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APPENDIX I 336 APPENDIX I A Proposal for Increased Use of Industry Technical Expertise in the U.S. Export Control Process Paul Freedenberg Baker and Botts This paper examines the mechanisms by which the U.S. government obtains technical advice on U.S. and multilateral export control matters, in particular advice from industry experts. The first three sections of the paper describe, respectively, how technical advisory committees, technical working groups, and technical task groups function. The final section discusses problems with the current technical advisory system and recommends changes in the system in order to increase the participation of industry experts in decision making on U.S. technology transfer policy. ROLE OF THE TECHNICAL ADVISORY COMMITTEES Section 5(h) of the Export Administration Act (EAA) of 1979, as amended, mandates the existence of technical advisory committees (TACs) and charges them with the task of advising and assisting the executive branch of the U.S. government in matters relating to export controls. The secretary of commerce can establish a TAC on receipt of a request for such a committee from substantial segments of an industry that produces goods or technical data subject to export controls. The TACs enable private individuals from industry to discuss their concerns directly with government officials and to attempt to provide some perspective on national security issues in light of U.S. worldwide competitiveness. Currently, there are 10 TACs, as follows: 1. Automated Manufacturing Equipment (AMETAC)
APPENDIX I 337 2. Computer Peripherals, Components, and Related Test Equipment (CPTAC) 3. Computer Systems (CSTAC) 4. Electronic Instrumentation (EITAC) 5. Materials (MATTAC) 6. Biotechnology (BIOTAC) 7. Semiconductor (SEMITAC) 8. Telecommunications Equipment (TETAC) 9. Transportation and Related Equipment (T&RETAC) 10. Militarily Critical Technologies List Implementation (MITAC) Each TAC consists of representatives of U.S. industry and government, including representatives from the Departments of Commerce, Defense, and State, the intelligence community, and, at the discretion of the secretary of commerce, other departments and agencies of the U.S. government. A large majority (about 90 percent) of the representatives on each TAC are from industry. No industry representative, however, may serve on a TAC for more than four consecutive years. Thus, in order to obtain broader participation, the benefit of experience and expertise is sacrificed. TAC Responsibilities and Authority As outlined in Section 5(h) of the EAA, the tasks of the TACs are as follows: 1. To provide advice and information with respect to questions involving technical matters related to the particular TAC's area of expertise. 2. To provide information on worldwide availability and utilization of production technology. 3. To advise with respect to licensing procedures that affect the level of export controls applicable to any goods or technology. 4. To assist in the periodic review of the Commodity Control List. 5. To play a role in the revision of qualification requirements for minimum thresholds for any goods eligible for export under a distribution license. 6. To review draft regulations prior to their issuance. 7. To assist in the review of export control regulations and the Commodity Control List in order to determine how compliance with their provisions can be facilitated by simplifying the regulations or the list. 8. To advise the President with respect to the likely effect of the imposition of export controls for foreign policy purposes. The TACs are also involved in the review of applications for U.S. export licenses and applications for approval by the Coordinating Committee for Multilateral Export Controls (CoCom) of exports from other CoCom countries. Each of the 10 TACs focuses on products and technology falling within
APPENDIX I 338 specified entries on the Commodity Control List. The procedures by which the TACs perform the functions listed above are somewhat informal; there are no published regulations describing, for example, the TACs' role in the interagency review of proposed regulations. The TAC program is administered by the Office of Technology and Policy Analysis (OTPA) of the Department of Commerce's Bureau of Export Administration (BXA). The OTPA coordinates the activities of the TACs and assists them with administrative and secretarial support. In addition, an OTPA representative is assigned to each TAC to provide policy guidance. The agencies of the U.S. government are under no obligation to adopt recommendations of the TACs. The role of the TACs is to inform policymakers fully on the technical aspects of a particular license or commodity list entry so that their decisions will be based on knowledge of all relevant facts. Consequently, policymakers are free to ignore the advice and even the factual findings of the TACs. This has led some TAC members to criticize policymakers involved in the export control process for failing to respect and reasonably adopt the recommendations and findings of the TACs. Recently, however, steps have been taken to strengthen the role of the TACs in the export control process. It has clearly been the intention of Congress that the TACs have a central role in the formulation and application of the U.S. export control regime. For instance, amendments to the EAA contained in the Omnibus Trade and Competitiveness Act of 1988 attempted to increase and strengthen the role of the TACs in the activities listed above. Also, the TACs have been put under the control of the Office of the Deputy Assistant Secretary of Commerce, a move intended to give the TACs