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Finding Common Ground: U.S. Export Controls in a Changed Global Environment 8 Elements of a New Response: Multilateral Control Regimes As noted in previous chapters, the effectiveness of multilateral export controls depends on a number of conditions, including the membership, the goals and targets, and the mechanisms of the regime. This chapter discusses (1) the objectives and operation of traditional, multilateral security export controls and (2) emerging multilateral security export control regimes. Because both problem areas involve considerable uncertainty, the emphasis in this chapter, and in Chapters 9 and 10, is on identifying flexible and adaptive control strategies whose specifics can be modified in response to changing international security realities. COCOM: A NEW DIRECTION Although support for denial of munitions items to the Soviet Union or East European countries is likely to continue, support for the control of dual use items is eroding. This is particularly true of controls on dual use items that are not highly sophisticated and have little military utility. The traditional CoCom objective of retarding the qualitative progress of Soviet military capabilities could be preserved while allowing for expanded, legitimate trade by shifting the focus of CoCom from an embargo on the export of listed items to proscribed countries to approval of items on a sharply reduced CoCom Industrial List, contingent on acceptable, veritable end-use conditions approved by CoCom. Rather than considering approved sales of controlled items to proscribed countries as "general exceptions" to an embargo, the denial of such sales would be
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment the exception. Approval would be presumed for all transactions for which end-use conditions ensured an acceptable level of risk. The extensiveness of end-use conditions and the need for physical verification would depend on the nature of the item and the security risk inherent in the proposed transfer. Although assurances against military use or unauthorized retransfer would be uniform, physical verification of the end use would not be necessary for all transactions. Further, certain items would not be immediately amenable to end-use conditions at an acceptable level of risk, but the level of risk would be adjusted over time on the basis of demonstrated end-use reliability and political factors. An administrative effect of this change in focus would be the requirement to monitor and ensure compliance with end-use conditions and deter diversions. License review would still be necessary, but once standard and uniform end-use conditions for the approval of the remaining Industrial List items were established, the focus of the control program would be to ascertain compliance with those conditions. Although CoCom partners have always been opposed to extraterritorial application of export controls, the end-use verification practices envisioned in this proposal would not be universally applied to all transactions and need not be adversarial. Instead, end-use assurances against military use or unauthorized retransfer would be characterized as standard conditions of sale, and potential verification as a standard inspection or audit. Also, the inspections or audits of limited, selected transactions need not be performed by enforcement agents of the exporting country. There are a number of alternatives, including CoCom inspection teams; certified, private inspection companies; and a contractual arrangement between the trading parties. Although not directly applicable, lessons can be drawn from several existing audit or inspection arrangements, including the periodic governmental review of transaction records for U.S. distribution licenses,* the International Atomic Energy Agency (IAEA) inspection practices, the inspection regimes established under the Treaty on Conventional Forces in Europe, or the confidence-building measures of the Conference on Security and Cooperation in Europe. Whatever mechanism is employed, the end-use verification effort will undoubtedly be aided by the increasing openness of the Soviet Union and Eastern Europe. In addition to the shift in focus from denial of Industrial List items to approval with end-use conditions, CoCom should review its traditional objective of controlling East-West arms transfers under the International Munitions List and International Atomic Energy List. Beyond maintaining these * For a complete explanation of the U.S. distribution license audit requirements, see the "Internal Control Program" handbook prepared by the Department of Commerce, Office of Export Licensing.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment control lists, there is currently no formal mechanism for coordinating national restrictions on the worldwide transfer of arms. Although a comprehensive discussion of munitions transfers is beyond the scope of this study, it is important to note that an upgraded role for CoCom in managing arms transfers is a viable future possibility. The continued credibility of CoCom depends on the willingness of the members to recognize and respond to the new political, economic, and military realities. This requires that a new approach to control objectives be reflected in modified control practices and a higher threshold of military utility as a criterion for control. To this end, CoCom should take the following steps: Approve the sale of Industrial List items to the Soviet Union and Eastern Europe for civilian end uses when acceptable safeguards can be demonstrated to CoCom. To the extent feasible, publish standard end-use conditions necessary for favorable consideration of exports of controlled items. Provide for periodic, and in some cases unannounced, visits to the physical location to verify the end use of limited, selected items. The possibility of visitation would be a stated condition of sale. The visits might be performed by (1) members' individual enforcement agencies, (2) collective or joint member enforcement (i.e., the IAEA model), (3) the exporter (i.e., the distribution license model), or (4) by private inspection companies certified by CoCom. COCOM: A NEW ENVIRONMENT