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U.S. Export Policy Toward the PRC

page 2

Controls Maintained in Cooperation with Other Nations

The 1979 Act provides:

It is the policy of the United States (A) to apply any necessary controls to the maximum extent possible in cooperation with all nations, and (B) to encourage observance of a uniform export control policy by all nations with which the United States has defense treaty commitments or common strategic objectives.15

Until its dissolution on March 31, 1994, the Coordinating Committee on Multilateral Export Controls (COCOM) was the primary multinational export control organization through which the United States and member countries controlled exports to countries of concern.

The United States currently participates in four multilateral export control regimes: the Wassenaar Arrangement, the Australia Group, the Missile Technology Control Regime, and the Nuclear Suppliers Group.

COCOM (Coordinating Committee on Multilateral Export Controls)

In 1949, the United States and 14 other countries created by informal agreement the Coordinating Committee on Multilateral Export Controls for security purposes.

The initial COCOM member countries were Belgium, Canada, Denmark, France, the Federal Republic of Germany, Greece, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Turkey, the United Kingdom, and the United States. Later, Spain and Australia joined COCOM.

COCOM maintained three control lists:

  • The International Atomic Energy List
  • The International Munitions List
  • The Industrial List

The Industrial List contained dual-use items (that is, items that have both civil and military applications) not included in the other two lists. COCOM performed a comprehensive review of each of the control lists at least every three to four years to reflect technological developments and changes in the ways in which end users could apply technologies.

Under COCOM, member countries surrendered some of their national sovereignty and national discretion by allowing other member countries to vote on export cases that required COCOM approval, according to Steven C. Goldman, Director of the Office of Chemical and Biological Controls and Treaty Compliance and Acting Director of the Office of Nuclear and Missile Technology Controls within the Bureau of Export Administration at the Department of Commerce.16

With the fall of the Berlin Wall and the changes in the Eastern European governments in 1989, President Bush approved in May 1990 a U.S. proposal to COCOM for a significant reduction in the COCOM controls and for the development of a new "core list" of strategic items to replace the existing Industrial List. In June 1990, COCOM agreed with most of the elements in the U.S. proposal, and COCOM eliminated 30 items in the Industrial List while partially decontrolling 12 additional items. COCOM also agreed to a reduced "core list" of dual-use items that would be controlled for national security purposes to proscribed countries.

In view of the changing strategic environment in Central and Eastern Europe and the Newly Independent States of the former Soviet Union, COCOM adopted criteria in December 1991 for the removal of countries from the list of proscribed countries. Hungary was removed from this list in May 1992.

The United States submitted a proposal to COCOM in 1992 to establish a COCOM Cooperation Forum to discuss international standards for export controls, and to provide a way to coordinate technical assistance efforts with the countries of Eastern and Central Europe and the former Soviet Union. COCOM agreed with this proposal in June 1992, and the COCOM Cooperation Forum held its first meeting in November 1992. One of the items discussed by the Forum was a new approach to COCOM export controls that would contribute to the economic development of reforming countries by providing more access to higher levels of controlled items.

A report to Congress, dated September 30, 1993, which was submitted by the U.S. Trade Promotion Coordinating Committee, an interagency group chaired by the Commerce Department, stated that the Clinton administration was taking action to:

Adapt the multilateral export control system to address proliferation threats and to ensure the consistent application of export control policies and procedures by member countries.

Continue current vigorous efforts to reorient COCOM export controls to the post-Cold War world . . .17

Shortly after this report was submitted to Congress, the Clinton Administration made a proposal to the COCOM member countries to dissolve COCOM and to create a new multilateral mechanism to achieve a number of objectives, including:

  • Preventing states such as Iraq, Iran, North Korea, and Libya from obtaining conventional weapons and other sensitive technologies
  • Furthering the process of engaging Russia and other Newly Independent States in developing export control systems
  • Removing disadvantages to U.S. exporters resulting from inadequate multilateral coordination on exports of sensitive technologies to terrorist states18

In November 1993, the COCOM member countries agreed to the U.S. proposal to establish a new multilateral mechanism, including the proposal to phase out COCOM. The Export Administration Annual Report for 1994, and the 1995 Report on Foreign Policy Export Controls, stated that:

As a result of [the] end of the Cold War, it was agreed by all COCOM members that COCOM should cease to exist after March 31, 1994.19

Discussions among the COCOM member countries continued in early 1994 regarding the new organization to control exports of conventional weapons and sensitive dual-use goods and technologies.