more visibility and prestige. In addition, the Department of Commerce is in the process of writing a TAC handbook, which will, for the first time, delineate the particular procedures that the TACs and other government agencies are to adhere to in implementing those provisions of the EAA that describe the duties of the TACs. During 1989, the TACs began to become more involved in U.S. participation within CoCom. For instance, an industry representative from one of the TACs has been participating in CoCom negotiations in Paris. (This is such a new concept that travel reimbursement has not been authorized, and the industry representatives on a TAC must pay their own travel expenses.) The TACs are also involved in the U.S. review of particular license applications brought to CoCom by other governments. TAC Meetings Roughly 80 TAC meetings are held annually. Meetings are generally announced in the Federal Register at least two weeks prior to the date on which the meeting is to be held. These meetings are open to the public,
APPENDIX I 339 except when the TAC is reviewing (a) specific applications for licenses to export from the United States; (b) specific applications that were brought to CoCom by a foreign government and are being reviewed by the U.S. government, or (c) confidential government proposals to decontrol certain technology. Most frequently, meetings are ''partially closed." This means that the public may attend as much of the meeting as is concerned with matters other than a specific application or confidential government proposals; when the TAC members begin to discuss confidential matters, members of the public are asked to leave. Unless a meeting is "closed," the public is invited to participate in the meeting, and members of the public may present papers or comments during the meeting. Often, members of the public provide briefing papers that are distributed to TAC members prior to a meeting so that each TAC member can read and consider the paper prior to the scheduled meeting. As companies have become aware of the role of the TACs in export administration, and as the role of the TACs has continued to expand, representatives from the public have more frequently participated in TAC meetings. The Militarily Critical Technologies List The Militarily Critical Technologies List (MCTL) is an outgrowth of a recommendation made by J. Fred Bucy of Texas Instruments to the Defense Science Board in 1976. A Defense Science Board task force chaired by Dr. Bucy proposed that the Department of Defense maintain a list of strategically critical elements, such as arrays of know-how; keystone manufacturing, inspection, and test equipment; keystone materials; goods accompanied by sophisticated know-how; and items of intrinsic military utility.1 Section 5(d) of the Export Administration Act of 1979 (as amended) provides the authority for the secretary of defense to maintain such a list. The basic concept of the list is to focus control on technology and critical manufacturing know-how rather than on finished products. ROLE OF TECHNICAL WORKING GROUPS Technical Working Groups (TWGs) were established by the Institute for Defense Analyses (IDA) under contract to the Department of Defense. The TWGs are composed of knowledgeable technical persons from various elements of the Departments of Defense, Energy, Commerce, and State, other governmental agencies, industry, and academia. Membership in the TWGs is about evenly divided between members of industry/academia and government. Each TWG is responsible for a specific category, or group of categories, on the MCTL and for identifying technologies of a militarily critical nature in its area of responsibility. The TWG's job is to ensure that timely
APPENDIX I 340 recommendations are made to set in motion the process of bringing such technologies under export control or decontrol. The TWGs also assist in assessing foreign capabilities in the technologies they are charged with monitoring. Inclusion of industry representatives in the TWGs provides for an interchange between industrial experts and technical experts from the government. Currently, there are 12 TWGs; their organization parallels that of the 12 technical task groups (discussed below) established by the Department of State. They are as follows: ⢠Chemical and Materials (TWG1) ⢠Transportation (TWG2) ⢠Telecommunications (TWG3) ⢠Avionics, Navigation, Naval Equipment and Identification (TWG4) ⢠Semiconductors and Electrical Components (TWG5) ⢠Instrumentation (TWG6) ⢠Computers (TWG7) ⢠Industrial Manufacturing and Process Control Equipment (TWG8) ⢠Systems and Munitions (TWG9) ⢠Foreign Capabilities (TWG10) ⢠Nuclear Energy Systems (TWG11) ⢠Biotechnology (TWG12) TWG Responsibilities and Authority Each of the TWGs is responsible for accomplishing the necessary analysis and actions required to update and implement the portions of the MCTL for which it is responsible. The TWGs as a body must also ensure that any actions taken that affect other sections of the MCTL are coordinated with the other TWGs concerned. Some of the specific TWG member responsibilities are as follows: 1. Provide analysis and technical assessment for use in drafting MCTL items, CoCom proposals, or language for Department of Commerce implementation of the MCTL in West-to-East or West-to-West regulations. 2. Prepare drafts of MCTL items. 3. Assist in drafting technical proposals for CoCom. 4. Assist in drafting Export Administration Regulations. 5. Review and assist in resolving user comments on draft documents. 6. Review proposals from other TWGs and committees. 7. Provide information on foreign technology and products. 8. Arrange for regular attendance at meetings. Recommend new members or alternates.
