U.S. Export Policy Toward the PRC
Missile Proliferation Sanctions on the PRC
The National Defense Authorization Act for Fiscal Year 1991 requires mandatory U.S. sanctions against foreign persons who export an item on the Missile Technology Control Regime (MTCR) Annex to a country that is not an MTCR member country.177
The sanctions are to be applied even though the Annex item is not subject to U.S. export controls.
If the exported items are MTCR Category I items (that is, missile systems and key subsystems), all export licenses are required to be denied for two years. If the exported items are MTCR Category II items (dual-use items), all export licenses for controlled missile technology items are required to be denied for two years.178
The State Department Bureau of Political-Military Affairs announced the imposition of missile proliferation sanctions on entities in the PRC and Pakistan in May 1991, because of PRC transfers to Pakistan of technology related to the M-11 short-range ballistic missile.179 These sanctions denied export licenses for two years for:
Commercial communications satellites for launch by the PRC
Missile technology or equipment
The sanctions were effective on June 25, 1991, and applied to the following foreign entities:
China Great Wall Industry Corporation
China Precision Machinery Import-Export Corporation
The Space and Upper Atmosphere Research Commission of Pakistan180
The sanctions also denied U.S. Government contracts relating to such items.181
These May 1991 sanctions were lifted by President Bush on March 23, 1992, after the PRC agreed to adhere to the initial MTCR 1987 Guidelines and Annex.182 But MTCR Category II (dual use) sanctions were again imposed on entities in the PRC and Pakistan on August 24, 1993, as a result of the PRCĖs sale of M-11 missile-related equipment to Pakistan.183
The August 1993 missile proliferation sanctions were imposed on the PRC Ministry of Aerospace Industry, including China Precision Machinery Import-Export Corporation (CPMIEC), and the Pakistani Ministry of Defense.184 The sanctions also applied to the divisions, subunits, and any successor organizations to these entities, including:
China National Space Administration
China Aerospace Corporation
Aviation Industries of China
China Precision Machinery Import-Export Corporation
China Great Wall Industries Corporation or Group
Chinese Academy of Space Technology
Beijing Wan Jun Industry Corporation
China Haiying Company
Shanghai Astronautics Industry Bureau
China Chang Feng Group185
The August 1993 sanctions affected seven planned launches of U.S. commercial communications satellites in the PRC.
On November 1, 1994, President Clinton lifted the sanctions after the PRC issued a statement agreeing not to export ground-to-ground missiles inherently capable of delivering at least a 500-kilogram payload with a range of at least 300 kilometers.186
Authority to impose missile proliferation sanctions pursuant to the National Defense Authorization Act for Fiscal Year 1991 has been delegated by the President to the Secretary of State. There have been reports of additional possible violations of the missile technology control provisions of this Act by the PRC.187 No additional sanctions, however, have been imposed as a result.
U.S. Munitions List Changes Regarding Satellites
COCOM used three lists to control the export of items to proscribed destinations: the International Munitions List, the Industrial List, and the International Atomic Energy List.188 "Dual-use" items were identified on the Industrial List, if not included in another COCOM list. Except for the United States, most COCOM countries conformed their national lists to correspond to the COCOM International Munitions List and the Industrial List.189
In the United States, the State DepartmentĖs Munitions List contained items listed in COCOMĖs International Munitions List, and a few items listed in COCOMĖs Industrial List. The Commerce Control List, meanwhile, included most but not all of the items on COCOMĖs Industrial List.
Relaxation of Satellite Export Rules
When President Bush pocket-vetoed the Omnibus Export Amendments Act of 1990 (H.R. 4653), which contained amendments to the 1979 Act, he issued a Memorandum of Disapproval that directed:
By June 1, 1991, the United States will remove from the U.S. munitions list all items contained on the COCOM dual-use list [that is, the COCOM Industrial List] unless significant U.S. national security interests would be jeopardized.190
At the time, commercial communications satellites were on the COCOM "dual-use" Industrial List, not the COCOM International Munitions List. But in the United States, they were included on the State Munitions List rather than on the Commerce Control List. In accordance with the directive in the Memorandum of Disapproval, therefore, the State Department formed an Interagency Space Technical Working Group in August 1991 to evaluate whether jurisdiction over the export of such satellites should be removed from the U.S. Munitions List, and placed instead on the Commerce Control List.
On October 23, 1992, the Departments of State and Commerce issued regulations transferring only certain commercial communications satellites from the State Munitions List to the Commerce Control List.191 The regulations provided that satellite parts, components, accessories, attachments, and associated equipment, including ground support equipment, would remain on the State Department Munitions List. These items could, however, be included on a Commerce Department export license application if the items were needed for a specific launch of a commercial communications satellite under Commerce Department jurisdiction.
All detailed design, development, manufacturing, and production technical data for satellites continued to be controlled under the State Department Munitions List. Technical data, including marketing data, necessary to launch, operate, and maintain satellites and associated ground equipment for satellites was to be controlled under the Commerce Control List by the Department of Commerce.
