretion, over almost six decades. It is based largely on the experience of the Cold War years when the United States was confronting a unitary threat from the Soviet Union, and on the conditions of economic and technological competitiveness that existed in the 1950s, 1960s, and 1970s. Although economic and security condi- tions have changed dramatically, our approach to export controls has 1

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1 BEYOND “FORTRESS AMERICA” persisted, both in substance and in the administrative structures within which the controls are carried out. How Did We get Where We Are? In response to the numerically superior military forces of the Soviet Union and its Warsaw Pact allies, the United States committed to build- ing a military establishment that fielded qualitatively superior forces. To sustain this “run faster” strategy, the United States invested signifi- cantly in advanced research and development in university, industry, and national laboratories to produce superior technology in fielded military systems. As a result, the United States achieved the leadership position in many areas of science and technology. There followed well-documented efforts by the former Soviet Union to systematically collect and exploit for military purposes scientific and technical information produced in the West.1 These efforts were unprec- edented in scope and in the resources (both human and financial) dedi- cated to their implementation. To counter this threat, the United States crafted a system of policies and regulations designed to limit the flow of technology to the Soviet Union and its allies. This system included clas- sification, export controls, deemed export controls,2 restrictions on the dissemination of government-funded research, and limitations on visa and visitation privileges by those who could collect advanced scientific and technological knowledge within the United States. Each of these regulatory requirements was premised on the direct application of par- ticular elements of technology to specific military uses. Moreover, all of these military uses were envisioned, in the U.S. regulatory design, as being wielded by an identified state power—most specifically, the former Soviet Union and its allies. With a common understanding of the security threat they faced, the United States and its allies acted to deny crucial technology to the Soviet Union and the other states of the Warsaw Pact. 1See, for example, National Academy of Sciences, National Academy of Engineering, Insti- tute of Medicine. 1982. Scientific Communication and National Security (hereafter known as the Corson Report after the panel’s chair, Dale Corson). Washington, DC: National Academy Press, pp. 17-18. 2Deemed export controls refer to controlling the transfer of technical information to foreign nationals who are studying or working in the United States.

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19 FINDINGS How Have global Conditions Changed? The fall of the Soviet Union was a triumph for the West, eliminat- ing the single largest threat to the security of the United States and its allies. However, the demise of the former Soviet Union let loose regional animosities that in some cases had lain dormant under Soviet control, and in others, had been obscured by Cold War geopolitics. At the same time, this dissolution loosened the ties among the countries of the anti- Soviet West that had cooperated with one another out of a common fear of the Soviet Union. This has made it difficult for the United States and its allies to deal consistently with the rise of smaller politically motivated enemies, who in many cases are non-state actors—even mere groups of individuals—and whose size is disproportionate to the nature of the threat they pose. The post-Cold War period is also marked by major changes in world economics that have transformed the international economic landscape. The opening of trade among nations of East and West, com- bined with advances in information technologies, have made it possible for people, goods, and technology to move freely across formerly closed borders. Well-financed centers of scientific excellence with long-term goals sprang up in South Korea, Singapore, China, and India. The scientific establishments in Europe, Israel, Japan, and more recently, Russia, have realized a new vigor in the post-Cold War global economy. Several countries in the Middle East are now investing to advance their own scientific research capabilities. Many countries—and especially China—are learning to exploit their new scientific strengths by means of globalized business models that take advantage of peer-to-peer initia- tive structures.3 For many countries, trade policies that fostered economic develop- ment became a high priority. The need to control exports for mutu- ally agreed national security objectives no longer dominated the policy agenda of U.S. allies. Meanwhile, multinational corporations based in the United States shifted research and development efforts offshore to accompany the opening of markets, as in China; or to take advantage of lower costs and well-educated English-speaking technical elites, as in India and Ireland. Moreover, innovation itself is becoming increas- 3See, for example, Lewis M. Branscomb’s article, “Research Alone is Not Enough,” in Science, 321: (1589) (August 15 2008), pp. 915-916 that calls for American policy makers to encourage the development of relational business models.