APPENDIX I 341 9. Assist, as requested by the chairperson, in acquiring information on subject matter or other technical areas within the member's organization or agency. 10. Provide notice of emerging technologies they become aware of during their normal course of work or research, to include a short summary of the technology of concern. 11. Act as technical advisors for Department of State list review meetings and CoCom sessions when requested. 12. Provide unique information and briefings to other committee members. Each TWG is responsible for ensuring that action is taken to prepare and forward to the appropriate technical task group technical proposals that implement its portion of the MCTL.2 TWG Membership and Application Process The chairperson for each TWG is appointed by the IDA director of critical technologies and has overall responsibility for the operation of that TWG and any subgroup or subcommittee formed to support it. This general responsibility entails many specific responsibilities, including staffing the TWG with knowledgeable and technically competent members from industry, academia, and the government. The size of each TWG and the makeup of the membership are the responsibility of each chairperson. Members of the TWGs are selected for their high degree of competence in their technical areas. Each member must volunteer his or her services and agree to participate actively in the technical activities of the TWG. The members must also possess a Secret security clearance. TWG Meetings Meetings of the TWGs are usually held at the IDA facilities in Alexandria, Virginia. Occasionally, meetings are held at other locations in the United States. These off-site meetings facilitate attendance of technical experts who may be concentrated in a geographical area remote from IDA; they also give TWG members an opportunity to tour facilities where the technology or products under consideration are being developed, manufactured, or used. Detailed minutes of the meetings are furnished to all attendees and certain key government and industry management personnel. A meeting coordinator at IDA provides administrative support. TWG meetings are normally attended only by TWG members who possess a Secret security clearance. From time to time, unclassified TWG meetings are held so that a wide range of U.S. personnel from academia and industry who do not possess security clearances can participate. On selected occasions,
APPENDIX I 342 open meetings are held on such subjects as optics and computer software. Non- U.S. personnel in industry and academia are free to participate in these open meetings. ROLE OF TECHNICAL TASK GROUPS The technical task groups (TTGs), or their individual members, also assist in identifying technical experts or serve as technical experts to support the U.S. delegation to CoCom during negotiation of specific items. In addition, they participate in strategy sessions and assist in drafting statements, proposals and counterproposals, and other documents; participate and assist in list review follow-up actions; and track items of interest to ensure that CoCom decisions are subsequently reflected in changes to the appropriate U.S. export control documents. Some of the specific TTG member responsibilities are as follows: 1. Assist in establishing positions on appropriate CoCom Industrial List (IL), International Atomic Energy List (IAEL), and International Munitions List (IML) items and formulate recommendations. 2. Assist in drafting comparisons of proposals, and accompanying commentary as necessary, to facilitate consideration of current drafts of proposals. 3. Furnish technical advice during the consideration of proposals forwarded by other TTGs for coordination. 4. Review, evaluate, and make recommendations as to U.S. positions on proposals of other CoCom nations. 5. Review and resolve user comments on draft documents. 6. Evaluate IL and IML coverage of new and emerging technologies. 7. Assist in the preparation of an overview and substantive discussion memorandum for delegation members of items of TTG responsibility prior to each negotiating session. 8. Recommend technical experts and other support staff to be available to support the U.S. delegation during negotiations of specific CoCom items. 9. Participate in strategy sessions and assist in drafting statements, proposals and counterproposals, minutes and summaries, cables, records of discussions, and other documents as required. 10. Prepare and maintain during CoCom negotiations a current status summary. 11. Redraft and resubmit proposals as necessary in light of comments and concerns of other CoCom nations expressed during negotiations. 12. Participate in and assist in list review follow-up actions. 13. Track items of interest to ensure that CoCom decisions are subsequently reflected in changes to the International Traffic in Arms Regulations, the Commodity Control List, and the list of nuclear equipment and materials