The October 1992 regulatory changes did not transfer all commercial communications satellites to the jurisdiction of the Commerce Department. Commercial communications satellites that had any of the following nine characteristics would continue to be licensed by the State Department:
Antennas with certain characteristics
Intersatellite data relay links
Space-borne baseband processing equipment
Cryptographic items controlled under the U.S. Munitions List
Certain on-orbit propulsion systems
Certain attitude control and determination systems
Permanent orbit transfer engines (that is, kick motors)192
The Trade Promotion Coordinating Committee Recommends Moving Satellites to Commerce Department Jurisdiction
The Export Enhancement Act of 1992 required the President to establish the Trade Promotion Coordinating Committee:
(1) to provide a unifying framework to coordinate the export promotion and export financing activities of the United States Government; and
(2) to develop a government-wide strategic plan for carrying out the Federal export promotion and export financing programs.193
The 1992 Act stated that the Trade Promotion Coordinating Committee would include representatives from the Departments of Commerce, State, Treasury, Agriculture, Energy, and Transportation, the Office of the United States Trade Representative, the Small Business Administration, the Agency for International Development, the Trade and Development Program, the Overseas Private Investment Corporation, and the Export-Import Bank of the United States.
The Secretary of Commerce chairs the Trade Promotion Coordinating Committee.
One of the duties of the Committee was to develop and implement a strategic plan for U.S. trade promotion efforts. The 1992 Act indicated that the strategic plan should:
Establish a set of priorities for Federal activities in support of U.S. exports
Review current programs to promote U.S. exports
Identify areas of overlap and duplication
Propose an annual unified Federal trade promotion budget
Review efforts by the states to promote U.S. exports
The 1992 Act stated that the Trade Promotion Coordinating Committee was to "coordinate export promotion and export financing activities of the U.S. Government." The Act did not state expressly that the Committee was a mechanism to conduct a review of the Commerce DepartmentĖs export control program under the Export Administration Act, or a review of the State DepartmentĖs export control program under the Arms Export Control Act.
However, under the direction of Secretary of Commerce Ronald H. Brown, the Trade Promotion Coordinating Committee seized the opportunity to review the nationĖs export controls. The controls were viewed in terms of "regulatory obstacles to exports" in developing the congressionally-mandated strategic plan report.194 On September 29, 1993, Commerce Secretary Brown issued the first Trade Promotion Coordinating Committee report, "Toward a National Export Strategy Û Report to the United States Congress."
This report indicated that there had been "numerous consultations with exporters" in preparation of the section on export controls. But it did not indicate whether the Department of Defense, or the Intelligence Community, analyzed the national security implications of the proposed liberalizations of export controls. Chapter 5 of the report, "Regulatory Obstacles to Exports," quoted the President:
[F]or some time the United States has imposed stringent export controls on many of our most competitive exports . . . One reason I ran for President was to tailor export controls to the realities of a post-Cold War world.
Let me be clear. We will continue to need strong controls to combat the growing threat of proliferation of weapons of mass destruction and dangerous conventional weapons, as well as to send a strong signal to countries that support international terrorism. But we also need to make long overdue reforms to ensure that we do not unfairly and unnecessarily burden our important commercial interests.195
Chapter 5 of the report described a number of specific actions the Clinton administration was taking to liberalize export controls on computers (see the chapter on High Performance Computers for a more detailed discussion of the Select CommitteeĖs investigation of these matters) and telecommunications products. In addition, it stated that the administration was taking the following action:
The administration will review immediately those COCOM International Industrial List items that currently are contained on the US Munitions List (e.g., civil developmental aircraft, commercial satellites) in order to expedite moving those items to the Commerce Control List.196
An outgrowth of the Trade Promotion Coordinating Committee is the Advocacy Center within CommerceĖs International Trade Administration. The Advocacy Center is designed as a coordination point to marshal the resources of the U.S. Government agencies in the Trade Promotion Coordinating Committee to assist the sales of U.S. products and services abroad. The Advocacy CenterĖs web site home page indicates that assistance can include "a visit to a key foreign official by a high-ranking U.S. government official" and "direct support by U.S. officials (including Commerce and State Department officers) stationed at U.S. embassies." Businesses interested in being considered for acceptance as a "client" of the Advocacy Center are requested to submit a "background data form" and a "bribery agreement form" to CommerceĖs Advocacy Center.197
The 1996 Transfer of Jurisdiction Over Commercial Satellites To Commerce
In January 1995, the Department of Commerce began to work with other departments and agencies to transfer the rest of the commercial communications satellites, including those which possessed any of the nine militarily sensitive characteristics, from the State DepartmentĖs Munitions List to the Commerce DepartmentĖs Control List.