The practical circumstances under which CoCom operates have been radically changed not only by the events in Eastern Europe and the Soviet Union, but also by changing world trade and finance patterns. The continued viability of CoCom depends not only on a new approach to its traditional adversaries, but also a review of the total environment in which it operates and consideration of an expanded membership. "Borderless" Trade Within the European Community The European Community (EC) is working to institute a single European market in 1992 with virtually "borderless" trade among its members. There has been much speculation about the effect this will have on CoCom controls. The current members of the European Community are also members of CoCom, with the exception of Ireland. Ireland, however, practices a system of export controls that is similar to the CoCom system. It is possible that the advent of "borderless" trade could exacerbate existing problems in those EC/CoCom countries with relatively fewer resources to devote to export
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment control, since they could become targeted as relatively easier points of diversion for items originating elsewhere in the Community. Article 223 of the Treaty of Rome states that EC national Governments will retain authority over matters of national security and defense. The EC Commission has passed two resolutions related to collective export controls—one banning EC export of chemical weapons precursors and one restricting trade with South Africa. Neither of these resolutions signals EC intentions to displace individual EC member's roles in CoCom; in fact, they may presage increased EC attention to proliferation controls rather than East-West controls. Despite discussion of CoCom in the European Community, there has been no formal request for an EC representative in CoCom, nor has there been any serious action to supersede the authority of national governments to implement CoCom controls. Given the complicated business of organizing and administering monetary and economic unification, it is unlikely that the European Community will want to add to its responsibilities in the near future (i.e., prior to 1992). When the single market becomes operational in Europe, CoCom partners are likely to be practicing license-free trade among themselves, except for munitions and items controlled under other multilateral regimes, such as missile technology. From a governmental management perspective, the primary difference between current licensing practices and the license-free system will be the lack of an import certificate issued by the importing country. Most of the CoCom countries that operate what are perceived as inadequate control programs produce few controlled items indigenously and thus depend on the issuance of an import certificate as an alert that controlled goods are entering their jurisdiction. With very limited exceptions, however, U.S. Industrial List exports to any CoCom destination are shipped under either general or special licenses and therefore do not require an import certificate. In addition, CoCom members, including the United States, do not closely review individual licenses for the export of Industrial List items to other CoCom destinations and rarely, if ever, deny such exports. Thus, because establishing a system of license-free trade in CoCom is an important step in eliminating burdens on West-West trade, the adoption of the common standard elements of licensing and enforcement by all CoCom members should be a continuing U.S. priority. Although there will be "borderless" trade within the European Community for most goods, that does not signal the elimination of all customs ports and authorities. The export of weapons will still be nationally controlled, and trade moving from an EC member to an outside destination will still be subject to appropriate national licensing and documentation requirements. Perhaps the most fundamental effect of license-free CoCom trade or borderless trade in the EC will be the sharp reduction in government-created and-maintained paper trails of controlled transactions, which will reduce the
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment availability of the most frequently used tools of enforcement. The inclusion of a "control identifier" or control marking on the Single Administrative Document to be used by EC members, or a control marker on the standard Customs Cooperation Council trade documents (used internationally to identify the contents, origin, and destination of goods in trade), may have potential as a useful enforcement tool . Since the information on standard trade documents is retained by importing and exporting governments for statistical purposes, incorporation of a control marker would allow for automated records on controlled transactions with relative ease. In light of the changing operational environment for export controls, the U.S. should take the following steps: Continue to press for the adoption of a license-free system of trade in CoCom, to be implemented consistently and in accord with "common standard" compliance in order to ensure effective controls and to avoid disadvantaging those countries that make the effort to comply. Promote the use of a generic control indicator in conjunction with internationally recognized import/export documents. The control indicator, or marker, could be used by all countries that maintain restrictions on the export of certain items. Third Country Cooperation Recognizing that CoCom controls could not be effective if comparable goods were available from third countries, the United States urged its CoCom partners to undertake a "Third Country Initiative," now called Third Country Cooperation (TCC), with a number of European neutrals and newly industrializing countries (NICs). The trend of locating Western manufacturing plants in these third countries, or off-shoring, has added to their indigenous capabilities and increased the need for a cooperative program. The "mutual security" motivation for cooperation among CoCom members has proved to be only marginally valid for gaining cooperation by third countries. The European neutrals have cooperated to some extent, based on the perception of a generalized threat to European security posed by the East. The security interests of most Asian and Latin American NICs, however, derive principally from regional instability and are only indirectly related to East-West tensions. Further, not only do third countries in Europe, Asia, and Latin America have varying national security interests, they also have divergent political and economic goals. The Asian countries have generally perceived cooperation with CoCom as a means of improving their international political status and of pacifying the United States in one trade area while they continue contentious negoti-
