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8
Recommendations of the Pane!
PREAMBLE
National security export controls should seek to preserve and enhance the
technology lead and military capabilities of the West while minimizing the
constraints on the economic vitality of the United States, its allies, and other
nations friendly to Western interests. In today's global trade environment,
U.S. economic vitality can be maintained only by ensuring that the nation's
products remain competitive-in terms of quality, price, and availability
with the best that other nations can offer. Trade promotes economic and
technological strength, which is vital to Western military strength. Thus,
maintaining the vigor and productivity of the U.S. technological base is
fundamental not only to the continued economic vitality of the West but also
to its military security. National security export controls also represent an
important, albeit secondary, means of maintaining military security by
impeding the flow of those goods and technologies deemed militarily
important to the Soviet Union and its Warsaw Pact allies.
The panel's recommendations therefore are directed toward enabling
the United States and its allies to maintain a balanced and effective export
control regime. The recommendations are offered within the context of
what the panel considers appropriate national policy objectives. It should
be the policy of the United States:
1. to promote the economic vitality of Free World countries,
2. to maintain and invigorate the domestic technological base, and
167
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68 BA LANCING THE NA TI ONAL INTERES T
3. to cooperate with its allies to impede the Soviet Union and other
Warsaw Pact countries in their efforts to acquire Western technology
that can be used directly or indirectly to enhance their military capabil-
ity.
RECOMMENDATIONS
Within the context of the declaratory policy set forth above, the panel
makes two basic recommendations, together with a series of corollary
prescriptions.
I. STRENGTHEN THE COCOM MECHANISM
The panel recommends that the United States take the lead in further
strengthening the CoCom mechanism so that it can function as the linchpin
for a fully multilateral national security export control regime for dual use
technologies. Under current and prospective global circumstances, such a
multinational system is essential to achieve maximum export control effec-
tiveness without impairing Western economic vitality. To strengthen the
current system of multilateral controls will require greater harmonization of
the current U.S. approach and that of our technologically advanced allies
through closer consultation and through the adoption of policies that
promote cooperation. The two most immediate objectives are: (1) to limit
the coverage of the U.S. Control List and the CoCom International List to
those items whose acquisition would significantly enhance Soviet bloc
military capabilities and that are feasible to control, and (2) to obtain
agreement on a common approach to reexports of CoCom-origin items.
The United States should strive to create a community of common
controls on dual use technology that is, a set of trade relationships
unimpeded by national security restrictions among those Free World
nations that share an expressed willingness to adhere to common or
equivalent export control restraints on the transfer of strategic and
controllable goods and technologies to the Soviet Union and its Warsaw
Pact allies. While recognizing that there are certain systemic deficiencies
in the existing national security export control regime that will require
sustained effort to overcome, there remain a number of initiatives that can
be undertaken to advance this objective.
Accordingly, the panel recommends the following changes in U.S. policy:
1. Control Only CoCom-Proscribed Items
As a general policy the United States should seek to control only
the export of CoCom-proscribed items, and then only when they are
destined for a proscribed country or for a non-CoCom country that
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RECOMMENDATIONS OF THE PANEr 169
has not entered into an agreement* to protect items controlled by
CoCom.
.
2. Within CoCom, Seek Controls on Exports to Third Countries
With respect to CoCom, the United States should:
Negotiate agreements with member countries" regarding control
of their exports and reexports from their territory to third (i.e.,
Free World non-Cocom) countries, thereby obviating the need for
U.S. reexport authorization. These control agreements might
involve a variety of mechanisms appropriate to national policies
and legal practices, including the use of import certifica-
tion/delivery verification procedures, end-user checks, export
denial lists, and so on. Such agreements should stipulate that
participating countries share and act on information regarding
potential diverters.
· For almost all goods, eliminate the requirement to obtain validated
licenses and reexport authorizations for exports to those trading
partners with which the United States has reached agreement on
the control of exports to third countries. Validated licenses should
be required only for exports of extremely sensitive high-level
technology (e.g., supercomputers). Reliance should be placed on
cooperating foreign governments to prevent diversions from their
own territory. There also should be a provision for reinstituting
validated licensing requirements for CoCom countries that subse-
quently fail to implement and enforce national security export
controls on trade with non-CoCom Free World countries.