At a meeting in Wassenaar, the Netherlands in March 1994, the COCOM member countries agreed to continue the use of the COCOM control lists to control exports until the new organization was formed.

Wassenaar Arrangement

The final agreement to establish a new multilateral export control organization was approved in July 1996, over two years after the dissolution of COCOM.

The new organization, called the "Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies" (Wassenaar Arrangement), became effective in September 1996.

The 33 member countries of the Wassenaar Arrangement include: Argentina, Australia, Austria, Belgium, Bulgaria, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, Romania, Russia, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom, and the United States.

Negotiations regarding the items to be covered under the Wassenaar Arrangement began with the COCOM control list prior to the final agreement, according to James A. Lewis, Director of the Office of Strategic Trade and Foreign Policy Controls within the Bureau of Export Administration at Commerce.20 Lewis says that the "essential" Wassenaar list of controlled items is not very different from the COCOM list as it existed in 1993 (that is, the same nine categories of items and the same general format and structure).21

Roger Majak, Assistant Secretary of Commerce for Export Administration, says the Wassenaar Arrangement includes no written agreement regarding the countries of concern.22 However, Majak indicated that there is a verbal agreement that the countries of concern are Iran, Iraq, North Korea, and Libya.23

Unlike the COCOM Secretariat, the Wassenaar Secretariat █ located in Vienna, Austria █ does not perform a review function. That is, the Wassenaar Arrangement does not require that member countries submit export licenses for sensitive commodities and technologies to the Secretariat for review by other member countries prior to approval.

Instead, licensing by Wassenaar member countries is done by "national discretion," which means that while member countries share a common control list and a common set of objectives, each country can decide on its own how it will implement the control list and the objectives.

Commerce╠s Lewis says "one of the challenges for Wassenaar is achieving greater consistency in national application." 24

Some items included in the Wassenaar control list are included in the Commerce Control List,25 and the remainder are included in State╠s Munitions List.26 Wassenaar control list items included in the Commerce Control List are considered to be subject to U.S. national security controls, although Lewis says that some of those items are subject to U.S. foreign policy controls as well.

Regarding high performance computers, Lewis indicates that Wassenaar member countries have agreed to control the export of computers capable of 2,000 millions of theoretical operations per second (MTOPS) and above, and that most member countries do not require licenses to export computers below this level of capability.27 Lewis says that, at a recent Wassenaar meeting held to discuss control list items, the United States was the only member country that opposed moving this level up to 4,000 MTOPS.28

Under the Wassenaar Arrangement, member countries provide semi-annual reports to the Wassenaar Secretariat of export licenses regarding covered items they have approved or denied. Member countries receive three levels of semi-annual reports from the Wassenaar Secretariat. The member countries are provided semi-annual reports regarding approvals that include the control number and a brief description of the commodity or technology, the quantity approved, and the country of receipt. They are also provided with semi-annual reports regarding denials that include the same information. In addition, members receive semi-annual reports regarding denials of sensitive items that include the names of the intended recipients.

The Wassenaar Arrangement has a "no undercut agreement" on denials, according to Lewis, although he says "it could use a little work." 29 Under this agreement, when a member country reports a denial of a sensitive item to the Wassenaar Secretariat, no member will approve the sale of the same item to the same end user without first consulting the country that initially denied the export.

Included in the July 1996 agreement to establish the Wassenaar Arrangement was a provision for a 1999 review of the "overall functioning" of the regime.30 Commerce╠s Lewis says this review will be conducted in the spring of 1999.31 Commerce╠s Bureau of Export Administration has, however, only begun to review the effectiveness of the Wassenaar Arrangement in preparation for this two-year review.

Commerce Assistant Secretary Majak says that "[o]n the dual use side. . . [the Wassenaar Arrangement] has been successful in defining a common list and some common target control levels, but the implementation of those control levels by the member countries has been very uneven and in many respects unsatisfactory." 32

Australia Group

The Australia Group was established in 1984 as an informal forum for member countries that seek to discourage and impede chemical weapons and biological weapons proliferation. The Australia Group pursues these goals by harmonizing national export controls on chemical weapons precursor chemicals, biological weapons pathogens, and dual-use equipment that may be used for chemical or biological weapons, and by sharing information on proliferation programs.33 The Australia Group meets annually in Paris.

Currently, 30 countries are members of the Australia Group █ Argentina, Australia (which chairs the Group), Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, the Slovak Republic, the Republic of Korea, Spain, Sweden, Switzerland, the United Kingdom, and the United States. All member countries are signatories of the 1993 Chemical Weapons Convention.