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment ations in other areas (e.g., intellectual property rights, import quotas, closed domestic markets). Thus, Singapore and South Korea have reached agreements with the United States on national security export controls, and Taiwan and Indonesia have expressed interest in cooperating with the United States and CoCom (see Table 8-1). But third countries in Asia have taken very few concrete steps to establish export control programs. The notable exception is Hong Kong, which, while it remains a Crown colony, administers an extensive export control program with the United Kingdom. Latin American countries, specifically Brazil and Argentina, tend to link any cooperation on East-West export controls to liberalization of U.S. nuclear export policies. Since its initiation in 1984, the CoCom TCC initiative has enjoyed only limited success: Few CoCom members have actively pursued such agreements; the agreements negotiated* do not systematically cover all goods reexported from CoCom countries and indigenously controlled by CoCom; and the cooperating countries exhibit uneven will in implementation and enforcement. The U.S. threat to restrict the export of certain high-technology items to countries that do not cooperate sufficiently with CoCom is hollow. U.S. export licensing statistics show that approval rates and average license processing times for exports to countries that do not cooperate with CoCom are not significantly different from those for cooperating countries (see Table 8-1). More important, many U.S. industries would be economically disadvantaged without these markets, and third countries can easily turn to other foreign suppliers. Cooperating third countries are not direct participants in CoCom. They have no vote, cannot participate in the list review process, and must forward their general exception cases through a CoCom member for full CoCom review. They also have no vote on the cases of CoCom members. As the quality and sophistication of the goods third countries produce inevitably rise, their willingness to subject high-value exports to the decisions of a group in which they have no vote will decline rapidly. Given the overall decline in the perception of the security risk posed by the Soviet Union and other WTO countries, combined with the increasing sophistication of goods produced in third countries, the prospects for improving third country cooperation are limited. To maintain current levels of cooperation, as well as to encourage expanded cooperation, it will be necessary to reduce the scope of CoCom-controlled goods and provide political and economic incentives for third country cooperation. To this end, CoCom should take the following actions: * This conclusion is inferred from comments of both U.S. and foreign government officials. The panel was not able to analyze the actual agreements because access to the documents was denied by the State Department.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment TABLE 8-1 Third-Country Licensing Comparisons (U.S. $ thousands) 1987 1988 1989 Country Number Amount Number Amount Number Amount Avg. Processing Time, 1989 Switzerlanda Approved 2,470 $ 696,044 2,125 $ 513,300 1,637 $ 575 9 business days Rejected 5 343 0 1 4 Finlandb Approved 831 373,147 686 421,402 565 451,836 9 Rejected 2 787 3 782 1 143 Austriac Approved 891 223,944 756 178,839 531 629,365 13 Rejected 5 2,608 3 859 4 897 Singapored Approved 1,560 3,108,254 1,391 3,876,306 1,294 2,712,754 10 Rejected 26 15,162 12 7,626 3 10,194 South Koreae Approved 3,177 2,902,284 3,843 6,294,560 4,017 5,342,199 11 Rejected 5 680 0 0
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment 1987 1988 1989 Country Number Amount Number Amount Number Amount Avg. Processing Time, 1989 Taiwanf Approved 4,855 6,438,855 4,837 11,082,427 4,960 12,072,043 17 Rejected 5 171 3 21,981 12 12,703 a Switzerland has no formal agreement with the United States or other CoCom member, but it practices export controls on the basis of informal arrangements. Switzerland receives all available licensing benefits, except the general license for intra-CoCom trade (GCT). b Finland does not have a formal agreement with the United States or other CoCom member, but it practices export controls on the basis of informal arrangements. Finland receives all available licensing benefits, except GCT. c Austria does not have a formal agreement with the United States or other CoCom member, but it practices export controls on the basis of informal arrangements. Austria receives general license for CoCom and cooperating countries (G-Com), general license for cooperating governments (GCG), 15/15 day license processing, and PRC permissive reexport. The remaining licensing benefits, with the exception of GCT, were expected to be granted in late 1990. d Singapore signed a Memorandum of Understanding with the United States in 1987 and was subsequently granted G-Com and GCG. The granting of further benefits is predicated on implementation of the agreement. e South Korea signed a Memorandum of Understanding with the United States in 1987, but the agreement was not ratified by the Korean parliament until 1989. South Korea was scheduled to receive GCG and 15/15 day license processing benefits in late 1990. Further benefits are predicated on implementation of the agreement. f Taiwan has not signed an agreement with the United States or other CoCom member. Taiwan does not have a formal system of export controls and does not receive any licensing benefits. SOURCE: U.S. Department of Commerce, Bureau of Export Administration.