APPENDIX I 343 controlled under the licensing authority of the Nuclear Regulatory Commission. The TTGs are also responsible for evaluating coverage of new and emerging technologies on the Industrial List and for formulating recommendations for new or revised coverage as necessary. TTG members are all government personnel; a chairperson is chosen from the participating government agencies and formally designated by the Department of State. Industry representatives may serve as advisors to TTGs at the discretion of the chairperson. Each TTG has an IDA-provided technical advisor to its senior Defense Department representative, who assists in preparation of U.S. proposals to CoCom, the defense of proposals during negotiations, and other secretariat functions. DISCUSSION AND RECOMMENDATIONS The MCTL became a useful guide to the strategic value of dual use technology and products. It is an encyclopedia of critical technology, substantially longer than the Commodity Control List it was designed to guide. The MCTL is less relevant today, however, in the wake of the June 1990 CoCom High-Level Meeting and the political decision by the President to reduce the CoCom list of controlled commodities to a bare minimum (i.e., a "core" list). It would be useful for the TWGs to continue to meet from time to time to update the MCTL and to do whatever special studies of dual use technologies the Departments of State and Defense think appropriate. However, because of the need for clarity and predictability as to the appropriate place for industry technical input into the U.S. export control process, it should be made clear that the Commerce Department's TAC system is the appropriate entry point for industry input and advice on key policy issues, such as the technical parameters of the U.S. and CoCom control lists. It is important not to have a situation in which there are dueling industry experts. As a consequence, the TACs must be the focal point for industry input into list formulation and advice on specific CoCom licensing cases. Other sources of expertise are available to the U.S. government, such as the scientists and technicians of the armed services and national laboratories, but there is no inherent value in spreading industry expertise throughout the U.S. government. This does not mean that the U.S. government should stop recruiting industry experts to participate in the TWGS, but it should be made clear that the key entity for industry input into the CoCom list review process is the TAC. That clarification will also raise the morale of TAC members, thereby aiding in the recruiting process for that advisory group. The European system for drawing on industry expertise is far less formal than that of the United States. For more than a decade, Philips, the premier
APPENDIX I 344 Dutch electronics company, has provided a technical representative for the Dutch CoCom delegation. Similarly, Siemens of West Germany has long provided technical experts for the German CoCom delegation, and International Computers Limited (ICL) has furnished similar expertise to the British team at CoCom. Although the European system is far less formal and administratively less transparent than that of the United States, no complaints have surfaced from other companies in those countries that the firms have taken unfair advantage of their position. Such suspicions, however, have frequently been voiced by U.S. companies, who find it difficult to believe that Philips, Siemens, or ICL do not derive some benefit from insider information and special treatment. Nonetheless, the U.S. government has had a long tradition of bending over backwards to avoid giving even the appearance of favoring one U.S. company over another. Obviously, the informal European system is fraught with the danger of at least the appearance if not the reality of conflict of interest. Since there are at least two or three, and many times a half-dozen or more, major firms doing business in each of the major categories of the Commodity Control List (computers, telecommunications, electronic components, machine tools, and so on), it would seem unfair and arbitrary to single out an expert from one firm to be the industry advisor to the U.S. government. In every major category, there is the danger of one firm seeming to gain an unfair advantage through participation in CoCom. That is why it was not until 1989 that TAC representatives were asked to participate in ongoing CoCom negotiations, and even then it was done under strict guidelines that kept them from learning individual firm identities in cases before CoCom and from dealing with specific foreign licensing cases. It is possible for industry expertise to be provided during CoCom negotiations, but with the U.S. system and regulatory framework, such expertise has to be carefully circumscribed. The conditions for industry representatives' involvement, a clear and open process for nominating those individuals, and an explicit statement of the areas in which they cannot participate would facilitate the creation of a permanent industry advisory system at CoCom headquarters. After the establishment of such rules, utilizing TAC chairpersons (or their designees) with a Secret security clearance ought to be quite easy if there is the political desire and will to do so. The TACs have been an important yet grossly underutilized asset of the Commerce Department. The major reason behind this underutilization is a problem of management. The TACs meet several times a year. They frequently come forward with detailed recommendations for changes in the CoCom control list or with recommendations regarding the determination of foreign availability. All too often their recommendations have, for all intents and purposes, been ignored. That is, either their recommendations for list changes have not been raised by the Commerce Department in interagency
