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COMMISSIONED PAPERS for the report FINDING COMMON GROUND: U.S. EXPORT CONTROLS IN A CHANGED GLOBAL ENVIRONMENT JAPAN'S STRATEGIC TRADE CONTROLS: A NEW ERA Donald Goldstein THE STATE OF PERESTROIKA. UNION Joel Hellman . A SURVEY OF U.S. SPECIALISTS ON THE SOVIET NATIONAL SECURITY AND FOREIGN POLICY EXPORT CONTROLS International Business-Government Counsellors, Inc. RECENT DEVELOPMENTS IN EASTER BLOC COUNTRIES AND THEIR EFFECTS ON COCOM, WEST GERMAN AND EUROPEAN PERSPECTIVES Wolfgang Reinicke Panel on the Future Design and Implementation of U.S. National Security Export Controls Committee on Science, Engineering, and Public Policy National Academy of Sciences National Academy of Engineering Institute of Medicine 1991
RECENT DEVELOPMENTS IN EASTERN BLOC COUNTRIES AND THEIR EFFECTS ON COCOM: WEST GERMAN AND EUROPEAN PERS PECTIN7ES Wo~ fgang H. }keinicke The Brookings Institution and Yale University May 29, 1990 a study prepared for the National Academy of Sciences ~ Panel on the Future Design and Implementation of National Security Export Controls
IRE ~ am ENDIVE SAY 1. ~rION 1.1. Purpose Of Stat 1.2. ~t~1~y l.3. A Word Of Caution 2. ~ UNWED SO AND ~ COEVAL P~C OF A: D=T~ ANON; ALIIES 2.1. me Political Disunion 2.1.1. Nature of E~st~ Pelatior~s: Creative Oration vs. Eve Ant~i~ 2.1.2. ~~ As An J~trL~t of Foreign Policy 2.2. me E~znic Dimension 2.2.1. On AS An J=tr~t of dial Policy 2.2.2. EXb~1 True: - tic Right vs. Primula 2.2.3. Tic Iin~: Cl~ Tim vs. The its 2.4. by . · · . 1111 1 1 2 2 4 s 5 10 ~3 14 19 20 23 3. ~ DEMONIC ~~ IN ]~ EAST Ad 1'1~ ~fE=C~ONS t~ axes 25 3.1. ~ On Socratic public, On, arm On Unification 25 3.1.1. On Ed the Unified Any 3.~.2. SO arx! odium Run: Endemic Unity arm Politick Division~licati~ for don 3 .~.3 . three S~iz~1 aloes 3.2. Astern Eye 3 . 3 . ~ Sc viet Union 3.4. by 25 26 36 41 50 72
4. (I: ~ EI3K)PEAN DIMENSION 4 . 1 . Icon 4.2. ExE=rt Controls: A (an Ran Foreign Policy? 4.3. Export Controls Ark The Marinate Of lye Single Market S. C~SICtJ: IlIE FUIU~ OF ~ ~1~ AND ORES AF~X A Sac B 75 75 78 80 102 107 113 ******************
EXEC~T~ RI~RY This study examines the Federal Republic of Germany's (F.R.G.) and the European Community's (EC) perspectives on and disagreements with the U.S. on the future of CoCom in light of the developments in the Eastern bloc since the Fall of 1989. Three elements determine the F.R.G.'s position. The first is a series of five policy differences between the U.S. and the F.R.G. regarding adequate responses of their governments to developments in the East. These disagreements are historical in nature and have divided the allies for many years. First, contrary to the U.S., the F.R.G. has always emphasized a strategy towards the East that relies not only on the maintenance of military security but also on economic cooperation. This economic dimension of East-West relations is an important instrument in improving the Federal Republic's overall relationship with the East, and contributes to greater national security. Second, due to the low degree of East West economic interdependence, the F . R . G . views economic sanctions against the East as inef f ective . Moreover, economic sanctions are mostly reactive and they do not provide any constructive impetus for changing the overall East-West relationship. Third, white the F . R. G . does not see any systematic effort by the U. S. to use Cocom to further its commercial interests, there is great concern that the impending liberalization process be conducted in a way that avoids discrimination against particular industrial sectors . Fourth, export controls are in stark contradiction to the basic principles of the F.R.G.'s external trade relations. Contrary to the U.S., where trade is a privilege regulated through a licensing procedure, it is a basic right in the F.~.G. Fifth, the economic ties of the F.R.G. with Eastern Europe and the Soviet Union have been of much greater intensity and historical duration than those of the U.S. and the economic and political interests at stake in East-West trade are of much greater significance. Given the above, the F.R.G. argues that the reforms currently underway in the East vindicate its traditional approach to East-West relations. The degree of CoCom liberalization required should not only be a function of the political and economic reforms already achieved, it must be part of a broad strategy to encourage the process of economic and~political reform in the Eastern bloc, and to strengthen international stability. The second element that determines the F.R.G.'s position with regard to Cocom are the "structural realities" of the impending unification of the two Germanies. They limit the range of policy responses which can be undertaken without undermining both the unification process and the progress of economic and political renewal in Eastern Europe and the Soviet Union. With regard to East Germany, CoCom must turn to the task of determining a special status for the G.D.R. before July 1. The continued application of CoCom rules in the dual-use area would severely undermine the monetary and economic union. Dangerous nuclear safety standards, environmental pollution and the continued presence of Soviet troops in East Germany are three additional challenges that have to be addressed by policy makers. In Eastern Europe, the G.D.R. should not be singled out as i