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Include on the CoCom core list only those items that are physically produced or sourced only in CoCom member nations or fully cooperating third countries. Initiate a plan whereby fully cooperating third countries can observe and contribute to CoCom list construction and case review. This may involve expanding the membership of CoCom or creating an ''observer status." Eliminate reexport authorization requirements for goods being reexported out of fully cooperating third countries. Seek multilateral agreement to control the reexport of controlled goods out of noncooperating third countries. Offer extension of the license-free system of trade as a CoCom-wide benefit to cooperating countries that have operational export control systems. The Third Country Cooperation Working Group in CoCom should certify the cooperating countries that have adequate systems. COCOM: ADMINISTRATION AND MANAGEMENT The narrow focus of CoCom on an explicitly targeted group of countries and commodities has enabled it to function with relative effectiveness. CoCom's goals were clearly linked to the mutual security of all members and the guiding principle of consensus ensured that all members could exercise influence on the actions of the group. The combination of these factors enabled CoCom to operate on the basis of international consensus, without the need for a formal treaty. Sharply differing views on the appropriate translation of CoCom objectives into actual export restrictions inevitably have created tensions among the member countries, however. Although these stresses pre-date 1989, the dramatic events in the Soviet Union and Eastern Europe exacerbate the problem. The continued viability of CoCom depends not only on its capability to respond to dramatic changes in the security, political, and economic environment, but also on its ability to agree on items requiring control and on control mechanisms. The agreements reached at the June 1990 Executive Committee and High-Level meetings in Paris reconfirmed multilateral support—at least for the near term. Thirty Industrial List entries were decontrolled, and the members agreed to develop an even more streamlined "core list" by early 1991. In conjunction with a revised control list, CoCom partners are also discussing the conditions necessary for approved exports of controlled items. The current secrecy surrounding the conditions that exist for the favorable consideration of exports subject to full CoCom review prohibits exporters from taking advantage of potential exceptions to a general
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment embargo and discourages exporters from even attempting to establish trade with proscribed countries. As stated in Chapter 6, the practice of allowing national discretion (administrative exception notes) on licensing decisions for controlled goods above the general exception level is inconsistent with the concept of uniform treatment among all members and the limitation of controls to critical items. In short, national discretion translates into unilateral export controls. Another source of tension is the fact that national control systems vary widely, as does the methodology by which items are determined to warrant control or decontrol. Despite the obvious connection to military utility of the CoCom strategic criteria, the role of the national defense agencies of member countries in the CoCom list review process is limited and inconsistent. In the United States, the Defense Department has had major influence on both U.S. and CoCom policy for a number of years. The same has not been true, however, of the defense and intelligence agencies of most other CoCom countries. Moreover, the Strategic Technology Experts Meeting, which has been nominally affiliated with CoCom since 1985, has been ineffective as a forum for coordinating inputs from national military establishments. Industry participation in list review, although seemingly more influential than defense input by the other CoCom countries, is also inconsistent. Perhaps the most potentially damaging discrepancies in CoCom are, however, members' practices in licensing West-West trade. In addition to the unilateral controls maintained by the United States, there are other differences in the approach of CoCom members to licensing and enforcement operations. The information required with license applications, the scrutiny with which such applications are reviewed, the investigation of potential violations, and the imposition of penalties on proven violators—all are critical to the effectiveness of members' control systems, as well as to the impact of controls on exporters. The resources and attention devoted to these factors vary starkly among CoCom members, however, particularly with respect to controlled exports to nonproscribed countries. Despite disproportionate attention to licensing and enforcement, the U.S. practice of resisting decontrol in the CoCom forum while removing licensing requirements for nonproscribed trade (e.g., broad general and special licenses) promotes the belief that the United States is not concerned with the positions of its allies and uses CoCom as a tool to gain economic advantage. Moreover, the location of CoCom headquarters within the U.S. embassy annex in Paris furthers the perception of the United States as controlling the organization to its own national advantage. Multilateral cooperation is an essential element in the effectiveness of any export control program. In addition, increased CoCom cooperation is necessary during this time of transition in Europe to ensure "equal
