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Introduction

MANDATE AND BACKGROUND OF THE STUDY

This study was mandated in Part I, Section 2433, of the Omnibus Trade and Competitiveness Act of 1988, in which the Congress requested that the National Academies of Sciences and Engineering ''conduct a comprehensive study of the adequacy of the current export administration system in safeguarding United States national security while maintaining United States international competitiveness and Western technological preeminence."* The legislative request for the study came more than a year before the opening of the Berlin Wall and all the other extraordinary political and economic changes that have occurred in Eastern Europe and in the Soviet Union itself, the consequences of which are being played out across the world.

Congress asked the National Academy complex to undertake the study on the basis of its past record of accomplishment in the general subject area. In 1982, for example, the Academy complex's Committee on Science, Engineering, and Public Policy (COSEPUP) convened a special panel to determine whether U.S. national security interests were being compromised by the open communication of the results of basic research. The resulting report,

*  

Appendix E contains the complete language used in Part I, Section 2433, of the Omnibus Trade and Competitiveness Act of 1988, which was signed by the President on August 23, 1988.

†  

The National Academy complex includes the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine.



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Finding Common Ground: U.S. Export Controls in a Changed Global Environment 1 Introduction MANDATE AND BACKGROUND OF THE STUDY This study was mandated in Part I, Section 2433, of the Omnibus Trade and Competitiveness Act of 1988, in which the Congress requested that the National Academies of Sciences and Engineering ''conduct a comprehensive study of the adequacy of the current export administration system in safeguarding United States national security while maintaining United States international competitiveness and Western technological preeminence."* The legislative request for the study came more than a year before the opening of the Berlin Wall and all the other extraordinary political and economic changes that have occurred in Eastern Europe and in the Soviet Union itself, the consequences of which are being played out across the world. Congress asked the National Academy complex† to undertake the study on the basis of its past record of accomplishment in the general subject area. In 1982, for example, the Academy complex's Committee on Science, Engineering, and Public Policy (COSEPUP) convened a special panel to determine whether U.S. national security interests were being compromised by the open communication of the results of basic research. The resulting report, *   Appendix E contains the complete language used in Part I, Section 2433, of the Omnibus Trade and Competitiveness Act of 1988, which was signed by the President on August 23, 1988. †   The National Academy complex includes the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Scientific Communication and National Security 1 (known as the Corson report after its chairman, Dale R. Corson), released in September 1982, laid the basis for the development in 1985 of National Security Decision Directive 189, which restated the importance to the national interest of maintaining open communication of "fundamental" research within the constraints imposed by security classification or other existing law. At the time of its report, the Corson panel indicated that there was another major dimension to the export control problem, which it did not have the opportunity or mandate to examine in depth—namely, that of technology transferred as part of or in association with commercial activities. In 1985, COSEPUP undertook this second study, when it appointed the Panel on the Impact of National Security Controls on International Technology Transfer, chaired by Lew Allen, Jr. The report of this study, Balancing the National Interest: U.S. National Security Export Controls and Global Economic Competition (known as the Allen report), was released in January 1987.2 The Allen report stated clearly for the first time that it was necessary to take account of U.S. economic vitality and competitiveness in formulating export controls on strategic technology, and it urged that U.S. policy move toward complete multilateralization of the formulation and implementation of export control policy. Most recently, the National Research Council's Computer Science and Technology Board established a committee to assess trends in computer science and technology as they affect and are affected by export controls. From that assessment came the report Global Trends in Computer Technology and Their Impact on Export Control,3 released in December 1988, which made recommendations for export control based on the committee's conclusions about the intrinsic controllability of computer technologies and the interplay among controls, technology development, and prospects for the U.S. computer industry. In response to the current congressional request, COSEPUP established the Panel on the Future Design and Implementation of U.S. National Security Export Controls. The composition of the panel was the result of a careful search by the presidents of the National Academies of Sciences and Engineering designed to ensure a panel with balance, depth of expertise, and objectivity. The panel included many individuals who have had substantial experience in government at the most senior levels pertaining to national security affairs, a number of others who have held senior posts in or contributed advice to the intelligence community, and still others who possess substantial legal expertise from work on strategic trade issues. Many others hold (or have held) leadership positions in high-technology industries. Three members of the panel also served on the earlier Allen panel. The congressional request also called for the Academies to examine the impact of any recommended conceptual approach to export controls in several

