controls, foreign policy controls over U.S.-owned foreign entities, written assurance requirements and other importer certifications, more stringent controls on technical data (including visits and employment of non-U.S. citizens), controls over foreign products with U.S.-origin technology, parts, or components, control of many civil products and technologies under the munitions control regime, more burdensome and complex licensing regimes, and more stringent enforcement mechanisms. In a world of diffuse economic and technological power, the widespread use of unilateral export controls is counterproductive.
Although some CoCom countries practice limited or unofficial forms of reexport controls, the United States is the only country formally requiring that its permission be obtained by non-U.S. parties for the reexport of goods or technology that have come to rest in another country. In addition to items unchanged in form, non-U.S. technology may be controlled if it is commingled with U.S.-origin technology, and foreign-made goods may be controlled if they contain more than 25 percent U.S.-origin parts or components (10 percent if the destination is one of seven selected countries controlled for foreign policy reasons).
U.S. rules require that written assurances be obtained from recipients of controlled dual use technical data that neither the data nor their direct product will be reexported to a controlled country without U.S. permission. In addition, goods and technical data received under license from the Department of State cannot be reexported without U.S. permission, and State does not allow for a 25 percent de minimus on the foreign incorporation of U.S. parts and components.
These reexport rules are enforced through administrative, civil, and criminal penalties and by restricting or denying trade with the foreign violator. The U.S. rationale for reexport controls is that the absence of such controls allows third-party middlemen to make sales where U.S. firms are restricted and thus undercuts the purpose of the control program and disadvantages U.S. exporters. Other governments say that reexport controls cannot be effectively enforced, and most say they have no legal authority to require or enforce reexport controls. The major adverse reaction to U.S. reexport controls arises when they are imposed in connection with U.S. unilateral foreign policy objectives and when their application is complex, such as the rules for parts, components, and technical data.
Data collected in 1986 for the Allen panel showed that compliance with U.S. reexport controls is minimal among foreign parties who are independent of U.S. firms.17 Although BXA licensing data show that more than 11,500 cases, at a value of close to $41 million, were approved for reexport in 1989, there is virtually no way to estimate the portion of total controlled reexports these figures represent (see Table 6-7).
The panel's European fact-finding delegation was told by a major German industrial association that member industries are advised to comply only with