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment economic footing" among all members while managing the redefinition of trade goals as they relate to mutual security. To this end, the United States should press CoCom to undertake the following: Seek a common standard of licensing and enforcement practices for trade with nonproscribed countries. This should include controls on the reexport of controlled items (including those items eligible for approval with conditions) out of noncooperating countries. Eliminate the use of national discretion (administrative exception controls). The revised Industrial List ("core list") should be brief enough that all cases can be reviewed by CoCom. Improve the transparency of CoCom operations. This includes making the conditions necessary for favorable consideration of controlled exports standard and public, to the extent feasible. "Internationalize" the image of CoCom. For example, (1) move CoCom headquarters out of the U.S. embassy annex in Paris, (2) upgrade the involvement of other members in the administration of CoCom, and (3) share the costs of operation more evenly. Encourage increased input from members' national defense and intelligence agencies by upgrading and more fully integrating with CoCom the existing Strategic Technology Experts Meeting. PROLIFERATION CONTROLS: THE NEED FOR COLLECTIVE SECURITY The review of evolving U.S. national security interests in Chapter 5 made clear the large and growing international security problems posed by the militarization of a number of regions and the proliferation of advanced conventional weapons and weapons of mass destruction in those regions. By their nature, these problems can only be addressed effectively through international measures. Effective export control regimes designed to address these problems must also be collective and should include all the major supplier countries. Without the cooperation of the major supplier countries, weapons, weapons designs, and critical dual use technologies will continue to be available to nations that are intent on acquiring advanced conventional weapons or weapons of mass destruction. The general issue of trade in weapons is in urgent need of international attention, but the panel was unable to give adequate consideration to the problem. Future U.S. policy could be considerably informed by a study of these issues undertaken by an appropriate group of experts. Exports of advanced dual use items often play a central enabling role in the proliferation of advanced weapons. These problems can, in part, be
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment addressed through export controls outlined in the Export Administration Act. Chapter 6 reviewed the international regimes designed to deal with nuclear proliferation, the proliferation of missile technologies, and the proliferation of chemical weapons. That analysis leads to four general observations: There are at present insufficient linkages between the CoCom regime and the various other multilateral arrangements established to address nuclear, missile, or chemical exports and CoCom. The reasons for this lack of coordination include the varying memberships, targets, and associations with broad treaties. The structure of the regimes and the accountability of each member to the regime itself also vary. There is insufficient high-level leadership and policy coordination for a collective approach to proliferation problems. If the various potential supplier states are pursuing uncoordinated policies—at one moment supplying potential proliferators for reasons of short-term foreign policy or commercial interests, at others, imposing bans or staking out strong moral positions against proliferation—determined proliferators will generally be able to "play the field" and continue to achieve their goals. The three proliferation control regimes do not cover all the proliferation issues of greatest security concern. For example, it is easy to imagine military situations in which smart targeting technology, advanced reconnaissance and intelligence-gathering capabilities, or sophisticated command and control systems could have military significance comparable to the availability of some weapons covered under the current proliferation regimes. The three proliferation regimes are not well coordinated at the operational level either internationally or within the U.S. government . The same countries or groups are often involved in more than one type of proliferation control activity. The same intermediaries are often involved in obtaining needed goods for several destinations or several different kinds of proliferation projects. In limited cases, the same technologies can be useful in several different types of proliferation activity. Although there are a number of dissimilarities among the proliferation regimes as well, the facts still suggest a need for much closer national and international coordination at the operational level. Coordination of Current Regimes The 12 members of the Missile Technology Control Regime (MTCR) are also members of CoCom, the Zangger Committee,* and the Australia Group. Most of the projects targeted by the MTCR are in countries that have not signed the Nuclear Non-Proliferation Treaty. Both the Zangger Committee * Except Spain.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment and the Australia Group are corollary arrangements to broad treaties. Beyond these facts, there are few similarities among the actual control regimes. Each of the regimes in question addresses a unique issue with its own problems and distinguishing characteristics. The objectives of the various proliferation control regimes are not as narrow or distilled as the objectives of traditional CoCom controls. Perhaps the most important distinction between East-West and proliferation controls, however, is that the United States is not in a position to exercise the same level of influence over the suppliers of goods related to nuclear, chemical, and missile proliferation. Indeed, some of the potential suppliers of these weapons of mass destruction also are the targets of current control regimes. Moreover, as discussed in Chapter 7, it is critical to include the Soviet Union in multilateral arrangements to control the sale of advanced weapons and weapons capabilities. The appropriate membership in a control regime depends on more, however, than the potential suppliers. It also depends on the specific intent of the control regime and the context within which the regime operates (e.g., as an outgrowth of treaty commitments or as a result of political-military alliances). The number of participants in a regime and the nature of their relationship to each other affect the collective ability to specify control targets and mechanisms. As the number of participants increases and objectives become