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0 BEYOND “FORTRESS AMERICA” ingly international.4 Finally, advances in information, communication, and transportation technologies and a switch to “just-in-time” inven- tory management have made U.S. industries increasingly reliant on global supply chains whose disruptions, when they occur, hurt the U.S. economy.5 Increasingly, American science and technology lost the dominance that had characterized earlier decades as scientific and technological capacity increased dramatically in other nations.6 The reflexive tighten- ing of security after the September 11, 2001, attacks blunted recognition in U.S. policy of the breadth and depth of the rising competition to American science and technology. The Single Technology Base The technology base of a nation consists of all the elements that contribute to the ability of the nation to develop technology, to field advanced systems, and to compete in technology-based markets; it encompasses people, infrastructure, research laboratories, and man- ufacturing capacity, as well as science and engineering education capacity. As conditions in the marketplace changed, the separate, and often secret, military technology base that in the 1970s supported the military market gradually merged with the much larger technology base that supported the commercial market. This global commercial market provided enormous incentives for the rapid development of sophisti- 4Sociologists and economists are uniformly pointing to an increasing interdependence of innova- tion systems in various countries. This interdependence consists of increasingly complex collabora- tions across national borders and among researchers and users of research from various institutions. These collaborations allow firms to take advantage of foreign innovation systems for a variety of solutions to technological problems. For an overview of innovation system literature, see Carlsson B. 2006. Internationalization of innovation systems: A survey of the literature, Research Policy, 35: (1), pp. 56-67. Also see Etzkowitz, H., and Leydesdorff, L., 2000. The dynamics of innovation: from national systems and “Mode 2” to a triple helix of university–industry–government relations. Research Policy 29: (2), pp. 109-123. 5The West Coast dock strike in 2002 that lasted for 10 days had an estimated cost of $15 billion to the U.S. economy. See The Reform Institute’s 2008 report, Global Supply Chain Presents Oppor­ tunities and Perils, released March 6, 2008. 6The 2007 report to Department of Commerce Secretary Carlos Gutierrez from the inde- pendent Deemed Export Advisory Committee (hereafter referred to as the DEAC Report), has listed the following areas in which the United States has lost its scientific and engineering leadership: “polymer composites (Germany), 3D optical memories (Japan), bulk metallic glass (Japan), biostatistics/multivariate statistics (France), population biology (UK), adaptive dynamics (Germany/Switzerland), theoretical biology (Netherlands), and solar energy (Japan/Germany).” The DEAC Report, p. 11.

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1 FINDINGS cated technologies, while the market for specific military applications became relatively smaller.7 As the military market shrank, investments flowed naturally, by market-driven forces, to the civilian sector. More and more of the technologies and The communications that support military situation components used for war-fighting awareness today are and intelligence collection came to predominantly civilian be based on the same technology technology. During Operation that supported the development Iraqi Freedom (2003), 80% of and production of civilian goods all satellite communications and services.8 used commercial satellite services. Innovations came quickly in the 1980s and 1990s—especially in SOURCE: Cavossa, David, “State of the electronics and information tech- Satellite Industry”, presentation for the nology—and the U.S. military was FAA’s Commercial Space Transportation Advisory Committee (COMSTAC), able to incorporate civilian compo- October 25, 2006. Available at nents, or variants of them, to add http://www.faa.gov/about/office_org/ headquarters_offices/ast/industry/ functional capability to military advisory_committee/meeting_news/ systems. By 2000, except for small media/COMSTAC_Presentation-SIA_ Cavossa.ppt. but important niches in the military sector, components for both mili- tary applications and the commer- cial market were drawn from the same technology base. A key differen- tiating characteristic in the military market now was not the underlying scientific or technological information, components, or products, but the methods by which these were applied to specific military uses. With the evolution to a single technology base supporting both military and commercial demand came the opening of global markets through political means, such as the loosening of Russia’s grip on its satellite states, the rise of state-controlled capitalism in China, and vari- ous world trade agreements. These global markets, although they often 7The consolidation of the defense industry is in part emblematic of the establishment of a single technology base. In 1993, there were 36 major prime contractors. By 1999, these contractors had consolidated to just 8 prime contractors. A similar consolidation has happened among second- and third-tier contractors with their numbers falling from 85 to 44 in a similar time period. See Bear Stearns, The Consolidation of the Defense Industry: Winners and Losers, February 7, 2000; and Bear Stearns, The Consolidation of the Aerospace Industry/Defense Merchant Supplier Base, April 17, 2000. 8Defense Science Board, 2006 Summer Study: 21st Century Strategic Technology Vectors, avail- able at http://www.acq.osd.mil/dsb/reports.html.

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 BEYOND “FORTRESS AMERICA” started at considerably lower levels, grew at much higher rates than the more mature domestic U.S. markets. These global markets became as important as—and increasingly more important in some areas for U.S. companies—than the market within U.S. borders.9 Despite, or perhaps because of, the merger of the military and com- mercial technology bases, the U.S. federal bureaucracy redoubled its efforts to prevent the transfer of information, components, and products to potential U.S. adversaries by adding new items to the control lists that could not be exported from the United States without an export license.10 With the tensions that developed after the September 11, 2001, attacks, the licensing process slowed even further. Items rarely came off the lists, even if newer, more advanced developments com- pletely bypassed the technologies on which they were based. In addi- tion, the bureaucracy’s attention to “deemed exports” became more focused.11 Foreign scientists and students in the United States were barred from exposure to export-controlled items unless their host insti- tutions obtained an export license. The Harms Caused by the Current Export Control System If appropriately construed and implemented, export controls (and the derivative “deemed export” controls) constitute a legitimate con- straint on commercial activity for the purpose of protecting national 9Ibid. 10The one exception is in 1995-1996 when the multilateral forum, the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (hereafter referred to as the Wassenaar Arrangement), was established. The categories of items that were either decontrolled or controlled at more advanced levels included computers, beta-test software, precursor chemicals, and integrated circuits. See the Export Administration Annual Report 199 and 199 Report on Foreign Policy Export Controls, U.S. Department of Commerce, Bureau of Export Administration. 11The National Defense Authorization Act for Fiscal Year 2000 authorized the Inspectors General of the Departments of Commerce, Defense, Energy, and State, in consultation with the Directors of the CIA and FBI, to conduct a multiyear assessment of the adequacy of current export controls and counterintelligence measures to prevent the acquisition of sensitive U.S. technology and technical information by countries and entities. The 2004 reports focused on regulations regarding deemed exports. A total of seven reports were issued in April 2004, including a report from the Department of Homeland Security (established in 2003), and an interagency review sum- marizing the findings and recommendations of the six individual agency IG reports. Three of the reports—State, DHS, CIA—remain either classified or are publicly unavailable. See in particular Deemed Export Controls May Not Stop the Transfer of Sensitie Technology to Foreign Nationals in the U.S., Final Inspection Report No. IPE-16176, March 2004. Available at http://www.oig.doc. go/oig/reports/00/BIS­IPE­11­0­00.pdf.