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment industrial sectors. COSEPUP considered those industries subject to export controls in which U.S. exports are dominant or strong competitors. Industrial sectors for which, at the outset of the study, export controls were known to be under executive branch review (e.g., machine tools and telecommunications) were excluded from consideration. COSEPUP appointed separate subpanels, representing sectors with a range of product life cycles, on (1) computer technology (hardware and software), (2) advanced industrial materials, and (3) civilian aircraft and jet engines. Each subpanel was connected to the main panel through its chairperson, who was a member of the main panel. Like the members of the main panel, those appointed to the three subpanels were chosen after a careful search, primarily on the basis of recognized expertise in the particular field of technology. The computer hardware and software subpanel comprised members of the Computer Science and Technology Board study committee that had previously produced the Global Trends report. Section 2433 of the Omnibus Trade and Competitiveness Act of 1988 set out five specific tasks for the Academies study. After carefully examining the terms of the legislation and consulting with the relevant federal agencies, COSEPUP developed a five-point charge to the panel* that incorporated all of the major issues raised in the legislative request: (1) consider various existing and alternative conceptual approaches to the design of national security export controls, including methodologies for determining which end products and technologies are likely to make a significant difference in the military capabilities of controlled countries; (2) develop a set of dynamic and implementable principles for determining which technologies should be subject to control; (3) demonstrate how the principles would be applied to a few selected technological sectors; (4) clarify in operational terms the meaning of "foreign availability" and rationalize and harmonize the U.S. and CoCom (Coordinating Committee for Multilateral Export Controls) procedures for dealing with identified cases of foreign availability; and (5) to the extent warranted, develop proposals for new procedures and organizational arrangements to ensure more timely, predictable, and effective decision making on national security export controls. The charge to the panel was prepared by COSEPUP in early 1989 and accepted by the panel at its organizational meeting in August of the same year. The study itself began in the fall of 1989 and ended in late 1990. During that period, international developments reshaped the global political landscape, with marked consequences for the agencies of the U.S. government responsible for export control matters, for the leadership of the executive branch, and for the deliberative and policy oversight committees of the Congress. *   The complete COSEPUP charge to the panel is contained in Appendix F.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Due to the dramatic changes in the context and circumstances of its work, the panel found itself repeatedly having to reexamine its charge. Inevitably, some of the original emphases of the study have shifted, and the relative importance of various elements of the original charge has changed. In particular, the panel expanded its examination of export controls beyond dual use technologies (i.e., technologies that have military and commercial applications) to consider technologies of proliferation concern: advanced conventional weapons, missile delivery systems, and nuclear, biological, and chemical weapons. The panel also broadened its consideration of ways to change export control policies as the Soviet Union and its former Warsaw Treaty Organization (WTO) allies, traditional adversaries of the United States, evolve internally and become more fully integrated into the global political and economic system. Finally, the panel examined shifts in the sources of threat in the new global context—a shift dramatically highlighted by the explosion of regional conflict in the Middle East in 1990. These changes in emphasis notwithstanding, the panel believes it has remained faithful to the original charge of the study. SCOPE OF THE PANEL'S WORK The panel and its professional staff pursued an ambitious scope of work that included briefings, foreign fact-finding missions, and commissioned research papers. First, the staff collected and analyzed public literature and classified documents made available by government agencies. The panel also held discussions with representatives of all the federal agencies involved directly in the formulation or implementation of national security export control policy (and related topics)—namely, the Departments of Defense, Commerce, State, Treasury (U.S. Customs Service), and Energy; the National Aeronautics and Space Administration; and the White House's Office of Science and Technology Policy. In addition, the panel heard classified briefings by the Technology Transfer Intelligence Committee, an interagency group of the intelligence community, and a special subcommittee of the panel heard a number of additional briefings at high levels of classification. The panel also had extensive contact with and heard briefings by representatives of affected sectors of U.S. high-technology industry. (Appendix M provides a list of the briefers and contributors to the panel and their affiliations.) Three foreign fact-finding missions constituted the second element of the study. In February 1990, a delegation of the panel visited five Asian countries: Hong Kong, Japan, Macao, South Korea, and Taiwan. In May 1990, a second delegation visited five European countries: Belgium, France, Germany, Switzerland, and the United Kingdom; this trip also included a stop at CoCom headquarters in Paris. Also in May 1990, a third delegation of the panel visited Canada. In each country, panel members held confidential,