special case by CoCom. Discriminating in favor of the G. D. R. sends the wrong signals to the rest of Eastern Europe and wil ~ intensify the already enormous difficulties they face in reform) ng their economies . The West German government is skeptical of the U. S. propose ~ to institute a re-export control system in Eastern Europe . Lack of expertise, experience, and f inancial resources in the East make such a proposition infeasible. In addition, the inability of German customs official s to operate on foreign territory and the need to estate! ish a huge bureaucratic apparatus that might become redundant before it is fur ly operational, make it difficult to advocate such a solution. The F.R.G. also rejects a policy of favorable consideration towards Eastern Europe. It gives the liberalization process a transitory quality and allows the U.S. to reverse the process with. a veto at any time discouraging private sector investment . Wes- Germany advocates the general streaml ining of the industrial ~ ist . : order to reduce it to a smal ~ core of sensitive technology. Be Cowmen 70% and 90% of the items could be eliminated creating a threshold that is below the current China green line. Some of the remaining items may also be exported subject to an end-use verification procedure. From the F.R.G.'s perspective, numerous economic and political reasons exist in support of treating the Soviet Union as an equal among the Eas tern bloc countr i e s . Whi ~ e high techno 1 ogy imports c annot s ubst i tute f or economic re f orm i n the Sovi et Un ion, a liberalization of Cocom would help its realization. In addition, the F . R. G . argues that the symbolic effect of isolating the Soviet Union and the re f arm or i ented Sov i et ~ eaders i s po ~ i ~ i ca ~ ~ y de struct i ve . Special consideration must also be given to the close economic ties between the G. D. R. and the Soviet Union . The success of German economi c un i on depends to a cons i derab} e degree on the cont inuat i on of trade between the two countries . In addition, given the complementary nature of the trade, the Soviet Union cons iders the maintenance of the commercial treaties as vital to their national security. The F . R. G . favors a substantial liberalization of the Sitcom i ndustri a l ~ i st f or the Sovi et Un i on . Rather than continue a pa l ~ cy based on technology denial, the F.R.G. advocates a regime based on safeguards in the form of end-use certificates and on-site inspection. The Soviet Union has reacted favorably to such a proposition and has offered to establish a system of safeguards under Western control. Finally, the F.R.G. 's perspective on the issue of CoCom has been inf luencec! by the pressure from the opposition and the business community . This pressure has both reinforced the preexisting inclination to liberalize Sitcom and has given the government little room to maneuver in negotiating with the U.S. in CoCom. Like the F.~.G., the EC rejects an approach which utilizes economic strength as an instrument of political confrontation with the Eastern bloc. This position arises both from the extensive economic relations and significant industrial interests which have developed between the two areas as well as the EC's commitment to the dual track approach embedded in the CSCE process. From the perspective of a common EC foreign policy, the European Parliament
(EP) has criticized CoCom on several occasions and has urged the Commission to take a position. Given that technology transfer fails into the realm of national security, the Commission has until recently not addressed the issue of export controls in terms of a common EC security policy. However, export controls affect the EC not only at the foreign policy level; a more important aspect of CoCom is its effect on the EC's mandate to create a single market by early 1993. Here too, the EP has drawn attention to the conflict between CoCom and the provisions of the EC treaty. National export controls not only violate the mandate of the Single Market, they also create competitive asymmetries among member states in their trade with third countries. The developments in Eastern bloc thus have only reinforced the EP's position to overhaul the entire CoCom system. The Community will not accept the current export control practices by it members as it threatens the entire purpose of "1992". With the exception of a core munitions list that remains under the control of national authorities intra EC trade must be liberalized. As to trade in dual use technology with third countries it will be necessary to harmonize export controls at the European level, though the actual controls could still be administered on a national basis. However the EC is not a member of CoCom and there are reasons to doubt whether it has an interest in becoming one. In general, officials at the EC agree that the Community should play a constructive role in shaping the future security structure of Europe, rather than joining an outmoded institution which derives its legitimacy from the Cold War. The analysis of the West German and European perspectives on the future of CoCom lead to the conclusion that the very concept of strategic as defined by CoCom must be reconsidered. Given the radically transformed political and military situation in Europe it is in the security interest of European nations not to restrict the f low of high technology to the East, but to promote and to enhance it. This requires that the strategic criteria that define Western security encompass a broader definition to include among other things (a) the stabilization of the economic and political reform efforts in Eastern Europe and the Soviet Union and (b) the avoidance of ~ nuclear disaster caused by inadequate safety standards in nuclear reactors as well as the drastic reduction of pollution in Eastern Europe and the Soviet Union. Two additional considerations should be included in a successful reform effort. First, a new control scheme must be embedded in the new security structure that is emerging in Europe. This could be achieved through a multilateral export regime under the CSCE umbrel la which is advocated by West Germany as wel ~ as the EC and could provide substance to the calls of policy makers to develop new political tasks for the disintegrating military alliances in both East and West. Second, joint membership of East and West in this export control system also addresses the common security threat from potential military powers elsewhere in the world as well as new technologies and weapons that have surfaced during the last decade. It is questionable whether CoCom is capable of adapting to these new conditions which require its reform.