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 FINDINGS security. However, the export control system enforced in the United States today has failed to evolve with changing global conditions, and now produces significant harm to U.S. military capability, to homeland security, and to the nation’s economic competitiveness. Harm to U.S. military capability. Over time, the harm to the U.S. military capability caused by export controls has expanded and has now reached substantial proportions. In response to export controls, decisions of U.S. corporations actually prevent full utilization of American technology for defense purposes. Some U.S.-based compa- Even more than 25 years after nies that have developed valuable the international sales of the new technology choose to stay out F-16 jet fighter aircraft, only of military markets because they non-major F-16 spare parts believe (often erroneously) that if can be transferred between they do not sell to the military, then countries that purchased this export controls would not apply to fighter. An official third-party transfer license is needed— them. Other companies opt not to even in-theater—when one enter fields in which controls may country provides emergency apply and direct their investment repairs for another. As a capital elsewhere.12 Such decisions result, force readiness may deprive the military of the benefits be compromised. of new scientific and technological SOURCE: Defense MOU Attachés developments that otherwise might Group (Defense Cooperation Attachés be available for incorporation into of 21 member nations). new military systems. Companies with significant commercial markets that continue to sell to the military may suboptimize military systems to minimize the impact of the export controls. As foreign companies and governments fill the competitive gaps left by U.S.-based compa- nies that are not permitted—or choose not—to export, valuable tech- nical developments occur outside the United States to which the U.S. military and intelligence agencies then have no access. The additional financial costs to companies for compliance with export licensing are particularly difficult for smaller, innovative suppliers to absorb, and 12In a 2002 unpublished report by the Office of the Deputy Under Secretary of Defense (Indus- trial Policy), titled “Less Traditional Suppliers for transformational warfare” (summarized in the 2003 report, Transforming the Defense Industrial Base: A Roadmap), it was found that export control restrictions are a major impediment to participation of less traditional suppliers.

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 BEYOND “FORTRESS AMERICA” they are thus deterred from working with the military to solve critical defense problems.13 Export controls also constrain the contribution that allied military forces can make to U.S. military operations. For example, in an overseas military operation, some allies may be cleared to repair U.S. equipment and others may not; this can prevent repair at facilities closest to the theater of operation. Allied military equipment returned to the United States for repair may need to be cleared for “export” (before shipment back) by determining that nothing has changed to affect the equipment’s compliance with U.S. export law. The military thus faces difficulties in outsourcing maintenance and other services to take advantage of lower- cost foreign commercial sources for functions traditionally performed by military personnel. Foreign manufacturers increasingly refuse to install U.S. equipment in systems they produce. If non-U.S. equipment is used, U.S. export controls do not apply. If U.S. equipment is used, then export controls do apply, and the systems may not be shipped or re-exported without approvals that involve a lengthy bureaucratic process. Foreign defense contractors also avoid using U.S. subsystems to avoid U.S. controls that would restrict third-country transfer and other commercial uses. 14 Finally, these controls may actually hamper the U.S. government’s own understanding of foreign military capabilities and foreign scientific developments. When components or products are available from many sources around the world, U.S. export controls cannot prevent foreign militaries from acquiring them. Allowing foreign military services to buy such components from U.S. sources can improve U.S. awareness of the characteristics of their systems, which might otherwise be just as capable but less well understood. 13It is the view of small entrepreneurial companies, such as the Insitu Group which helped to pioneer the unmanned aerial vehicle (UAV), that classification of their technology as dual-use can “significantly impede small company growth.” This example and others are described in Transform­ ing the Defense Industrial Base (see footnote 16) available at http://www.acq.osd.mil/ip/. 14In 1999, commercial satellites were reclassified by Congress from being controlled by the Com- merce Department as a dual-use item to being controlled by the State Department as munitions under the International Traffic in Arms Regulations. Alcatel Space (now Thales) then announced in 2002 its company policy to build ITAR-free satellites, launching its first ITAR-free satellite success- fully in 2005. Since then, other European aerospace companies such as EADS, Morotta, and Surrey Satellite Company have all followed suit and advertise their products as being “ITAR-free.” The European Space Agency has recently implemented a policy of “nondependence” on U.S. spacecraft parts as a “key performance indicator” in purchasing decisions. Sources: William Mathews, U.S. Holds Up Sale of C-295s to Venezuela, Defense News, October 24, 2005, and Peter B. de Selding, Europe to Reduce Need for Foreign Spacecraft Parts, Defense News, October 6, 2008.