The Australia Group has established export controls on 54 chemical precursors and a list of chemical weapons-related production equipment. Regarding biological weapons, the Group has established export controls on certain microorganisms, toxins, and biological weapons-related production equipment.34

Member countries implement export controls that are identified and agreed upon by the Australia Group by "national discretion," which means that member countries individually decide how to implement the controls.

Export license applications for Australia Group items that are approved by a member country are not reported to other member countries. Goldman indicates that there is a "no undercut agreement" on denials by Australia Group members.35

Australia Group items are included in the Commerce Control List of the Export Administration Regulations. Such items on the Commerce Control List are considered to be subject to foreign policy controls.

Missile Technology Control Regime

The Missile Technology Control Regime (MTCR) was created in April 1987 by Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The purpose of the MTCR is to limit the proliferation of missiles capable of delivering weapons of mass destruction.

Licensing by Missile Technology Control Regime member countries is done by "national discretion."

The Missile Technology Control Regime currently has 29 member countries. In addition to the seven original countries, the members are Argentina (joined in 1993), Australia (1990), Austria (1991), Belgium (1990), Brazil (1995), Denmark (1990), Finland (1991), Greece (1992), Hungary (1993), Iceland (1993), Ireland (1992), Luxembourg (1990), the Netherlands (1990), New Zealand (1990), Norway (1991), Portugal (1992), Russia (1995), South Africa (1995), Spain (1989), Sweden (1991), Switzerland (1992), and Turkey (1997).

MTCR controls are based upon Guidelines and an Equipment and Technology Annex. The Annex consists of a list of missile-related items subject to controls, and is divided into two categories:

  • Category 1 includes missile subsystems and production equipment for missile systems. Category 1 items are controlled by the Department of State under the U.S. Munitions List
  • Category 2 includes dual-use components, materials, and other commodities

Goldman, of Commerce╠s Bureau of Export Administration, says that approximately 70 percent of the items listed in Category 2 are included in the U.S. Munitions List, and about 30 percent of the items are included in the Commerce Control List.36

While the People╠s Republic of China is not a member of the MTCR, it agreed in 1992 to adhere to the original Guidelines, and the Equipment and Technology Annex agreed to in 1987 by the MTCR member countries.37

The PRC decision followed the imposition by the United States of missile proliferation sanctions on the PRC in 1991 because the PRC had transferred M-11 short-range ballistic missile technology to Pakistan.38

The PRC has not, however, agreed to adhere to revisions to the Guidelines and Annex that have been adopted since 1987.39

Nuclear Suppliers Group

The Nuclear Suppliers Group was established in 1992. Member countries have agreed to adhere to Guidelines and implement an Annex with respect to exports of nuclear and nuclear-related dual-use commodities.

Also, member countries adhere to safeguards established by the International Atomic Energy Agency.

The Nuclear Suppliers Group currently consists of 34 member nations █ Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, Romania, Russia, the Slovak Republic, Spain, South Africa, Sweden, Switzerland, Ukraine, the United Kingdom, and the United States.

According to Stephen C. Goldman of Commerce╠s Bureau of Export Administration, the Nuclear Suppliers Group export controls are similar to those that existed under COCOM╠s International Atomic Energy List.40 Unlike the COCOM controls, however, the Nuclear Suppliers Group export controls are implemented on a "national discretion" basis.

The Nuclear Suppliers Group works on the basis of a consensus of the member countries, and the Guidelines call for consultations among member countries regarding sensitive export cases.

License applications for items covered by the Nuclear Suppliers Group that are approved by a member country are not reported to other member countries. However, there is a "no undercut rule" on denials by member countries.

Back  |  Forward


COX REPORT

Overview
pages 1 | 2 | 3 | 4

PRC Acquisition of U.S. Technology
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

PRC Theft of U.S. Nuclear Warhead Design Information
pages 1 | 2 | 3 | 4 | 5

High Performance Computers
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

PRC Missile and Space Forces
pages 1 | 2 | 3 | 4 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Hughes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Loral
pages 1 | 2 | 3 | 4 | 5 | 6

Launch Site Security in the PRC
pages 1 | 2 | 3 | 4 5 | 6

Commercial Space Insurance
pages 1 | 2 | 3 | 4

U.S. Export Policy Toward the PRC
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Manufacturing Processes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

Recommendations
pages 1 | 2 | 3

Appendices
pages introduction | A | B | C | D | E | F



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