broader, the specificity with which targets and mechanisms can be defined declines. On the other hand, the impact of possible sanctions increases with the number of participants. The challenge is to define the objectives and obligations of control regimes so as to optimize their participation and scope without diluting their effectiveness. High-Level Leadership and Policy Coordination If proliferation is to be effectively managed, two conditions must be met. First, legitimate security concerns of potential proliferators must be recognized and addressed, most likely in a regional context. Without a reduction in the threat and subsequent demand and commercial incentives for arms exports, any strategy to manage proliferation will be severely limited. Second, there must be a well-coordinated approach to dealing with specific states or groups that have been identified as being intent on proliferating. These conditions, coupled with political reality, suggest that the most effective approach involves close coordination among a relatively small number of countries, including at least the United States, the United Kingdom, the Soviet Union, France, Germany, Japan, and China. This should be combined with a broad plan to strengthen and coordinate
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment existing international regimes to which all interested states could be parties, with the long-term goal of eventual consolidation. Coordination among the major players could be achieved on an informal basis through one or more existing international mechanisms or through some new organization. CoCom often is suggested as an appropriate forum for coordinating the nonproliferation efforts of the major players, although given the group's historic focus, it is difficult to envision the Soviet Union or China as participants in CoCom discussions. The United Nations, and particularly the revitalized Security Council, may be a viable forum for achieving broad political consensus on these issues. Since several types of coordination are required, ranging from the development of broad political consensus to the specific coordination of sensitive intelligence and enforcement activities, more than one organizational framework may be necessary, and frequent informal consultations will almost certainly be essential. It is equally important that each of the participants coordinates its internal management of these issues to remain informed and to avoid working at cross-purposes. In principle, it is desirable to integrate the existing international export control regimes to manage nuclear proliferation, the proliferation of missile technologies, and the proliferation of chemical weapons. The resulting single, integrated framework also could address the proliferation of advanced conventional weapons and related systems. In practice, however, because of the differences in the basis and operation of the existing regimes, and the obstacles to negotiating the necessary arrangements among large numbers of states, it seems unlikely that the integration of all the existing regimes will be possible in the near future. Hence, the United States should give high priority to the following: The development of formal or informal mechanisms that allow close and effective coordination among existing international proliferation control regimes. This should include cross-referencing existing control lists, sharing intelligence on targets and acquisition efforts, and cooperating on enforcement activities. The expansion of one of the existing regimes, or development of a new regime, to cover proliferation of advanced conventional weapons and related systems. The expansion of an existing regime, or development of a new regime, to consolidate the existing proliferation controls and the control of advanced conventional weapons and related systems. Prospects for success in these tasks will be considerably increased if the major players are able to provide coordinated leadership. In the United States, additional coordination is required within the Department of State, as well as other agencies. Further, in U.S. embassies abroad it would be desirable to have one office handle all pro-
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment liferation-related matters. According to information gathered on the panel's European fact-finding mission, nuclear and missile technology regimes are handled by science attaches, while chemical issues may be handled by different attaches within the same embassy. The Applicability of Export Controls to the Control of Proliferation Table 7-1 listed eight forms that export controls can assume, ranging from embargo on the one end to simple monitoring of export activity at the other. To the extent that export controls are used as a tool in managing proliferation, different kinds of controls are likely to be most effective for different parts of the problem. For example, embargo is probably the correct solution for certain specific items, such as plutonium or highly enriched uranium. The optimal strategy for technologies such as advanced computing may involve a combination of selective prohibition and discretionary licensing based on end-use control (but discretion that is internationally coordinated, not left to the varying judgments of individual countries). Notification may be sufficient for a large set of potentially sensitive technologies because tracking may be the best strategy for many items. Informal government persuasion may be the most effective way of dealing with others. The choice of an appropriate mix of controls for managing proliferation risks is a complex and difficult problem that requires far more careful and extensive study than this panel or any other group has yet been able to conduct. Such analysis should be an important factor in the implementation of proliferation controls. Whatever mix of policy tools is adopted to manage proliferation risks, and whatever role export controls play within that mix, one lesson from the history of East-West controls is very clear. When the United States (or any other country) is trying to exert international leadership, unilateral proliferation controls may be appropriate for short durations. To be effective in the long run, however, proliferation controls must be undertaken on a multilateral basis. Great care must be exercised in developing any multilateral system of dual use export controls imposed to manage proliferation given the large number of dual use technologies that could potentially be affected. In some situations, however, only a relatively small number of destinations are likely to be of serious concern at any given time. This is particularly true, for instance, in regard to chemical weapons—the chemicals necessary to produce weapons are widely available and the weapons production process is relatively unsophisticated, but relatively few countries are suspected of developing chemical weapons.