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 FINDINGS Given the globalization of science and technology, it is particularly important to monitor technological developments overseas, not only to ensure that U.S. military systems use the world’s best technologies, but also to understand what capa- The Russian RD-180 engine powers all Atlas V vehicles bilities might become available to for critical U.S. national U.S. adversaries. Constraints on security and civil space launch interactions between U.S. and for- missions. Export controls eign researchers will handicap this inhibit U.S. engineers from country’s ability to track global tech- collaborating in troubleshooting nical developments that might have or improving the engine in any way. An RD-180 engine relevance to national security. As (or derivative engine, such the CSIS Commission on Scientific as the RD-171M) failure or Communication and National Secu- serious anomaly on a U.S. or rity put it, “In a world of global- foreign launch could ground ized science and technology, security the Atlas V fleet. Resolution of the root cause and corrective 15 comes from windows, not walls.” action needed to return the Atlas V fleet to flight status is Harm to homeland security. Many severely impeded by the export export controls have the poten- control regime that highly tial to damage homeland security constrains U.S. interactions because they are based on the with the Russian designers and producers of the engine. premise that selected technology should be limited to use inside the SOURCE: Greg Pech, Director, Atlas United States and by American Propulsion Systems, United Launch citizens—in other words, an exten- Alliance LLC. sion of the “Fortress America” mindset. Yet U.S. homeland secu- rity may be well served by the use of sophisticated military-like systems in international locations such as airports and seaports. The movement between U.S. and international commercial locations—and movements between one international location and another—required for aircraft that might be equipped with anti-terrorist devices is also not addressed in the current export control regime. As a result, some anti-terrorist systems may be most essential in precisely the countries where the risk of diversion brings export controls into play and encumbers their use. 15CSIS Commission on Scientific Communication and National Security, Security Controls on the Access of Foreign Scientists and Engineers to the United States, October 2005, p. 15. Available at http://www.csis.org/media/csis/pubs/0100_whitepaper.pdf.

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 BEYOND “FORTRESS AMERICA” Export controls may also act to make U.S. advanced technology com- panies less able to compete for global business, particularly homeland security business, and therefore less able to sustain their techno- logical preeminence that produces Counter-MANPADS systems (Man Portable the technology needed to protect Air Defense System) are the United States and its citizens. designed to protect aircraft In addition, some important from a shoulder-launched new areas critical to homeland missile. They are categorized security cannot be made to fit into as munitions by the the current regulatory framework, International Traffic in Arms Regulations (ITAR). Installing such as the free exchange of civil- Counter-MANPADS systems ian information on the Internet, on commercial aircraft would or the rapid advances in the bio- require an ITAR license for logical sciences. The implications each travel leg outside the of these two domains for greater United States. Inherently unpredictable airline schedules homeland or global security are not make it impractical for airlines yet fully understood. They have to provide such protection. largely been the province of the commercial world, academia, and SOURCE: Richard Barth, the non-security sectors of the U.S. De-conflicting Counter-proliferation and Counterterrorism Policy, presented government. Advances in these at COSSP Meeting, Irvine CA, fields rely for their creative success December 13, 2007. on broadly distributed, informal networks of individuals committed to an unprecedented level of openness well beyond the control or economic leverage of the homeland security community. Both are examples of newly important areas in which current export controls may not work well. Harm to U.S. economic competitiveness. The artificial limitations on trade imposed by lists of controlled technologies have had pre- dictable results with respect to the U.S. position in global markets. With U.S. companies prevented by export controls from competing in certain markets, foreign competitors, often sponsored by their governments, spring to fill these competitive gaps. As these com- petitors have proliferated, U.S. companies have suffered challenges in the marketplace that would not have been present but for export controls. The biggest risk to U.S. jobs is a lack of economic com- petitiveness, and U.S. export control policy directly undermines

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 FINDINGS that competitiveness. 16 Even if a U.S. company is licensed to export a controlled product, a foreign buyer may be reluctant to use it because of the fear that a separate export license will be required to make repairs, or even to honor a A 2007 survey of 202 aerospace companies indicates that request for additional information compliance costs associated about the product. with export controls average As U.S. companies have evolved $50 million annually and have to compete in global markets and increased 23% since 2003. have become multinational cor- porations with a substantial pres- SOURCE: Air Force Research Laboratory analysis of survey of ence in numerous countries, the 202 space companies/ business units, cost of complying with U.S. list- 2007. Reported in the CSIS report, Health of the U.S. Space Industrial based export controls has risen Base and the Impact of Export dramatically. This additional burden Controls by Pierre Chao, February 19, 2008. Available at http://www.csis. on U.S.-based companies makes org/media/csis/pubs/021908_csis_ them less competitive. spaceindustryitar_final.pdf. The regulatory limits on provid- ing controlled information to foreign scientists and students now affect the research and development capacity of U.S. corporate laboratories. This is especially true as U.S.-based firms establish laboratories overseas, and even as they staff their U.S. labora- tories with graduates of U.S. science and engineering programs, an ever- increasing share of whom are foreign nationals. Failure to “run faster” by developing qualitatively better products and services with the best talent available is a serious threat to U.S. economic competitiveness. Similarly, export controls and “deemed export” rules make U.S. universities less able to attract the most capable foreign researchers or to retain some of the most creative faculty members.17 Important discov- 16A key to designing the Boeing 787 aircraft is the ability of engineers at Boeing to work closely with foreign suppliers. Yet many of Boeing’s engineers are veterans of the B-2 stealth bomber program of two decades ago, who refused to guarantee that their know-how in designing aircrafts did not come from their participation in that program. This caused delays in the 787 program, as lawyers had to pour through documents from the 1970s to determine if key technologies for the 787 came from the commercial sector and were thus free of ITAR controls. In some cases, engineers had to develop new tests to prove well-known facts in technologies like composites to ensure that this knowledge did not come from the B-2. Dominic Gates, Separation anxiety: The wall between military and commercial technology, Seattle Times, January 22, 2006. 17See, for example, Science and Security in a Post 9/11 World, pp. 40-48 (National Academies Press), and The DEAC Report, pp. 35-46 (Deemed Export Advisory Committee, Department of Commerce).