APPENDIX I 345 meetings, or their recommendations for change have been voted down. Sometimes their foreign availability recommendations have been sent back to the Office of Foreign Availability in the Commerce Department. There, they have either died a slow bureaucratic death of endless debate, or they have not been acted on in a sufficiently timely manner so as to demonstrate to the TAC members that their proposals (or opinions) had an effect on policy. This nonaction, in turn, has led to a loss of morale, to a sense that the hard work and long hours went for naught. Inevitably, there has been a demoralizing effect on the entire process. Senior engineers and officials of high-tech companies are not likely to want to devote their time and effort to a process that has no visible result. Eventually, they drop out, or they recommend against TAC membership to their talented colleagues. Sometimes they will simply miss meetings, or they will not put in the effort necessary to construct quality recommendations. Whatever the mode, the TAC process is undermined and diminished. Perhaps these individuals should have been counseled to have patience and to keep plugging away. But most engineers and members of high- tech industries do not have the patience and tenacity necessary to operate at the slow pace of government decision making. Some of the problem stems from the fact that during the 1980s, the U.S. government (or at least the Department of Defense) had decided, as a matter of policy, not to decontrolâor even downgrade the CoCom classification ofâany product involved in the manufacture of semiconductors. That would explain why recommendation after recommendation for change in the semiconductor manufacturing equipment list was ignored or fell into the bureaucratic "black hole" of interagency review, never to be heard of again. The simplest solution to this problem would have been to communicate frankly with the members of the SEMITAC, to tell them that it was highly unlikely that their recommendations would be acted on. Instead, the SEMITAC met several times a year, took up the time and effort of some of the leading semiconductor engineers of some of the leading manufacturers in the country, such as Intel and Hewlett-Packard, yet failed to have any visible result in terms of either list revisions or foreign availability decontrols (with the notable exception of the famous silicon wafer saw decontrol in 1987). Fundamental changes are needed in the way the Commerce Department manages and utilizes the TACS. First, the status of the TACs and the level of their interaction with officials of the Commerce Department must be enhanced. Currently, TACs and their chairpersons interact with mid-level staff of BXA's Office of Technology and Policy Analysis. By contrast, members of the President's Export Council, Subcommittee on Export Administration (PECSEA) have regular (at least quarterly) meetings with officials at the level of under secretary or assistant secretary in the Bureau of Export Administration. Frequently, equally high-level officials of the International Trade Administration (ITA) join the meetings. It would be difficult
APPENDIX I 346 to have this level of interaction for every member of the eight TACS. But an umbrellaâor super-TACâcommittee of TAC chairpersons could be formed and could have the same interaction with BXA and ITA officials, as well as the secretary of commerce, who has traditionally addressed the PECSEA annually. Increased interaction and feedback would have the immediate result of raising morale. This, in turn, would help the recruitment process. It also would enable TAC members to get policy-level feedback (and, as appropriate, commitments) on their proposals, so that the unfortunate history of the SEMITAC would not be likely to be repeated in the 1990s. With regard to middle management of the TAC process, a new position, director of the technical analysis division, should be established at the Senior Executive Service (super-grade) level. Until there is a senior executive with the responsibility for the overall Commerce Department positions on CoCom list review proposals, the TACs will not have the focus and the status they deserve. The current director of the Office of Technology and Policy Analysis simply has too many other responsibilities to devote the time and attention necessary to coordinate and integrate the TACs into the Commerce Department's CoCom list review process. Once the