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OCR for page 70
4
The Dimensions of
National Security Export Controls
Two laws provide the primary mandate for U.S. national security
export controls. The Arms Export Control Act of 1976~ requires govern-
ment approval for the import and export of military weaponry and
services. The Export Administration Act (EAA) of 1979, as amended,2
controls the export of commercial goods and technologies that would
make a significant contribution to the military capabilities of a potential
adversary. EAA also authorizes controls to serve U.S. foreign policy
goals and to ensure the domestic availability of resources in short
supply.
The regulations implementing these laws are extensive and complex.
The United States asserts jurisdiction over goods and technology even
outside the territorial United States when: (1) the product or technology
in question originated in or is to be or has been exported from the United
States; (2) the product or technology incorporates or uses products or
technology of U.S. origin; and (3) the exporter is a U.S. national or is
owned or controlled by U.S. interests. Responsibility for administering
the export control system is divided among many federal departments
and agencies as is representation in the export control policymaking
process.
To some degree, U.S. export controls parallel multilateral or bilateral
agreements or understandings with other countries. The United States is
a founding member of the Coordinating Committee on Multilateral Export
Controls (CoCom), an informal, nontreaty organization comprising all the
NATO countries (except Iceland) and Japan.3 Created in 1949 in the early
70
OCR for page 71
THE DIMENSIONS OF NATIONAL SECURITY EXPORT CONTROLS 71
days of the Cold War, CoCom administers a uniform system of multilat-
eral controls over three categories of products: munitions, nuclear
energy, and dual use. All products subject to CoCom control are also
subject to U.S. controls. In addition the United States has bilateral
agreements or arrangements with a number of non-CoCom nations that
provide for varying degrees of cooperation on national security export
controls. These countries include Australia, New Zealand, Austria,
Switzerland, and Sweden.
This chapter presents an overview of the dimensions of the current
national security export control system. It first summarizes the evolution
of export controls in the United States to provide a historical context.
Next, it examines the mechanisms used by the United States for
policymaking and administration. Finally, it reviews the multilateral
CoCom framework for controlling strategic goods and technologies and
key attributes of the controls maintained by several other nations.
HISTORICAL BACKGROUND
Current controls on the export of commercial dual use products and
technologies have their roots in the period leading up to World War II. To
understand more fully the current efforts of the United States to impede
the flow of these products and technologies to potential adversaries, it is
useful to review the evolution of export controls and the historical
circumstances that have shaped them.
World War II Origins and the Early Postwar Years
Before 1940 the United States had no legal mechanism for controlling
peacetime exports of militarily significant products or information to
potential enemies.4 Consequently, despite the growing military threat
posed by fascism and militarism in the late 1930s, there were no legal
constraints on exports, and U.S. firms were free to sell almost anything to
Germany, Italy, or Japan virtually until the outbreak of hostilities.
Japan's military industry in particular seems to have benefited to a
considerable degree from free access to technology, strategic materials,
and capital from the United States.5
By 1940, however, the war had begun in Europe, and Congress moved
to give the President authority to control the export of militarily signifi-
cant goods and technology. Section 6 of Public Law 703 (July 2, 1940 [54
Stat. 7141) gave the President authority to prohibit or curtail the export of
"military equipment or munitions or component parts thereof, or machin-
ery, tools, or material, or supplies necessary for the manufacture,
servicing, or operation thereof...." The President was required only to
OCR for page 72
72 BALANCING THE NATIONAL INTEREST
determine that his actions were necessary in the interest of national
defense and to issue a proclamation describing the articles or materials
included in the prohibition or curtailment.
The export control authority provided by the 1940 law originally was
intended to expire in only 2 years. But by 1942 the United States was at
war, and Congress extended the authority. It was extended again in 1945,
in 1946, and in 1947 with only minor revisions. A reading of the hearings
accompanying these extensions, together with the fact that each exten-
sion was of such limited duration, suggests that Congress regarded export
controls as merely a temporary restriction on U.S. trade made necessary
by the war. But by 1949, when export controls again came up for renewal,
Congress was weighing a somewhat different set of factors in its export
control policy equation.
The Export Control Act of 1949 and the Establishment of CoCom
In considering the export control issue in the increasingly tense
West-East atmosphere of the late 1940s, Congress sought to avoid the
mistakes of the period leading up to World War II; primary among these
was providing potential enemies with the wherewithal to make war. By
1949 it was apparent that the Soviet Union and its allies, including the
People's Republic of China (PRC), were potential military adversaries.