For those CoCom countries unwilling to agree to or unable to
implement controls on exports to third countries, retain the
present system of validated licenses and reexport authorization
while continuing to pursue adequate control arrangements.
3. Negotiate Comprehensive Understandings with Third Countries
With respect to non-CoCom Free World countries, the United
States should:
· In coordination with other key members of CoCom, negotiate
comprehensive understandings or equally effective informal ar-
rangements deemed acceptable by the U. S. Department of State-
that specify controls on the export of all CoCom-proscribed goods
and technology (including those produced indigenously) to the
*Such an agreement might be implemented either through a formal memorandum of
understanding or an informal arrangement that achieves the same result.
fit may be most feasible to begin this process initially with such key members of CoCom
as Japan, France, the Federal Republic of Germany, and the United Kingdom.
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i70 BALANCING THE NATIONAL INTEREST
Warsaw Pact countries and to other noncooperating third coun-
tries. A graduated scheme of incentives should be developed for
third countries that agree to less than comprehensive controls.
· Accord full "CoCom-like" treatment (meaning that exporters to
those countries should not be required to seek validated licenses
or reexport authorization) for exports to those third countries that
have agreed to comprehensive arrangements, or that have been
judged by the State Department to maintain equivalent standards,
as soon as these countries can demonstrate their ability and
willingness to enforce export controls. Such a commitment to
enforcement should include formal or informal sharing of infor-
mation on possible diverters.
· Continue existing licensing requirements, as appropriate to their
Commerce Department country group classification, for exports
to third countries that are unwilling or unable to enter into
comprehensive understandings or informal arrangements.
4. Remove Items Whose Control Is No Longer Feasible
Regardless of the rate of progress on CoCom and third country
negotiations, the United States should actively seek to remove from
both the U.S. Control List and the CoCom International List items
whose control is no longer feasible or necessary. This would include
goods and technologies:
· for which there is demonstrated foreign availability from any
country that has not agreed to adhere to export controls and for
which this availability has not been eliminated within a reasonable
period of time through negotiated agreements (see Item II.4 on pp.
175-176~; or
· for which control at the source is not practicable, that enter into
world trade channels through multiple entrepot points, and that
are manufactured and shipped in volumes so large they have in
effect become "technological commodities" (e.g., certain com-
puter memory chips and some personal computers).
5. Maintain Unilateral Controls Only on a Temporary Basis or for
Limited, Unique National Security Circumstances
Regardless of the rate of progress on CoCom and third country
negotiations, the United States should eliminate the use of unilateral
national security export controls except in those circumstances in
which active efforts are under way to negotiate multilateral controls
within and outside of CoCom- in which case unilateral controls
could be maintained on a temporary basis or in those situations in
which unique national security circumstances warrant the imposi
tion of such controls for limited periods of time. Where a decision
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RECOMMENDATIONS OF THE PANEL 171
has been taken to impose or maintain unilateral national security
export controls, such restrictions should be subject to a 3-year
"sunset provision" requiring their periodic rejustification.
The panel wishes to emphasize that the phrase "unique national
security circumstances" does not justify retaining present U.S.
unilateral controls. Rather, it recommends that controls be estab-
lished on a multilateral basis and that, in cases in which the United
States or another CoCom member country cannot achieve unanim-
ity on the need to control a particular item, no unilateral controls
should be imposed. In rare cases the United States or another
CoCom country may believe that critical national security concerns
are at stake and may wish to reserve the right to establish a unilateral
restriction on their domestic industry. This exception should be used
sparing Y.
For these few exceptions, it would be useful for CoCom countries
to report their exports of new, uncontrolled items going to the Soviet
bloc. Such reporting would over time better inform CoCom on the
advisability of establishing controls on the proposed item and better
inform U.S. and other CoCom policymakers on the effectiveness of
the unilateral control. The panel recommends that the United States
explore within CoCom the feasibility of developing a practical
reporting system for this category of items.