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Across-the-board licensing and screening of a broad range of items to numerous destinations will not be an efficient or effective way of controlling exports related to proliferation. Export controls should focus on a limited set of items and on specific target countries. This is true for several reasons: Wide application of export controls to prevent proliferation is probably unachievable and, in any event, would reduce the vigilance exercised over any given transaction. If vigilance is to be maximized, the controls must be very focused. General searches for patterns of diversion in worldwide trade data are a far less efficient strategy for identifying diversion than more targeted efforts. This is because fraudulent exports will not be reported and diversions typically involve a small portion of the enormous amount of international commercial trade. Overly wide application of export controls to prevent proliferation is likely to impose high costs on U.S. and other developed world economies. Previous experience with East-West controls suggests that this can lead to a rapid breakdown in consensus, a decrease in effectiveness, and disadvantages for U.S. Exporters. The United States should learn from its experience with East-West controls and work to ensure that, in developing a strategy for the management of proliferation risks, a broad and burdensome export control regime is not unilaterally applied to U.S. exporters. In order to employ export controls effectively in managing proliferation risks, the United States should take the following steps: Analyze the relative usefulness and advantages or disadvantages of alternative types of export controls for different proliferation or security concerns. Focus proliferation controls narrowly on the proliferation risks and activities of greatest concern, including technical assistance. Develop a new regime, or expand an existing regime, to cover proliferation of advanced conventional weapons and related systems. Seek active, specific, and operational coordination on proliferation controls among the major players, including at least the United States, the United Kingdom, the Soviet Union, France, Germany, Japan, and China. As part of a broader strategy of managing proliferation risks, seek to strengthen and coordinate existing proliferation control regimes with the long-term goal of eventual consolidation.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Nuclear Export Controls The panel was not able to devote sufficient attention to the detailed operation of this or the two other proliferation regimes to offer complete and specific recommendations. The panel has, however, made several observations concerning multilateral nuclear export controls. First, not all countries capable of producing specially designed nuclear equipment, technology, and material have agreed to control the export of such items. Second, not all countries that have committed to control the export of specially designed nuclear equipment, technology, and materials have corresponding controls on nuclear-related dual use items. Although a number of the countries that participate in the Zangger Committee and Nuclear Suppliers Group have recently begun to recognize the importance of certain critical, dual use items to the development of nuclear weapons systems, the United States is still the only country practicing formal export controls on such items. The Nuclear Non-Proliferation Treaty will be up for renewal in 1995. In the period since the treaty was negotiated, several additional states have become nuclear states. Thus, a strategy must be developed by which newly nuclear states are brought within the appropriate treaty structure and encouraged to cooperate in the export control arrangements corollary to the treaty. It is also important to step up discussions with other Zangger Committee members to control the export of critical dual use items. Missile Export Controls Although the Missile Technology Control Regime has had some success, several major impediments to real effectiveness remain. One such impediment is the fact that several major sources of advanced missile technology, including the Soviet Union, India, and China, are not official participants. Perhaps the most limiting factor, however, is the secrecy that surrounds the projects of concern. It is difficult to engage the cooperation of other countries and industry when neither the rationale for controls nor the targets can be identified. Secrecy also severely strains cooperation on legitimate civilian projects in countries regarding which there may be concern about nuclear missile development. Disagreements among the regime's participants on the targets of export controls and conditions for acceptable dual use sales further exacerbate strained relations with both the importing country and regime partners. Some partners maintain that only projects in countries with unsafeguarded nuclear facilities should be subject to controls; others maintain that the possibility of reexport or retransfer necessitates worldwide controls. Some countries argue that government assurances against nuclear-missile end use are adequate conditions