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 BEYOND “FORTRESS AMERICA” Freedom to collaborate without limitation. Open communication among scientists can provide insights into problems and their solutions that otherwise might escape notice. Rapid advances often occur at the inter- faces between fields or from the application of advances in one field to a related field. Free and open interaction among scientists serves to open windows of intellectual inquiry that otherwise might remain closed. Pluralistic and meritocratic support of science. Science in the United States is not guided by a master plan that constrains scientific activity to defined avenues. A variety of federal agencies and philanthropies provide support for research, thus providing some assurance that impor- tant areas of work will be funded, even if they depart from the main- stream view. Multiple funding sources and decisions also help ensure that research with implications for a particular organization’s mission will be conducted. Similarly, most scientific research funding is admin- istered under a meritocratic review system designed to support the best researchers who propose the best ideas. Freedom to publish. Science is a cumulative subject in which each sci- entist builds on the work of others. The fundamental error-correc- tion mechanism of science arises from the replication of work that has been conducted by others, thus enabling mistakes to be exposed. This approach depends on the wide dissemination and open communication of scientific results and methods. These practices are threatened by government regulation that restricts the flow of information about scientific and technological endeavors and the flow of people participating in research. Indeed, the need to prevent government restrictions from damaging the fundamental research enterprise was recognized as far back as the Truman Admin- istration, and it was codified by President Reagan in 1985 in National Security Decision Directive 189 (NSDD-189). This Directive states that the United States’ “leadership position in science and technology is an essential element in our economic and physical security,” and that “the strength of American science requires a research environment . . . in which the free exchange of ideas is a vital component.”44 It then goes 44CSIS Commission on Scientific Communication and National Security, “Security Controls on Scientific Information and the Conduct of Scientific Research,” June 2005, p. 1; available at http:// www.csis.org/media/csis/pubs/00_cscans.pdf. Quotations are from National Security Decision

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9 FINDINGS on to direct that “where the national security requires control, the mechanism . . . is classification,” and that to the extent consistent with law, “no restrictions may be placed upon the conduct or reporting of [unclassified] federally-funded fundamental research.” Presidential Directives remain in force until supplanted or rescinded, and for this one, neither has happened. In fact, it was explicitly reaffirmed by then-National Security Advisor Condoleezza Rice in 2001. Accord- ing to the CSIS Commission on Scientific Communication and National Security, This Directive does not assert that the open dissemination of unclassified research is without risk. Rather, it says that openness in research is so impor- tant to our own security–and to other key national objectives–that it warrants the risk that our adversaries may benefit from scientific openness as well. And even though today’s adversaries differ from the ones we faced during the Cold War, the world’s scientific and technological landscape has also evolved. Science and technology are global enterprises, and our ability to constrain their adverse application by unilaterally restricting their dissemination is if anything even poorer today than it was when NSDD-189 was issued.45 Despite this directive’s language barring restrictions on either the conduct or the reporting of fundamental research, it has not had the effect of precluding all such restrictions. A number of recent reports have addressed the effect that “sensitive but unclassified” information controls, contractual clauses, and “deemed export” controls have had on fundamental university research in the United States, particularly that involving foreign nationals.46 The Need for Scientific Talent from Outside the united States Three parallel developments have increased U.S. dependence on foreign scientific talent. U.S. corporations are shrinking their U.S.- based laboratory infrastructure and are expanding their overseas research capabilities. At the same time, U.S. university-based science Directive 189, “National Policy on the Transfer of Scientific, Technical, and Engineering Informa- tion,” September 21, 1985, a directive that applies to “federally-funded fundamental research in science, technology and engineering at colleges, universities and laboratories.” 45Ibid., p. 2. 46Ibid., as above. Also, see Restrictions on Research Awards: Troublesome Clauses 00/00. Released July 2008. See also the original version, Association of American Universities/Council on Governmental Relations. 2004. Restrictions on Research Awards: Troublesome Clauses, A Report of the AAU/COGR Task Force.

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0 BEYOND “FORTRESS AMERICA” research centers have also become more dependent on foreign talent. And, in the U.S. workplace, foreign scientists and technology special- ists are in great demand. Over the past 20 years, many corporate research laboratory opera- tions within the United States that focused on fundamental research have been reduced in scope or eliminated entirely. The trend more recently has been to locate corporate research and development operations over- seas to take advantage of skilled local researchers, lower wages for research work, and eventually, ris- ing product demand in fast-growing economies. In some cases the ability Alcatel and Bell Labs formed a joint venture in China, of a corporation to market its prod- Alcatel Shanghai Bell. Chinese ucts most effectively in a particu- researchers exploring 4G wire- lar country requires placement of a less systems may collaborate research laboratory or a manufac- with their colleagues in turing plant in that country. U.S. Alcatel’s laboratory in and multinational companies now Germany. However, export controls preclude the par- have corporate research laborato- ticipation of 4G researchers in ries located in China, India, Israel, Alcatel’s New Jersey lab. and Europe. An American company that SOURCE: Dr. Jeong H. Kim, President, Bell Labs at Alcatel-Lucent, The Impact locates facilities in other countries is of Export Controls on the US Economy faced with rules that change based (via teleconference). COSSP Meeting, on location. For example, work that March 14, 2008. is conducted by Chinese citizens in a Chinese facility with no technol- ogy or knowledge transfers from a parent U.S. firm would not be subject to U.S. controls, regardless of how sophisticated the design or objective. However, two research teams within the same corporation, one in the United States and one in a foreign country, may not be able to collabo- rate, even on a project involving rather old technology, due to export control regulations. These situations are independent of whether the company has proprietary protections for its research results that would protect the technology from possible diversion outside the company. U.S. research universities have been expanding overseas, setting up affiliates or branches in Hong Kong, Singapore, China, Europe, and more recently, India and the Middle East. Similarly, universities in the United States are partnering with universities across the globe. Much of this expansion has been proceeding for more than a decade and involves challenging research collaborations. These overseas operations

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1 FINDINGS are beginning to attract scientific research talent in these host countries that prefers to work at home. U.S.-based researchers benefit from col- laboration with researchers in these foreign affiliates. But such linkages further complicate the distinctions Locations of the Top 100 that must be drawn under existing Research Universities regulations between U.S. and for- Rankings eign institutions. THES- The influence of foreign uni- Country QS SJTU versities and foreign government Australia 7 3 laboratories is increasing. Univer- Canada 5 4 sities around the world now have China 2 the capability to compete effectively Europea 36 33 for scientific leadership against the Hong Kong 3 Israel 1 1 U.S. science and engineering estab- Japan 4 4 lishment in many fields. The best Korea, South 2 foreign universities now have the New Zealand 1 research equipment and infrastruc- Russia 1 ture to compete with the best U.S. Singapore 2 research universities for students United States 37 54 and researchers. Where limitations SOURCES: Times Higher Education exist on foreigners studying or Supplement-Quacquarelli Symonds working in the U.S. system, foreign (THES-QS) “World University Rankings 2008” and the Center for World-Class universities are well positioned to Universities, Shanghai Jiao Tong extend competing offers. University (SJTU) “2008 Academic Ranking of World Universities.” The United States also depends in significant ways on a global sci- aEurope includes: Austria, Belgium, Denmark, Finland, France, Germany, entific and technological workforce Ireland, Italy, Netherlands, Norway, at home. The percentage of sci- Sweden, Switzerland, and the United ence and engineering workers in the United States who are foreign nationals increased from 14 percent to 22 percent from 1990 to 2000. In 2006, more than half the doctorate-level graduating engineers in the United States were foreign-born, as were 45 percent of the PhD recipi- ents in the physical sciences, computer sciences, and life sciences. 47 Access to foreign scientific talent is controlled by U.S. visa policy, which is based on a statute enacted in 1952 (with major amendments in 1965, 1986, and 1990), and on laws related to non-immigrant visas 47The DEAC Report, pp. 65-66.

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 TABLE International STEM Scholars by Specialization in the United States Major Field of Specialization 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 Growth 2001/07 Health Sciences 23,568 21,070 17,244 19,630 19,590 23,872 1.3% Biological and Biomedical Sciences 12,558 14,749 19,234 19,271 22,500 19,353 54.1% Engineering 9,806 9,945 8,871 10,398 11,056 11,789 20.2% Physical Sciences 12,042 12,052 10,943 11,832 11,735 11,494 -4.6% Agriculture 2,925 3,287 2,570 3,316 3,006 3,930 34.4% Social Sciences and History 3,871 3,456 2,736 3,585 3,491 3,635 -6.1% Computer and Information Sciences 2,838 2,697 3,067 2,779 3,200 2,947 3.8% Mathematics 2,236 2,276 1,990 2,151 2,231 2,161 -3.4% Psychology 860 843 995 1,076 1,164 1,474 71.3% TOTAL 70,704 70,375 67,650 74,038 77,973 80,654 14.1% SOURCE: Institute of International Education, Open Doors report, 2007.