6. Eliminate Reexport Authorization Requirements in Countries Partic-
ipating in a Community of Common Export Controls on Dual Use
Technology
To further the objective of developing a community of common
controls on dual use technology among cooperating countries of the
Free World and to encourage international cooperation and trust,
the United States should eliminate any requirement that a buyer
seek authorization for a reexport that is subject to CoCom or
"CoCom-like" controls by the country of initial export. Reliance
should be placed instead on foreign governments that participate in
CoCom or that have agreed (formally or informally) to impose
"CoCom-like" controls on exports to prevent diversions from their
territory.
7. Maintain Current Control Procedures on the Transfer Within CoCom
of Sensitive Information, Technical Data, and Know-How
The United States should continue to rely on current security
classification procedures and the protection afforded by general
license GTDR and individual proprietary interests to control the
transfer within CoCom of information, technical data, and know-
how that are considered to be militarily sensitive. This approach is
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172 BALANCING THE NATIONAL INTEREST
based on the recognition that the benefits of additional controls on
technical data are outweighed by the potential damage of such
restrictions to international business operations and R&D activities
in the West. The attempt to exercise broader control of technical
data is likely to prove unnecessarily restrictive to all such interna-
tional cooperative ventures.
8. Reduce the Scope of the CoCom List and Modify CoCom Decision-
Making Policies and Procedures
There are a number of steps the United States together with its
CoCom allies should take to improve the efficiency and effective-
ness of the multilateral process. The most important step is to
reduce the overall scope of the CoCom International List to improve
its credibility and enforcement. List credibility also would be
improved by the imposition of a 4-year "sunset provision" that
would cause lower-level CoCom items to be removed automatically
from the list- unless their inclusion can be rejustified when they
come up for periodic review. The panel further recommends that the
general procedure for decontrolling International List items be
modified decontrol should no longer require unanimity to im-
prove the effectiveness of multilateral enforcement.
To ensure balanced consideration of economic and military fac-
tors, the panel also supports greater participation by defense officials
of the allied countries, as initiated through the establishment of the
CoCom military experts group, in the multilateral decision-making
process. Finally, the panel recommends that the uncertainties indus-
try often associates with CoCom decision making be reduced
through greater transparency. This could be accomplished by en-
couraging member governments to provide industry with appropri-
ately sanitized and delayed information regarding approval and
denial precedents.
9. Maintain a Clear Separation Between National Security and Foreign
Policy Export Controls
Existing statutory authority describes separate systems and pro-
cedures for the control of exports for foreign policy versus national
security reasons. Therefore, the U.S. government should maintain
the clearest possible separation between the unilateral control of
exports for political that is, foreign policy purposes and the
system of multilateral controls that are maintained for national
security purposes. Although examination of the system of foreign
policy export controls was beyond the scope of this study, the panel
notes that many of our CoCom allies continue to disagree pro-
foundly with some U. S. foreign policy export controls. If not
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RECOMMENDATIONS OF THE PANEL -173
effectively isolated, such controls can have a corrosive effect on the
resolve of the CoCom allies to cooperate in the implementation of
national security export controls.
II. ACCORD GREATER IMPORTANCE IN U.S. NATIONAL SE
CURITY EXPORT CONTROL DECISIONS TO MAINTAINING
U.S. TECHNOLOGICAL STRENGTH, ECONOMIC VITALITY,
AND ALLIED UNITY
The panel recommends that executive branch decisions concerning
national security export controls accord greater importance than they
currently do to maintaining U.S. technological strength, economic vigor,
and allied unity. Ultimately, an elective multilateral national security
export control regime can be established only through the commitment and
support of the President and Congress. Nevertheless, the decision-making
and advisory mechanisms of the executive branch also must be constituted
and tasked appropriately to facilitate the effective implementation of the
policy approach proposed above.
As a general policy the United States should strive to achieve clarity,
simplicity, and consistency in its national security export control proce-
dures, as well as in the multilateral CoCom structure, and to obtain
broader consensus on the need for national security export controls
among the Free World nations that use and/or produce dual use technol-
ogy. To achieve this goal, the United States should design policies and
procedures that emphasize efficiency and effectiveness over comprehen-
siveness. Over the long term, U.S. national security export control
policies also should remain flexible to political and economic changes in
the world situation.