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment frank meetings on national security export control matters with government officials, industry leaders, academic experts, and other informed observers. (Summary reports describing the panel's foreign fact-finding missions are included as Appendix D.) A third element of the study involved the commissioning of a series of research reports prepared by outside consultants and by the panel's professional staff. Some of these reports developed new information; others reexamined existing problems from new perspectives. (Three of these reports are included as Appendixes G, H, and I. Four additional papers prepared for the panel are available on request.*) Finally, each of the three appointed subpanels held a series of meetings and subsequently reported its findings to the main panel, in writing and through its respective chairperson. The subpanels' views provided valuable input for the analysis that follows. The complete reports of the subpanels are included as Appendixes A–C. FOCUS OF THE STUDY IN A RAPIDLY CHANGING ENVIRONMENT In addressing its charge, as noted earlier, the panel confronted a special challenge due to the unprecedented political changes that were occurring while the study was in progress. On the one hand, it is impossible to predict with certainty the permanence or eventual success of the democratization process in the East European countries or of glasnost, perestroika, and other politico-military changes in the Soviet Union. On the other hand, it is equally impossible to ignore these new realities, or the new and growing threats from nontraditional sources, given that they condition the need for and design of national security export controls. Ultimately, the panel made what it believed were reasonable and prudent judgments about Soviet military capabilities and doctrine, the technological requirements for Soviet military systems, and the overall nature of the threat—both current and prospective—posed by the Soviet Union and its former WTO allies. In its analysis and its findings and recommendations, the panel endeavored to develop an approach to export controls that would (1) facilitate flexible and positive responses to further improvement in East-West relations, (2) continue to protect the security of the United States and its allies during this highly uncertain period of political and economic transition, (3) minimize the adverse impact of export controls *   The following papers are available through the Publications-on-Demand program of the National Academy Press: Donald Goldstein, Japan's Strategic Trade Controls: A New Era; Joel Hellman, The State of Perestroika: A Survey of U.S. Specialists on the Soviet Union; International Business-Government Counsellors, Inc., National Security, and Foreign Policy Export Controls ; and Wolfgang Reinicke, Recent Developments in Eastern Bloc Countries and Their Effects on CoCom: West German and European Perspectives.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment on economic competition in the global marketplace, and (4) be responsive to new threats from countries that raise concerns about proliferation. The assumptions built into and the limitations imposed on the study are to some extent similar to those of the previous COSEPUP study, the Allen report. But they also differ in several important respects. The similarities and differences include the following: Means of strategic technology transfer. Like the Allen report, this analysis focuses on problems associated with the direct or third-party diversion—or in some cases, legal sale—of technology considered important to the military systems of potential adversaries. It does not address, except in a general way, the problem of military or industrial espionage, against which export controls are largely ineffective. Deficiencies in the U.S. defense industrial base and military procurement process. Because maintaining Western military capabilities requires developing and fielding new technology, as well as denying technology to potential adversaries, issues relating to the U.S. industrial base and procurement process are highly relevant. However, as did the Allen panel, the panel determined that the complex problems associated with maintaining the U.S. defense industrial base and/or rationalizing the military procurement process were beyond the terms of the congressional request. Use of export controls to protect short supplies and U.S. Markets. The panel chose to set aside the application of export controls to prevent the short supply of certain strategic commodities. It also did not address more recent proposals to impose (or reimpose) export controls to promote U.S. economic competitiveness, for example, in situations in which another nation is selling products or services (e.g., space launches) on the international market at heavily subsidized prices. The panel determined that the treatment of such policy issues also exceeded its charge. Economic and technological impact of export controls. The Allen report was concerned exclusively with the impact of export controls on the United States and other non-Communist countries. Although that remains a primary focus of the current study, the dynamic political situation in Eastern Europe and recent progress on arms control negotiations make the situation today vastly more complicated. Among cooperating Western countries, the need for virtually license-free trade with each other is now taken almost as a given. But the constraining impact of controls on countries newly converted to democracy and to market economics was—and properly so—a subject of concern to this panel as well. Broadened focus of controls. The Allen panel focused exclusively on the control of dual use goods and technology, primarily as implemented under Section 5 of the Export Administration Act of 1979, as amended, and it chose explicitly not to address issues associated with munitions controls

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment or foreign policy controls. This panel decided to address these issues because in the new political and economic environment, maintaining these often artificial distinctions has tended to impede rational policy-making. This is particularly true with respect to the initiation or maintenance of controls on exports to countries of proliferation concern. Although currently treated as a foreign policy or munitions issue, proliferation may pose the most urgent national security threat to the United States and to other countries interested in maintaining a stable world order. ORGANIZATION OF THE REPORT Chapter 2 examines the need for export controls in the changed global environment, following which Chapter 3 examines the impact of export controls on U.S. industry. Chapter 4 discusses evidence on the acquisition of sensitive Western technology by the Soviet Union and its former WTO allies and by countries of proliferation concern. Chapter 5 rounds out the overview of changing conditions with an examination of transformations in the calculus of U.S. national security interests. Chapter 6 describes the history, development, and operation of the current U.S. and multilateral export control regimes. The next four chapters address the components of the panel's proposed response to changing national security conditions, beginning with an examination of U.S. policy considerations (Chapter 7), followed by discussion of multilateral regimes (Chapter 8), and concluding with two chapters on the U.S. export control regime. Chapter 9 examines details of the policy process, and Chapter 10 addresses the formation and management of U.S. control lists. Two final chapters summarize key findings and conclusions (Chapter 11) and the recommendations (Chapter 12) of the study. NOTES 1.   National Academy of Sciences, Scientific Communication and National Security (Washington, D.C.: National Academy Press, 1982). 2.   National Academy of Sciences, National Academy of Engineering, and Institute of Medicine, Balancing the National Interest: U.S. National Security Export Controls and Global Economic Competition (Washington, D.C.: National Academy Press, 1987). 3.   National Research Council, Global Trends in Computer Technology and Their Impact on Export Control (Washington, D.C.: National Academy Press, 1988).