Thus, the lesson of prewar U.S. trade with Japan- trade that had
increased that country's military effectiveness entered into the debate
on export controls. Although shortages still played an important role in
justifying the continuation of export controls, the 1949 debates included
for the first time explicit references to the behavior of the Soviet Union
in Eastern Europe and reminders that uncontrolled exports to Japan
before the war were "subsequently used against our own people."6
When the export control question came to a vote, Congress elected to
perpetuate the extraordinary wartime powers extended to the executive
branch and to maintain the strict export control regime that had evolved
during the war. The new authority, the Export Control Act of 1949,
codified the export control procedures that were then being practiced by
the executive branch under the terms of the 1940 act (and its subsequent
extensions). Two important principles embodied in this legislation have
survived the three major, subsequent revisions of the law (1969, 1979,
and 19851: (1) the executive branch has broad authority to determine
what products or technical data should be subject to export licensing, to
administer the licensing system, and to impose penalties for violations;
and (2) the rule-making process, including those procedures that apply
to the composition of the Control List (of items subject to licensing), is
exempt from the usual provisions for public participation and is less
.
OCR for page 73
THE DIMENSIONS OF NATIONAL SECURITY EXPORT CONTROLS 73
likely to be the subject of judicial review.7 Thus, the export control
authority exercised by the executive branch today is substantially
unchanged in its basic legal structure from that originally granted by
Congress in 1940 as an extraordinary war power.
The renewed international tensions that contributed to Congress'
decision to maintain what were essentially wartime export controls also
led, in 1949, to the founding of NATO and the other regional treaty
organizations. To ensure the effectiveness of NATO and the other
regional alliances, the United States transferred military technology
(mostly in the form of hardware) directly to its allies. In addition, as
Western Europe and Japan recovered from the war, they began to
revitalize their industrial capabilities and to challenge what had been
virtually a U.S. monopoly on advanced technology (see Chapter 31.
To prevent such technology from reaching the hands of potential
adversaries, it became necessary to establish a mechanism to coordinate
allied export control policies. That mechanism, which was created in
1949, was the Coordinating Committee on Multilateral Export Controls,
or CoCom. From the start, however, the items on which the United
States imposed controls differed from those controlled by CoCom: In
addition to those items that all CoCom members agreed to control, the
United States controlled many items unilaterally. The vast majority of
these pertained to areas in which the United States held a virtual
monopoly.
To prevent the flow of controlled U.S. technology and information
from third (non-CoCom) countries to the Communist world, the United
States also imposed controls on the reexport of U.S.-origin goods,
controls that were accepted because the United States at that time was
the only source of many advanced technology-based products. Further-
more, countries that were the beneficiaries of the Marshall Plan and
other U. S. government programs and that were dependent on the United
States for their security were not inclined to challenge U.S. export
controls.
As with the previous export control acts, the Export Control Act of
1949 was originally scheduled to expire in just a few years, this time in
1953. That it was necessary to extend and strengthen the act repeatedly
throughout the next two decades was due not only to continued tense
relations with the Soviet Union but also to a fundamental change in the
U.S. military posture and strategy in the decade following World War II.
The United States and its allies chose to abandon the successful wartime
strategy of being prepared to outproduce the adversary and began under
the NATO doctrine to rely on superior military technology to offset the
numerical advantages achieved by the Soviet military in the postwar
decades.
OCR for page 74
74 BALANCING THE NATIONAL INTEREST
The New Role of Science and Technology in
Postwar U.S. Defense Strategy
From the start of the postwar era, U.S. military planners understood
that they could not achieve the goal of maintaining military superiority
solely with narrowly defined engineering research aimed at meeting a
specific military requirement. Before them was the example of the
development of atomic weapons a graphic demonstration that highly
speculative ideas at the frontiers of basic research could become militarily
decisive in a very short period of time. The lesson inherent in the
Manhattan Project was that the U.S. government, in a departure from
prewar policy, should continue to promote the early development of
technologies with possible military application. Thus, the United States
perpetuated parts of the research system that had been created during the
war and expanded the role of federal laboratories in the early postwar
years. The government also expanded the role of the military services in
supporting science and engineering research at both government and
private laboratories.
In the l950s Congress broadened federal research support still further.
At the beginning of the decade, it established the National Science
Foundation as a source of federal funding for scientific research that was
not directed at a specific military or other previously defined national
objective. In the late l950s the coming of the space race resulted in the
founding of NASA*; it also provided the impetus for the creation of
federal programs to enhance scientific and technical education, which was
considered to be a vital part of the infrastructure necessary to support
military programs. In the 1960s and 1970s federal support of research and
development continued; programs included funding directed toward solv-
ing key national environmental, energy, health, and economic problems.
Thus, federal support of research and development a governmental role
that originated during the postwar era as a military necessity ultimately
evolved into a permanent recognition of the importance of science and
technology to broader national interests.
Detente and the Export Administration Act of 1969
When export control legislation again came up for renewal in 1969, the
mood of Congress and of the nation was far different from what it had
been at the time of the previous reauthorizations. Detente was the
*NASA incorporated the National Advisory Committee for Aeronautics, an aeronautical
research agency established in 1914.
OCR for page 75
THE DIMENSIONS OFNATIONALSECURITY EXPORT CONTROLS 75
operative principle, and there were calls in Congress for a relaxation of
West-East trade restrictions. According to Henry Kissinger, even as the
debate over the renewal of export controls went on in Congress, the
National Security Council issued a directive: The list of items controlled
by the United States should be brought in line with the less extensive
CoCom list, except for those items over which the United States held a
monopoly.8
In the legislation Congress finally adopted, the substitution of "admin-
istration" for "control" in the title of the 1969 Export Administration Act
reflected the political mood of the time and implied a far more liberal
export control policy than was embodied in the previous acts. The act
included language advocating expanded trade with the Soviet Union and
Eastern Europe, recognized the economic cost of excessive controls, and
required the executive branch to provide Congress with explicit justifica-
tion for the continued control of products and technical data available to
potential enemies from suppliers outside the United States. Believing,
however, that improved Soviet attitudes on other issues should be a quid
pro quo for improved trade relations, President Nixon blocked a number
of efforts made by the Department of Commerce to reduce the number of
items controlled for export to the Soviet bloc. Nevertheless, the atmo-
sphere of detente ultimately did bring some relaxation, albeit only briefly,
in the U.S. export control regime. The United States and its allies
approved the export of major automotive and semiconductor manufac-
turing facilities to the Soviet Union, and U.S. companies sold to the
Soviets some highly advanced machine tools, computers, and communi-
cations equipment.
During this same period there were shifts in the economies of the
Western nations that significantly changed the dynamics of export con-
trols. Most important was that for many areas of advanced technology the
civil sector began to lead the military, and sophisticated dual use items
increased in relative importance in international trade. As a result, export
controls reached an ever-growing share of U.S. commercial exports.
U.S. NATIONAL SECURITY EXPORT CONTROLS
Figures 4-1 and 4-2 illustrate the structure of current U.S. national
secur~tv export controls. The complexity illustrated by these figures is
-~~~^~ ~~ Or ¢~ ,
partly a function of the multifaceted task of controlling the exports of
militarily significant products and technology and partly a result of the
long evolution of U.S. controls as described above. Although the enabling
legislation has been amended many times, there has never been a
complete overhaul of the controls or of the list of controlled items since
the system was initiated in the days preceding World War II.
OCR for page 76
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OCR for page 78
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OCR for page 80
80 BALANCING THE NATIONAL INTEREST
Controls on Munitions
Under the 1976 revision of the Arms Export Control Act, the U.S.
government strictly controls the import and export of defense articles
(arms, ammunition, and implements of war), defense services, and
directly related technical data. The International Traffic in Arms Regula-
tions (ITAR)9 implement the law; the Office of Munitions Control (OMC)
in the Department of State administers the regulations. Through its role as
adviser to OMC, the Department of Defense is largely responsible for
determining the defense items to be controlled.
~ . ~ . ~ . ~ .. . ..
ITAR defines a defense article as any item specifically designated on
the U.S. Munitions List, which is part of ITAR. Defense service means
"the furnishing of assistance, including training, to foreign persons in the
design, engineering, development, production, processing, manufacture,
use, operation, overhaul, repair, maintenance, modification, or recon-
struction of defense articles. " a If an article or service is on the Munitions
List, ITAR regulates its export and reexport exclusively. To supplement
the published Munitions List, OMC determines on written request
whether particular articles or services are controlled by ITAR or whether
they are subject to the Commerce Department's controls on dual use
items.
Before an article or a service subject to ITAR can be exported, OMC,
with DoD advice, must formally approve the transaction. No approvals
are granted for exports or reexports to actual or potential adversaries.
And unlike the Commerce Department's Export Administration Regula-
tions (see below), there are no general licenses or "bulk" validated
licenses covering multiple transactions. The written approval of the State
Department also must be obtained before an end user abroad may resell
or dispose of an ITAR-controlled item to another party in his country or
in any other nation.
Most other Western nations maintain similar controls on the import and
export of munitions. And, as noted earlier, CoCom also maintains a
munitions list specifying the items that all its member countries control.
For most nations, including the United States, munitions controls are
relatively straightforward. The control system for dual use products and
technologies is more complex.
Controls on Dual Use Products and Technologies
The Export Administration Act (EAA) of 1979, as amended
, authorizes
the control of exports of commercial goods and technologies that would
make a significant contribution to the military capabilities of a potential
adversary. It also authorizes controls to achieve U.S. foreign policy goals
OCR for page 92
92 BALANCING THE NATIONAL INTEREST
Reexport Controls
In addition to export controls, EAR specifies a comprehensive control
system for reexports of U.S.-origin products and technical data from
foreign countries. These reexport controls encompass finished end prod-
ucts and, under certain circumstances, U.S.-origin parts and components
incorporated into end products that are manufactured abroad. They are
similar to controls for direct exports: An exporter in another country must
obtain specific approval from the Department of Commerce for a reexport
if the product or technical data involved would have required a validated
license for shipment directly from the United States to the country of final
destination (see Figure 4-61. Under a 1986 Commerce Department pro-
posal published in the Federal Register, no reexport approval would be
required for foreign-manufactured products that are exported to most
Free World nations if the U.S.-origin controlled parts and components
constitute 20 percent or less of a product's value.
In certain instances, exports of foreign end products that are manufac-
tured with U.S.-origin technical data are controlled by EAR even if these
products are entirely of foreign content. Controls on foreign-made "direct
products" of U.S.-origin technology apply primarily to exports to Soviet
bloc or other embargoed countries of products in categories that are
subject to CoCom export regulation. These controls have their principal
impact on exports from industrialized countries outside CoCom such as
Switzerland, Sweden, Austria, South Korea, Taiwan, and Singapore,
countries that do not themselves have comparable export control sys
tems.
Penalties for Violations
The U.S. government is authorized to impose several types of admin-
istrative sanctions for EAR violations. First, the Commerce Department
has discretionary authority to impose fines of up to $100,000 per violation
in cases involving national security controls and up to $10,000 per
violation in other cases. Second, the department may suspend or revoke
a company's privilege to participate in all types of export transactions-
those carried out under general licenses as well as those covered by
validated licenses. In invoking this type of sanction, the department may
suspend or revoke a company's or an individual's existing export li-
censes, it may deny future license applications, and it may prohibit export
transactions that would be covered by a general license. Third, the U.S.
Customs Service may require the forfeiture of goods that have been
seized during the course of an unauthorized export.
Companies and individuals whose export privileges have been sus
OCR for page 93
THE DIMENSIONS OFNATIONALSECURITY EXPORT CONTROLS 93
pended or otherwise impaired are listed by the Department of Commerce
in the Table of Denial Orders, which is published in the Federal Register.
Any company that engages in an export transaction with these companies
or individuals in violation of the denial order is itself subject to all the
penalties available under the act. These civil sanctions apply even to
unintentional violations.
The Justice Department enforces criminal provisions of the Export
Administration Act in the federal courts. Under these provisions, indi-
viduals may be imprisoned for up to 10 years and/or fined up to $250,000
for each willful violation. Companies may be fined up to five times the
value of the exports involved or $1 million, whichever is greater.
Unintentional violations generally are not subject to criminal prosecution.
ADMINISTRATION OF U.S. CONTROLS
The spectrum of administrative, investigatory, and enforcement activ-
ities related to export controls involves a broad array of departments and
agencies within the executive branch. Various instruments-legislation,
regulations, and executive orders-define the roles of these departments
and agencies. In general, the Commerce Department regulates exports of
commercial equipment and technology, and the State Department over-
sees exports of military equipment and technology. The Defense Depart-
ment plays a key advisory role for both commercial and military exports.
In addition to these departments, a number of other governmental entities
maintain a special interest in controlling the transfer of militarily impor-
tant technology; these include the Departments of Treasury (U.S. Cus-
toms Service), Energy, and Justice, as well as NASA, the Nuclear
Regulatory Commission, and the intelligence agencies. The Department
of Commerce and the U.S. Customs Service share responsibility for the
enforcement of export controls and are now directly linked by computer
for more efficient case processing. The latter agency is empowered to
seize unauthorized shipments or suspected diversions, which are subject
to forfeiture. It also has an extensive enforcement program known as
Operation Exodus that includes random checks of outgoing shipments for
license authority. The existence of such a program indicates the increased
enforcement emphasis within the U.S. government and has helped to
focus public attention on the need to uncover and prevent illegal ship-
ments.
By law the interagency process for deciding export control issues for
dual use commodities and technologies centers in the Department of
Commerce; recently, however, the Department of Defense has dominated
the national security aspects of the procedure. The Reagan administration
came into office convinced that Soviet acquisition of U.S. military and
OCR for page 94
-
P NO
.
I
U.S. r~xpo~ authorization required.
374.3
~ ~ ~ ~ Ajar
a ~ ~ ~ ~ ~ ~ an ~ ~ ~
reasons ache commode was 10 be exposed dlrec11y from the United Sages 10
Me new Mung ~ d~n~o~
l
U.S. reexport au1horiza110n required
- ~n~
- Nuclear: 378.7
I
.
No U.S. r~xpo~ authorlz~10n required.
1 & 3
I
1
^
_ ~ I
_ ~ -
o1 dosllra110n under General Llcense
G-DEST?
T
I ~
_ principal element in lhe end produc1 snd
~k~~
__ ~.
| No 1
[ I I
~u~ ~o ~-n~ end p~du~,
were o1 U.S.-origin, be expo~d 10 lhe
_~_u~
U-n~ G-DE~?
. .
~a~ ~ ~. ~ ~ _
France, lhe Federal Republlc o1 Germany, Greece, llaly, Japan, Luxembourg, lhe Nelherlands, .
No-~, ~-g~, Sp~n, ~, or ~e Un~d ~ngdo~ ~ ~e ~un~ G~up O, W, or Y ~ ~ ~e
- ~ ~
I
I ,
1 ~
No U.S. reexpo~ au~horiz~lon required. |
374.3(e)
TH~ CH^~ IS FOR ILLU~IVE PURPOSES ON~
~_~ ~
FIGURE 4-6 U.S. reexpo~ bcensing decidon cb=. Basic steps required of ~reign
reexpo~ers 10 comply witb und~er~ U.S. reexpod regulations.
OCR for page 95
THE DIMENSIONS OF NATIONAL SECURITY EXPORT CONTROLS 95
l
ED
1 - 1
~ 1
Is the commodity a part of a component
which is incorporated into a foreign
product?
Will any of the following conditions be met?
1) Reexports of any commodity that at the time
of reexport-
(A) May be exported directly from the United
States to the new country of destination
under General License G-DEST, GTE, G-COM,
G-NNR, or G-FTZ;
(B) Are valued at an amount that does not exceed
the GLV value on the Commodity Control List
for the new country of destination;
(C) Could be exported under General License SHIP
STORES or PLANE STORES if the same vessel
or aircraft were departing from a U.S. port
(except equipment and spare parts described
in 371.9(a)(3) and 371.10(a)(3)); or
(D) May be exported directly from the United
States to the country of destination under
subsection (f) of General License GLR
(371 .1 7(f)).
2) Reexports to a destination to which direct
shipment from the United States is
authorized under an unused outstanding
validated export license.
3) Reexports of any commodity from Canada
that, at the time of reexport, may be
exported directly from the United States
to the new country of destination under
any general license;
4) Reexports between Switzerland and
Liechtenstein;
5) Reexports between ultimate consignees as
provided by the terms of: the Project
License procedure (see 373.2(g)), or the
Distribution License procedure (see
373.31 (i)).
6) Reexports to a destination in Country
Group T or V of a U.S.-origin commodity
for servicing, and subsequent return of
the serviced commodity to the original
consignee, provided that the return of
the serviced commodity complies with the
conditions of 371.17(a);
7) Reexports (return) to the United States
of any commodity.
8) Reexports from a foreign destination to
Canada of any commodity if the commodity
could be exported to Canada from the
United States without a validated
license.
Reexports from COCOM countries to
Country Group Q. W. or Y or to the
People's Republic of China that meet the
conditions set forth in 374.3(e).
10) Reexports from a COCOM country to the
People's Republic of China that meet the
requirements set forth in Advisory Notes
for the People's Republic of China in the
Commodity Control List (Supplement No. 1
to 399.1) and are licensed for shipment
by that country.
No U.S. reexport authorization required.
374.2
Will all of the following conditions be met?
_
1) The commodities being exported:
(A) Are identified by an "A" on the CCL;
(B) Are not included in the "Advisory Notes" for those commodities in the CCL;
(C) Are valued at more than $4,000 (except that commodities in CCL entries 1548, 1555, 1559, and
1781, and entries beginning with the digits 2 and 3, are eligible regardless of value); and
(D) If included in entry 1s6sA, have at least one parameter falling in the extreme right hand, i.e. (d),
column of boxes on Form ITA-6031 P. Computer Systems Parameters.
2) The reexport is made in accordance with the conditions of the licensing authorization issued by the
applicable COCOM participating country; and
3) The reexport has received unanimous approval from COCOM.
FIGURE 4-6 Continued.
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96 BALANCING THE NATIONAL INTEREST
dual use products and technology was a serious problem. The Department
of Defense took the lead and acted with vigor in a number of areas, either
directly or by pushing Commerce, State, or other organizations to take
action. At the behest of DoD, the U.S. Customs Service has intensified its
enforcement efforts and the Departments of Commerce and State have
encouraged the CoCom member countries to improve their enforcement
programs. The Department of Defense has had a statutory obligation for
many years to review license applications for selling controlled items to
proscribed destinations; this obligation is now being fulfilled by the
Defense Technology Security Administration (DTSA), created under
DoD Directive 5105.51. DTSA has assumed primary responsibility for
license reviews, which was formerly held by the Office of the Under
Secretary for Research and Engineering. Now, as a result of a presidential
directive issued in January 1985, DoD also reviews license applications
for certain commodities to 15 Free World destinations from which the risk
of diversion to the Soviet bloc is considered particularly high.
During both the first and second Reagan administrations, the National
Security Council (NSC) evolved and modified a structure for export
control policy and decision making. From 1981 to mid-1982, the Senior
Interagency Group on Foreign Policy (SIG-FP) coordinated the imple-
mentation of policy decisions on unilateral and multilateral control of dual
use high-technology exports. This group also dealt with other interna-
tional foreign policy and economic issues such as the export of oil and gas
equipment and U.S. policy toward construction of the Siberian natural
gas pipeline. The State Department chaired the SIG-FP and its lower-
level working groups. Staffing within the SIG-FP on high-technology
exports was thin, however, and policymaking reportedly was slow and
indecisive, primarily because of three factors: (1) the State Department's
desire to focus on other foreign policy issues that it considered to be of
higher priority; (2) State's reluctance to antagonize other Western allied
nations; and (3) disagreement within the SIG-FP over the issues.
In June 1982 following the imposition of U.S. sanctions against its
European allies over the Siberian pipeline,~9 NSC created a new Senior
Interagency Group on International Economic Policy (SIG-IEP). The
main objective of this new group was to improve NSC attention to issues
such as high-technology exports, issues that have overlapping diplomatic,
economic, and military implications. During the second half of 1982,
when attention remained focused on the Siberian pipeline and the
resistance to U.S. controls by the allies, the secretaries of treasury and
state cochaired the SIG-IEP. The United States and its allies finally
resolved the pipeline issues in December 1982 through an agreement
within NATO: The United States agreed to lift the sanctions in exchange
for a thorough review of West-East trade questions.
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THE DIMENSIONS OF NATIONAL SECURITY EXPORT CONTROLS 97
In early 1983 under National Security Decision Directive 83-1, NSC
relegated export control policy to a lower "working-level" SIG, which
was established officially as the Senior Interagency Group on Transfer of
Strategic Technology (SIG-TST). This group continues to function and
has become known more commonly as the SIG-TT (Technology Trans-
fer). A primary purpose of the SIG-TT is to expedite decision making in
connection with the CoCom list review process. The under secretary of
state for security assistance, science, and technology chairs the SIG-TT;
the assistant secretary of defense for international security policy or the
deputy under secretary of defense for policy represents DoD; and the
assistant secretary of commerce for trade administration or the deputy
assistant secretary for export administration represents the Department
of Commerce.20
Since 1983 some of SIG-TT's major activities have focused on export
policy vis-a-vis the People's Republic of China, the development of an
administration position on the renewal of the expiring Export Adminis-
tration Act of 1979, and the allocation of enforcement responsibility
between the Treasury and Commerce Departments. SIG-TT also has
devoted attention to U.S. proposals for strengthening multilateral na-
tional security controls through CoCom.
MULTILATERAL NATIONAL SECURITY EXPORT CONTROLS
Based in Paris, the Coordinating Committee on Multilateral Export
Controls (CoCom) administers uniform multilateral national security
export controls on munitions, products and technologies related to
nuclear energy, and dual use products and technologies. Items in each of
these categories are placed on control lists maintained by CoCom if there
is unanimous consent among the member nations for control. Many of the
items on the U.S. Control List parallel items found on the CoCom dual
use list, which is known as the International List. The International List
covers three types of goods:
· items designed specially or used principally for development, pro-
duction, or utilization of arms, ammunition, or military systems;
· items incorporating unique technological know-how, the acquisition
of which might give significant direct assistance to the development and
production of arms, ammunition, or military systems; and
· items in which proscribed nations have a deficiency that hinders
development and production of arms, ammunition, or military systems,
a deficiency they are not likely to overcome within a reasonable period.
CoCom groups the items on the International List into various catego-
ries. Some categories, such as those covering measuring instruments
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98 BALANCING THE NATIONAL INTEREST
(category no. 1529) and computers (category no. 1565), include products
whose technical characteristics range across several levels of sophistica-
tion. The degrees of control, which are outlined in Table 4-1, depend on
various technical parameters specified in the list or in notes appended to
the list. There must be unanimous approval by CoCom members for the
export to proscribed destinations of items representing the highest level of
technological sophistication; at the lowest level any CoCom government
can approve an export based solely on national discretion.
This method of operation reflects the fact that, although there is strong
support among CoCom members for a system of common national
security export controls, there is considerable disagreement about the
scope of items subject to control and the degree to which control is
necessary and practical. For example, Canada, the United Kingdom,
France, West Germany, and Japan have for years actively advocated
major reductions in the scope of coverage. They subscribe to the view
that the current multilateral CoCom control list is too extensive and that
it would be more credible and more enforceable if widely available
items were removed.
Prior to 1985, CoCom conducted reviews of the dual use and other
control lists every 3 years. In 1985 it initiated a process of annual reviews
covering one-fourth of the list every year. (This spreads out the review
process and alleviates administrative requirements at the CoCom secre
TABLE 4-1 CoCom Procedures
· General embargo-covering items that must be submitted to CoCom for a general
exception to the embargo with approval to export requiring unanimity among the
members.
- Favorable consideration-covering items falling below the general embargo line that
will be considered favorably for export on a case-by-case basis if they meet certain
conditions specified in the accompanying notes.
· One-time review and listing or the "45-day" procedure-covering items for which a
decision to approve their export as a category of product will be made within 45
days; in this case, the question period lasts only 30 days (as compared to 8 weeks for
general exception cases). If a product is listed (by make and model number),
subsequent exports are controlled under administrative exception note procedures or
are free from controls depending on the procedure specified.
Notification- covering items that have been nationally approved for export for which
notice must be given to CoCom 30 days in advance of shipment but that do not
require CoCom approval.
Administrative exception notes (AEN)-covering items that may be exported at
national discretion with only the requirement to report statistics to CoCom monthly
(after the fact unless stipulated otherwise).
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THE DIMENSIONS OF NATIONAL SECURITY EXPORT CONTROrS 99
lariat.) Although CoCom now reviews list items on the average only once
every 4 years, it publishes the results of the review (i.e., additions and
deletions to the list) at the end of each year instead of waiting until all
items have been reviewed. In practice, this puts changes into effect more
quickly than under the old procedures. Moreover, the practice of review-
ing only a portion of the list each year does not preclude any CoCom
member government from proposing essential changes additions, mod-
ifications, etc. to portions of the list not under review.
Not all proscribed destinations are treated by CoCom in the same way.
At the end of 1985, CoCom agreed to treat the People's Republic of China
more liberally than the other CoCom-proscribed destinations. As a result,
it added certain equipment (i.e., equipment that falls within agreed-upon
technical parameters in each of 27 International List categories) to the
national discretion level of control for the PRC. This equipment now can
be shipped to that country without prior multilateral CoCom review.
Currently, CoCom follows a policy of not permitting exceptions to the
general embargo for proposed exports to the Soviet Union. This policy,
which was adopted after the Soviet invasion of Afghanistan, does not
apply to other CoCom-proscribed destinations that is, nations in East-
ern Europe.
THE CONTROL SYSTEMS OF OTHER WESTERN NATIONS
The panel reviewed in detail the export control systems of five CoCom
countries that maintain control lists substantially parallel to the CoCom
list: Canada, France, Japan, the United Kingdom, and West Germany.
All five nations have objected to the U.S. assertion of jurisdiction over the
following: (1) the reexport of U.S.-origin items; (2) the export of foreign-
made products that contain U.S. parts and components or that are based
on U.S. technology; and (3) the export of non-U.S.-origin items by U.S.
subsidiaries located in their countries. None of the five administers the
type of reexport controls listed above on their own dual use items.
Moreover, Canada, France, and the United Kingdom have adopted
legislation that is specifically designed to protect their sovereignty from
the reach of extraterritorial U.S. controls.
All five nations support the international import certificate/delivery
verification (IC/DV) system. Under this system the government of the
nation importing controlled items from a CoCom country assumes the
responsibility for preventing diversionary reexports to proscribed desti-
nations.
With limited exceptions, none of the countries imposes controls that
extend beyond the CoCom lists. Certain chemicals make up the only
category of items controlled unilaterally by Canada for other than
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100 BALANCING THE NATIONAL INTEREST
short-supply reasons. West Germany controls a few munitions and
nuclear energy items unilaterally.
There is little similarity among countries with respect to technical data
controls. Some restrict the export of intangible data; others limit controls
to tangible forms of information.
Generally speaking, each CoCom country requires export licenses for
CoCom-controlled commodities shipped to non-CoCom, nonproscribed
destinations or "third countries." These third countries, however, are not
dealt with uniformly. Several of the nations require consignee assurances
from Third World countries, a practice that does not mirror U.S. policy.
Even within the United States there is no uniformity. For example, the
Commerce Department requires import certificates from some non-CoCom
nations (e.g., India and Hong Kong); in the case of other countries, it
requires consignees merely to sign and submit supporting end use state-
ments. From still other consignees-in some nations in Central and South
America the United States does not require any such assurances.
As part of the special relationship with Canada discussed earlier,
Canada abides (albeit somewhat reluctantly) by U.S. national security
reexport regulations requiring authorization for U.S.-origin items that are
originally shipped to Canada but are being supplied finally to third
countries. Canadian cooperation also includes restricting reexports of
U.S.-origin items pursuant to U.S. foreign policies not shared by Canada.
However, Canadian and U.S. views differ on whether or not an item is of
U.S. origin. Although the United States essentially contends that U.S.
identity is never lost, Canada maintains that a U.S. item loses its identity
if it is materially changed in Canada and the proportion of U.S.-origin
parts and components in the resulting new product is less than 80 percent.
The panel also reviewed in detail the export controls of one non-
CoCom nation in Europe and one non-CoCom nation in the Far East-
Austria and South Korea, respectively. As a neutral nation, Austria
approaches export controls from a different perspective than the CoCom
countries. Because it desires to maintain good commercial relations with the
West without violating its neutrality, Austria maintains controls on reexports
as specified by the original country of origin. Austrian-origin goods, how-
ever, are restricted only to prevent shortages or price fluctuations.
Austria requires licenses for exports of items that are imported with
import certificates, a system based on voluntary agreements between
Austrian firms and the Austrian government. Under this system, firms
certify that they will abide by the conditions in the export license or
reexport license governing items they import from other nations.
Because of its hostility toward North Korea, the Republic of Korea
engages in no direct trade with CoCom-proscribed destinations on the
presumption they are conduits to North Korea. Otherwise, Korea does
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of these acts provided for judicial review of export regulations or individual licensing
decisions.
8. Henry Kissinger, White House Years (New York: Little, Brown and Co., 1979), pp.
153-154.
9. 10 C.F.R. 120-130.
10. 10 C.F.R. 120.8.
11. 15 C.F.R. 368-399.
12. Public Law 99-64, 99th Congress, July 12, 1985.
13. See "Notice of Proposed Rulemaking: General License for Certified End-User Proce-
dure," Federal Register 51, no. 120, pp. 22826-22829.
14. 15 C.F.R. 379.3. The Department of Commerce has proposed modifying the terms of the
GTDA license; see Federal Register 51, no. 95, pp. 17986-17989.
15. Romania, Libya, Hungary, Poland, Albania, Bulgaria, Czechoslovakia, Estonia, the
German Democratic Republic, Laos, Latvia, Lithuania, the Mongolian People's Re-
public, the Union of Soviet Socialist Republics, Cuba, Kampuchea, North Korea, and
Vietnam fall within these five country groups.
16. Invention Secrecy Act of 1951: 35 U.S.C. 181 et seq.; 37 C.F.R. Part 5.
17. See FederalRegisterS1, no. 180, pp. 32938-32939. This notice appears to imply that
only technical data whose export is controlled by the Department of Defense according
to guidelines contained in DoD Directive 5230.25, dated November 6, 1984 (32 C.F.R.
Part 250), may be subject to the "Secrecy Order and Permit for Foreign Filing in Certain
Countries." The commissioner of patents and trademarks, however, in correspondence
to the American Association for the Advancement of Science dated March 13, 1986, has
asserted that this secrecy order may be used in connection with patent applications
arising from privately sponsored research.
18. See `'Notice of Proposed Rulemaking: Revision of Controls on Foreign Products
Incorporating U.S. Origin Parts, Components, and Materials," Federal Register 51, no.
129, pp. 24533-24535.
19. In 1978 the Soviet Union proposed building a large-diameter natural gas pipeline from
Siberia to Western Europe. Beginning in 1981 the United States sought to block
cooperation by Western European nations and Japan. On June 18, 1982, President
Reagan extended a previous order prohibiting direct exports from the United States of
oil and gas equipment for the project to include sales by overseas subsidiaries of U.S.
firms and by foreign firms producing such equipment under U.S. license. This order was
rescinded on November 13, 1982.
20. Membership of the Senior Interagency Group on Transfer of Strategic Technology
includes representatives from the Departments of Commerce, Energy, Justice, State,
and Treasury, the Arms Control and Disarmament Agency, the Central Intelligence
Agency, the Federal Bureau of Investigation, the Joint Chiefs of Staff, the National
Aeronautics and Space Administration, the National Security Agency, the National
Science Foundation, the National Security Council, the Office of Management and
Budget, the Office of the Secretary of Defense, the Office of Science and Technology
Policy, the Office of the Vice President, the U.S. ambassador to the United Nations, the
U.S. Customs Service, and the U.S. trade representative.
Representative terms from entire chapter:
export control