new director is established, the top priority should be the integration of the TAC chairpersons into the drafting of the CoCom list review positions. This would include full participation in State Department TTG discussions. This happened in November and December 1988 and during the 1990 core list discussions, but it has not been institutionalized and there could easily be backsliding into nonparticipation once again. At the same time that the status enhancement and integration of the TACs into the policy process are accomplished, it would also be appropriate to depoliticize and centralize the TAC nomination process. Although TAC members have historically been viewed as highly specialized technical advisors, TAC membership is sometimes the result of partisan political payoff. The TAC chairpersons, who must utilize the talents of committee members to formulate TAC positions, have virtually no role in the selection process. Almost as bad, the political clearance process slows still further an already long security clearance process. If the TAC chairpersons are to be upgraded and integrated into the Commerce Department/BXA policy process and have a voice in the State Department list review process, it makes sense to retain the political clearance process for those individuals. The only justification for extending that political clearance to the other TAC committee members would be for the purpose of extending the number of political plums available to the victorious presidential partyâhardly the sort of reasoning that should guide those concerned about improving the technical expertise available to the nation's CoCom team.
APPENDIX I 347 Finally, if the TACs do become an integral part of the CoCom list review process, full compensation should be arranged for all travel expenses, particularly to Paris to participate in CoCom deliberations. The next few years are likely to be a time of austerity with regard to government expenditures, but surely the government can ensure that those who volunteer their time and technical expertise do not also have a special tax placed on them instead of repayment for their expenses. The changes that have been outlined above would be quite easy to implement. They are fully in keeping with the legislative intent of the Export Administration Act and the Omnibus Trade and Competitiveness Act of 1988 with regard to the consultation process for control list changes and CoCom list review proposals. There is likely to be resistance from other agencies, particularly the Defense Department, as the TACs are fully integrated into the process both in Washington and in Paris. However, it is clear that the current approach to utilizing the TACs has repeatedly failed. Indeed, it has alienated and, at times, infuriated members of the business community who have volunteered their time and effort to the U.S. government. The government should do better. The implementation of these proposals will start that process. ALTERNATIVE MECHANISMS Are there any better mechanisms for involving high-level industrial leaders in technology transfer policy decisions than through the current advisory process? The answer is "probably not." There is no reason to invent a new mechanism when all that needs to be done is to streamline, focus, and manage better the current technical advisory system. If the companies affected by export controls recognize that the participation of their high-level engineers has a measurable payoff in improving the export control system under which they operate, the top executives in those companies will authorize the funds and identify the appropriate individuals to participate in the TACs. The current TAC participation in formulating the core list of CoCom-controlled products and technologies, scheduled to be completed by Spring 1991, may very well convince key members of industry that TAC participation does make a difference. Such a positive experience should do more to enhance future participation than all the structural changes and promises the U.S. government could make. As suggested above, a number of key improvements in the technical advisory system should be made, but the key to a well-functioning system in the future is a genuine commitment on the part of the Commerce Departmentâand, indeed, the U.S. governmentâto involve industry representatives in the review process, to give them appropriate feedback
APPENDIX I 348 on their advice and counsel, and ultimately, to act on their suggestions for improvements in the control lists and their implementation. NOTES 1. U.S. Department of Defense, Office of the Director of Defense Research and Engineering, An Analysis of Export Control of U.S. TechnologyâA DoD Perspective (Report of the Defense Science Board Task Force on Export of U.S. Technology) (Washington, D.C.: U.S. Government Printing Office, 1976). 2. For more information, see U.S. Department of Defense, Office of the Under Secretary of Defense (Acquisition), The Militarily Critical Technologies List, Vol. 1, List of Militarily Critical Technologies (Washington, D.C.: U.S. Government Printing Office, 1989).