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment for the sale of dual use items; others argue that the reliability of such government assurances is suspect. Moreover, investigations and prosecution of end-use violations are difficult to conduct when the top priority is to protect intelligence sources and methods. The effectiveness of this regime would be improved if conditions for approved exports and sanctions against the importing parties for violations of the export conditions were made standard and public among regime members. It is also important to include other major suppliers in the regime, but this is unlikely to happen, or to lead to greater effectiveness, until existing internal disputes are resolved. The structure of the MTCR is an impediment to its effectiveness as well. An ad hoc demarche process for export denials and an erratic meeting schedule contribute to licensing discrepancies and engender too many urgent bilateral meetings. If left unresolved, this problem would be complicated further as the number of participants increased. The primary arguments against a more structured regime and an expanded membership have been the relative standing of existing missile capabilities as either appropriate or inappropriate depending on the military and political alliances to which the end-user countries belong and the sensitive nature of the intelligence that contributes to identifying the regime's targets. As long as the regime continues to focus on inappropriate end users, political-military alliance and shared intelligence will remain the most critical elements of cooperation. Nevertheless, regime partners often disagree on the translation of mutual security and intelligence analysis into trade decisions. The future direction of this regime is clearly a trade-off between (a) attempting to identify and subsequently embargo specific nonpeaceful missile delivery systems in a very closed and limited environment or (b) more broadly and publicly defining regime goals and proscribed end uses in the global context. The nature of the regime will determine the attitude of nonregime countries toward cooperation. Chemical Export Controls The Australia Group has been operating as an interim mechanism in anticipation of completion of the Chemical Weapons Convention (CWC). The final details of the convention are still being negotiated, but the broad outlines are clear. The production and possession of chemical weapons will be banned (use is already banned under the Geneva accords). The convention will likely hold signatory governments explicitly responsible for reporting to a secretariat on all international trade in specific chemical precursors. It is unclear what explicit responsibility signatory governments will have in reviewing or constraining trade in identified precursors with nonsignatories. To date, process
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment equipment and technology specially designed for chemical weapons production have not been identified. The secretariat will include an inspection function for signatories, but the specific form that inspections will take—routine, challenge, ad hoc—is still under discussion. The possibility of inspection for nonsignatories receiving chemical weapons precursors also is under discussion. A number of nations participating in these negotiations are working hard to avoid the awkward three-part grouping of official-haves, unofficial-haves, and have-nots that has characterized the Nuclear Non-Proliferation Treaty. Several problems are associated with controlling the export of chemical weapons precursors. For example, the fungibility of chemicals and the ease with which civilian manufacturing plants can be converted to chemical weapons plants limit the effectiveness of export controls. In addition, there is no standard method of controlling the export of identified precursors, either under the Australia Group or CWC, which also reduces the effectiveness of the controls and creates serious commercial inequalities. Further, it is unclear how export controls might be employed in the event that a country is determined to possess or to be developing chemical weapons. The matter of collective sanctions for violating the terms of the CWC, or U.S. sanctions for violating the terms of the U.S. export license, must be resolved. Given the demonstrated willingness of some countries to use chemical weapons and the potential impact of such use on the world community, collective sanctions for possessing or developing chemical weapons should be established in the immediate future. There is reason to be concerned that export controls related to the CWC, as well as the reporting requirements of the treaty, could impose significant economic costs on the chemical industry. Thus, it is important to ensure that the resulting system strikes an appropriate balance between the objective of limiting proliferation and the imposition of costs on the world's process chemical industry and to ensure that the actual operation of the system is equitable. Recommendations for Specific Changes in Proliferation Control Regimes With respect to specific proliferation control regimes, the United States should undertake the following: Prepare both a U.S. and multilateral approach to the problem of states that have become nuclear but that are currently treated as nonnuclear under the Nuclear Non-Proliferation Treaty.
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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Encourage other participants in the Zangger Committee and Nuclear Suppliers Group to control the export of critical, dual use items. Work to resolve the internal problems in the Missile Technology Control Regime concerning appropriate conditions for sale and to expand membership to include other important supplier states, including the Soviet Union, India, and China. Construct a positive list of civilian space launch or satellite projects that have committed to peaceful end use and are certified as acceptable recipients of missile-related items. To the extent feasible, state the retransfer restrictions and end-use conditions necessary for acceptable sales of dual use items subject to missile technology controls. In negotiating the Chemical Weapons Convention, explicitly consider collective export control responses (sanctions) to nonsignatories that develop or possess chemical weapons. Seek enforcement and inspection procedures that successfully focus on those few destinations that pose the greatest proliferation risks.
Representative terms from entire chapter: