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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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Suggested Citation:"II. Findings." National Research Council. 2009. Beyond 'Fortress America': National Security Controls on Science and Technology in a Globalized World. Washington, DC: The National Academies Press. doi: 10.17226/12567.
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II. Findings Each of the committee’s findings is summarized and then discussed in detail in the text that follows. Finding 1 Designed for the Cold War when the United States had global dominance in most areas of science and technology, the current system of export controls now harms our national and homeland security, as well as our ability to compete economically. A. In almost all cases, the technology base that supports our national security also supports the high-technology sector of the civil- ian economy. B. Many controls imposed in the name of national and homeland security do not, in fact, improve national and homeland security. C. Many current controls (outside of narrowly defined military niches) aimed at protecting national security, in fact weaken U.S. innova- tion and competitiveness in global markets, thereby reducing economic prosperity, which is an essential element of U.S. national security. The current system of federal controls on the flow of scientific information developed, by accretion, over almost six decades. It is based largely on the experience of the Cold War years when the United States was confronting a unitary threat from the Soviet Union, and on the conditions of economic and technological competitiveness that existed in the 1950s, 1960s, and 1970s. Although economic and security condi- tions have changed dramatically, our approach to export controls has 17

18 BEYOND “FORTRESS AMERICA” persisted, both in substance and in the administrative structures within which the controls are carried out. How Did We Get Where We Are? In response to the numerically superior military forces of the Soviet Union and its Warsaw Pact allies, the United States committed to build- ing a military establishment that fielded qualitatively superior forces. To sustain this “run faster” strategy, the United States invested signifi- cantly in advanced research and development in university, industry, and national laboratories to produce superior technology in fielded military systems. As a result, the United States achieved the leadership position in many areas of science and technology. There followed well-documented efforts by the former Soviet Union to systematically collect and exploit for military purposes scientific and technical information produced in the West. These efforts were unprec- edented in scope and in the resources (both human and financial) dedi- cated to their implementation. To counter this threat, the United States crafted a system of policies and regulations designed to limit the flow of technology to the Soviet Union and its allies. This system included clas- sification, export controls, deemed export controls, restrictions on the dissemination of government-funded research, and limitations on visa and visitation privileges by those who could collect advanced scientific and technological knowledge within the United States. Each of these regulatory requirements was premised on the direct application of par- ticular elements of technology to specific military uses. Moreover, all of these military uses were envisioned, in the U.S. regulatory design, as being wielded by an identified state power—most specifically, the former Soviet Union and its allies. With a common understanding of the security threat they faced, the United States and its allies acted to deny crucial technology to the Soviet Union and the other states of the Warsaw Pact. See, for example, National Academy of Sciences, National Academy of Engineering, Insti- tute of Medicine. 1982. Scientific Communication and National Security (hereafter known as the Corson ­Report after the panel’s chair, Dale Corson). Washington, DC: National Academy Press, pp. 17-18. Deemed export controls refer to controlling the transfer of technical information to foreign nationals who are studying or working in the United States.

FINDINGS 19 How Have Global Conditions Changed? The fall of the Soviet Union was a triumph for the West, eliminat- ing the single largest threat to the security of the United States and its allies. However, the demise of the former Soviet Union let loose regional animosities that in some cases had lain dormant under Soviet control, and in others, had been obscured by Cold War geopolitics. At the same time, this dissolution loosened the ties among the countries of the anti- Soviet West that had cooperated with one another out of a common fear of the Soviet Union. This has made it difficult for the United States and its allies to deal consistently with the rise of smaller politically motivated enemies, who in many cases are non-state actors—even mere groups of individuals—and whose size is disproportionate to the nature of the threat they pose. The post-Cold War period is also marked by major changes in world economics that have transformed the international economic landscape. The opening of trade among nations of East and West, com- bined with advances in information technologies, have made it possible for people, goods, and technology to move freely across formerly closed borders. Well-financed centers of scientific excellence with long-term goals sprang up in South Korea, Singapore, China, and India. The scientific establishments in Europe, Israel, Japan, and more recently, Russia, have realized a new vigor in the post-Cold War global economy. Several countries in the Middle East are now investing to advance their own scientific research capabilities. Many countries—and especially China—are learning to exploit their new scientific strengths by means of globalized business models that take advantage of peer-to-peer initia- tive structures. For many countries, trade policies that fostered economic develop- ment became a high priority. The need to control exports for mutu- ally agreed national security objectives no longer dominated the policy agenda of U.S. allies. Meanwhile, multinational corporations based in the United States shifted research and development efforts offshore to accompany the opening of markets, as in China; or to take advantage of lower costs and well-educated English-speaking technical elites, as in India and Ireland. Moreover, innovation itself is becoming increas- See, for example, Lewis M. Branscomb’s article, “Research Alone is Not Enough,” in Science, 321: (1589) (August 15 2008), pp. 915-916 that calls for American policy makers to encourage the development of relational business models.

20 BEYOND “FORTRESS AMERICA” ingly international. Finally, advances in information, communication, and transportation technologies and a switch to “just-in-time” inven- tory management have made U.S. industries increasingly reliant on global supply chains whose disruptions, when they occur, hurt the U.S. economy. Increasingly, American science and technology lost the dominance that had characterized earlier decades as scientific and technological capacity increased dramatically in other nations. The reflexive tighten- ing of security after the September 11, 2001, attacks blunted recognition in U.S. policy of the breadth and depth of the rising competition to American science and technology. The Single Technology Base The technology base of a nation consists of all the elements that contribute to the ability of the nation to develop technology, to field advanced systems, and to compete in technology-based markets; it encompasses people, infrastructure, research laboratories, and man- ufacturing ­ capacity, as well as science and engineering education c ­ apacity. As conditions in the marketplace changed, the separate, and often secret, military technology base that in the 1970s supported the military market gradually merged with the much larger technology base that supported the commercial market. This global commercial market provided enormous incentives for the rapid development of sophisti- Sociologists and economists are uniformly pointing to an increasing interdependence of innova- tion systems in various countries. This interdependence consists of increasingly complex collabora- tions across national borders and among researchers and users of research from various institutions. These collaborations allow firms to take advantage of foreign innovation systems for a variety of solutions to technological problems. For an overview of innovation system literature, see Carlsson B. 2006. Internationalization of innovation systems: A survey of the literature, Research Policy, 35: (1), pp. 56-67. Also see Etzkowitz, H., and Leydesdorff, L., 2000. The dynamics of innovation: from national systems and “Mode 2” to a triple helix of university–industry–government relations. Research Policy 29: (2), pp. 109-123. The West Coast dock strike in 2002 that lasted for 10 days had an estimated cost of $15 billion to the U.S. economy. See The Reform Institute’s 2008 report, Global Supply Chain Presents Oppor­ tunities and Perils, released March 6, 2008. The 2007 report to Department of Commerce Secretary Carlos Gutierrez from the inde- pendent Deemed Export Advisory Committee (hereafter referred to as the DEAC Report), has listed the following areas in which the United States has lost its scientific and engineering leadership: “polymer composites (Germany), 3D optical memories (Japan), bulk metallic glass ( ­ Japan), biostatistics/­multivariate statistics (France), population biology (UK), adaptive dynamics (Germany/­Switzerland), theoretical biology (Netherlands), and solar energy (Japan/Germany).” The DEAC Report, p. 11.

FINDINGS 21 cated tech­nologies, while the market for specific military applications became relatively smaller. As the military market shrank, investments flowed naturally, by market-driven forces, to the civilian sector. More and more of the technologies and The communications that components used for war-fighting support military situation awareness today are and intelligence collection came to predominantly civilian be based on the same technology technology. During Operation that supported the development Iraqi Freedom (2003), 80% of and production of civilian goods all satellite communications and services. used commercial satellite Innovations came quickly in services. the 1980s and 1990s—especially in SOURCE: Cavossa, David, “State of the electronics and information tech- Satellite Industry”, presentation for the nology—and the U.S. military was FAA’s Commercial Space Transportation Advisory Committee (COMSTAC), able to incorporate civilian compo- October 25, 2006. Available at nents, or variants of them, to add http://www.faa.gov/about/office_org/ headquarters_offices/ast/industry/ functional capability to military advisory_committee/meeting_news/ systems. By 2000, except for small media/COMSTAC_Presentation-SIA_ Cavossa.ppt. but important niches in the military s ­ ector, components for both mili- tary applications and the commer- cial market were drawn from the same technology base. A key differen- tiating characteristic in the military market now was not the underlying scientific or technological information, components, or products, but the methods by which these were applied to specific military uses. With the evolution to a single technology base supporting both military and commercial demand came the opening of global markets through political means, such as the loosening of Russia’s grip on its satellite states, the rise of state-controlled capitalism in China, and vari- ous world trade agreements. These global markets, although they often The consolidation of the defense industry is in part emblematic of the establishment of a single technology base. In 1993, there were 36 major prime contractors. By 1999, these contractors had consolidated to just 8 prime contractors. A similar consolidation has happened among second- and third-tier contractors with their numbers falling from 85 to 44 in a similar time period. See Bear Stearns, The Consolidation of the Defense Industry: Winners and Losers, February 7, 2000; and Bear Stearns, The Consolidation of the Aerospace Industry/Defense Merchant Supplier Base, April 17, 2000. Defense Science Board, 2006 Summer Study: 21st Century Strategic Technology Vectors, avail- able at http://www.acq.osd.mil/dsb/reports.html.

22 BEYOND “FORTRESS AMERICA” started at considerably lower levels, grew at much higher rates than the more mature domestic U.S. markets. These global markets became as important as—and increasingly more important in some areas for U.S. companies—than the market within U.S. borders. Despite, or perhaps because of, the merger of the military and com- mercial technology bases, the U.S. federal bureaucracy redoubled its efforts to prevent the transfer of information, components, and products to potential U.S. adversaries by adding new items to the control lists that could not be exported from the United States without an export license.10 With the tensions that developed after the September 11, 2001, attacks, the licensing process slowed even further. Items rarely came off the lists, even if newer, more advanced developments com- pletely bypassed the technologies on which they were based. In addi- tion, the bureaucracy’s attention to “deemed exports” became more focused.11 Foreign scientists and students in the United States were barred from exposure to export-controlled items unless their host insti- tutions obtained an export license. The Harms Caused by the Current Export Control System If appropriately construed and implemented, export controls (and the derivative “deemed export” controls) constitute a legitimate con- straint on commercial activity for the purpose of protecting national Ibid. 10The one exception is in 1995-1996 when the multilateral forum, the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (hereafter referred to as the Wassenaar Arrangement), was established. The categories of items that were either decontrolled or controlled at more advanced levels included computers, beta-test software, precursor chemicals, and integrated circuits. See the Export Administration Annual Report 1994 and 1995 Report on Foreign Policy Export Controls, U.S. Department of Commerce, Bureau of Export Administration. 11The National Defense Authorization Act for Fiscal Year 2000 authorized the Inspectors G ­ eneral of the Departments of Commerce, Defense, Energy, and State, in consultation with the Directors of the CIA and FBI, to conduct a multiyear assessment of the adequacy of current export controls and counterintelligence measures to prevent the acquisition of sensitive U.S. technology and technical information by countries and entities. The 2004 reports focused on regulations regarding deemed exports. A total of seven reports were issued in April 2004, including a report from the Department of Homeland Security (established in 2003), and an interagency review sum- marizing the findings and recommendations of the six individual agency IG reports. Three of the reports—State, DHS, CIA—remain either classified or are publicly unavailable. See in particular Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the U.S., Final Inspection Report No. IPE-16176, March 2004. Available at http://www.oig.doc. gov/oig/reports/2004/­BIS-IPE-16176-03-2004.pdf.

FINDINGS 23 security. However, the export control system enforced in the United States today has failed to evolve with changing global conditions, and now produces significant harm to U.S. military capability, to homeland security, and to the nation’s economic competitiveness. Harm to U.S. military capability. Over time, the harm to the U.S. military capability caused by export controls has expanded and has now reached substantial proportions. In response to export controls, decisions of U.S. corporations actually prevent full utilization of American technology for defense purposes. Some U.S.-based compa- nies that have developed valuable Even more than 25 years after the international sales of the new technology choose to stay out F-16 jet fighter aircraft, only of military markets because they non-major F-16 spare parts believe (often erroneously) that if can be transferred between they do not sell to the military, then countries that purchased this export controls would not apply to fighter. An official third-party them. Other companies opt not to transfer license is needed— even in-theater—when one enter fields in which controls may country provides emergency apply and direct their investment repairs for another. As a capital elsewhere.12 Such decisions result, force readiness may deprive the military of the benefits be compromised. of new scientific and technological SOURCE: Defense MOU Attachés developments that otherwise might Group (Defense Cooperation Attachés be available for incorporation into of 21 member nations). new military systems. ­ Companies with significant commercial ­markets that continue to sell to the military may suboptimize military systems to minimize the impact of the export controls. As foreign companies and governments fill the competitive gaps left by U.S.-based compa- nies that are not permitted—or choose not—to export, valuable tech- nical developments occur outside the United States to which the U.S. military and intelligence agencies then have no access. The additional financial costs to companies for compliance with export licensing are particularly difficult for smaller, innovative suppliers to absorb, and 12In a 2002 unpublished report by the Office of the Deputy Under Secretary of Defense (Indus- trial Policy), titled “Less Traditional Suppliers for transformational warfare” (summarized in the 2003 report, Transforming the Defense Industrial Base: A Roadmap), it was found that export control restrictions are a major impediment to participation of less traditional suppliers.

24 BEYOND “FORTRESS AMERICA” they are thus deterred from working with the military to solve critical defense problems.13 Export controls also constrain the contribution that allied military forces can make to U.S. military operations. For example, in an overseas military operation, some allies may be cleared to repair U.S. equipment and others may not; this can prevent repair at facilities closest to the theater of operation. Allied military equipment returned to the United States for repair may need to be cleared for “export” (before shipment back) by determining that nothing has changed to affect the equipment’s compliance with U.S. export law. The military thus faces difficulties in outsourcing maintenance and other services to take advantage of lower- cost foreign commercial sources for functions traditionally performed by military personnel. Foreign manufacturers increasingly refuse to install U.S. equipment in systems they produce. If non-U.S. equipment is used, U.S. export controls do not apply. If U.S. equipment is used, then export controls do apply, and the systems may not be shipped or re-exported without approvals that involve a lengthy bureaucratic process. Foreign defense contractors also avoid using U.S. subsystems to avoid U.S. controls that would restrict third-country transfer and other commercial uses. 14 Finally, these controls may actually hamper the U.S. government’s own understanding of foreign military capabilities and foreign scientific developments. When components or products are available from many sources around the world, U.S. export controls cannot prevent foreign militaries from acquiring them. Allowing foreign military services to buy such components from U.S. sources can improve U.S. awareness of the characteristics of their systems, which might otherwise be just as capable but less well understood. 13It is the view of small entrepreneurial companies, such as the Insitu Group which helped to pioneer the unmanned aerial vehicle (UAV), that classification of their technology as dual-use can “significantly impede small company growth.” This example and others are described in Transform­ ing the Defense Industrial Base (see footnote 16) available at http://www.acq.osd.mil/ip/. 14In 1999, commercial satellites were reclassified by Congress from being controlled by the Com- merce Department as a dual-use item to being controlled by the State Department as munitions under the International Traffic in Arms Regulations. Alcatel Space (now Thales) then announced in 2002 its company policy to build ITAR-free satellites, launching its first ITAR-free satellite success- fully in 2005. Since then, other European aerospace companies such as EADS, Morotta, and Surrey Satellite Company have all followed suit and advertise their products as being “ITAR-free.” The European Space Agency has recently implemented a policy of “nondependence” on U.S. spacecraft parts as a “key performance indicator” in purchasing decisions. Sources: William Mathews, U.S. Holds Up Sale of C-295s to Venezuela, Defense News, October 24, 2005, and Peter B. de Selding, Europe to Reduce Need for Foreign Spacecraft Parts, Defense News, October 6, 2008.

FINDINGS 25 Given the globalization of science and technology, it is particularly important to monitor technological developments overseas, not only to ensure that U.S. military systems use the world’s best technologies, but also to understand what capa- The Russian RD-180 engine bilities might become available to powers all Atlas V vehicles for critical U.S. national U.S. adversaries. Constraints on s ­ ecurity and civil space launch interactions between U.S. and for- missions. Export controls eign researchers will handicap this inhibit U.S. engineers from country’s ability to track global tech- c ­ ollaborating in ­troubleshooting nical developments that might have or improving the engine in relevance to national security. As any way.  An RD-180 engine (or derivative engine, such the CSIS Commission on Scientific as the RD-171M) failure or Communication and National Secu- serious anomaly on a U.S. or rity put it, “In a world of global- foreign launch could ground ized science and technology, security the Atlas V fleet. Resolution of comes from windows, not walls.” 15 the root cause and corrective action needed to return the Atlas V fleet to flight status is Harm to homeland security. Many severely impeded by the export export controls have the poten- control regime that highly tial to damage homeland security c ­ onstrains U.S. interactions because they are based on the with the Russian designers premise that selected technology and producers of the engine. should be limited to use inside the SOURCE: Greg Pech, Director, Atlas United States and by American Propulsion ­Systems, United Launch c ­ itizens—in other words, an exten- Alliance LLC. sion of the “Fortress ­ America” mindset. Yet U.S. homeland secu- rity may be well served by the use of sophisticated military-like systems in international locations such as airports and seaports. The movement between U.S. and international commercial locations—and movements between one international location and another—required for aircraft that might be equipped with anti-­terrorist devices is also not addressed in the current export control regime. As a result, some anti-terrorist systems may be most essential in precisely the countries where the risk of diversion brings export controls into play and encumbers their use. 15CSIS Commission on Scientific Communication and National Security, Security Controls on the Access of Foreign Scientists and Engineers to the United States, October 2005, p. 15. Available at http://www.csis.org/media/csis/pubs/051005_whitepaper.pdf.

26 BEYOND “FORTRESS AMERICA” Export controls may also act to make U.S. advanced technology com- panies less able to compete for global business, particularly homeland security business, and therefore less able to sustain their techno- Counter-MANPADS logical preeminence that produces systems (Man Portable the technology needed to protect Air Defense System) are the United States and its citizens. designed to protect aircraft from a shoulder-launched In addition, some important missile.  They are categorized new areas critical to homeland as munitions by the security cannot be made to fit into International Traffic in Arms the current regulatory framework, Regulations (ITAR).  Installing such as the free exchange of civil- Counter-MANPADS systems on commercial aircraft would ian information on the Internet, require an ITAR license for or the rapid advances in the bio- each travel leg outside the logical sciences. The implications United States. Inherently of these two domains for greater unpredictable airline schedules homeland or global security are not make it impractical for airlines yet fully understood. They have to provide such protection. largely been the province of the SOURCE: Richard Barth, commercial world, academia, and De-conflicting Counter-proliferation the non-­security sectors of the U.S. and ­Counterterrorism Policy, presented at COSSP ­Meeting, Irvine CA, government. Advances in these December 13, 2007. fields rely for their creative success on broadly distributed, informal networks of individuals com­mitted to an unprecedented level of openness well beyond the control or economic leverage of the homeland security community. Both are examples of newly important areas in which current export controls may not work well. Harm to U.S. economic competitiveness. The artificial limitations on trade imposed by lists of controlled technologies have had pre- dictable results with respect to the U.S. position in global markets. With U.S. companies prevented by export controls from competing in certain markets, foreign competitors, often sponsored by their governments, spring to fill these competitive gaps. As these com- petitors have proliferated, U.S. companies have suffered challenges in the marketplace that would not have been present but for export c ­ ontrols. The biggest risk to U.S. jobs is a lack of economic com- petitiveness, and U.S. export control policy directly undermines

FINDINGS 27 that competitiveness. 16 Even if a U.S. company is licensed to export a controlled product, a foreign buyer may be reluctant to use it because of the fear that a separate export license will be required to make repairs, or even to honor a A 2007 survey of 202 aerospace request for additional information companies indicates that compliance costs associated about the product. with export controls average As U.S. companies have evolved $50 million annually and have to compete in global markets and increased 23% since 2003. have become multinational cor- porations with a substantial pres- SOURCE: Air Force Research L ­ aboratory analysis of survey of ence in numerous countries, the 202 space ­companies/ business units, cost of complying with U.S. list- 2007. Reported in the CSIS report, Health of the U.S. Space ­Industrial based export controls has risen Base and the Impact of Export d ­ ramatically. This additional burden C ­ ontrols by Pierre Chao, February 19, 2008. Available at http://www.csis. on U.S.-based companies makes org/media/csis/pubs/021908_csis_ them less competitive. spaceindustryitar_final.pdf. The regulatory limits on provid- ing controlled information to foreign scientists and students now affect the research and development capacity of U.S. corporate laboratories. This is especially true as U.S.-based firms establish laboratories overseas, and even as they staff their U.S. labora- tories with graduates of U.S. science and engineering programs, an ever- increasing share of whom are foreign nationals. Failure to “run faster” by developing qualitatively better products and services with the best talent available is a serious threat to U.S. economic competitiveness. Similarly, export controls and “deemed export” rules make U.S. universities less able to attract the most capable foreign researchers or to retain some of the most creative faculty members.17 Important discov- 16A key to designing the Boeing 787 aircraft is the ability of engineers at Boeing to work closely with foreign suppliers. Yet many of Boeing’s engineers are veterans of the B-2 stealth bomber program of two decades ago, who refused to guarantee that their know-how in designing aircrafts did not come from their participation in that program. This caused delays in the 787 program, as lawyers had to pour through documents from the 1970s to determine if key technologies for the 787 came from the commercial sector and were thus free of ITAR controls. In some cases, engineers had to develop new tests to prove well-known facts in technologies like composites to ensure that this knowledge did not come from the B-2. Dominic Gates, Separation anxiety: The wall between military and commercial technology, Seattle Times, January 22, 2006. 17See, for example, Science and Security in a Post 9/11 World, pp. 40-48 (National Academies Press), and The DEAC Report, pp. 35-46 (Deemed Export Advisory Committee, Department of Commerce).

28 BEYOND “FORTRESS AMERICA” eries may be hindered, or may simply occur elsewhere. The rapid and dynamic nature of leading-edge fundamental research makes it almost impossible to predict with any precision the disciplines in which a researcher will work, the colleagues or laboratories with whom he or she will collaborate, the equipment needed, and the possible modifications that may have to be made to that equipment. All of these factors would need to be tracked so that a research institution could, with assurance, know when to apply for an export license for its foreign scientists and students. Licensing requirements inevitably lead to delays, and they may deter or even eliminate the spontaneous discoveries that arise from seren- dipitous interactions and spur-of-the-moment collaborations, most of which are impossible under “deemed export” rules. For example, dur- ing a conversation at a conference or research seminar, a researcher may realize that his or her laboratory apparatus is well configured to help solve a colleague’s problem. If export licenses are required to use that apparatus, or even to share technical data about the possible application, the opportunity to help will be delayed by a month or more, and will therefore likely be lost.18 Finding 2 The system of export controls on the international flow of science, technology, and commerce is fundamentally broken and cannot be fixed by incremental changes below the Presidential level. A. For most of the last 20 years, the executive and legislative branches of the federal government have failed to come to agreement— either internally or with each other—on dual-use export control policy. This failure has led to unnecessary vulnerabilities in our national secu- rity and in our economic competitiveness. B. The current list-based systems are unwieldy, slow, difficult to administer rationally, and are overly proscriptive given global develop- ments in science and technology. C. The lack of multinational consensus among our allies about export controls further reduces the effectiveness of unilateral U.S. actions. 18These two paragraphs draw heavily from Security Controls on the Access of Foreign Scientists and Engineers to the United States, CSIS, October 2005, p. 15.

FINDINGS 29 Policy Making in the Absence of Law The current system of federal controls on exports is based on three statutes enacted in 1968, 1978, and 1979. The Arms Export Control Act of 196819 governs the export of weapons systems and information asso- ciated with weapons systems. It is administered by the Department of State through the International Traffic in Arms Regulations (ITAR). The Atomic Energy Act of 1954, as modified by the Energy Reorganization Act of 1974 and the Nuclear Non-Proliferation Act of 1978, governs the export of nuclear materials and technology. It is administered principally by the Nuclear Regulatory Commission, with inputs from the Depart- ments of Commerce, Energy, and State. The Export Administration Act of 197920 addresses the export of dual-use21 technologies and informa- tion. It is administered by the Department of Commerce through the Export Administration Regulations (EAR). However, this act has lapsed several times, most recently in 2001. During each hiatus and since 2001, the EAR has been continued by invocation of presidential emergency p ­ owers under the International Economic Emergency ­ Powers Act of 197722 on the grounds that the expiration of the act poses an “unusual and extraordinary threat to the national security, foreign policy and economy of the United States.”23 19“The International Security Assistance and Arms Export Control Act of 1976 (P.L. 94-329), enacted on June 30, 1976, changed the title of the Foreign Military Sales Act (FMSA) of 1968 (P.L. 90-629), as amended, to its present one—the Arms Export Control Act. (22 U.S.C. 2751 et. seq.) All references to the predecessor statute, the FMSA, are legally deemed to be references to the AECA.” U.S. Defense Articles and Services Supplied to Foreign Recipients: Restrictions on Their Use. Updated March 14, 2005, Richard F. Grimmett, Specialist in National Defense Foreign Affairs, Defense, and Trade Division, RL30982, p. CRS-1. Available at http://www.fas.org/sgp/ crs/natsec/RL30982.pdf. 20The Export Administration Act (EAA) was enacted in 1969 to replace the Export Control Act (enacted in 1949 and renewed, largely without amendment, seven times). The EAA was amended in 1974, 1977, and 1979. The 1979 Act constitutes the basis of the current export control system. The Export Administration Act: Evolution, Provisions, and Debate, Updated January 9, 2008, Ian F. Fergusson, Specialist in International Trade and Finance, Foreign Affairs, Defense, and Trade Division, RL31832, pp. CRS-2-3. Available at www.fas.org/sgp/crs/secrecy/RL31832.pdf. 21The committee uses the term “dual-use” to refer to technologies that have legitimate commer- cial use but could also be used in military systems. 22For a history of these efforts, see The Export Administration Act: Evolution, Provisions, and Debate, Updated January 9, 2008, pp. CRS-2-6. 23Despite twelve attempts to reauthorize the Act in the 1990s and regular attempts since then, Congress has been unable to update the Export Administration Act. In seven legislative efforts since 1996, four did not get beyond committee, one was approved by committee but did not reach the floor, and two failed to pass when sent to the other house of Congress. The Export Administra­ tion Act, Updated January 9, 2008, p. CRS-12.

30 BEYOND “FORTRESS AMERICA” The lack of existing legislation on dual-use export controls means that economic globalization, the 2001 terror attacks on the United States, the wars in Iraq and Afghanistan, the impact of globalized com- munications, the role of China in the American economy, and the rise of Europe as an economic competitor, are all not reflected in current export control legislation. The absence of dual-use export control legis- lation undermines the implementation of policy in the executive branch because there is no current statute to provide the legal framework within which the Departments of State, Commerce, and Defense can reconcile their differences.24 Thus, there is no core agreement within the executive branch or between the White House and Congress about what export controls on dual-use items and technologies are supposed to achieve. In the breach, the competing bureaucracies in the Departments of State, Defense, and Commerce become a principal source of stagnation and inertia.25 The constituencies within each of these agencies are dis- connected and sometimes work at cross-purposes, resulting in extended inaction on particular problems as the departments struggle for policy primacy in the interagency process.26 One set of conflicts results from ambiguity about which agency an exporter must apply to for an export license. Under the current system, the Directorate of Defense Trade Controls within the Department of State issues licenses for defense items and services, and the Bureau of Industry and Security, within the Department of Commerce, issues licenses for dual-use items and technologies. Yet these categories leave 24See, for example, the April 2008 GAO Report, Export Controls: State and Commerce Have Not Taken Basic Steps to Better Ensure U.S. Interests Are Protected. 25The Departments of Homeland Security and Treasury, and the Federal Bureau of Investigation play lesser roles in this bureaucratic infighting. 26While not a licensing agency, the Department of Defense also plays a central role in export control policy decisions and in the determination of individual licensing cases, both munitions and dual use. First, Defense is responsible for providing the technical expertise that guides the formation of the U.S. Munitions List, and it is responsible for compiling the Militarily Critical Technologies List. Second, both the Office of the Secretary of Defense (OSD) and the Joint Staff have a “seat at the table” on all interagency export control policy reviews and issue discussions, and their views are generally influential. Third, the Defense Technology Security Administration (DTSA), which is part of OSD, routinely reviews each license application—for both munitions and dual-use items—that is not subject to automatic approval. In some cases, DTSA may raise concerns about the technical parameters of the proposed export, finding that a particular configuration may be too close to the version used in U.S. military systems. In other cases, it (or the military Services) may raise operational concerns about the enhanced military capability that a particular export might give to a potential adversary. It is an extremely rare event that the Departments of State or Commerce (and especially the latter) can or will move ahead to approve a proposed export without the explicit, or at least the tacit, approval of the Department of Defense.

FINDINGS 31 ample room for overlap and varying interpretations. These interagency conflicts adversely affect the public—researchers and ­ exporters—and may hamper enforcement when controls are actually needed. The United States today is the only country in the world that has more than one agency designated as the licensing authority for both munitions and dual-use items for export (see Appendix F for a list of the U.S. govern- ment agencies involved in export controls). Another set of conflicts occurs with respect to the substance of individual determinations as to the approval or denial of particular licenses. The question of whether a particular export should be allowed often turns on the proper categorization of the item; namely, whether it falls within or outside of a controlled category of items. Another factor is the destination of the item when exported; i.e., whether it is going to a commercial or military buyer, and in which country. For example, a commercial manufacturer of communications devices may argue that a particular component is available on the open market in Europe and therefore the manufacturer should be allowed to export. The govern- ment agencies charged with guarding national security may argue that this component is used in specific military guidance systems and there- fore the manufacturer should not be allowed to export. A third set of conflicts arises when agencies, corporations, and universities disagree about the categories of items, or particular items, which should or should not appear on the control lists. A system that removes items from the control lists in a diligent way and on a periodic basis will generate disputes that need to be resolved. For example, if a component part of a weapons system is removed from the control list because components of that type have a civilian application and are sold commercially elsewhere in the world, an agency with national security responsibilities may still argue that the category or listed item, including the component part, has special capabilities applicable only to weapons systems, and therefore only a less capable component should be allowed to be exported. This logjam is not hopeless. One solution is for Congress to reform export control laws. Given the lack of decisive action for the last two decades, this may happen, but not without a significant push from the White House. Thus, the second and most viable short-term solution is for the President to become personally involved. In fact, President George W. Bush did so in January 2008 with the release of NSPD 56 on Defense Trade Reform. While five bills were under consideration in the 110th Congress, nothing came of these efforts (see Appendix J for a list of these

32 BEYOND “FORTRESS AMERICA” bills). This effort will have to be revived with the next administration. Specific recommendations to this effect are discussed in Chapter 2. Lists Are Necessary, but Not Sufficient The acts described above gave rise to an interlocking set of lists that informs the current system. These include: • The United States Munitions List, compiled by the Department of State, specifies the defense goods and services that require a license in order to be exported and implements the Arms Export Control Act. This list sets out 18 categories such as toxicological agents and equipment and radiological equipment (Category XIV) and spacecraft systems and associated equipment (Category XV). • The Commerce Control List, compiled by the Department of Commerce with interagency input, specifies which dual-use items require licenses for export. It includes almost 3,000 separate items in ten categories, including materials processing (Category 2), electronics (Category 3), and sensors and lasers (Category 6). • The Technology Alert List, compiled by the Department of State, implements the Immigration and Nationality Act. It acts as a guide to con- sular officials reviewing visa requests from students and researchers seeking to enter the country. It identifies “sensitive” areas of science and technol- ogy in which exports of technology or information might be controlled. • The Militarily Critical Technologies List, compiled by the Depart- ment of Defense, advises the administering authorities in the Departments of State and Commerce as to technologies that could permit significant advances in the development, production, and use of military capabilities of potential adversaries. An item on the Commerce Control List or the U.S. Munitions List is either prohibited from export or requires a license to export. The inclination of bureaucracy is generally to play it safe; items are added to the lists as science and technology developments occur in fields in which military uses could be envisioned.27 In 1994, the controls on exports—sending information, compo- nents, and products out of the United States—were supplemented by 27See Appendix H for the technology categories of the Commerce Control List and the U.S. Munitions List.

FINDINGS 33 Growth of the CCL Categories (1995-2008) 510 500 CCL Categories 490 480 470 460 450 1995 2000 2005 2010 Year SOURCE: The Export Control Classification Numbers (ECCNs) counts for 1985-2008 are taken from annual editions of the Code of Federal Figure 1 1985 (CFR 399.1), 1990 Regulations: (15 CFR 799.1), 1995 (15 CFR 799.1), 200 (15 CFR 774 Supplement No. 1), 2005 (15 CFR 774 Supplement No. 1), and 2008 (15 CFR 774 Supplement No. 1). The relationship between the number of ECCNs and the number of controlled goods is neither direct nor proportional and is influenced by several variables, including the breadth of products and goods controlled and the list of destination countries defined for each ECCN. The Commerce Control List (CCL) is not in fact an explicit list of commercial items to be controlled and is instead a list of technology descriptions that may qualify a product for export. A cross-reference between an ECCN and common product types is included within the current CCL, but it clearly states that it is not an exhaustive list. Furthermore, the index cannot be independently derived from the CCL itself, and different derivations based on different interpretations will lead to different lengths. Comparing the ECCN totals over time introduces additional variables and ambiguity; in some cases, the decontrol of a specific item can lead to splitting an ECCN in two; on other occasions ECCNs covering the same items are grouped or divided; and in yet other cases, technologies covered by an ECCN may stay the same while the list of controlled destinations changes. Changes in size therefore are not always proportional to changes in the scope of control, and while the number of ECCNs is a reasonably reliable indicator of the extent of control, the numerous specifics involved in interpreting each ECCN, and each ECCN change, prevent broad and definitive conclusions from being made. a related system of controls on “deemed exports,” which were defined as delivering information or allowing exposure to export-controlled components and products within the United States to non-U.S. persons. Because these individuals might be expected to take this information with them in their heads or in personal notes when they leave the United

34 BEYOND “FORTRESS AMERICA” States at some future time, providing the information or access to them was “deemed” to be an export for regulatory purposes. In this way, the reach of the lists was extended to many activities conducted entirely within the United States, and not just to the activities of exporting goods and services. Making lists is a natural and logical response to the perceived need to prevent information, components, and products from leaving the United States if those items might be used militarily by hostile foreign powers or terrorists to harm the United States, and if equivalent goods or services are not otherwise legally available overseas. List-making produces a stable platform from which the government bureaucracy can operate within a vigorous competitive environment on the part of export-minded U.S. companies. During the Cold War, list-based controls largely succeeded in preventing the export of illicit items and technology because the lists were shorter, and the criteria for export decisions could be tied directly to Soviet military needs and capabilities.  However, the list-making regime became static very early in its life. Only infrequently would items be removed from the lists, regardless of competitive developments that made the technology available in open international markets. Examples of the outmoded nature of these lists have been identified in numerous previous studies and reports and stand un-rebutted.28 This list-based system of controls constitutes a technological ­Maginot Line. It has seven major problems. First, the lists are always out of date. They do not, and cannot, reflect what is available in real time on the open market or in open published sources in the global marketplace of scientific ideas. For that reason, in some cases, the United States is controlling information that is readily available elsewhere. In addition, emerging research in very new fields will typically not appear on any government-generated list until consid- erable time has passed, by which point the technology is no longer new or emerging and may be well known in commercial markets or in the international research environment. This is not to suggest that only new, emerging technologies should be subject to controls. Some technologies that have been in existence for a long time still need to be controlled, such as technologies related to nuclear, chemical, and biological ­weapons. The relevance to security is a function of what a technology can do and where 28See Appendixes D and E for related recent and ongoing studies in this area.

FINDINGS 35 else it might be available, not just whether it is new. Moreover, the current lists are governed by broad categorical definitions of sensitive technolo- gies that lead to an inevitable lack of specificity. This, in turn, leads to a system in which little bureaucratic Items on the Commerce effort is required to apply controls Control List that are Widely Available to new technologies, whereas signifi- cant bureaucratic effort is required 1. Computers with an adjusted to address an out-of-date control. peak performance above The fundamental structure of today’s 0.75 weighted TeraFlops lists produces export controls that (speed rating) in aggregation are not only out of date, but also are controlled. Yet, using information easily obtained on expand without restraint or careful the Internet, linking together consideration. 8 Cell processors (jointly developed by IBM, Sony, and Second, the government’s list- Toshiba, and commonly found keepers are not—and cannot be— in the Sony Playstation 3), can produce 1 TeraFlop. the cutting-edge researchers who 2. Symmetric key encryption know the current state of research using greater than 64 bits work in every relevant field, or the key is controlled. However, extent and nature of work in for- software algorithms with eign countries that would render the capability greater than 64 bits, listed items out of date and beyond such as Twofish and Serpent, are already widely available effective control. The lists are now via the Web. so detailed that it would be imprac- tical for the government to employ recognized experts in every field. Even if it could, their governmental responsibilities would preclude these experts from keeping up with their research—a prerequisite for maintaining ­ specialized expertise. For that reason, it is virtually impossible for the government to maintain lists that actually reflect current conditions. Third, the lists contain overlaps that the list-keepers themselves do not agree on how to manage. The embargo controls at the Office of Foreign Assets Control at the Treasury Department include items controlled by the Department of State munitions list, and overlap occurs in the muni- tions exports to Cuba, Iran, and Sudan, and also in the case of re-exports. There is no official deferral procedure and it is generally assumed that approval must be sought from both parties. Generally, items controlled by State are not controlled by Commerce, although not always. Usually, when

36 BEYOND “FORTRESS AMERICA” State removes an item, it becomes controlled by Commerce, although sometimes it becomes decontrolled entirely. Items are also occasionally transferred back and forth. Adding even more to the confusion, some items are explicitly included in both lists. In some cases, this is because the Commerce Control List is written to conform to the European Union control list and includes many items that are actually under State jurisdic- tion. Reliance on lists further complicates this issue twofold. First, State does not allow detailed descriptions of its controls on the Commerce Control List, and second, while these entries are denoted on the Com- merce list, if industry notices that an item is removed from Commerce’s list, this is entirely misleading, as the item may actually have been, and will continue to be, controlled by State. Confusion has not only led to inconclusive congressional efforts to clarify jurisdictions, but also creates a disincentive for industry, as the onus lies on exporters to navigate the system and determine which agency has jurisdiction.29 (See Appendix F for the agency decision-making tree.) Fourth, when the United States lists exports that it intends to restrict as defense goods or services, and other countries list those exports as dual-use items, where there is a significant commercial market, other countries have both a priority list for and a strong incentive to fund research and development in precisely those areas. For that reason, we are, in effect, actively nurturing foreign competitors for our own goods and services. Indeed, our lists provide foreign competitors with a “road-map” regarding the specific technologies and end products in which they should invest.30 In addition, the lists—especially those developed under international agreements—can be used defensively by countries that are developing their own commercial capabilities and wish to protect themselves from U.S. exports. Once an item goes onto a list under one of the international agreements and is then automatically incorporated into the U.S. lists, the U.S. authorities will prevent U.S. companies from exporting the item into the foreign market—precisely the effect desired by the foreign competitor. 29See United States Export Controls by William A. Root, John R. Liebman, and Roszel C. T ­ homsen II, 5th edition. Aspen Publishers, 2007, Chapter 1, pp. 9, 11-12. 30In 2004, for example, the European Components Initiative was formed to identify technologies to be developed within the European community to lessen dependence on components for space that are under U.S. export restrictions. Phase 1 was the development of 18 key components and is to be completed by 2009. Phase 2, started in 2006, is targeting 54 additional components. Source: https://spacecomponents.org/public/eci/ (accessed October 15, 2008).

FINDINGS 37 Fifth, lists are reasonably well adapted to controlling exports of readily identified materials or systems (stealth and nuclear weapons, for example) that are concrete and tangible, but they are poorly suited to controlling exports of knowledge or complex systems of vastly different levels of sophistication. Sixth, the listed areas affect the research choices of the best scien- tists and engineers within the United States. Some avoid involvement in research areas that are affected by federal controls out of an appre- hension that significant work may not be published or that ­ students and ­ researchers needed for first-rate laboratories will not be avail- able.31 Breakthroughs will thereby be thwarted. For items that must be c ­ ontrolled—weapons-grade materials and systems—such opportunities may be a necessary cost, but to the extent that the lists are out of date or include overly broad definitions, important research opportunities remain unexploited. Seventh, some technologies, such as computer processors, encryp- tion chips, and the high-temperature components of gas turbine engines, are produced at various levels of capability. Low-capability products for the commercial market are readily available worldwide and are inappro­ priate for export control, whereas very high-technology applications may warrant restrictions until they are overtaken by new developments. However, the boundary between low and high capability moves rapidly, and the lists cannot keep up. As significant as these problems are, however, lists are also an effi- cient way—indeed the only way—to keep track of items. In Recom- mendation 1, the committee proposes a strategy for making lists more relevant and manageable. Lack of International Agreement over “Dual-Use” Export Controls During the Cold War, the NATO allies and Japan shared a multi­ lateral consensus on the need for effective and relatively uniform con- 31Examples of how federal controls affect research choices can be found in the 2007 NRC Report, Science and Security in a Post 9/11 World. See Box 2-B on the effects of classification on research into wireless sensor networks on p.33 and the testimony of Rachel Claus and Michael Nacht on p.36.

38 BEYOND “FORTRESS AMERICA” trols on a range of munitions and dual-use goods and technologies to the (former) Soviet Union, the other Warsaw Treaty member states, and to a lesser extent, the Peoples’ Republic of China. In 1949, the allies established the Coordinating Committee on Multilateral Export Con- trols, known as “CoCom,” as a mechanism to give each participating state the opportunity—and the right—to review the exports of each of the other member states prior to shipment. Under the informal terms of CoCom, each state had the right to exercise a veto over another state’s proposed export to any of the proscribed countries. After the dissolu- tion of the Soviet Union and the termination of the Warsaw Treaty, CoCom was disbanded, reflecting the loss of a basic sense of common purpose and consensus among the advanced industrialized countries on the need for controls, as well as on the countries or non-state entities to be targeted. Today there are five informal multilateral regimes that address the harmonization of national export control policies.32 As discussed above, the Departments of State and Commerce, respectively, rely on the U.S. Munitions List and the Commerce Control List to determine which items, services, or technologies require a license for export. These lists, in turn, inform and are informed by the lists that support the multilateral export control regimes in which the United States participates. Like the old CoCom, none of the five international arrangements are treaty-based, and therefore have no legal standing under U.S. law or under the laws of any other participating state. Moreover, none of them include a veto right by member states, nor do they require unanimity for an export to go forward. The member states of all of these informal organizations are responsible for implementing the guidelines on the basis of their own national discretion and in accordance with their own national legislation and practice. • The Nuclear Suppliers’ Group (1974) is an informal group of 45 countries that seeks to ensure that nuclear transfers for peaceful pur- 32The passage of United Nations Security Council Resolution 1540 in 2004 marks a potentially significant addition to the function and scope of multilateral regimes that deserves further scrutiny.  This resolution affirms official support for the existing multilateral treaties aimed at limiting the proliferation of weapons of mass destruction to states. United Nations Security Council Resolution 1540 constitutes a binding obligation to the states parties to prevent non-state actors from acquiring WMD technologies.  While they are intrinsically tied, it remains to be seen how the relationship between this resolution and the existing multilateral agreements that it supplements will evolve in the coming years.

FINDINGS 39 poses are not diverted to unsafeguarded nuclear fuel cycle or nuclear explosive activities. In 1992, the Nuclear Suppliers’ Group included guidelines on transfers of nuclear-related dual-use equipment, material, and technology that could make a significant contribution to an unsafe- guarded nuclear fuel cycle or nuclear explosive activity. • The Zangger Committee (1974) is an informal forum of 36 mem- bers. Its purpose is to harmonize the interpretation of nuclear export control policies for States Parties to the Nuclear Non-Proliferation Treaty. The Zangger Committee maintains a Trigger List (triggering safeguards as a condition of supply) of nuclear-related strategic goods to assist countries that are party to this treaty in identifying equipment and materials subject to export controls. • The Australia Group (1985) is an informal forum of 41 countries that seeks to ensure that exports do not contribute to the development of chemical or biological weapons. The Australia Group Common Con- trol Lists cover chemical weapons precursors, dual-use chemical manu- facturing facilities, dual-use biological equipment and related technolo- gies, biological agents, and animal and plant pathogens. • The Missile Technology Control Regime (1987) is an informal group of 34 countries that seeks to limit proliferation of unmanned delivery systems exceeding a certain payload weight and range. The MTCR Equipment, Software, and Technology Annex is the common list of controlled items agreed on by the countries participating in the Missile Technology Control Regime. • The Wassenaar Arrangement (1995) has 40 member countries and is focused on transfers of conventional arms and dual-use goods and technologies. The Wassenaar Dual-Use Goods and Technologies and Munitions List contains nine categories of items to be controlled, each consisting of many subcategories and individual items. The informal nature of these organizations does not create a major impediment to the effectiveness of the four multilateral regimes that are specifically concerned with weapons or technologies of mass destruc- tion, because of the general agreement regarding the need for their control.33 The same cannot be said of the Wassenaar Arrangement, however. Its members disagree about which countries are states of 33See, for example, James A. Lewis’ 2005 article, Looking Back: Multilateral Arms Transfer Restraint: The Limits of Cooperation, Arms Control Today, Volume 35. Available at: http://www. armscontrol.org/act/2005_11/NOV-LOOKINGBACK.

40 BEYOND “FORTRESS AMERICA” c ­ oncern—­particularly with regard to China—and what constitutes a destabilizing dual-use transfer.34 For example, despite U.S. protests on the transfer of dual-use technology, the European Union signed an agreement with China in 2003 that allowed China to invest 230 ­million Euros in the European Union’s satellite navigation system. 35 The members of the Wassenaar Arrangement also foster suspicion toward one another. The United States, for example, is concerned that other m ­ embers do not take national security threats—and hence, export c ­ ontrols—­seriously enough, while several of the other members think that the United States is seeking to use export controls to maintain a competitive advantage in high-technology goods. The net result is that the export control systems of the member states have grown increas- ingly heterogeneous and asymmetrical, with a growing gap between what is controlled by the United States and what is controlled by everyone else, which has in turn put U.S. exporters at an increasing competitive disadvantage. (See Appendix K for a comparison of multi- lateral dual-use control lists.) The problems discussed here regarding informal multilateral control regimes—and the Wassenaar Arrangement in particular—do not suggest that they should be abandoned, but point to their inevitable weakness when their members no longer share a strong consensus on the nature or goals of the enemy. In truth, no security-focused multilateral organiza- tions have ever thrived, except at times of strongly shared perceptions of threat, such as during the Cold War. Given that all of these regimes are products of the Cold War, they ought to be redesigned for this glo- balized world.36 However, the details of such a redesign are beyond the purview of this report. The multilateral regimes are not the only venue in which the United States and its allies diverge over controls. For example, U.S. allies con- tinue to press for liberalization of U.S. export defense rules, particularly as these rules adversely affect proposed joint production and procure- ment activities. The U.S.-U.K. and U.S.-Australia Treaties on Defense Trade Cooperation, if ratified by the Senate, would free up numerous 34“The Wassenaar Arrangement at a Glance.” Arms Control Association Factsheet, 2007. Avail- able at http://www.armscontrol.org/factsheets/wassenaar. 35 José Carlos Matias, E.U.-China Partnership on the Galileo Satellite System, Power and Interest News Report, July 17, 2007. Available at http://www.pinr.com/report.php?ac=view_report&report_ id=665&language_id=1. 36The committee decided not to propose a corresponding recommendation, however, because the report’s recommendations are intended to be acted on in the short term.

FINDINGS 41 ITAR goods (articles, services, and related technical data) for export to those two countries. One key objective of these treaties is to enhance for- eign participation in the production of the Joint Strike Fighter, a ­project with close and traditional allies of the United States that was threat- ened by U.S. export controls.37 The Royal United Services Because the majority of mili- Institute asserts that “the International Traffic in Arms tarily sensitive technologies and Regulations is the biggest products today are dual-use in obstacle to trans-Atlantic R&D nature, and many of those that are collaboration in the defence not multi­laterally controlled are field, and possibly in other available in global commerce from fields as well” in its 2007 multiple sources, unilateral restric- study, Defence Research and Development in the Atlantic tions can be effective only for the Nations. They cited the F-35 limited number of items for which as showing “the weakness of the United States is the sole sup- present arrangements. The UK, plier, or where it has overwhelm- the leading collaborator with ing market dominance. A similar the US, has had increasing and increasingly public logic applies to the exchange of sci- difficulties in collaboration ence and engineering information, with the US, because of the where today there are only a lim- restrictions placed on all US ited number of fields in which the technology transfers to other United States holds a commanding countries (even of unclassified lead such that the bulk of new dis- technology) by ITAR.” coveries or technological advances SOURCE: Defence Research and are coming from U.S. laboratories. Development in the Atlantic Nations. In instances in which that might be A RUSI European Security Programme Study. ­Contributions by Graham Jordan the case, the relevant laboratories CB and Tim Williams. Edited by would rarely be staffed exclusively Alastair Cameron. with U.S. citizens, unless they are doing classified work. Under these circumstances, it no longer makes sense for the United States to attempt to impose unilateral controls across a wide range of dual-use technologies and scientific information. Such policies do not help to advance either U.S. or international security. Instead, they reduce the global competitiveness of U.S. companies and the ability 37Note, however, that the Joint Strike Fighter project includes six other partners: Canada, D ­ enmark, Italy, Netherlands, Norway, and Turkey. They will be excluded from the benefits derived from these treaties if ratified.

42 BEYOND “FORTRESS AMERICA” of U.S. researchers to stay at or near the leading edge of science and technology. It may be possible for the United States to continue to control, for some limited period, those few fields of science and technology where our companies and research establishments still hold a commanding lead relative to the global competition. There is also a case to be made for maintaining unilateral controls pertinent to a very small number of sensitive research areas that pose a genuine risk of catastrophic terror- ism.38 However, for most areas of science and technology, there are per- suasive and urgent reasons to eliminate unilateral controls on dual-use goods and technologies. Finding 3 U.S. national security and economic prosperity depend on full global engagement in science, technology, and commerce. A.  Highly capable centers of scientific research excellence and industrial innovation have been developed in many foreign countries over the past 20 years; the United States maintains scientific leadership in some areas, and it is hotly contested or has been lost in others. B. Global information exchange via the Internet, the increased speed of scientific and technology advancement, and the strategy of “run faster” are all incompatible with our existing systems of regulating the movement of people, ideas, components, and products. C.  The best practices that underpin successful competition in research and technology advancement are undermined by government regulation that restricts the flow of information and people participat- ing in fundamental research. 38Some contend that research on pathogenic organisms warrants unilateral controls. However, studies of the dual-use implications of biological research—including the landmark National Research Council’s 2004 study, Biotechnology Research in an Age of Terrorism—point out that although there are concerns that the scientific community has to take seriously, the government is not and cannot be the appropriate control mechanism. Various self-governance approaches would be more appropriate. Although transfers of pathogenic agents themselves are now subject to strict control in the United States and other countries, controlling the dissemination of research involving these agents is much more problematic for reasons that go beyond the disincentives to control fun- damental research in other areas. Building on the recognition that public health is an international responsibility, research on pathogens has long been internationalized. The “bugs,” equipment, and expertise are widely available, and the existence of disease as an ongoing human calamity means that constraints on research could mean that people who might otherwise be saved will die.

FINDINGS 43 D.  The best scientific talent from outside the United States has been and remains critical to the U.S. research and development enter- prise. Maintaining access to this talent depends on visa policies that are welcoming to legitimate and qualified students and researchers. Breakthrough discoveries in science often come when supporting advancements in related fields have occurred in sufficient numbers or new types of instrumentation have become available. If one researcher or laboratory “misses” a new advance, it is likely that a competitive researcher elsewhere will make the discovery soon thereafter. Also, important discoveries can still be made by an individual scientist working with a small team in a single laboratory, but with increasing frequency, important discoveries are made by scientists who work in teams and who have access to the best work going on in scientific centers around the world and access to state-of-the art instrumentation. Collaboration among individual scientists and laboratory teams is vital. Maintaining Leadership in Science and Technology Science has always thrived on open communication and open par- ticipation, and it advances most rapidly wherever the environment is most supportive. The frontiers of science have moved from continent to continent throughout history. Only in recent decades has science and technology leadership been centered in the United States. Dur- ing the period immediately following World War II, the United States became a champion in supporting and funding research as the nation responded to the national imperatives generated by the Cold War and the launch of ­Sputnik. The National Science Foundation was started, scholarships were created to attract young people to science and engi- neering programs, the national laboratories were created, and scientific think tanks were developed. Through the remainder of the twentieth century, American scientists and engineers—many of them naturalized citizens—published the most significant papers, won the majority of Nobel and other prestigious science-related prizes, founded the famous technology companies, and filed the most patents. During the past two decades, virtually all of these conditions have changed. Other nations invested heavily in science and technology, both in industry and in academia, and developed programs to attract young people to these disciplines. Globalization came to science and tech- nology in the same way that it came to manufacturing, although with

44 BEYOND “FORTRESS AMERICA” somewhat more stealth. In the field of physics, for example, during the ten years from 1997 to 2006, American production of scientific articles published in the American ­Physical Society’s journals declined from Multinational Foreign 50 percent to 30 percent, with for- Laboratories and eign scientists now accounting for Fabrication Plants the remaining 70 percent.39 Simi- GE: China, Germany, India larly, in 2006, Americans originated only 50 percent of the total patents IBM: China, India, Israel, filed in the United States, with for- Japan, and Switzerland eigners originating the remainder.40 At the present time, the reality of Intel: China, Germany, Mexico, India, Russia, and Spain “American science” at its highest levels, under the influences of glo- Sun Microsystems: China, balization, is far different from what Czech Republic, France, it was 20 or even 10 years ago. Germany, India, Ireland, Israel, Similarly, advanced tech­nology Japan, Norway, and Russia leadership has become global. Japan SOURCE: Derived from the f­ollowing leads in a number of key technolo- corporate webpages: http://www. gies such as flat screens, Korea has ge.com/research/grc_3.html, http:// www.research.ibm.com/worldwide/, become a world leader in semi­ http://techresearch.intel.com/articles/ conductor memory, Europe leads None/1475.htm, http://www.oecd. org/dataoecd/32/9/37846828.pdf. in some aspects of telecommunica- Last accessed July 25, 2008. tions and embedded systems, and China is increasingly a center for high-technology manufacturing. In addition, U.S.-based multinational companies have developed research and development facilities around the globe, including in China, India, Israel, Eastern Europe, Russia, and South America. Much of this glo- balization of scientific research and development has been driven by the search for talent, lower staff costs, and market share. Today, the interaction of U.S. and foreign scientists has global reach and occurs on several levels. Directors of academic departments and research laboratories seek to attract the very best talent from the avail- 39American Physical Society, “Physical Review, Physical Review Letters, and ST-AB Published Articles; Geographic Distribution of Corresponding Authors,” available from the American Physi- cal Society. 40U.S. Patent and Trademark Office, Patents By Country, State, and Year - Utility Patents: Decem­ ber 2006, available at http://www.uspto.gov/go/taf/cst_utl.htm.

FINDINGS 45 able pool of graduate students, post-doctoral fellows, and more junior researchers, wherever they can be found.41 The most talented students and researchers push the frontiers of science further and faster. Brain- power is paramount; nationality is irrelevant. A leading American sci- entist in a cutting-edge field wants the very best scientific colleagues working with him or her regardless of nationality. An outstanding pool of talent working on a problem is the most likely path to significant scientific advancement. Similarly, in a world in which breakthroughs can happen anywhere, being competitive requires being aware of—and capitalizing on— d ­ evelopments in other places. American scientists benefit from exchanges with their intellectual peers, no matter where those peers are working. Developments in one laboratory may lead to insights that stimulate break- through discoveries in other laboratories, and the professional ties that grow through international conferences, exchanges, visits, e-mail com- munication, and technical interaction with colleagues all over the world maximize the chances of staying abreast of—and advancing—the state of the art. Ease of communication and transportation of people, ideas, material, and equipment are essential for making progress anywhere, and barriers to that movement will impede national technical capability. In a parallel development, the boundaries separating research, devel- opment, and production have been blurring. Science and technology have never quite fit the “linear model” in which research leads to devel- opment that leads to production and then to sales and marketing. The innovation process has always been an iterative one with knowledge and incentives flowing in both directions. Science is used to solve problems on the factory floor, and market demand can stimulate initiation of the research needed to develop next-generation products. The acceleration and globalization of science and technology, along with the progressive 41Although some contend that the large number of foreign nationals in U.S. science and engi- neering graduate programs inhibits Americans from enrolling, evidence suggests that low student interest is the stronger explanation. The number of U.S. citizens and permanent residents entering and completing undergraduate degrees in STEM fields has remained stable over the past 20 years (Rising Above the Gathering Storm, National Academies Press, 2007, p. 98). Meanwhile, STEM graduate programs have grown from 212 universities producing 18,052 PhDs in 1970 to 339 uni- versities producing 29,951 PhDs in 2000 (“Changing Demographics of U.S. Science-Engineering PhDs,” NBER Working Paper No. 10554). Thus, the number of Americans earning college science degrees has remained constant while the size of graduate programs has increased. Furthermore, subsequent studies show that graduate education is far less attractive to Americans than to foreign students (“Changing Demographics of U.S. Science-Engineering PhDs,” NBER Working Paper No. 10554).

46 BEYOND “FORTRESS AMERICA” abandonment of central corporate research laboratories, makes the dis- tinctions among “research,” “development,” and “production” even less appropriate now than in the previous era. Speed Is a Critical Factor As the global scientific community grows larger and more con- nected, it grows more competitive and dynamic. Introducing unilateral delays into the progress of the U.S. scientific enterprise can be damaging in a globally competitive environment. A new scientific breakthrough, or a newly developed technological capability, can stimulate additional research in laboratories around the world. Although science does depend on the ability of researchers to validate previously published results, the scientific reward system–and the allocation of competitively awarded resources–strongly favors the first to publish. Speed is equally critical in bringing high-technology products to market. In some markets, a con- siderable percentage of product revenues at a given point in time comes from products that did not exist one year earlier.42 The Internet has transformed the conduct of research. In digi- tal form, huge amounts of information can be stored and transferred around the globe at lightning speed. Knowledge can be transferred, overtly or covertly, much more efficiently than was formerly possible. But the Internet continues to transform the conduct of research in ways that transcend its role in the dissemination of information. It has become an essential infrastructure for the conduct of collaborative interchange because it allows researchers in dispersed locations to plan future activi- ties and researchers worldwide to collect, analyze, and forward data taken at remote locations. It greatly facilitates the collaborative interpre- tation of data and enables the rapid and global dissemination of research results. Instantaneous Web-based communication, in which authors post papers for distributed and ongoing post-publication review and com- ment, is in many instances replacing the traditional publication model, in which draft papers have to run through such traditional gatekeepers as peer reviewers and journal editors prior to publication in regularly scheduled journals. Some laboratories have gone so far as to maintain their research notebooks in an online wiki format, with each day’s raw 42The DEAC Report, p. 12, citing an example from a corporation in the microprocessor manu- facturing business.

FINDINGS 47 data posted to the Web in a form that is accessible to all.43 Web-enabled research and publication is particularly incompatible with a security review process that depends on time-demarcated milestones such as pre-publication review and formal publication. The “run faster” strategy served the United States extremely well in winning the Cold War. There is really no alternative strategy in the current competition for knowledge, technology advancement, and eco- nomic competitive advantage except to engage on a global level, and to “run faster.” Best Practices that Enable Success in Fundamental Research Science in the United States has been effective because, for the most part, the following practices governing the conduct of scientific research have been recognized and honored. Maintaining these practices would naturally allow us to become more aware of advancements in science and technology and how they relate to our national security, including how our advancements could be countered by others. Freedom of inquiry. Subject to limitations in support, scientists are gen- erally free to pursue any question that is of interest. It is often visionary scientific teams that discover paradigm-shifting advances leading to whole new fields of inquiry. Freedom to pursue knowledge at the scientist’s own discretion. Many scien- tists are interested in unraveling the mysteries of the natural and physical worlds without regard to practical applications. Others pursue opportu- nities driven by technology shifts, but without a defined end goal. Yet others choose to tackle and solve problems that confront mankind. Expe- rience has shown that expansions of knowledge, as well as ­opportunity- driven research, often eventually lead to products and processes of great significance to national security or the economy in ways that were never anticipated by those conducting the initial research. For example, those working on the quantum theory of matter in the early twentieth century did not know that their work would lead to the computing and commu- nication capabilities that have transformed the world. 43The synthetic biology community is increasingly operating in this mode through use of Open Wetware, an open source collaborative online research environment. See Mitchell Waldrop, Science 2.0: Great New Tool, or Great Risk?, Scientific American online, http://www.sciam.com/article. cfm?id=science-2-point-0-great-new-tool-or-great-risk. Last accessed January 14, 2008.