Toward these ends, the panel recommends the following specific
changes in U.S. policy and procedures.
1. Balance the Protection of Military Security with the Promotion of
National Economic Vitality Through Affirmative Policy Direction
The President should require that the National Security Council
(NSC) implement the existing policy mandate as set forth in the
Export Administration Act of 1979, as amended- which calls both
for the protection of military security and for the promotion of
national economic interests. Currently, because of insufficient atten-
tion and leadership from above, the existing policy mechanisms
either are not being used or are producing results that fail to take
adequate account of important national interests. This problem can
be ameliorated by providing regular, affirmative policy direction to
the responsible line agencies.
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174 BALANCING THE NATIONAL INTEREST
Accordingly, NSC should take steps to fulfill its responsibility on
national security export control matters by providing the necessary
balanced policy guidance. The secretaries of commerce and treasury
should participate in NSC meetings at which export control matters
are to be addressed. Moreover, as a matter of urgency, NSC should
be staffed properly to deal with these matters and a senior NSC staff
member should be given responsibility for bringing representatives
of conflicting agencies together to resolve policy differences. A1-
though NSC can assume such responsibility without legislation, the
panel further recommends that Congress consider whether the
National Security Act of 1947 (as amended) ought to be modified to
reflect the growing importance of international trade as a fundamen-
tal element of U.S. national security.
2. Provide Sufficient Resources and Authority to the Departments of
Commerce and State to Allow Them to Fulfill Their Roles in the
Export Control Process
To establish a more balanced policymaking process within the
federal government, the Departments of Commerce and State
should be allocated sufficient resources dedicated to the implemen-
tation of national security controls. In particular, the Department of
Commerce should upgrade significantly the capacity and sophistica-
tion of its automated systems and the quality of its in-house
technical and analytical expertise. The Export Administration Act
specifies that the Department of Commerce has primary responsi-
bility for export licensing policy and procedures. In the case of
national security export controls, Commerce has lost much of that
leadership role because of its ineffective performance in the past and
must now establish the organization, competence, and drive to merit
regaining that role.
It is also essential that the Department of State vigorously fulfill its
traditional role of ensuring that the U.S. government speaks with a
single, coherent voice when dealing with foreign governments and
foreign firms on national security export control matters. Another
State Department responsibility should be to work to reduce con-
flicts within the ranks of CoCom, conflicts that stem in part from
differences among the respective national delegations over how to
prioritize conflicting economic and military objectives. Although the
United States has had some modest success in encouraging allied
defense officials to participate in the CoCom process, it is essential
that State Department officials now play a more assertive leadership
role in the U.S. CoCom delegation so as to create a balanced
representation of U.S. economic and defense interests.
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RECOMMENDATIONS OF THE PANEL 175
3. Restore Technical Judgment and Overall Balance to the National
Security Export Licensing Process
The locus of responsibility and decision making within the De-
partment of Defense has shifted from the office responsible for
research and engineering to the office responsible for policy. This
shift has resulted in greater attention to extant deficiencies of the
CoCom process and increased efforts to stem the leakage of tech-
nology to the Soviet bloc. Although the pursuit of these policy
objectives has led to the resolution or improvement of a number of
long-standing problems, there has been at the same time a significant
reduction in the weight accorded to technical factors and a resultant
imbalance in the policy process. It should now be the goal (1) to
establish greater balance within DoD between its technical and
policy elements and (2) to reduce the DoD role in detailed license
review as parallel steps are taken within the Department of Com-
merce to strengthen its capability to implement national security
export control licensing Procedures. The role of the policy side of
DoD on export control issues should focus on the broader goal of
maintaining the strategic balance and the contribution of technology
to military systems.
4. Implement the Decontrol Procedures Required by Law When Foreign
Availability Is Found to Exist
The lack of action by the federal government on foreign avail-
ability determinations is contrary to the statutory language ex-
pressed in the Export Administration Act of 1979, as amended.
This is due in part to the fact that no specific time lines for the
completion of foreign availability determinations are specified in
the legislation. Moreover, apart from the broad statutory criteria,
there is still no generally accepted definition of foreign availability.