This effort included a joint industry meeting in March 1995 with Commerce Department representatives hosted by C. Michael Armstrong, Chairman and Chief Executive Officer of GM Hughes Electronics.198 Also, Armstrong submitted in March 1995 a report, "White Paper on Commercial Communications Satellites: Issues and Answers," to Anthony Lake, Assistant to the President for National Security Affairs.199
An interagency working group chaired by the State Department started in April 1995 to review and clarify the commercial satellite jurisdiction issue.200
During 1995, the Clinton administration was lobbied by companies interested in transferring the responsibility for commercial satellite export licensing from the State Department to the Commerce Department. For example, Armstrong sent a letter to Samuel R. Berger, Assistant to the President for National Security Affairs, in September 1995, following a meeting with him on September 20, that stated:
Efforts by the State Department to keep commercial communications satellites on the State Department Munitions List should not be allowed to succeed.201
Also, Armstrong, along with Bernard L. Schwartz, Chairman of Loral, and Daniel M. Tellep, Chairman and Chief Executive Officer of Lockheed Martin Corporation, sent a letter to the President on October 6, 1995, that stated:
Continuing to license export of these technologies under the more stringent and cumbersome Munitions List places American companies at a distinct disadvantage in global markets.202
After a series of meetings of the State-chaired interagency working group formed in April 1995, there was no interagency agreement on the commercial satellite jurisdiction issue. In particular, Secretary of State Warren Christopher and the State Department objected to the transfer to Commerce.
At this point, the National Security Council "took charge of the process" and conducted "high-level, informal discussions" that resulted in the March 1996 decision by President Clinton to include all commercial communications satellites in the Commerce Control List, with interagency appeal procedures that appear to have satisfied Secretary Christopher.203
Commercial communications satellites having the nine identifying characteristics that remained under the jurisdiction of StateĖs U.S. Munitions List were transferred formally to the Commerce Control List in October 1996. At the same time, the jurisdiction for jet engine "hot section" technology for the development, production, or overhaul of commercial aircraft engines was moved from the U.S. Munitions List to the Commerce Control List.
CommerceĖs Federal Register notice regarding this change imposed foreign policy controls on all commercial communications satellites and jet engine hot section technology under the Commerce Control List. The Federal Register notice also clarified that technical data provided to the launch provider (form, fit, function, mass, electrical, mechanical, dynamic/environmental, telemetry, safety, facility, launch pad access, and launch parameters) for commercial communications satellites would be under the Commerce Control List.
In addition, the October 1996 notice clarified that all other technical data, defense services, and technical assistance for satellites and rockets Û including compatibility, integration, or processing data Û would continue to be controlled under the State DepartmentĖs Munitions List.204
Other items that were moved from the U.S. Munitions List to the Commerce Control List included:
Commercial products with image intensifier tubes (1994)
Commercial encryption items (December 1996)
Satellite fuels (April 1998)205
The 1999 Return of Jurisdiction Over Commercial Satellites to the State Department
The Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 directed that all satellites and related items that are included in the Commerce Control List should be transferred on March 15, 1999 back to the State DepartmentĖs Munitions List and controlled under the Arms Export Control Act.206
The Act also required that all export licenses for satellites and related items have a Technology Transfer Control Plan that is approved by the Secretary of Defense and an Encryption Technology Transfer Control Plan that is approved by the Director of the National Security Agency.207
The Act included a requirement for a detailed report to Congress that must accompany any Presidential "national interest" determination pursuant to the Foreign Relations Authorization Act for Fiscal Years 1990 and 1991 to waive the Tiananmen Square sanctions and permit the export of satellites for launch in the PRC.208 The detailed justification must include:
Detailed description of all militarily sensitive characteristics integrated within, or associated with, the satellite
Estimated number of U.S. contractor personnel required in the PRC to carry out the satellite launch
Detailed description of the U.S. GovernmentĖs plan to monitor the satellite launch, including the estimated number of required U.S. personnel
Estimated cost to the Department of Defense for monitoring the satellite launch, and the amount to be reimbursed to the Defense Department
Reasons why the satellite launch in the PRC is in the national security interest of the United States
Impact of the proposed export on employment in the United States on a state-by-state basis
Impact of the proposed export on reducing the current U.S. trade deficit with the PRC
Impact of the proposed export on the PRC transition from a nonmarket to market economy
Impact of the proposed export on opening new markets in the PRC to U.S. products
Impact of the proposed export on reducing significant PRC trade barriers to U.S. export and foreign direct investment209
In early December 1998, Space News reported that the White House and the Commerce Department, in coordination with the U.S. aerospace industry, were developing an executive order that would give Commerce the right to appeal State licensing decisions on license applications regarding items on the U.S. Munitions List.210
At the present time, these applications are not referred to Commerce for review. The proposed executive order reportedly would allow Commerce to review the license applications and to appeal StateĖs decisions on them. As reported, the change would permit Commerce to review State license applications for all items in the U.S. Munitions List, including commercial communications satellites.
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