48 BEYOND “FORTRESS AMERICA” Freedom to collaborate without limitation. Open communication among scientists can provide insights into problems and their solutions that otherwise might escape notice. Rapid advances often occur at the inter- faces between fields or from the application of advances in one field to a related field. Free and open interaction among scientists serves to open windows of intellectual inquiry that otherwise might remain closed. Pluralistic and meritocratic support of science. Science in the United States is not guided by a master plan that constrains scientific activity to defined avenues. A variety of federal agencies and philanthropies provide support for research, thus providing some assurance that impor- tant areas of work will be funded, even if they depart from the main- stream view. Multiple funding sources and decisions also help ensure that research with implications for a particular organization’s mission will be conducted. Similarly, most scientific research funding is admin- istered under a meritocratic review system designed to support the best researchers who propose the best ideas. Freedom to publish. Science is a cumulative subject in which each sci- entist builds on the work of others. The fundamental error-correc- tion mechanism of science arises from the replication of work that has been conducted by others, thus enabling mistakes to be exposed. This approach depends on the wide dissemination and open communication of scientific results and methods. These practices are threatened by government regulation that restricts the flow of information about scientific and technological endeavors and the flow of people participating in research. Indeed, the need to prevent government restrictions from damaging the funda­mental research enterprise was recognized as far back as the Truman Admin- istration, and it was codified by President Reagan in 1985 in National Security Decision Directive 189 (NSDD-189). This Directive states that the United States’ “leadership position in science and technology is an essential element in our economic and physical security,” and that “the strength of American science requires a research ­ environment . . . in which the free exchange of ideas is a vital component.”44 It then goes 44CSIS Commission on Scientific Communication and National Security, “Security Controls on Scientific Information and the Conduct of Scientific Research,” June 2005, p. 1; available at http:// www.csis.org/media/csis/pubs/0506_cscans.pdf. Quotations are from National Security Decision

FINDINGS 49 on to direct that “where the national security requires control, the mechanism . . . is classification,” and that to the extent consistent with law, “no restrictions may be placed upon the conduct or reporting of [unclassified] federally-funded fundamental research.” Presidential Directives remain in force until supplanted or rescinded, and for this one, neither has happened. In fact, it was explicitly ­reaffirmed by then-National Security Advisor Condoleezza Rice in 2001. Accord- ing to the CSIS Commission on Scientific Communication and National Security, This Directive does not assert that the open dissemination of unclassified r ­ esearch is without risk. Rather, it says that openness in research is so impor- tant to our own security–and to other key national objectives–that it warrants the risk that our adversaries may benefit from scientific openness as well. And even though today’s adversaries differ from the ones we faced during the Cold War, the world’s scientific and technological landscape has also evolved. S ­ cience and technology are global enterprises, and our ability to constrain their adverse application by unilaterally restricting their dissemination is if anything even poorer today than it was when NSDD-189 was issued.45 Despite this directive’s language barring restrictions on either the conduct or the reporting of fundamental research, it has not had the effect of precluding all such restrictions. A number of recent reports have addressed the effect that “sensitive but unclassified” information controls, contractual clauses, and “deemed export” controls have had on fundamental university research in the United States, particularly that involving foreign nationals.46 The Need for Scientific Talent from Outside the United States Three parallel developments have increased U.S. dependence on foreign scientific talent. U.S. corporations are shrinking their U.S.- based laboratory infrastructure and are expanding their overseas research capabilities. At the same time, U.S. university-based science Directive 189, “National Policy on the Transfer of Scientific, Technical, and Engineering Informa- tion,” September 21, 1985, a directive that applies to “federally-funded fundamental research in science, technology and engineering at colleges, universities and laboratories.” 45Ibid., p. 2. 46Ibid., as above. Also, see Restrictions on Research Awards:  Troublesome Clauses 2007/2008. Released July 2008. See also the original version, Association of American Universities/Council on Governmental Relations. 2004. Restrictions on Research Awards: Troublesome Clauses, A Report of the AAU/COGR Task Force.

50 BEYOND “FORTRESS AMERICA” research centers have also become more dependent on foreign talent. And, in the U.S. workplace, foreign scientists and technology special- ists are in great demand. Over the past 20 years, many corporate research laboratory opera- tions within the United States that focused on fundamental research have been reduced in scope or eliminated entirely. The trend more recently has been to locate corporate research and development operations over- seas to take advantage of skilled local researchers, lower wages for research work, and eventually, ris- ing product demand in fast-­growing Alcatel and Bell Labs formed economies. In some cases the ­ability a joint venture in China, of a corporation to ­market its prod- A ­ lcatel Shanghai Bell. ­Chinese ucts most effectively in a particu- researchers exploring 4G wire- less systems may ­collaborate lar country requires placement of a with their ­colleagues in research laboratory or a manufac- A ­ lcatel’s ­laboratory in turing plant in that country. U.S. G ­ ermany. However, export and multinational companies now controls preclude the par- have corporate research laborato- ticipation of 4G researchers in Alcatel’s New Jersey lab. ries located in China, India, Israel, and Europe. SOURCE: Dr. Jeong H. Kim, President, An American company that Bell Labs at Alcatel-Lucent, The Impact of Export Controls on the US Economy locates facilities in other countries is (via teleconference). COSSP Meeting, faced with rules that change based March 14, 2008. on location. For example, work that is conducted by Chinese citizens in a Chinese facility with no technol- ogy or knowledge transfers from a parent U.S. firm would not be subject to U.S. controls, regardless of how sophisticated the design or objective. However, two research teams within the same corporation, one in the United States and one in a foreign country, may not be able to collabo- rate, even on a project involving rather old technology, due to export control regulations. These situations are independent of whether the company has proprietary protections for its research results that would protect the technology from possible diversion outside the company. U.S. research universities have been expanding overseas, setting up affiliates or branches in Hong Kong, Singapore, China, Europe, and more recently, India and the Middle East. Similarly, universities in the United States are partnering with universities across the globe. Much of this expansion has been proceeding for more than a decade and involves challenging research collaborations. These overseas operations

FINDINGS 51 are beginning to attract scientific research talent in these host countries that prefers to work at home. U.S.-based researchers benefit from col- laboration with researchers in these foreign affiliates. But such linkages further complicate the distinctions Locations of the Top 100 that must be drawn under existing Research Universities regulations between U.S. and for- Rankings eign institutions. THES- The influence of foreign uni- Country QS SJTU versities and foreign government Australia 7 3 laboratories is increasing. Univer- Canada 5 4 sities around the world now have China 2 the capability to compete effectively Europea 36 33 for scientific leadership against the Hong Kong 3 U.S. science and engineering estab- Israel 1 1 lishment in many fields. The best Japan 4 4 Korea, South 2 foreign universities now have the New Zealand 1 research equipment and infrastruc- Russia 1 ture to compete with the best U.S. Singapore 2 research universities for students United States 37 54 and researchers. Where limitations SOURCES: Times Higher Education exist on foreigners studying or Supplement-Quacquarelli Symonds working in the U.S. system, foreign (THES-QS) “World University Rankings 2008” and the Center for World-Class universities are well positioned to Universities, Shanghai Jiao Tong extend competing offers. University (SJTU) “2008 Academic Ranking of World Universities.” The United States also depends in significant ways on a global sci- aEurope includes: Austria, Belgium, Denmark, Finland, France, Germany, entific and technological workforce Ireland, Italy, Netherlands, Norway, at home. The percentage of sci- Sweden, Switzerland, and the United ence and engineering workers in the United States who are foreign nationals increased from 14 percent to 22 percent from 1990 to 2000. In 2006, more than half the ­doctorate-level graduating engineers in the United States were foreign-born, as were 45 percent of the PhD recipi- ents in the physical sciences, computer sciences, and life sciences. 47 Access to foreign scientific talent is controlled by U.S. visa policy, which is based on a statute enacted in 1952 (with major amendments in 1965, 1986, and 1990), and on laws related to non-immigrant visas 47The DEAC Report, pp. 65-66.

52 TABLE International STEM Scholars by Specialization in the United States Major Field of Specialization 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 Growth 2001/07 Health Sciences 23,568 21,070 17,244 19,630 19,590 23,872 1.3% Biological and Biomedical Sciences 12,558 14,749 19,234 19,271 22,500 19,353 54.1% Engineering 9,806 9,945 8,871 10,398 11,056 11,789 20.2% Physical Sciences 12,042 12,052 10,943 11,832 11,735 11,494 -4.6% Agriculture 2,925 3,287 2,570 3,316 3,006 3,930 34.4% Social Sciences and History 3,871 3,456 2,736 3,585 3,491 3,635 -6.1% Computer and Information Sciences 2,838 2,697 3,067 2,779 3,200 2,947 3.8% Mathematics 2,236 2,276 1,990 2,151 2,231 2,161 -3.4% Psychology 860 843 995 1,076 1,164 1,474 71.3% TOTAL  70,704 70,375 67,650 74,038 77,973 80,654 14.1% SOURCE: Institute of International Education, Open Doors report, 2007.

FINDINGS 53 that were passed after September 11, 2001.48 The Immigration and N ­ ationality Act of 1952, as amended over the years, governs who may enter the United States. This law is administered by the Department of State, and as of 2003, by the Department of Homeland Security. The general visa requirements for entry to the U.S. pre-date the cur- rent security climate, which is focused on the potential terrorist threats emanating from non-state and substate actors. Formerly, visa restrictions focused on nation-states and defined the risk of admitting a particular person to the United States with reference to that person’s country of origin or current residence.49 Like the export control system, the visa system as it affects visitors who come to the United States for scientific or technological work or study is based on lists. • The Technology Alert List implements the Immigration and Nationality Act and was created during the Cold War to help consular officers identify areas of science and technology in which exports of technology or information might be controlled. The list itself, which sets out general categories of “sensitive” academic disciplines, is no longer made public. But in the recent past, it has included biotechnology, chemical and biomedical engineering, advanced computer and micro- electronic technology, marine technology, robotics, and urban planning. Students and researchers seeking to enter the country to study in these areas are specially reviewed. • The Visas Condor Program (established in 2002) also implements the Immigration and Nationality Act. In addition to specific classified criteria, it sets out 25 countries (including China, India, Israel, and ­Taiwan) from which anyone applying to enter the United States is specially reviewed.50 • The Visas Mantis Program (established in 1998) focuses on the applicant’s proposed activities in the United States that may have s ­ ecurity-related concerns. 48After the terror attacks of September 2001, visa rules were almost immediately modified by the USA PATRIOT Act of 2001, and subsequently by the Enhanced Border Security and Visa Entry Reform Act of 2002, the Homeland Security Act of 2002, and the National Intelligence Reform Act of 2004. 49Then as now, however, the primary determining factor for allowing foreign nationals into the United States for nonpermanent stays is whether the applicant could demonstrate that they planned to return home. 50For both the Technology Alert List and Visas Condor program, see http://www.travel.state. gov/law/legal/testimony/testimony_797.html.

54 BEYOND “FORTRESS AMERICA” Like the export control list system discussed above, over time, the visa list system added general categories of academic disciplines or coun- tries of concern, but rarely took any subject or any country off a list. Like the export control regime, the visa restriction system suffers from all the infirmities of a static, list-based system administered by separate and often competing bureaucracies. Consular officials charged with evalu- ating visa applications often lack the necessary technical or scientific expertise to determine efficiently whether an applicant is a legitimate scientific researcher or poses a security risk. Up to six different agen- cies51 may be involved in the visa clearance for a single individual to visit the United States, whether the visit is for a week to attend a conference or for a multiyear stay as a student. After the September 11, 2001, attacks, the visa regime was tight- ened. The interagency review process had been based on a system that allowed entry if no agency raised a specific objection within 10 days. The new process requires an affirmative clearance before a visa is issued, regardless of how long the review process takes. The scientific community—and particularly, the scientific research community—raised a vigorous protest in 2003 over the post-9/11 visa rules because too many legitimate scholars were being caught in the regulatory net.52 The State Department responded and within two years, the most draconian rules affecting graduate students were ameliorated significantly. Students and exchange visitors applying for non-immigrant visas were given priority, and the duration for students in the United States with Visas Mantis clearances was extended from one year to a maximum of up to four years for students. However, significant barriers still remain for scholars and researchers seeking visas to attend confer- ences or for other short-term professional trips in the United States. 53 51For example, the U.S. Embassy located in the country where the researcher has applied for a visa, the CIA, FBI, the Departments of Commerce and Homeland Security, and the Department of Treasury’s Office of Foreign Assets Control. 52The scientific community protested in a House Science Committee hearing on March 26, 2003, and received the Committee’s full support. Two weeks later, in a speech at the AAAS Science and Technology Policy Colloquium, John Marburger, the Director of the Office of Science and Technol- ogy Policy, also lent his support to addressing these visa issues. For a summary of the hearing, see “House Science Committee Calls for Review of Visa Policy Changes” by Charlene Porter, ­available at http://www.america.gov/st/washfile-english/2003/March/20030327161127retropc0.3604242.html, and for the text of the director’s speech at AAAS, see http://www.ostp.gov/pdf/jhmaaasvisas.pdf. Accessed October 15, 2008. 53One problem stems from the time it takes to fulfill the requirement from the National Intel- ligence Reform Act of 2004 that 100 percent of all applicants be interviewed.

FINDINGS 55 The uncertainty surrounding the ability of even prominent members of the international scientific community to acquire visas has obvious negative effects. • Foreign candidates for corpo- Dr. Goverdhan Mehta—former rate jobs or university positions go director of the Indian Institute of Science and the president elsewhere. When foreign ­ nationals of the University of ­Hyderabad, develop technologies for foreign and current president of companies, the United States loses the International Council for the advantage of determining how S ­ cience, an organization those technologies will be developed comprising the national and deployed. scientific academies of 29 countries including the United • The often prohibiting dif- States—was invited to give ficulties of foreign researchers to a lecture at the ­University participate in conferences held in of Florida in 2006. His visa the United States causes conference application was initially delayed organizers to seek sites outside the pending review in Washington to determine “the potential use United States. of his research in chemical • When entry restrictions ex- weapons.” Although the visa clude or discourage the best foreign was ultimately issued, Mehta researchers from working for U.S.- withdrew his application and based companies, the U.S. military cancelled his trip to the may have access to the world’s best United States. work only after it is commercialized SOURCE: Available at http://www.­ in a foreign country. sciencemag.org/cgi/content/full/311/ 5765/1229a?rss=1. Last accessed July 22, 2008. With the need to “run faster” to remain competitive in the global economy, we need to be doing more, not less, to attract the most highly skilled personnel from all over the world to work in the United States. Current law has the perverse effect of permitting foreign students to enter the United States only if they can prove to a consular officer’s satisfaction that they will take what they learn home with them. For most categories of prospective student or scholar, anyone who admits that he or she might want to stay in the United States and contribute to this country’s technological competitiveness must—by law—be denied entry. Re-examining and re-calibrating visa restrictions would be an important step toward assuring that the United States is the destina- tion of choice for foreign scientists and students, as well as the leading producer of cutting-edge scientific research. The benefits to national

56 BEYOND “FORTRESS AMERICA” security appear to be negligible from excluding credentialed, recognized foreign scientists, particularly if they are sponsored by a research institu- tion or credentialed U.S. researchers. More important, the damage to U.S. economic prosperity is significant. The government cannot protect U.S. jobs by denying entry to foreign students and researchers. The jobs will simply go elsewhere. The biggest risk to U.S. jobs is a lack of economic competitiveness. Scientific talent working in the United States, from whatever country, promotes the goal of full employment. Finding 4 A new system of export controls can be more agile and effective, recognizing that, under current global conditions, risks to national security can be mitigated but not eliminated. An important caveat attaches to any discussion of changes in the cur- rent system of export controls: there is no “risk-free” solution. Today’s system is not risk-free either; in fact, it is arguably becoming more and more dangerous because the inclination to equate control with safety gives a false sense of security. The national security threats facing the United States from poten- tially hostile nation-states and actively hostile non-state terrorist groups are numerous, diverse, and wide-ranging. We can minimize the risk from these threats, but no system can avoid them entirely. Somewhere, somehow, our nation’s protective systems will be breached in the coming years; in virtually all cases, the means to accomplish these breaches exist in open markets worldwide. There is no realistic prospect of controlling all means of doing physical harm that might be used against us. The United States should not abandon its high walls around the technologies that can deliver a substantial and sustainable security advantage. There should be strong restrictions on technologies critical to the proliferation of nuclear weapons and on physical access to certain biological pathogens; if used for destructive purposes, both can cause catastrophic consequences. Likewise, there should be strong restrictions on those scientific breakthroughs with uniquely military applications. Stealth is one such example. But where there is a “civilian” use that is commercially relevant for legitimate productivity or consumption purposes in global markets, we should regulate very cautiously. Where technology is internationally accessible, along with a good market potential for products incorpo-

FINDINGS 57 rating that technology, unilateral export controls enforced only by the United States cannot provide any meaningful protection. U.S. industry is a major source of military equipment for our allies. When export restrictions are injudiciously applied, the result can be to undermine their confidence that the United States will be a reliable supplier of modern arms. And, as Unmanned aerial vehicles a result, it can stimulate the rise of (UAVs) are relatively inex- pensive aircraft, built from arms production capability outside current technology. They are the United States. Based on their well suited to in-theater surveil- range and payload, unmanned aer- lance where U.S. and allied ial vehicles (UAVs) are classified forces work closely together. as cruise missiles under the multi- However, export regulations lateral Missile Technology Control restrict export or exchange of information on UAVs by clas- Regime whose objective is non- sifying UAVs as cruise missiles proliferation of weapons of mass based on range and payload. destruction. U.S. implementation of This is yet another case of the regime using severe restrictions export regulations authored in has caused frustration among allied a past era impeding military cooperation today. militaries and may be encouraging other countries to develop the very technology being restricted. Under current global conditions, risks to national security can be mitigated, but not eliminated. A careful balance among interests is required, and the burden of proof must be on those who seek to restrict access, rather than the opposite. *** The committee finds that a clear, over-arching statement of national policy can be a useful means of resolving some important bureaucratic conflicts with respect to export controls. National Security Decision Direc- tive 189, in effect since 1985, is an example of this approach and provides an essential building block for a new export control policy. A 1982 study sponsored by the National Academies concluded that government con- trols on the publication of results from federally funded research were intruding into the conduct of research to a degree that could adversely affect important advances in science in the United States.54 By Executive 54The Corson Report.

58 BEYOND “FORTRESS AMERICA” Order, then-President Ronald Reagan required that government agencies determine in advance whether the products of federally funded funda- mental research would be classified. If classification was not justified, then these research products would remain unrestricted and could be pub- lished by the researcher or sponsoring institution. This policy statement provides protection for the publication of much of the research done in academic institutions. This balancing of national security concerns and the benefits of open publication of scientific work has served the nation well. The committee finds that a final, competent, neutral decision- m ­ aking body, external to the competing agencies, can also be a useful means of resolving these vexing conflicts inherent in the current system of export controls. This kind of decision-making body can be adapted for the export control system so that both sides, the would-be exporters and the export controllers (or other interested government agencies), can ­ marshal their evidence and a reasoned decision can be made. If favorable to the exporter, a prompt decision would mean that business exporters are not deprived of a market while foreign competitors move in and researcher “exporters” are not deprived of the opportunities to benefit from international collaborations. The existing system of export controls is not our only alternative. Nor do we have to abandon export controls altogether in the face of global competitive forces. Numerous studies have made more targeted proposals. This report sets out the high-level changes that need to take place by direction of the President before smaller changes recommended elsewhere can be implemented successfully. The committee finds, how- ever, that a better system is imperative and can be accomplished through a single Executive Order setting the system on a path much more pro- tective of both national security and economic prosperity.

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The national security controls that regulate access to and export of science and technology are broken. As currently structured, many of these controls undermine our national and homeland security and stifle American engagement in the global economy, and in science and technology. These unintended consequences arise from policies that were crafted for an earlier era. In the name of maintaining superiority, the U.S. now runs the risk of becoming less secure, less competitive and less prosperous.

Beyond "Fortress America" provides an account of the costs associated with building walls that hamper our access to global science and technology that dampen our economic potential. The book also makes recommendations to reform the export control process, ensure scientific and technological competitiveness, and improve the non-immigrant visa system that regulates entry into the United States of foreign science and engineering students, scholars, and professionals.

Beyond "Fortress America" contains vital information and action items for the President and policy makers that will affect the United States' ability to compete globally. Interested parties--including military personnel, engineers, scientists, professionals, industrialists, and scholars--will find this book a valuable tool for stemming a serious decline affecting broad areas of the nation's security and economy.

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