Serious effort should be devoted to developing an interagency
such a definition and reasonable deadlines for
consensus on
. .
c .eclslons.
The Department of Defense has overstepped its legitimate stat
. ~ _
utory role of providing technical input In foreign availability
determinations and has exercised de facto veto authority by
delaying the review of such determinations. The result of this
situation has been that, in 4 years, the Departments of Commerce
and Defense have been able to reach preliminary agreement on the
decontrol of only 3 items (out of more than 20 foreign availability
assessments). At the very least the Export Administration Act
should impose specific and equal time constraints on all responsi-
ble agencies. Because the process for determining foreign avail
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176 BALANCING THE NATIONAL INTEREST
ability is not now functioning effectively, there is a need for
effective remedial action by both the executive and legislative
branches.
5. Withdraw the Statutory Requirement to Integrate the MCTL into the
Commerce Department's Control List
Congress should withdraw the statutory requirement to integrate
the Militarily Critical Technologies List (MCTL) into the U.S.
Control List. The fundamentally different nature and functions of
the two lists the former an exhaustive list of all technologies with
military utility and the latter a specific list of items requiring an
export license make this goal unattainable. The Department of
Defense should develop guidance for use of the MCTL as a
reference document within DoD and as a basis for developing
proposals to CoCom.
6. Provide Effective, Two-Way Communication at the Highest Levels
Between Government and the Private Sector
A mechanism should be established (or upgraded) to provide
effective, two-way communication between the highest levels of
government and of the private sector on the formulation and
implementation of coordinated national policies that balance mili-
tary security and national economic vitality. One such group already
exists: the President's Export Council (PEC) and its Subcommittee
on Export Controls. However, its advice currently is not receiving
appropriate attention at senior policy levels within the government.
The panel recommends, therefore, that senior policy stab of the
Executive Office of the President meet periodically with the PEC (or
with other respected representatives of the private sector) and
inform the President of their concerns regarding national security
export controls. It may be necessary, however, for Congress to
establish a mechanism to ensure appropriate consideration of indus-
trial concerns in the formulation of national security export control
policy.
7. Develop Reliable Data Regarding the Operation and Impact of U.S.
National Security Export Controls
This study has revealed serious shortcomings in both the quality
and quantity of information maintained and analyzed by the U.S.
government on the operation of national security export controls
and their domestic and international impacts. The panel recom-
mends, therefore, that the Department of Commerce be instructed
by Congress to develop and analyze such data and that the depart-
ment be given sufficient resources to carry out these tasks.
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RECOMMENDATIONS OF THE PANEL 177
8. Make More Systematic Use of Intelligence Evidence on Current and
Anticipated Soviet Acquisition Efforts
The Intelligence Community should structure its efforts with
regard to West-East technology transfer so as to anticipate future
Soviet technology acquisition efforts. The line agencies of the U.S.
government, for their part, should strive to make more systematic
use of existing intelligence resources for modifying the composition
of the U.S. Control List, proposing changes to the CoCom Interna-
tional List, and reviewing sensitive individual export licensing
cases. In addition, the Intelligence Community should increase its
efforts to sanitize and declassify "finished" intelligence products to
provide a more informed public understanding of the technology
transfer problem.
CODA
The panel notes in conclusion that there is a need for national security
export controls and that current statutory authority recognizes the
necessity to accommodate both military security and economic vitality.
But the recent performance of the U.S. government on this matter has not
been satisfactory-and will be increasingly less so because of prevailing
trends in international trade and technology diffusion- because it has
tended to focus on tightening controls while giving little attention to their
effectiveness and costs. Although most of the necessary mechanisms
appear to be in place, the U.S. policy process for national security export
controls continues to lack proper direction and affirmative leadership at
the highest level. As a result, the executive branch has failed to imple-
ment the existing provisions of law in a coherent and effective manner,
which has in turn created uncertainty, confusion, and criticism both at
home and abroad. In the absence of appropriate corrective measures,
these continuing problems will exact ever-higher tolls- on both Western
economic vitality and innovative capacity and on the military security of
the United States and its allies.
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Representative terms from entire chapter:
export controls