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 FINDINGS that were passed after September 11, 2001.48 The Immigration and Nationality Act of 1952, as amended over the years, governs who may enter the United States. This law is administered by the Department of State, and as of 2003, by the Department of Homeland Security. The general visa requirements for entry to the U.S. pre-date the cur- rent security climate, which is focused on the potential terrorist threats emanating from non-state and substate actors. Formerly, visa restrictions focused on nation-states and defined the risk of admitting a particular person to the United States with reference to that person’s country of origin or current residence.49 Like the export control system, the visa system as it affects visitors who come to the United States for scientific or technological work or study is based on lists. • The Technology Alert List implements the Immigration and Nationality Act and was created during the Cold War to help consular officers identify areas of science and technology in which exports of technology or information might be controlled. The list itself, which sets out general categories of “sensitive” academic disciplines, is no longer made public. But in the recent past, it has included biotechnology, chemical and biomedical engineering, advanced computer and micro- electronic technology, marine technology, robotics, and urban planning. Students and researchers seeking to enter the country to study in these areas are specially reviewed. • The Visas Condor Program (established in 2002) also implements the Immigration and Nationality Act. In addition to specific classified criteria, it sets out 25 countries (including China, India, Israel, and Taiwan) from which anyone applying to enter the United States is specially reviewed.50 • The Visas Mantis Program (established in 1998) focuses on the applicant’s proposed activities in the United States that may have security-related concerns. 48After the terror attacks of September 2001, visa rules were almost immediately modified by the USA PATRIOT Act of 2001, and subsequently by the Enhanced Border Security and Visa Entry Reform Act of 2002, the Homeland Security Act of 2002, and the National Intelligence Reform Act of 2004. 49Then as now, however, the primary determining factor for allowing foreign nationals into the United States for nonpermanent stays is whether the applicant could demonstrate that they planned to return home. 50For both the Technology Alert List and Visas Condor program, see http://www.trael.state. go/law/legal/testimony/testimony_9.html.

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 BEYOND “FORTRESS AMERICA” Like the export control list system discussed above, over time, the visa list system added general categories of academic disciplines or coun- tries of concern, but rarely took any subject or any country off a list. Like the export control regime, the visa restriction system suffers from all the infirmities of a static, list-based system administered by separate and often competing bureaucracies. Consular officials charged with evalu- ating visa applications often lack the necessary technical or scientific expertise to determine efficiently whether an applicant is a legitimate scientific researcher or poses a security risk. Up to six different agen- cies51 may be involved in the visa clearance for a single individual to visit the United States, whether the visit is for a week to attend a conference or for a multiyear stay as a student. After the September 11, 2001, attacks, the visa regime was tight- ened. The interagency review process had been based on a system that allowed entry if no agency raised a specific objection within 10 days. The new process requires an affirmative clearance before a visa is issued, regardless of how long the review process takes. The scientific community—and particularly, the scientific research community—raised a vigorous protest in 2003 over the post-9/11 visa rules because too many legitimate scholars were being caught in the regulatory net.52 The State Department responded and within two years, the most draconian rules affecting graduate students were ameliorated significantly. Students and exchange visitors applying for non-immigrant visas were given priority, and the duration for students in the United States with Visas Mantis clearances was extended from one year to a maximum of up to four years for students. However, significant barriers still remain for scholars and researchers seeking visas to attend confer- ences or for other short-term professional trips in the United States. 53 51For example, the U.S. Embassy located in the country where the researcher has applied for a visa, the CIA, FBI, the Departments of Commerce and Homeland Security, and the Department of Treasury’s Office of Foreign Assets Control. 52The scientific community protested in a House Science Committee hearing on March 26, 2003, and received the Committee’s full support. Two weeks later, in a speech at the AAAS Science and Technology Policy Colloquium, John Marburger, the Director of the Office of Science and Technol- ogy Policy, also lent his support to addressing these visa issues. For a summary of the hearing, see “House Science Committee Calls for Review of Visa Policy Changes” by Charlene Porter, available at http://www.america.go/st/washfile­english/00/March/000111retropc0.0.html, and for the text of the director’s speech at AAAS, see http://www.ostp.go/pdf/jhmaaasisas.pdf. Accessed October 15, 2008. 53One problem stems from the time it takes to fulfill the requirement from the National Intel- ligence Reform Act of 2004 that 100 percent of all applicants be interviewed.

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 FINDINGS The uncertainty surrounding the ability of even prominent members of the international scientific community to acquire visas has obvious negative effects. • Foreign candidates for corpo- Dr. Goverdhan Mehta—former director of the Indian Institute rate jobs or university positions go of Science and the president elsewhere. When foreign nationals of the University of Hyderabad, develop technologies for foreign and current president of companies, the United States loses the International Council for the advantage of determining how Science, an organization those technologies will be developed comprising the national scientific academies of 29 and deployed. countries including the United • The often prohibiting dif- States—was invited to give ficulties of foreign researchers to a lecture at the University participate in conferences held in of Florida in 2006. His visa the United States causes conference application was initially delayed pending review in Washington organizers to seek sites outside the to determine “the potential use United States. of his research in chemical • When entry restrictions ex- weapons.” Although the visa clude or discourage the best foreign was ultimately issued, Mehta researchers from working for U.S.- withdrew his application and based companies, the U.S. military cancelled his trip to the United States. may have access to the world’s best work only after it is commercialized SOURCE: Available at http://www. in a foreign country. sciencemag.org/cgi/content/full/311/ 5765/1229a?rss=1. Last accessed July 22, 2008. With the need to “run faster” to remain competitive in the global economy, we need to be doing more, not less, to attract the most highly skilled personnel from all over the world to work in the United States. Current law has the perverse effect of permitting foreign students to enter the United States only if they can prove to a consular officer’s satisfaction that they will take what they learn home with them. For most categories of prospective student or scholar, anyone who admits that he or she might want to stay in the United States and contribute to this country’s technological competitiveness must—by law—be denied entry. Re-examining and re-calibrating visa restrictions would be an important step toward assuring that the United States is the destina- tion of choice for foreign scientists and students, as well as the leading producer of cutting-edge scientific research. The benefits to national

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 BEYOND “FORTRESS AMERICA” security appear to be negligible from excluding credentialed, recognized foreign scientists, particularly if they are sponsored by a research institu- tion or credentialed U.S. researchers. More important, the damage to U.S. economic prosperity is significant. The government cannot protect U.S. jobs by denying entry to foreign students and researchers. The jobs will simply go elsewhere. The biggest risk to U.S. jobs is a lack of economic competitiveness. Scientific talent working in the United States, from whatever country, promotes the goal of full employment. FINDINg 4 A new system of export controls can be more agile and effective, recognizing that, under current global conditions, risks to national security can be mitigated but not eliminated. An important caveat attaches to any discussion of changes in the cur- rent system of export controls: there is no “risk-free” solution. Today’s system is not risk-free either; in fact, it is arguably becoming more and more dangerous because the inclination to equate control with safety gives a false sense of security. The national security threats facing the United States from poten- tially hostile nation-states and actively hostile non-state terrorist groups are numerous, diverse, and wide-ranging. We can minimize the risk from these threats, but no system can avoid them entirely. Somewhere, somehow, our nation’s protective systems will be breached in the coming years; in virtually all cases, the means to accomplish these breaches exist in open markets worldwide. There is no realistic prospect of controlling all means of doing physical harm that might be used against us. The United States should not abandon its high walls around the technologies that can deliver a substantial and sustainable security advantage. There should be strong restrictions on technologies critical to the proliferation of nuclear weapons and on physical access to certain biological pathogens; if used for destructive purposes, both can cause catastrophic consequences. Likewise, there should be strong restrictions on those scientific breakthroughs with uniquely military applications. Stealth is one such example. But where there is a “civilian” use that is commercially relevant for legitimate productivity or consumption purposes in global markets, we should regulate very cautiously. Where technology is internationally accessible, along with a good market potential for products incorpo-

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 FINDINGS rating that technology, unilateral export controls enforced only by the United States cannot provide any meaningful protection. U.S. industry is a major source of military equipment for our allies. When export restrictions are injudiciously applied, the result can be to undermine their confidence that the United States will be a reliable supplier of modern arms. And, as Unmanned aerial vehicles (UAVs) are relatively inex- a result, it can stimulate the rise of pensive aircraft, built from arms production capability outside current technology. They are the United States. Based on their well suited to in-theater surveil- range and payload, unmanned aer- lance where U.S. and allied ial vehicles (UAVs) are classified forces work closely together. as cruise missiles under the multi- However, export regulations restrict export or exchange of lateral Missile Technology Control information on UAVs by clas- Regime whose objective is non- sifying UAVs as cruise missiles proliferation of weapons of mass based on range and payload. destruction. U.S. implementation of This is yet another case of the regime using severe restrictions export regulations authored in a past era impeding military has caused frustration among allied cooperation today. militaries and may be encouraging other countries to develop the very technology being restricted. Under current global conditions, risks to national security can be mitigated, but not eliminated. A careful balance among interests is required, and the burden of proof must be on those who seek to restrict access, rather than the opposite. *** The committee finds that a clear, over-arching statement of national policy can be a useful means of resolving some important bureaucratic conflicts with respect to export controls. National Security Decision Direc- tive 189, in effect since 1985, is an example of this approach and provides an essential building block for a new export control policy. A 1982 study sponsored by the National Academies concluded that government con- trols on the publication of results from federally funded research were intruding into the conduct of research to a degree that could adversely affect important advances in science in the United States.54 By Executive 54The Corson Report.

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 BEYOND “FORTRESS AMERICA” Order, then-President Ronald Reagan required that government agencies determine in advance whether the products of federally funded funda- mental research would be classified. If classification was not justified, then these research products would remain unrestricted and could be pub- lished by the researcher or sponsoring institution. This policy statement provides protection for the publication of much of the research done in academic institutions. This balancing of national security concerns and the benefits of open publication of scientific work has served the nation well. The committee finds that a final, competent, neutral decision- making body, external to the competing agencies, can also be a useful means of resolving these vexing conflicts inherent in the current system of export controls. This kind of decision-making body can be adapted for the export control system so that both sides, the would-be exporters and the export controllers (or other interested government agencies), can marshal their evidence and a reasoned decision can be made. If favorable to the exporter, a prompt decision would mean that business exporters are not deprived of a market while foreign competitors move in and researcher “exporters” are not deprived of the opportunities to benefit from international collaborations. The existing system of export controls is not our only alternative. Nor do we have to abandon export controls altogether in the face of global competitive forces. Numerous studies have made more targeted proposals. This report sets out the high-level changes that need to take place by direction of the President before smaller changes recommended elsewhere can be implemented successfully. The committee finds, how- ever, that a better system is imperative and can be accomplished through a single Executive Order setting the system on a path much more pro- tective of both national security and economic prosperity.